Legislature(2023 - 2024)ADAMS 519
05/11/2023 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB55 CS FOR SENATE BILL NO. 55(FIN) | |
| HB193 | |
| HB89 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 41 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | SB 55 | TELECONFERENCED | |
| *+ | HB 193 | TELECONFERENCED | |
| + | HB 89 | TELECONFERENCED | |
HOUSE BILL NO. 89
"An Act relating to the day care assistance program
and the child care grant program; and providing for an
effective date."
2:42:53 PM
REPRESENTATIVE JULIE COULOMBE, SPONSOR, thanked the
committee for hearing the bill. She introduced the bill
with prepared remarks:
HB 89 strengthens the childcare system in a number of
ways. It expands the number of families who can
utilize daycare vouchers and aligns the subsidy level
to reflect the actual cost of daycare. It makes
childcare expenditures and cash or equivalent accepted
by daycare facilities and payments to employees for
the purpose of offsetting childcare costs eligible for
tax credits. It increases the maximum individual tax
credit limit, develops a sliding fee scale to make
grants less generous for higher income families and
lower income families and provides grants for the
highest performing and highest quality childcare
facilities.
Representative Coulombe explained that at the outset the
bill did two things including the commission of a study to
find out the actual cost of daycare. She explained that
currently there was a market survey, which was basically
rates providers were currently charging; however, it was
not working because daycares were going under. She
explained it was not enough to keep daycares in business.
The department was conducting a survey to identify the
actual cost of care. The bill would adjust the amount up in
consideration of vouchers. Second, the bill would expand
the opportunity for families of different income levels to
access care. She shared that when she had first started as
a legislator, she had heard from many people in the private
sector who were struggling with workforce and one of the
largest problems was daycare. She elaborated that she
managed numerous people in her line of work and the lack of
childcare caused employees to miss work, arrive late, and
leave early. She considered the bill as a support for
families and workforce. She requested her staff to provide
a brief presentation.
DANIEL ROBBINS, STAFF, REPRESENTATIVE JULIE COULOMBE,
provided a PowerPoint presentation titled "HB 89 Child
Care" (copy on file). He began on slide 2 and discussed
that the bill aimed to fix the lack of affordable, quality
childcare. The lack of childcare worsened labor shortages,
endangered children, undermined families' economic
security, and decreased workforce participation. He relayed
that the solution was to strengthen the childcare sector to
improve access for families and help parents return to the
workforce (slide 3).
Mr. Robbins detailed that the bill strengthened the
childcare system in a number of ways (slide 4):
• Expands the number of families who can utilize daycare
vouchers
• Aligns the subsidy level to reflect the actual cost of
care
• Incentivizes tax breaks for employers to donate to
daycare facilities
• Increases the maximum tax credit
• Eliminates sudden drop-off of subsidies for higher
income families
• Provides grants to the highest performing/quality
daycare facilities
2:47:03 PM
Mr. Robbins reviewed that Alaska's childcare was in crisis
as a result of low wages, labor shortages, and a declining
number of childcare providers (slide 5). The graph on slide
6 showed that during the height of the COVID-19 pandemic,
there was a large dip in the number of childcare workers.
While the number had rebounded, it had not returned to its
level prior to the pandemic. He moved to slide 7 and
discussed that childcare subsidies were inadequate and did
not reflect the actual cost of care. He stated it was a
problem because it impacted lower income families and
middle class families. He explained that subsidies were
inadequate. He detailed that providers lost money when
offering care to lower income families and consequently
they were raising rates on middle class families, which in
turn forced additional families out of the workforce to
stay home and care for children.
Mr. Robbins addressed who was eligible for subsidies on
slide 8. Currently, the eligibility threshold was 85
percent of the state median income ($60,144 in Alaska for
one earner with one child). The threshold left most of the
middle class without affordable care and resulted in labor
shortages in every industry in Alaska. The bill raised the
eligibility threshold to 105 percent of the state median
income ($73,920 in Alaska for one earner with one child).
