Getting a raise is nearly always a good thing, but for working families in Iowa, earning 20 cents more per hour can mean losing thousands of dollars in child care assistance.
Families below the poverty line in Iowa are eligible to receive support for the majority of their child care, a benefit that can be worth more than $11,000 per year. Families are still eligible for the most of the credit — about $8,000 per year — until their incomes reach 145 percent of the poverty line, or about $25,000 for a single parent with one child. But if that parent’s income is just one percentage point higher, they aren’t eligible for support at all.
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That steep and dramatic cut-off point for assistance is combined with one of the lowest income thresholds in the country; neighboring states such as Kansas and Minnesota both set their cut-offs above 180 percent of the poverty line.
These programs are paid for by the Child Care and Development Block Grant (CCDBG), which has provided money to all U.S. states and territories for the purpose of helping low-income working parents afford child care since 1990. However, the program was chronically underfunded for decades, and by 2015 served the fewest children in the program’s history. In 2018, Congress increased discretionary CCDBG funding by about 80 percent for fiscal years 2018 and 2019, to help make up for some of the shortage. While this money was intended to make sure more children would receive care, Iowa’s eligibility ceiling has remained capped at 145 percent, where it has been for more than 10 years.
The 2018 increase in CCDBG funding means Iowa has $13 million more from the federal government to spend on child care assistance. While the Iowa legislature appropriated $3 million of the new CCDBG funding to increase reimbursement rates for child care providers, the rest of the funding increase hasn’t yet been allocated by Iowa’s legislature. At least 70 percent of the increase must be spent on direct services like expanding the number of families eligible for child care assistance or improving the quality and safety of child care in the state.
At the Iowa minimum wage, which remains frozen at the federal level of $7.25, pulling together the $186 per week it costs on average to pay for child care for one child takes 26 hours of the wages in a 40-hour week. Nearly two in every three Iowan parents working full-time would have to spend more than seven percent of their income to afford a child care center, exceeding the federal benchmark for affordability.
When getting a 20 cent raise means losing nearly the full value of the child care assistance benefit, the pressures on families are so strong that some working parents in Iowa are turning down small pay raises offered by employers to keep their Child Care Assistance (CCA) eligibility. In December of 2018, the federal Office on Child Care issued a citation to Iowa indicating the state wasn’t allowed to terminate benefits if the family initially qualified for CCA and saw only a modest increase in income. While Iowa is required to make this fix, the change is unlikely to help families who hover just above the threshold for eligibility.
Dave Stone, advocacy officer for United Way of Central Iowa, sees cost as the main sticking point for Iowa legislators hesitant to expand eligibility and soften the cliff effect. “Child care is expensive,” says Stone, and Iowa has “not been keeping up the appropriations” as child care costs have risen faster than wages.
The Beasleys are some of the people struggling to get by just above the cut-off for assistance. Katherine Beasley, her husband Dan, and their two kids, Peter (seven) and Noah (one), live in the Oakridge Neighborhood of Des Moines, a community that provides additional services to support their residents. When Noah was born in 2018, Katherine lost her job — in the first few weeks after Noah was born, he was frequently sick, and Katherine’s employer wasn’t happy that she wasn’t working enough hours. With only her husband Dan’s income, the Beasleys quickly drained their savings and fell behind on bills. By the time Katherine got a new job, her family had received their last possible extension from their utility company, and were about to have their electricity shut off. With her first paycheck, her family was just above the cutoff point for assistance.
“It was very stressful. You try not to show it to the kids, but you do feel depressed,” said Katherine. “The most important part was making sure the boys would be fed; sometimes there wasn’t anything left for us after feeding the boys.”
Through Oakridge, Katherine was able to access a program funded primarily by corporate donors that pays all but $50 of Noah’s $220 weekly child care cost. Even still, when Peter finishes elementary school for the summer in a few weeks, she doesn’t know how she’ll find care for him and still make ends meet if her next request for State Pay isn’t approved.
“I was taught that financial problems stay at home, so nobody really knows. I’d been raised not to ask for help, but it comes down to putting your kids first and supporting them,” she said. Struggling to provide for young children can be a stigmatizing experience. Perhaps this is why political interest in child care affordability lags behind higher education, despite the fact that child care is more expensive than college tuition in 28 states.
– Katherine Beasley
Without the Oakridge Neighborhood child care assistance, Katherine said she wouldn’t be able to continue her progress towards a nursing degree, a move she hopes will permanently change her family’s financial trajectory. “I’d have to get two jobs. The kids would never have mom or dad at home,” Katherine said, adding that it’s important to her that she has enough time to advocate for the needs of her older son, a special education student.
Helping families like the Beasleys is one reason why United Way of Central Iowa, along with their Skills2Compete Coalition partners including the Iowa Federation of Labor, AFL-CIO, and the Iowa State Education Association, have called on the Iowa state legislature to expand eligibility for CCA to at least 185 percent of the federal poverty line. The United Way of Central Iowa’s proposal would phase out assistance gradually using copays. To Stone, getting rid of the steep “cliff effect” is key. With a gradual phase out, families wouldn’t need to refuse small raises or avoid getting higher-paying jobs to maintain crucial child care assistance.
United Way of Central Iowa estimates implementing its proposal would cost around $22 million per year. On a federal level, the Child Care for Working Families Act, which is co-sponsored by the majority of congressional Democrats, would provide free child care to all families earning less than 75 percent of their state’s median income and cap spending for families earning up to 150 percent of the federal poverty line at 7 percent of their income. Sen. Elizabeth Warren (D-MA) has also proposed her own plan to pay for child care for all families making less than 200 percent of the federal poverty line, and to provide support for families earning more than 200 percent of the federal poverty line who still can’t find child care at less than 7 percent of their income..
“We know support for children is critically important for adults to have success — in work, in certification programs, or in education. And we need to make sure that children get the support they need to enter kindergarten on par with their peers,” said Teree Caldwell-Johnson, CEO of Oakridge Neighborhood Services. If Iowa appropriates enough money for affordable child care, a generation of parents will have the freedom to make a better life for their families, and a generation of children will start their lives on more solid footing.
Editor’s note: The Beasley family requested that their name be changed for privacy.
– Katherine Beasley