Gov. Kim Reynolds announced today the state has launched a new Child Care Business Incentive Grant Program to encourage employers to offer child care as a benefit to their employees.  

The grant program will provide a total of $25 million in state funds from Iowa’s share of federal American Rescue Plan Act money to support child care projects across the state. The majority of the funds, $20 million, will be used to support local infrastructure investments to build or expand child care capacity.

The remaining $5 million will be used to support arrangements between employers and child care facilities to expand and reserve child care slots. Potential projects could include the creation and development of an on-site child care center or a partnership with an existing child care center to create new child care slots paid for by a local employer.

According to the Child Care Task Force Report released in November, 23% of Iowans live in a “child care desert,” and Iowa has lost 33% of its child care businesses over the past five years. It’s estimated that Iowa’s child care shortage costs the state’s economy roughly $935 million annually in lost tax revenue, worker absences and employee turnover.

“I’ve heard from both parents and employers that child care is a barrier to work in our state,”  Reynolds said in a press release. “One of the top recommendations from my Child Care Task Force was to incentivize employer investment in child care. This program will do just that by encouraging employers to help deliver child care solutions to their employees, thereby bolstering opportunities for recruitment and retention of workers.”

Eligible applicants for the grant program include businesses and consortiums of employers in good standing with the state of Iowa. If the project involves partnering with local child care services, employers must have partnered with registered child development homes and/or licensed child care centers. All applicants must be employers not in the primary business of providing child care services.

Iowa Workforce Development, the Iowa Economic Development Authority and the Iowa Department of Human Services will identify an application panel to review and score proposals, according to a fact sheet on the program.

“Creating flexible options for child care at work not only helps families, but it also makes it easier for employers to recruit and retain the skilled workforce they need,” said Beth Townsend, director of Iowa Workforce Development. “It is vital to our economic growth that we provide parents with reliable and affordable child care options, especially those who are looking to reenter the workforce.”

Reynolds has directed state agencies to implement many of the Child Care Task Force Report  recommendations, investing more than $500 million of state and federal funds to address the crisis. Earlier investments include Child Care Challenge Fund grants, which will help to create an estimated more than 9,000 new child care slots across the state, as well as the Child Care Stabilization Grants and recruitment and retention bonuses for child care workers.  

Earlier this month, the Iowa Legislature passed HF 2127, which if enacted will allow child care providers to charge families who receive child care assistance the difference between the state reimbursement rate and the rate they would charge a private-pay family. That bill is awaiting Reynolds’ signature.

Information on the Child Care Business Incentive Grant Program is now available at this link. Additionally, businesses can register for a webinar on May 25 at noon for a comprehensive overview of the new grant opportunity and to answer any questions from interested applicants. The state will begin accepting applications on starting on June 17. Applications must be submitted by July 18.