The legislature has sent the governor a bill addressing the so-called “cliff effect” in state-funded child care assistance.
Under current law, low-income Iowans who qualify for state help in paying child care expenses can lose all those benefits if they take a small raise. Representative Ann Meyer, a Republican from Fort Dodge, says the bill creates a graduated system of reduced benefits as a low-income worker’s income rises.
“This allows families to become more successful, more independent, to accept raises and promotions in their jobs,” Meyer says, “and incrementally decrease their dependence on the Child Care Assistance Program.”
Iowa households earning up to 225% of the poverty level qualify today for state child care assistance.
“Should they accept a modest raise or promotion, they fall of the child care cliff,” Meyer says, “possibly making $100 or $200 extra a month, but losing about $1500 a month in child care benefits.”
Meyer says the bill creates “stair steps” out of the program, so those benefits decrease as the household closes in on reaching 250 percent of the federal poverty level. Senator Sarah Trone Garriott, a Democrat from Windsor Heights, voted for the bill, but she says the legislature should expand eligibility for child care assistance.
“It may be one of the most important things we could do as a state to bring people into the workforce,” she says, “which is something we really need right now.”
The House approved the bill in early March. The Senate passed it this week.
About 25,000 Iowa children currently live in low-income households with parents who work or go to school and receive state-funded child care assistance. In 2019, the United Way organizations in Iowa estimated the average cost for one child care slot was between $860 and $1300 a month.