There was no comprehensive effort to address Indiana’s child care and early learning shortages this legislative session, but a series of smaller changes will have big impacts on Hoosier families.
Spending public dollars on child care doesn’t just benefit the families who need the service today but the generations to come, Samuel Snideman said.
“Investments in child care can have untold economic benefits for adults in the family and, when we make investments in quality child care, for kids who are of low income,” said Snideman, the vice president of government relations at United Way of Central Indiana. “We set (those kids) on the path to economic self-sufficiency… and academic success as they get older.”
Research has repeatedly demonstrated that access to early learning better prepares children for school and those children are less likely to abuse substances or be incarcerated well into adulthood. Indiana studies have found that children in On My Way Pre-K (OMWPK) not only enter kindergarten with better social and literary skills but also continue to read at levels above their peers through their elementary years – an important consideration as one-in-five children leave third grade without reading proficiently.
But child care – when affordable and accessible – has the added benefit of freeing up parents for the workforce. Last month, Indiana reported more than 130,000 open job postings but less than two-thirds of Hoosiers actively participating in the labor market.
Child care allows more Hoosiers, usually women and especially women of color, the freedom to work.
“Folks who are in poverty face a lot of obstacles as they try to move up the ladder of economic self-sufficiency and mobility. One of those is that they often lack access to the kinds of high-paying jobs or educational opportunities… because they have caregiving responsibilities,” Snideman said.
“But if we don’t make investments in supports, like child care… those folks aren’t able to access those opportunities and unleash their full potential.”
Expanding early learning access
Perhaps the most consequential change will be the expansion of OMWPK, eligibility for which is determined as a percentage of the federal poverty level. Previously, the cutoff for full program benefits was 127%, or roughly $38,000 for a four-person family.
Following the passage of the budget, that number increased to 150% of the federal standard, or $45,000 for a family of four. The Family and Social Services Administration (FSSA) confirmed that this expansion would also apply to the federally funded Child Care Development Fund (CCDF), which covers certain child care services.
FSSA said that the two program changes will cover roughly 11,000 more children.
“This will allow thousands of families to access early care and education services,” said Erin Kissling, the chief learning officer for Early Learning Indiana. “Even though the actual dollar amount wasn’t expanded, programs are already used to that dollar amount… so it just gives additional families the ability to participate.”
The state awards $6,800 per child each year, where it has been since the program launched, Snideman said. Legislators designed it that way acknowledging that families may have access to other safety net programs to supplement child care but haven’t kept the amount even with inflation.
Snideman said the lower award amounts means providers who accept OMWPK children often take a loss, further depressing already low industry wages. Providers might also decline to accept the program.
“Moving that award cap to something closer to the true costs of care and education would be an enormous benefit to families and an enormous benefit to providers,” Snideman said.
However, some counties didn’t participate in OMWPK because of the required program match – something Snideman and others tried to eliminate this year.
Another provision – tucked into a wide-ranging educational matters bill – could simplify some of the state’s regulations on child care providers while also transitioning OMWPK from a pilot program to a permanent state expenditure.
Kissling, whose organization includes child care providers, said certain rules actually inhibited care centers – such as a rule that someone caring for infants must be at least 21 years old, a rule only some states have adopted.
“That’s something that really constrains how we’re allowed to staff those rooms,” Kissling said. “We work with career and technical education programs and the way that they are able to engage in our classrooms is very limited because those students are still in high school.”
The bill additionally requires that the state re-evaluate regulations regularly and find ways to incentivize salary increases – a long-recognized recruitment problem for the industry that averages a $11.64 hourly wage.
Getting businesses involved
Beyond the child and parents, the lack of child care in Indiana limits the state’s economic growth, primarily by preventing parents from joining the workforce. With the cost of child care often exceeding the cost of full-time college tuition, a parent may choose to stay home rather than working.
Recognizing this impact, the Indiana Chamber of Commerce included child care expansion and reform in their 2023 legislative session priorities.
Kevin Brinegar, the president and CEO of the chamber, said business leaders first started paying attention to Indiana’s child care shortage nearly two decades ago, as the organization’s annual survey of members identified child care – alongside the state’s housing shortage – as their company’s biggest external challenge.
“We were hearing it – in visits to members – that there were folks who wanted to be in the workforce but couldn’t because they couldn’t afford or couldn’t find adequate child care,” he said. “Particularly child care with an education or pre-K focus.”
Nearly three-quarters of businesses surveyed in 2022 said they left jobs open during the prior year due to a lack of qualified applicants, with more employers saying that the lack of affordable and accessible child care was a workforce barrier.
One way to help improve child care access is a “pilot program,” as Brinegar called it, to grant $2.5 million annually in tax credits to businesses with less than 100 employees or providers that expand child care capacity. Through it, employers could subsidize child care for their employees and receive either a 50% credit or $100,000 credit for that expenditure, as included in the state budget.
“We expect that would stimulate the expansion of child care,” Brinegar. “On the provider side, they would get an essentially identical credit… for the expenditures they make to expand capacity or establish new child care facilities.”
Growing the program depends on whether it produces the desired outcome in the coming years, Brinegar said, especially when it came to increasing the workforce participation rate – which remains below pre-pandemic levels.
Snideman added that the credit focuses on capital improvements, rather than operational expenses.
“It creates some challenges for some entities because the ongoing costs for maintaining a facility can be quite high, particularly if operators pay good wages,” Snideman said. “(But) the tax credit is a great improvement.”
In the pre-session chamber report, ‘Indiana’s Leaking Talent Pipeline,’ the chamber reported that those Hoosiers with the least education didn’t participate in the workforce. Among those with less than a high school diploma, less than 40% were employed. For those with a diploma, just over half, 54%, were working.
The report concluded by saying Indiana needed to do more to improve its overall workforce participation rate – and fill Indiana’s thousands of open jobs – by focusing on improving educational attainment and training for these two groups.
“It’s the folks with the lower levels of educational attainment that aren’t in the workforce,” Brinegar said. “Part of the problem is… they can’t find a job that pays enough to make it worth going to work and also be able to pay for child care. The math just doesn’t work.”
While the 2023 legislative session made progress expanding child care access and affordability, there’s more work ahead.
In 2021, Early Learning Indiana released its ‘Closing the Gap’ index, with a statewide score for childcare access at 60.6 on a 100-point scale – just above the cutoff for failing. In 2022, the organization updated the state’s score to 62.2.
“In 2021, we had 14 counties that had no high-quality care available. But in 2022, we were down to only five counties,” Kissling said. “That growth… it’s promising but we still have many areas of our state (that) face a scarcity.”
High-quality care signifies a program that has an educational component with active teacher engagement. The quality of early childhood care and education matters because that’s the time when our brain is most actively growing, Kissling said.
Kissling said she often describes Indiana’s early learning system as being in its “infancy stage.”
“The demand for quality child care exceeds the available supply,” Kissling said. “There’s a lot of work to do… (but) I think this will make a really big difference.”
The Indiana Capital Chronicle is an independent, not-for-profit news organization that covers state government, policy and elections.