At the same time that many parents are struggling to find quality, affordable child care, Iowa’s child-care centers are searching for ways to maintain qualified staffs yet still keep their rates within reach of families’ budgets.

For child-care providers such as Carol Zumwalt, it’s a delicate balancing act.

“I would love to be able to provide my workers better wages, but they’re a large part of our expenses,” said Zumwalt, whose business, Carol’s Child Care, serves 30 children in Norwalk. “I try to keep rates as low as I can, but if I have to pay more (in wages), I’m going to have to raise rates for parents.”

Last week, Gov. Tom Vilsack signed into law a bill that will provide higher reimbursement rates to child-care centers serving low-income children, create a new child-care tax credit for state taxpayers and establish a rating system for child-care centers that will be accessible online. The attention lawmakers are giving early childhood education is mirrored by the emphasis that it’s receiving from Iowa’s business leaders.

According to a new study commissioned by the Iowa Business Council, Iowa’s child-care industry is not only an important economic force in its own right, it’s also a crucial mechanism in a state that ranks third in the nation for having the most families in which both parents are working.

Conducted by the Iowa State University Extension Center for Family Policy, “Child Care, Parents & Work: The Economic Role of Child Care in Iowa” surveyed parents of both preschool and elementary-age children to detail their experiences with child care. Another component of the study estimated the economic impact, both direct and indirect, of the state’s child-care industry.

Max Phillips, vice chairman of the Iowa Business Council, said early childhood development issues are “at the top of our agenda” because of their importance to both the present and future workforces of Iowa. The council is made up of chief executives of the state’s largest companies, which together employ about 120,000 people.

“There’s a lot of national research out there that points to the fact that early childhood opportunities are a way to grow the state,” said Phillips, who is the Iowa president for Qwest Communications International Inc., “but we wanted to make sure everyone understood that this is an issue and an opportunity right here in Iowa.”

The study of Iowa’s situation reflects a national trend, in that as child care is becoming less affordable, the quality of care is also generally suffering. Of those parents surveyed who have a child under 5, nearly half said child care in their communities is not affordable, and one out of 20 respondents overall said they receive financial assistance from a government or social service agency to help cover child-care costs.

On the other end of the spectrum, according to the report, parents who are earning good dual incomes must still deal with the issue of “time poverty,” and so are increasingly relying on child-care providers to fill that gap with enriching activities. In some cases, parents are making do with less-than-ideal care situations as they search for better child-care arrangements.

“Due to the cost of child care and lack of reliable, available child care in Iowa, we find evidence that parents use a patchwork of providers in order to meet family budget restrictions and quality standards,” the report said. “When businesses consider attracting new employees to a community, special considerations must be made to accommodate the needs of parent workers. Consideration must be given to how parents will find quality care, in addition to the local supply of quality care.”

Addressing the problem

Vilsack, who has initiated several early childhood initiatives since 2000, earlier this year in his Condition of the State address challenged the Legislature to support additional funding for early childhood education, including money to establish a statewide rating system for child-care centers.

Early childhood education advocates say they’re encouraged that after years of discussion about improving care standards, the issue seems to finally be receiving the attention it deserves.

One bill signed by the governor last week, House File 761, will increase reimbursement rates to child-care centers that serve low-income families, and provides for the creation of a statewide quality rating system that may eventually reward higher-rated centers with increased funding.

Another bill, House File 816, would increase funding to the state empowerment boards, which were established to provide parent support programs as well as school readiness programs that can assist both preschools and child-care centers. The measure, which last week was in conference committee, would provide nearly $22.5 million to the boards, which can use the funds in part to provide additional training for child-care center staff.

“That’s what’s encouraging to us, that the problem has been recognized and is beginning to be addressed,” said Jim Wise, executive director of the Urban Education Network of Iowa, a coalition of the state’s eight largest school districts. “We believe that children who start to school ready to learn achieve higher, stay in school longer, get better paying jobs and are less likely to become part of the corrections system. And we know for sure that there’s a return of at least $7 for every $1 invested in savings of social expenditures avoided – so those are good odds.”

