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WASHINGTON —áThe U.S. House of Representatives advanced two bipartisan measures authored by Rep. Cindy Axne July 29, in legislation to support the affordability and accessibility of child care for Iowa’s working families.
The House passed the Child Care for Economic Recovery Act, which includes the text of Axne’s Improving Child Care for Working Families Act and COVID-19 Dependent Care Flexible Spending Arrangement Rollover Act of 2020. Both bills expand Iowa families’ ability to cover child care costs through dependent care assistance plans (DCAPs), which allow working parents to set aside pre-tax income for child care.
“Without access to safe affordable child care for their children, Iowa’s families will also be a step behind as we work to get our economy back on track,” Axne said. “I’m pleased to see the House passing two commonsense and bipartisan provisions I wrote earlier this year to ensure that families who are saving for child care are not left empty-handed and that their savings will actually cover the real costs of care."
The Improving Child Care for Working Families Act increases the cap on how much families can place in their DCAPs to $10,000 in order to cover the current costs of child care. The current limit, set at $5,000, has not changed since the IRS first set in in 1986.
The COVID-19 Dependent Care Flexible Spending Arrangement Rollover Act of 2020 prevents families from losing thousands in unspent DCAP savings at the end of 2020 by allowing the funds to rollover to the new calendar year. Currently the tax benefit resets on January 1, meaning savings not used on child careáby the end of the yearábecause of coronavirus precautions will be erased withoutáthis change.
In addition to these two provisions, the Child Care for Economic Recovery Act also:
Enhances the child and dependent care tax credit (CDCTC) and makes it fully refundable Creates a new refundable payroll tax credit for eligible employee dependent care benefits paid by employers Increased funds for the Child Care Entitlement to States program for the first time in more than a decade Provides $850 million for states to fill gaps in dependent care for essential workers, and invests $10 billion over 5 years to improve child care facilities and infrastructure. Axne also joined her colleagues in advancing the Child Care Is Essential Act July 29, which creates a new Child Care Stabilization Fund to provide grant funding to child care providers to ensure safe reopening and operations.
The grants would help child care providers keep up with operating expenses while requiring that providers continue to pay their staff, as well as promote compliance and reporting to ensure providers are following best practices and public health guidelines.
A recent report by the Center for American Progress found that the COVID-19 pandemic could lead to a permanent loss of nearly 4.5 million child care slots, removing child care options for families as they need to return to work.