He stated the department would scale subsidy level based on
need. He explained that the expanded number of families who
could afford care would result in more Alaskans going back
to work.
2:49:32 PM
Mr. Robbins discussed the subsidy rate calculation on slide
9. The subsidy rate was currently based on a market survey;
however, it underestimated the cost of care, which put
providers in greater financial risk and resulted in lower
income families not being able to obtain adequate
subsidies. The situation resulted in increased rates for
middle income families, which priced families out of care.
The bill aligned subsidy rates with actual cost of care,
which improved provider financial stability and
affordability for the middle class.
He turned to slide 10 and explained that a family with a
household income of $60,000 per year should not spend more
than $4,200 per year on childcare costs. Currently those
families were spending $6,600. He moved to slide 11 and
discussed that parents had reported that childcare issues
had caused them to go from full-time to part-time
employment and had prevented them from accepting jobs. He
shared that Missouri had proposed a tax credit to daycare
facilities for making capital improvements (slide 12).
North Dakota was spending over $70 million per year on its
childcare program aiming to make childcare affordable and
improve availability and quality (slide 13).
2:51:15 PM
Mr. Robbins provided a recap on slide 14. The solution was
to expand the number of families who were eligible for
childcare subsidies under the Child Care Program Office,
which would help more parents afford childcare and get back
to work.
Representative Coulombe relayed there was an issue with the
phone system and the committee may have to wait to ask the
department questions.
Representative Josephson stated that the Senate had $15
million for block grants. He asked if the funding was for
the program in the bill or something different.
Representative Coulombe replied that the [Senate] funding
was for childcare block grants to help subsidize childcare
centers. She clarified that HB 89 addressed vouchers
parents applied for that also went to childcare centers.
She stated that daycare centers were a terrible business
model for profit. The facilities would never be able to
charge what it actually cost to provide the service;
therefore, they would always be subsidized. She explained
that the grants [referenced by Representative Josephson]
and the vouchers helped make a difference. She added that
some of the items in the bill had come as amendments
throughout the committee process (e.g., the tax credits).
She was open to other things. She reiterated that the
vouchers and daycare grants ultimately ended up at the
childcare center, but the [childcare grants] were more
direct from the department to the centers.
2:53:57 PM
Representative Josephson looked at slide 13 and asked if
Mr. Robbins had stated that North Dakota invested $70
million per year or $7 million per year.
Mr. Robbins replied, "$70 million."
Representative Josephson remarked that North Dakota had
just a few thousand more residents than Alaska.
Representative Galvin looked at the bullet point on slide 4
that read "incentivizes tax breaks or employers to donate
to daycare facilities." She asked if it meant tax breaks
would be given to those donating to daycare. She asked if
it was similar to the University system where donating
businesses received a tax break.
Mr. Robbins answered that it was similar. The bill would
give tax breaks for businesses donating to daycare centers.
Representative Galvin asked for verification that the bill
would give tax breaks to incentivize donations.
Mr. Robbins agreed.
Representative Galvin looked at slide 8 and remarked that
the bill would increase the number of families with access
to childcare. She asked if there was available data
indicating what the expansion would look like.
Mr. Robbins replied that the Child Care Program Office did
not provide hard numbers indicating the number of families
the bill would help.
Representative Galvin echoed comments made by
Representative Josephson. She remarked that over $70
million was invested in North Dakota. She elaborated that
the issue had been present in Alaska for decades. She
highlighted that investing in a child's early years with
high quality early learning standards resulted in a much
higher workforce. She thanked the sponsor for calling the
committee's attention to North Dakota.
2:58:02 PM
Representative Ortiz thanked the sponsor for the
legislation. He looked at the bottom bullet on slide 4
specifying that the bill would provide grants to the
highest performing/quality daycare facilities. He asked who
determined which facilities were the highest performing.
Mr. Robbins replied that there were quality standards. He
detailed there were different levels [of quality] and the
number was displayed at each daycare facility. He believed
the maximum level was 5 and there were no facilities in
Alaska exceeding level 3. He stated the goal would be to
get to higher levels by providing grants.
