"Louisiana is engaged in groundbreaking work," says Cornell University economist Mildred Warner. "No other state has proposed such an innovative approach to early care and education finance." Geoffrey Nagle, director of the Tulane Institute of Infant Early Childhood Mental Health, agrees: "This is the most cutting-edge tax policy to support quality child care in the country." The Council for A Better Louisiana (CABL) likewise agrees. "It drives policy where we sorely need it," says CABL executive director Barry Erwin.
Lawmakers should welcome the chance to support cutting-edge reforms in education. They can start by checking out the map mentioned above (http://www.gnocdc.org/maps/orleans_child_care.pdf). It was co-produced by the locally based advocacy group Agenda for Children along with the Greater New Orleans Community Data Center, and it illustrates both the dearth of choices for working parents with children ages 5 and under and the reform potential of SB 361.
Among other things, the map shows that New Orleans had 92 childcare facilities as of May 31 -- down from 276 before Katrina. Most of the post-K facilities are clustered in areas that saw the least flooding, such as Uptown and Algiers. In heavily damaged areas, the facilities are fewer and scattered, but often bearing hopeful names. There is the "Precious Little People" childcare center in eastern New Orleans, "Angel Care" in Gentilly, the University of New Orleans Children's Center on the Lakefront and "Small World" in the Upper Ninth Ward.
Co-authored by Sen. Ann Duplessis and Rep. Karen Carter, both of New Orleans, the School Readiness Tax Credits bill would improve childcare centers statewide by using tax incentives to institute a quality-rating system for facilities, their directors and staff. The measure would grant tax credits to four key groups that are part of the childcare system -- childcare centers, childcare professionals, businesses and parents.
First, the proposal calls for a voluntary "Quality Rating System" of childcare centers. The state Department of Social Services (DSS) would establish criteria for evaluations and ratings of one to five stars, with the latter figure the highest rating. Centers that do not participate or that get only one star would get no tax credits. Facilities earning two stars would receive $750 per eligible child; three stars, $1,000; four stars, $1,250; and five stars, $1,500 per child. The goal is for most Louisiana childcare centers to earn three-star status or better within the next decade. North Carolina centers did that in five years, says Tulane's Nagle.
Parents could use the ratings to calculate individual childcare tax credits on their state income tax forms, ranging from 50 percent of their expenditures at a two-star facility to 200 percent at a five-star center -- with a maximum credit for two or more children capped at $3,150. Similar criteria would reward childcare directors and individual staffers for advanced degrees, providing $1,500 to $3,000 in tax credits that would effectively be salary bonuses given directly to the individuals. "No state has tax credits for [child care] providers or for teachers based on a rating system," says Nagle. "We're not just putting one toe in the water."
Finally, the bill would give tax breaks to businesses that help employees with annual childcare expenses or that make donations to qualifying childcare centers. The size of the credits, again, would depend on the quality-rating points of the childcare centers benefiting from the businesses' involvement. At the top tier, businesses could get credits of $10,000 for $50,000 in eligible assistance to a five-star childcare center. Moreover, credits earned but not used could be carried forward for four years.
As written, the childcare tax credits would cost the state roughly $26 million initially, according to legislative fiscal analysts. The state Department of Revenue estimates it would cost an additional $357,000 to administer the program, beginning in fiscal year 2008-09. But we see the tax credits as an investment in children, not a drain on the state treasury.
Judy Watts, the director of Agenda for Children, says the advocacy group supports the Quality Rating System despite some concerns. "We fully support the QRS, but we want to make sure that all centers have the capacity to reach for the stars," she says. Watts fears the tax credits might not help centers in low-income areas because those centers may not be able to secure upfront funding for the capital improvements needed for higher ratings. In addition, the staff incentives may lead to "creaming" of the best-qualified workers. Those are legitimate concerns.
One possible solution would be for New Orleans recovery officials to direct some federal aid to childcare services in the hardest-hit sectors of the city as part of an overall recovery plan. We also note that while "creaming" is always a concern in New Orleans education, we have seen no evidence that tax credits have caused such disparities elsewhere.
SB 361 sailed through the Senate unopposed. Gov. Kathleen Blanco, CABL and groups such as United Way's "Success By Six" have joined a groundswell of support for the measure. We urge House members to do likewise and vote for the children of the recovery.