Child care tax incentives plan meets sharply divided response in House committee

How do we get more child care providers in Minnesota? Statistics show the state is suffering from a child care shortage. Would creating tax incentives get more folks to pursue child care as a career?

It’s a source of what turns out to be fierce debate, judging from testimony in Wednesday’s House Taxes Committee.

Sponsored by Rep. Laurie Pryor (DFL-Minnetonka), HF1034 would create three refundable tax credits: one for individuals who pay for child care from a qualifying facility, another for those employed as child care professionals, and a third for providers who take care of children in several at-risk categories, including being homeless, in foster care or in need of child protection services.

Rep. Laurie Pryor

The bill was laid over for possible omnibus bill inclusion, but testimony and committee members’ responses to it made clear that it lacks support from several members in its current form. A companion, SF1110, sponsored by Sen. Paul Anderson (R-Plymouth), awaits action by the Senate Taxes Committee.

How much of a credit one could earn, and why, became a bone of contention among testifiers. Objections centered around two questions: Is the state’s Parent Aware rating system a fair and reliable gauge for measuring the quality of child care from a given provider? And will this system of tax credits do anything to cut into the child care deficit or will it actually drive providers away from the business?

The tiered system of tax credits would be tied to a child care provider’s Parent Aware rating, which ranges from 1-4 stars. Founded by a nonprofit, the Minnesota Early Learning Foundation, the goal of Parent Aware is to increase the use of early learning best practices in child care. Under Pryor’s bill, the more highly rated a child care provider is under the Parent Aware system, the greater the tax credits for both parents and providers.

But that’s not fair, according to Elizabeth Bangert, owner and director of Mankato-based Here We Grow Early Childhood Center. “We’re a 4-star-rated center and I’m against this bill. I stand to gain about $30,000 in tax credits, but I’m still opposed to it. Because it’s unfair to family providers and it won’t solve the child care crisis. I’m the only Parent Aware-rated provider in Mankato. … A 2018 Legislative Auditor’s report states that they can’t prove that these (highly rated) programs are more quality than anyone else.”

The Minnesota Association of Child Care Professionals sent a letter opposing the bill, saying, “Parent Aware is a voluntary rating system that continues to be a work in progress. There are currently flaws in the program that create an inherent bias against Minnesota’s licensed family child care programs.”

Representing the Coalition of Greater Minnesota Cities, Scott McMahon said demand for child care in outstate Minnesota is often twice that of availability, and that the bill wouldn’t address that sufficiently.

“Our cities hear too frequently from parents who are forced to leave the workforce because of a lack of available child care,” McMahon said. “[And] from businesses who have had prospective employees turn down job offers because they can’t find affordable child care in that community.”

While some committee members found the financial incentives in the bill laudable, others expressed concern that increased paperwork and other demands on providers under Parent Aware would make the career less attractive to prospective providers.