Representative Coulombe elaborated that the item referenced
by Representative Ortiz was an amendment that came later
[in a prior committee of referral]. She explained the
amendment aimed to incentivize a higher quality of care.
She relayed there was currently a rating scale of 1 to 5
and each daycare had a licensed childcare rating. She did
not want to make the requirement yet; therefore, the bill
included an option for the department that a daycare
facility rated 3 or higher could get additional funding for
performance. Part of the performance included interaction,
educational opportunities, the number of adults per child,
nutrition, and one other item. She stated it was a pretty
standardized system and she was amenable to the amendment
because it did not implement anything new and would use the
existing structure to incentivize childcare centers doing a
great job. Unfortunately, there was not currently a daycare
center above level 3. The goal was to incentivize
facilities to get a level 5 rating.
Representative Ortiz asked if there was someone from the
department visiting the various daycare centers around
Alaska determining that thus far, no one had exceeded a
level 3. She remarked that the department would likely be
able to provide more details.
3:01:10 PM
HEATHER CARPENTER, HEALTH CARE POLICY ADVISOR, DEPARTMENT
OF HEALTH, responded to the question by Representative
Ortiz. She highlighted that the department had plans to
dive into metrics around the grant portion of childcare and
the subsidizing of high quality care facilities. She noted
that unfortunately the program expert was unavailable
during the current meeting. She elaborated that one of the
reasons the governor had created a taskforce to look at
childcare was to task the department with determining how
to stabilize the sector and to consider what needed to be
looked at when considering how to reimburse things like
quality. She reminded the committee that childcare licenses
ranged from small providers in a home with a couple of
children to large facilities serving numerous children. She
noted the department wanted to account for the different
types of facilities when applying quality metrics. She
remarked that it was never a simple answer and childcare
was an incredibly complicated sector when thinking about
levers and options to consider.
Representative Ortiz discussed the concept of offering tax
credits. He remarked it assumed that childcare providers
were paying some tax. He asked if even the smaller
providers were paying a tax they may qualify for a credit
for. Alternatively, he asked if only corporate centers that
paid corporate taxes would get the credit.
Mr. Robbins answered that the tax credits were for
businesses providing any kind of assistance to daycare
facilities for things such as capital improvements.
Representative Coulombe responded that it was a corporate
tax. For example, the amendment was intended to apply to a
business like ConocoPhillips for having a childcare center
in the building or helping their families pay for their
childcare. She was not aware of any related taxes for small
businesses.
Representative Ortiz surmised that smaller providers would
not benefit from the tax credit portion of the bill.
Representative Coulombe agreed. She stated her
understanding there would not be a significant number of
opportunities for the particular benefit. She stated it was
also on a case by case basis and depended on the daycare
center. She believed the amendment was focused on larger
corporations.
3:04:41 PM
Co-Chair Edgmon thanked Representative Coulombe for
bringing the bill forward. He viewed the bill as one of the
more innovative pieces of legislation that would come
forward during the current session. He underscored that
Alaska had significant outmigration challenges, especially
with younger people and younger families. He believed the
bill and taskforce could help with that outflow. He had
heard from statewide associations that wages in childcare
centers were in the $12 to $13 per hour range. He stressed
the providers could not compete when it was possible to get
a job at Walmart paying $18 to $20 an hour. He referenced a
Hunt Institute summit on February 5 in Juneau that half the
committee had attended. He relayed that the summit had
talked about how Virginia, Mississippi, and North Dakota
were making childcare assistance an integral part of their
workforce development. He hoped the bill received swift
consideration.
Representative Coulombe thanked Co-Chair Edgmon for his
comments. She shared there had been someone representing
the Kenai private sector economic community at a recent
House Ways and Means Committee meeting. The individual had
stated there were three things government needed to solve:
daycare, transportation, and housing. She stated that she
heard from individuals across the private sector all
reporting that daycare was an issue. She recognized that
there were issues with the public sector too. She
considered it to be a workforce and pro-family issue. She
thought it fit with the governor's efforts to make Alaska a
pro-family, pro-life state.
