Groups working to improve access to quality child care in Iowa are touting the Legislature’s passage of two measures they say will help strengthen the state’s workforce by making quality child care more accessible to working families.

The Senate voted Monday to pass House File 302, which now goes to Gov. Kim Reynolds’ desk for her signature.

The measure increases the income level at which families would lose eligibility for child care assistance and establishes a graduated co-pay system where their contribution to their child care expenses as their income rises.

The bill provides a smoother transition away from child care assistance, rather than the abrupt termination of benefits when a parent’s income increases even just a little to put them over the upper income level to qualify for assistance.

Iowa’s Child Care Assistance program currently only allows families to participate if their income is below 145% of the federal poverty level. House File 302 allows those who start the program to increase their income up to 275% of the federal guidelines before benefits would end.

Under current guidelines, a family of four can make up to $37,990 a year to be eligible for assistance.

Those numbers are based on 145% of the poverty level. Under House File 302, a family of four could earn up to $65,500 a year and still qualify for financial assistance to pay for child care, which is often cited as a family’s highest monthly expense and can easily exceed $1,000 for many families.

That often results in decisions for one parent to stay at home, taking them out of the workforce.

Dave Stone, advocacy officer for the United Way of Central Iowa, called the bill’s approval “a really great step forward for child care in our state.”

“A graduated exit eligibility level works to smooth the cliff effect,” Stone said. “It takes all the sectors to solve this issue -- business, government and nonprofit. We have access issues, cost issues and the impact of the pandemic. We’re buoyed by this action on House File 302, but more work needs to be done.”

Later in the day, the Senate passed another child care priority this session when it voted to approve a plan that focused on moving funding for mental health services from county property taxes to the state. The bill also cuts income taxes, ends the state’s inheritance tax and increases tax credits for child care and affordable housing.

The measure, Senate File 619, doubles the income level to qualify for child care tax credits from $45,000 to $90,000. The bill, which heads to Reynolds for her approval, also ends state payments to local governments to offset earlier property tax cuts, often described as “backfill payments.”

Other child care proposals awaiting action in this year’s session are a measure that would provide matching workforce grants to help increase the number of child care providers in Iowa, increasing provider reimbursement rates for child care assistance to 50% of the 2020 market value, and provide tax credits to businesses that provide child care benefits to employees.

Stone said he’s hopeful some of those measures can still gain approval in each chamber as the two sides work toward adjournment.

The final day lawmakers received pay for their work was April 30, and the property tax measure that passed Monday was considered one of the measures that has kept the session from adjourning.

Joe Murphy, executive director of the Iowa Business Council, said the passage of the bills Monday “is huge for working families and for the economy overall.”

“As Iowa continues to struggle with a talent shortage, embracing such policies as House File 302 will help keep Iowans in the workforce and help keep Iowa families financially secure,” he said.

J.D. Davis, vice president of public policy for the Iowa Association of Business and Industry, said the organization “lauds the Iowa Senate action that would phase out eligibility for child care assistance as household incomes rise,” and that the Legislature is “poised to end the 2021 session with a strong emphasis on providing affordable, available child care options for Iowans."

Dustin Miller, executive director of the Iowa Chamber Alliance, said the passage of the child care measures is a step in the right direction toward helping Iowa families.

“Finding safe and affordable child care options for parents is extremely important for Iowa’s workforce needs,” he said. “This includes addressing barriers to employment such as impacting the ‘cliff effect,’ which can act as a disincentive for working parents.”