Federal Spotlight: ABI Supports Bipartisan Legislation to Improve Child Care for Iowans

March 24, 2021

When Iowa families are supported, everyone succeeds, which is why affordable child care remains a key priority for ABI. Sen. Joni Ernst and Congresswoman Cindy Axne have introduced the Improving Child Care for Working Families Act, which would permanently increase the cap on the amount of tax-free funds that working families and their employers can set aside in a dependent care assistance plan (DCAP). These dollars can be used for child care expenses and other qualifying dependent care matters.

Right now, the American Rescue Plan Act of 2021 has temporarily increased the DCAP limit to $10,500 for single taxpayers and married couples filing jointly (up from $5,000). The temporary increase for married individuals filing separately is set at $5,200 (up from $2,500). But these contribution limits have not changed for more than three decades, since 1986. The Improving Child Care for Working Families Act would permanently move the cap to $10,500.

ABI has heard from employers across Iowa about the need for solutions to help Iowa’s working families. Child care access and affordability are challenges for Iowa families and  has only worsened with the COVID-19 pandemic. The Improving Child Care for Working Families Act provides a solution that has been much needed for many years and will help address a critical workforce issue Iowans face.

The U.S. Chamber of Commerce Foundation conducted a study in 2020 and found Iowa loses an estimated $935 million annually for the state’s economy.

Key findings by the U.S. Chamber Foundation include:

  • Iowa employers lost $781 million each year due to absences and employee turnover
  • The state of Iowa lost an estimated $153 million annually in tax revenue due
  • 52 percent of parents who voluntarily left a job did so when their child(ren) was one year old or younger
  • Nearly 70 percent of parents rely on family members for at least some child care
  • 23 percent of enrolled parents postponed school or a training program due to child care issues

ABI joins several other organizations in support of this proposal: the Bipartisan Policy Center, Save the Children Action Network, Early Care and Education Consortium, Employers Council on Flexible Compensation, National Taxpayers Union, HealthEquity, Exceptional Persons Inc., Iowa Primary Care Association, Iowa Women’s Foundation, and Black Hawk County Child Care Coalition.

The bill number is S.897 in the Senate and H.R.2121 in the House of Representatives.