From a provider’s perspective, Zumwalt said: “My concern at this point is helping out the parents who are having trouble paying.” She said she knows of some centers that refuse to take children who meet the state threshold for assistance, primarily because it takes more than a month to be reimbursed. Additionally, there needs to be a wider range of programs to which centers can apply to receive grants or other assistance, she said.

“There are some, but they are pretty limited to who can apply for them, such as for infant care providers,” she said. “But for those of us who provide care on a day to day basis, there isn’t a whole lot to apply for.”

State officials estimate that the modified reimbursement rate approved by the Legislature will make an additional 700 families eligible to receive child-care assistance. Currently, families earning 140 percent or less of the state poverty level are eligible for assistance. That rate will increase to 145 percent, said Sheila Hansen, policy director for Every Child Counts, the advocacy division of the Child and Family Policy Center. Additionally, child-care providers will be reimbursed for those families at the 2002 market rate, rather than the 1999 rate that’s now being used, she said.

Under the quality rating system, “what we proposed is to provide incentives for child-care providers to participate in the rating program,” Hansen said. “What we would ask is that the state help them to meet those requirements. For example, if a provider has an associate’s degree, that their reimbursement rate would be higher than someone with a GED.”

Some businesses are already working to disseminate child-care information to their employees, Phillips said. Qwest, for instance, is now working to put information on its internal Web site for employees, similar to how it now provides human resources information, he said.

“We’ll be working with our (Iowa Business Council) members to get it out to them,” Phillips said. “We think that’s a start.” Additionally, the business council is planning to begin a series of seminars later this year that will examine the research that’s been done, as well as to tap into the experience of other states.

“One of the things we’re trying to do is encourage more local-level discussions in communities,” he said. “Where are we with child-care development in our community? I think we’ll come up with more creative ideas that will help keep Iowa at the top.”

Filling a gap

Shanell Wagler, empowerment community liaison for the Iowa Department of Management, is coordinating the involvement of the state’s 58 empowerment boards in the implementation of a rating system.

“How I see it, it really will help us home in on what kinds of training are needed,” said Wagler. “Then, as a parent, you’ll feel like you know a little bit more of what to expect (from a child-care center).”

According to a July 2004 survey by the National Child Care Information Center, 36 states have some form of tiered child-care rating system in place, though not all of the programs apply statewide. The approaches include tiered reimbursement, rated licenses, quality ratings, or in some cases a combination of strategies. About two-thirds of these states, among them Missouri and Kansas, have adopted a multi-tiered strategy for rating various types of care, rather than a simpler two-tiered rating for free-standing care centers and in-home care providers.

“In researching other states, we have some of the lowest expectations for child-care providers,” Wagler said. “We have higher expectations for people who do nails than we do for people who care for our children.”

Currently, child-care centers in Iowa can receive Gold Seal recognition from the state for becoming accredited by the National Association for the Education of Young Children. Of the 1,455 licensed child-care centers in the state, 192 have that voluntary accreditation, a process that takes about three years to complete.

“So in Iowa we had Gold Seal, which was like the crème de la crème, and licensed centers, but there was nothing in between,” Wagler said. Additionally, the NAEYC accreditation and Gold Seal programs were not available to in-home care providers. “So what (the rating system) does is help move us toward giving recognition for what providers are doing,” she said.

A rating system will create “a more objective means for parents to make informed decisions for choosing child care,” said Barb Merrill, state manager for TEACH, a teacher scholarship program administered by the Iowa Child Care and Early Education Network. “We’re very supportive of the rating system concept.”

Merrill said one of the ways her agency will support the rating system once it’s implemented will be to provide training programs for child-care centers to assist them in improving their ratings.

Wagler said the goal is to have the rating system in place by January.

“I feel pretty good about it,” she said. “I think it can happen. I think if we can get the infrastructure set up this year, we’ll really be able to get the ball rolling.”