HARRISBURG, PA — The Pennsylvania House of Representatives recently passed House Bill 1958, known as the Employer Child Care Tax Credit. This bill aims to make child care more affordable for many Pennsylvania families by providing tax credits to employers who contribute to their employees’ child care expenses.
The Start Strong PA campaign, a coalition advocating for improved child care services, issued a statement in response to the passage. “Creating and expanding tax credit programs like the Pennsylvania Child and Dependent Care Enhancement Tax Credit and the proposed Employer Child Care Tax Credit makes child care more affordable for many PA families who are able to access care,” the statement read. However, it emphasized that these initiatives do not address the significant shortage of child care teachers, driven by low wages.
The shortage has become a pressing issue, closing classrooms and entire programs. Tens of thousands of families currently struggle to find the child care they need. To tackle this crisis, the coalition urges Pennsylvania lawmakers to invest $284 million in new and recurring state funding for a child care teacher recruitment and retention initiative.
Diane Barber, Executive Director of the Pennsylvania Child Care Association, highlighted the financial dilemma faced by providers. “They know that in order to keep their teachers, they must pay more; however, providers also know that families are already struggling to afford care. This is the broken business model of child care, and we need help,” she said.
The proposed funding would provide monthly payments to providers who have a subsidy agreement with the commonwealth. It would be restricted to initiatives aimed at retaining and recruiting staff, such as hiring bonuses, benefit packages, wage increases, or retention bonuses for staff staying for a certain length of time or achieving specific credentials. Local providers would have the flexibility to determine how best to use these resources.
Governor Shapiro’s budget package includes a proposal to increase child care subsidy rates to the 75th percentile of the current price families pay for child care services. While helpful, these funds will primarily alleviate rising facility, food, utility, and supply costs for providers participating in Child Care Works. Unfortunately, they will not sufficiently address the overall costs necessary to recruit and retain child care teachers.
Carol Austin, Executive Director of First Up, stressed the broader economic implications. “Child care is the workforce behind the workforce,” she said. “When working families struggle to find affordable high-quality child care, their productivity plummets, impacting businesses’ bottom lines and our overall economy. Helping the child care sector recruit and retain its teachers is an investment in our commonwealth’s overall workforce that will benefit our economy.”
Addressing Child Care Challenges: HB 1958 and Beyond
House Bill 1958 amends the Tax Reform Code of 1971, providing an employer child care contribution tax credit. After passing the House with a 155-47 vote on May 22, 2024, the bill was referred to the Senate Finance Committee on May 29, 2024.
The passage of HB 1958 is a critical step towards making child care more accessible and affordable. However, the broader issue of a child care teacher shortage remains unresolved. Addressing this shortage is essential not only for the well-being of families but also for the overall economic health of the state. Without adequate child care, parents’ ability to participate fully in the workforce is hampered, which in turn affects business productivity and economic growth.
The debate over child care funding and support highlights the need for comprehensive solutions that encompass affordability, accessibility, and quality of care. As the bill moves to the Senate, stakeholders will be watching closely to see if further measures are taken to address the underlying issues within the child care sector.
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