Co-Chair Foster recognized Representative Zach Fields in
the audience.
Representative Hannan thanked Representative Coulombe for
taking on the issue. She recalled in the early 1990s when
high tech companies and hospitals were competing for a
limited work pool by offering childcare on their work
premises. She referenced the tax incentive in the bill for
corporations and asked if Representative Coulombe had heard
from corporations that the bill would incentivize them to
open on-premises facilities for their workforce.
Representative Coulombe answered that she had not talked
with corporations personally. She had spoken with many
businesses and believed they would jump at the chance to
help people get steadier daycare.
Representative Hannan noted there was a legal memo in the
bill packet about changing the rates. She referred to
Representative Coulombe's reference to the current market
survey method versus the actual cost of care [being used to
determine rates]. She recalled that when she was first
elected there had been an inadequate response to the market
survey but the rate had been set for two years. She asked
if the bill would get the state into a problem with federal
subsidies if the state changed from a market survey. She
stated her understanding the market survey was mandated
based on respondents and not the actual cost of care. She
asked if the cost of care study was in place or if it was
something the bill dictated the department to do.
3:09:49 PM
Ms. Carpenter replied that the department had worked with
the entire Juneau delegation on the issue. She noted it had
been one of the first issues she had worked on when she
started with the Department of Health (DOH). She stated
there were two methodologies the federal Administration for
Children and Families (ACF) allowed the state to use
including the market rate survey and the actual cost of
care. She elaborated that the intention (facilitated by the
work of the task force and commissioner) was to determine
whether the department could set up a cost of care analysis
and the methodology would have to be approved by the
federal government. The intention was to continue with the
market rate survey during the cost of care analysis to
ensure the department was looking at the rates and bringing
them more up to date. The plan was to determine whether
using the cost of care methodology was the better way to
pay for care. She referenced the legal memo by Legislative
Legal Services about increasing the threshold paid. She
detailed that ACF capped payment for care at 85 percent of
the state median income. She explained it meant that under
the bill anything between 86 percent to 105 percent of
state median income would have to be covered by general
funds.
Representative Hannan asked if that was reflected in the
bill's fiscal note. Alternatively, she wondered if the
fiscal note reflected the cost of the study to determine
how many people would be in the new gap area.
Ms. Carpenter answered that the fiscal note did not
currently include what it would cost. She explained that
the fiscal note system did not allow the department to add
an indeterminate on the front page of the grants line. The
note showed the cost of positions the department would
need. The page noted the indeterminate cost. The department
did not know the number of families that would enroll,
which made estimating the cost difficult. She shared that
as of February there were 2,739 children currently
receiving subsidies through the Childcare Program Office.
She detailed that 96 of the 2,739 (or 3 percent) were
served at the highest rate (75 percent to 85 percent of
state median income). She explained that the higher a
family's income, the higher their copay. She elaborated
that a parent stayed home with the kids in some families.
The department did not know if the change would be enough
to incentivize. She added that currently, nothing in the
bill directed DOH to decrease copays made by families. The
copay was on a sliding scale and the legislature could
direct the department to look at the lever. She thought it
warranted a conversation about whether a copay was
affordable when a family was making more money.
3:13:47 PM
Representative Hannan thought one of the downsides of the
fiscal note was that it did not show the lost economic cost
to Alaska due to inadequate childcare. She appreciated the
efforts on the bill. She remarked that it would not be a
single fiscal note. She highlighted that the cost of
providing more childcare would create an economic wheel
that would result in more working Alaskans and more
revenue. She stated it would benefit everyone.
Co-Chair Foster stated the information would be interesting
to see in the fiscal note, but hard to quantify.
Representative Tomaszewski referred to the individuals
currently covered (those up to 85 percent of the state
median income). He believed Ms. Carpenter had stated there
were about 2,700 individuals. He asked how much it
currently cost in general funds and federal funds.
