Time is now to solve childcare challenges

Iowa residents and businesses have been devastated by the global pandemic and derecho this year, many still hoping for relief and a path forward. While these disasters have caused short-term emergencies, they have also brought challenges to light that we need to resolve for the health of Iowans and our state’s economy.

One critical need that our state must address is access to affordable childcare. Already a problem pre-pandemic, the issue has since snowballed as 1,000 childcare centers have since the start of the pandemic, forcing parents and guardians (disproportionately women) to leave the workforce.

Affordable and accessible childcare is essential for a growing workforce and economy. Yet, for many Iowans, the high cost of childcare is a barrier to their financial stability. As an organization dedicated to helping Iowans achieve financial wellbeing, the Iowa Credit Union Foundation has been on the frontline of this issue.

In Fort Dodge and Webster County, the childcare shortage can have a direct impact on workforce recruitment and retention as the population continues to decline. Since 2011, Webster County has lost 530 childcare spaces and has a shortage of 1,600 childcare slots.

We must work together on solutions to expand access to affordable childcare by addressing challenges like the childcare cliff effect and through innovative programs that support public-private partnerships to provide options to Iowa parents and guardians.

The childcare cliff effect has been an issue for many years and creates an unnecessary barrier for career growth. The State of Iowa provides childcare assistance to eligible families at or below 225% of the Federal Poverty Level (FPL). However, this program has a cliff; once a family exceeds a particular income level, they lose their childcare assistance completely rather than graduating off the program. This is often called the childcare “cliff effect.”

For families on the financial edge, this means that a small increase in pay could lead to a net loss of hundreds of dollars each month. Additionally, the assistance program has an entry requirement – families must enter the program at 145% FPL or below in order to access any of the assistance. This means two families of four could each be making $40,000 a year, but only one is receiving help with childcare costs.

Childcare is not the only issue that has plagued the Fort Dodge community since the pandemic hit. The credit union industry stepped up and created an Emergency Relief Fund through the Iowa Credit Union Foundation to provide grants to Iowans and small businesses impacted by the pandemic. The response was overwhelming with more than 11,000 grant applications in 48 hours, including many from the Fort Dodge community.

The data from these applications shows not just the incredible financial need, but also a glimpse into the challenges facing Iowans and small businesses during the pandemic.

Data from the Fort Dodge grant applications earlier this year showed that, due to COVID-19:

• 58% of applicants lost employment

• 51% of applicants are unable to afford their rent or mortgage

• 46% of applicants are unable to afford their utility bill

• 41% of applicants are facing food insecurity

• 28% of individual applicants do not qualify for any other assistance programs

• 42% of business applicants have currently closed their business

• 24% of business applicants are not eligible for other government assistance programs

Those of us at the Foundation and throughout the credit union industry stand ready to work with state leaders on policy solutions to help Iowans recover from the pandemic and get back on their feet. A critical first step is finding access to affordable childcare so parents can improve their careers and financial futures. Iowa families are counting on us.

Jaimie Miller is executive director of the Iowa Credit Union Foundation


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