Community leaders shine light on childcare crisis, employer incentives

Posted by: Lisa Diehl on Wednesday, March 1, 2023

Employers learned about incentives available to provide assistance to current and future employees in finding quality, safe and affordable child care during a webinar hosted by the Wichita Regional Chamber of Commerce, Greater Wichita Partnership, Regional Economic Area Partnership, and the Workforce Alliance of South Central Kansas.

Quality, safe and affordable child care is on the Chamber and regional legislative agendas as area businesses continue to face a workforce shortage.

The childcare crisis

In early 2022, a broad coalition of childcare providers, workforce development experts, employers and elected officials joined together to tackle the childcare crisis. That’s when they discovered that the childcare tax credit was underutilized. At the time, only $100,000 of the available $3 million the state set aside had been accessed.

“We knew we had a childcare crisis, not just in our community locally, but also across the state,” Bulluck said. “It wasn’t just child care, though. It flowed into our workforce which in turn flows into our economic development, and all of this goes hand-in-hand. We realized we couldn’t do this alone.”

Across the state of Kansas, existing childcare centers are only meeting 44 percent of the demand for care for children age 6 and younger. In Sedgwick County, existing childcare centers are only meeting 41 percent of the demand. An additional 16,500 children may need childcare in order for their parents to enter the workforce.

“The other crisis with that is that infant and toddler care is really scarce, but it’s also expensive,” Bulluck said. “Our goal is to raise awareness among employers of the challenges that many workers are already facing in accessing quality, affordable childcare.”

In Sedgwick County, the average cost of child care for an infant is $1,250 a month. Many families are spending 40-percent of their income on child care.

Raising awareness of things employers can do to help employees find and secure safe and affordable child care – flexible spending accounts for dependent care, extended parental leave, on-site child care, and bring-your-infant-to-work policies – is another key component of their strategy. Not every solution will fit every workplace, she said.

For childcare providers, Child Start is working to provide direct connections between employers and providers to build creative partnerships. Some employers are paying to hold an infant or toddler spot with a childcare provider for that next employee due to long wait-lists.

Bulluck recommends every business complete a Family Friendly Workplace survey to identify employee needs so the business can begin to make progress on the issues employees are facing around child care.

Help from state, local government

The Kansas Legislature is also considering ways to address the critical childcare shortage. Nathanial Blank, Watkins Public Strategies, shared about two initiatives that are being discussed in Topeka this legislative session.

The first is Senate Bill 164 (SB 164), which offers a $2,000 income tax credit for childcare employees who work a minimum of 900 hours in a year for a licensed childcare provider, whether a facility or in-home center, preschool or a qualified after school program. Hearings for this legislation may be viewed on the Kansas Legislature’s YouTube channel.

Legislators are also considering the introduction of a bill that would lessen the burden of regulations for licensed child care in the state. The legislation would lower staff to child ratios to meet surrounding states’ requirements, lower licensing fees and change staff training requirements. This bill has not yet been introduced, and no hearings are yet scheduled.

Wichita’s City Council has already taken action to change a local ordinance restricting the number of children allowed in a licensed home childcare setting, said Becky Tuttle, Council Member for District 2. There are 299 licensed home childcare centers in Wichita, and with the change, they would be able to provide care for an additional 600 children in the city.

“This is a silent crisis that not enough folks are talking about,” Tuttle said. “I’m trying very hard to remind people that it’s not just a women’s issue. It’s not just a family issue. It’s a workforce issue and an economic development issue, and I think that brings it to the forefront.”

Because it’s a zoning change, the Sedgwick County Commission will have to approve the change. Tuttle said she’s already been working to ensure the County Commissioners understand its importance as they consider it later this month.

Childcare Tax Credit highlights

Michelle Moe Witte is an attorney specializing in employment law with Martin Pringle, Attorneys at Law, and a mom. She experienced the childcare crisis first-hand when she had her daughter 8 years ago. She placed her unborn child on a waiting list in October one year, and in October the next year, her daughter was able to start attending day care.

Witte participated in the 2022 Leadership Wichita class, where she first learned about the Childcare Tax Credit. On economic development day, someone mentioned the tax credit, and she wondered why she’d never heard about. She reached out to Child Start to learn more.

“My hope is that by providing some additional information, we can empower you as employers, as businesses in our community, to think creatively about how you can take advantage of this tax credit to benefit your employees and your workforce and our community as a whole,” she said.

Witte shared an overview of the current Childcare Tax Credits. She said the law provides flexibility in how a business can take advantage of the tax credits, allowing employers to choose the best option for them.

A business taxpayer who pays for or locates child day care services for an employee or employees can claim 30-percent of the net amount spent up to a cap of $30,000 per year.

A business taxpayer who provides facilities and necessary equipment for the establishment of child day care services can claim up to 50-percent of the amount spent up to a cap of $45,000 in the year the center is established. The facility must be established primarily for the use of your employees.

A business taxpayer who provides the facilities and necessary equipment for child day care services and operates the facility can claim up to 30-percent of the amount spent up to a cap of $30,000 per year for subsequent years of operation. The facility must be operated primarily for the use of your employees.

A business taxpayer who provides payments to an organization providing access to available childcare services for an employee or employee(s) can claim up to 50-percent of the net amount spent, up to a cap of $45,000 per year.

Your net spend is going to be less whatever amount employees are paying toward these costs.

For all the childcare tax credits, the money must be spent in Kansas. The child day care facility or provider must be licensed. The employer must complete a Kansas Schedule K-56 for each child day care provider referenced. If employees are using a lot of different providers across the area, you’ll need to complete multiple K-56 forms.

“These are all options or opportunities that are available under the tax credit. There are lots of different ways to take advantage of these. You get to decide which one makes the most sense for you and your employees.

Witte encourages employers to develop a written policy outlining qualifications, expectations and implementation specific to your business.