Ms. Carpenter did not have the number on hand. She
clarified that the funding was all federal and paid for
with a block grant.
Representative Tomaszewski asked for verification that
anything from 85 percent to 105 percent [of the state
median income] would be paid for with state general funds.
Ms. Carpenter agreed.
Representative Tomaszewski asked Ms. Carpenter to review a
chart in members' packets.
Ms. Carpenter noted that Representative Tomaszewski was
referring to a chart showing what a family's copay would be
based on their income and number of individuals in the
house ["Family Income and Contribution Schedule" revised on
February 21, 2022 (copy on file)]. She explained that
individuals at the lowest of state median income would have
a 1 percent copay. At that lowest rate, the copay for a
two-person household (one parent and one child) would be
$1. She elaborated that a two-person household earning
$5,012 per month would pay 9 percent of its income towards
the copay ($451 per month). She explained that when the
department worked with a daycare enrolled with the
Childcare Program Office, the department took out the copay
the parent should pay and paid the rate directly to the
childcare facility. She noted that what the department
helped pay for the family was separate from the grant
program contemplated in the legislation.
3:17:31 PM
Representative Stapp thanked Representative Coulombe for a
bill aimed at tackling a challenging issue. He had a couple
of concerns with some of the sections in the bill. He
considered the long-term fiscal impact, specifically the
tripling of the existing tax credit. He noted the bill
stated that after 2030 there would be a five-year rolling
inflation adjustment indexed to the Consumer Price Index
(CPI) for all urban consumers for urban Alaska. He noted
the CPI was very different for Fairbanks and Juneau than it
was for Anchorage, which made it difficult to calculate a
long-term fiscal note. He did not know how it was possible
to project the cost with the inclusion of the specific
provision. He asked for comment.
Ms. Carpenter responded that the section was not overseen
by the department.
Representative Coulombe replied that the topic came up in
one of the prior committees during a hearing on the bill.
She asked if Representative Stapp was referring to page 7.
Representative Stapp replied that he was referring to
repeating language on pages 3, 6, 9, 12, 15, 18, and 21. He
referenced lines 11 to 16.
Representative Coulombe asked if Representative Stapp's
concern was the connection to inflation.
Representative Stapp agreed and stated that the provision
effectively put increases on autopilot in perpetuity.
Representative Coulombe replied that the provision was
connected to the amount in place in the past. She believed
the concern was valid and she would follow up on the
question.
Co-Chair Foster moved to invited testimony.
3:21:05 PM
JEN GRIFFIS, PUBLIC POLICY MANAGER, THREAD, ANCHORAGE (via
teleconference), thanked the committee for the opportunity
to testify on the current challenges facing childcare and
families and to discuss how the bill could help address
some of the challenges. She explained that thread was a
statewide nonprofit that had been serving the childcare
sector in Alaska for over 35 years. The organization
provided direct services to families, early educators, and
childcare programs throughout the state. She read from
prepared remarks (copy on file):
As you have heard through the session, childcare has
been struggling. While this is not a new struggle - it
has always been challenging to find and afford quality
childcare - it is a struggle that is increasing as
early educators continue to leave the workforce and
childcare programs continue to close. This continued
decline in childcare availability is having a
significant impact on the workforce challenges in
other sectors and broader economic impacts as well.
Historically, the gap between availability within all
early education settings (pre-k, Head Start and
childcare) and the need in Alaska has been about 20%.
Since the pandemic, the challenges facing the
childcare sector have increased, primarily related to
attracting and retaining workforce. We are working to
update our data regarding the current gap in early
education, but the self-reporting we are hearing from
various programs and communities across the state
indicate some are experiencing declines in their
enrolled capacity as high as 40% due to workforce
shortages. This has resulted in classroom and program
closures further restricting the supply of available
childcare.
Federal stabilization funds during the pandemic
provided support to childcare providers. These funds
were delivered in three phases, with the most recent
phase, Phase 3, being distributed in April. Data on
the impact of the Phase 2 funds has been gathered and
will be shared soon, but the preliminary analysis
demonstrates that the $50 million in stabilization
funds that went directly to childcare providers and
programs kept childcare businesses open that would
have otherwise closed. But we also know that
investment alone was not enough to keep all programs
open or all early educators in the field.
While thread is advocating for additional direct
support for both early educators and childcare
programs during this coming fiscal year, we also
believe that creating a more stable childcare sector
will require shifts in the current policies around
Alaska's childcare assistance programs. House Bill 89
addresses two of these policy shifts - increasing
eligibility for the childcare assistance program and
including a cost of care model in the determination of
provider reimbursements.
Currently, the income eligibility limit for
participating in childcare assistance is 85% of state
median income. Increasing this eligibility limit would
allow more families to participate in the childcare
assistance program reducing their childcare costs.
This change has the potential to increase workforce
participation across multiple sectors. Additionally,
Additionally, childcare providers are currently
reimbursed at rates set by a market price survey that
is based on the amount providers charge for care, not
what it actually costs childcare programs to provide
quality care. When systems base childcare policies,
including childcare reimbursement rates, on a market
price survey that does not consider the true cost of
care it creates an unstable foundation for the
childcare system, a foundation that - as we've
witnessed - will struggle to weather economic and
societal pressures. Including cost of care analysis in
policy and fiscal planning for childcare provides a
foundation for a more stable system.
thread believes stabilizing Alaska's childcare system
and supporting Alaska's workforce requires policies
that reduce costs for parents and increase support for
childcare providers. These policies are the foundation
of HB89. We appreciate the sponsor for bringing this
bill forward and continuing the conversation around
childcare policy. While we were not able to testify
before the committee today due to other commitments,
if members have questions or need additional
information as they consider this bill please don't
hesitate to reach out. Thank you for your continued
support for Alaska's children and families.
Co-Chair Foster recognized Representatives Jennie
Armstrong, Justin Ruffridge, and Jesse Sumner in the room.
He thanked Ms. Griffis for her testimony.
Representative Coulombe provided closing remarks on the
bill. She thanked the committee for listening to the bill.
She relayed that she had heard from some individuals who
were concerned about government taking over childcare. She
detailed that those concerned individuals believed parents
should be staying home with their children. She agreed it
was the optimal situation, but things had changed and were
very different than when she had raised her kids. She
shared that when she had raised her kids there had been
enough stay-at-home moms to help each other out. She
reported that her street was now empty during the day
because everyone was at work. She clarified she was not
intending to build a bunch of government run daycares. She
was aiming to tackle the problems of daycare and she was
open to creative ideas. She believed some communities had
mom-and-pop daycares taking care of kids. She noted that
the committee had passed an amendment by Representative
Galvin to help fund some smaller daycares. She stated the
bill was a working document and she was open to ideas for
improvement. She wanted the bill to be the best possible
and to meet the most needs. She noted that was where the
tax credits had come from. The goal was to come up with a
creative solution involving partnership with the private
sector, helping small daycares, subsidizing larger
daycares, and ensuring quality service. She relayed that
the bill focused on a serious issue that needed to be
addressed.
HB 89 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed amendment deadlines for various
bills including HB 178, HB 112, SB 77, and SB 81.
Co-Chair Foster relayed that he would recess the meeting
until the following day at 8:00 a.m.
Representative Hannan asked when Co-Chair Foster may know
if the 8:00 a.m. meeting would happen.
Co-Chair Foster answered that hopefully they would know by
5:00 p.m. that afternoon.
Representative Ortiz asked about the amendment deadlines
for the following day.
Co-Chair Foster reread the amendment deadlines for four
bills.
Co-Chair Foster RECESSED the meeting until the following
morning at 8:00 a.m. [note: the meeting never reconvened].
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 89 Presentation v.3.pdf |
HFIN 5/11/2023 1:30:00 PM |
HB 89 |