Representative Mikie Sherrill (NJ-11) voted today to advance two major pieces of child care legislation that will help ensure children, families, and workers are protected as we work to safely reopen the country.
The Child Care is Essential Act (H.R. 7027) and the Child Care for Economic Recovery Act (H.R. 7327) will create a grant fund for child care providers to support safe reopening and operations and establish or expand tax credits for providers and families. According to the National Association for the Education of Young Children, 40 percent of childcare providers expect to shut their doors forever without additional assistance from the federal government.
“As a working mom who has had to piece together child care during the pandemic, I know how important this issue is for our families, businesses, and communities,” said Representative Sherrill. “How we address this child care crisis will have a deep reverberation through our economy and on the health and safety of families and workers. Without the proper support for child care to open safely and effectively, there will be no real reopening much of the workforce -- especially working moms. The Child Care is Essential Act and the Child Care for Economic Recovery Act will deliver urgently-needed relief to providers and working families.”
Watch Rep. Sherrill’s floor speech on the Child Care is Essential Act here.
The Child Care is Essential Act provides grant funding to child care providers to stabilize the child care sector and support providers to safely reopen and operate. It creates a $50 billion Child Care Stabilization Fund within the existing Child Care and Development Block Grant (CCDBG) program. Grant awards would be determined by providers’ pre-COVID-19 operating costs and adjusted to reflect the additional cost of providing care due to the pandemic. Grants would be equitably distributed to eligible child care centers, home based child care providers, and family child care homes.
The Child Care for Economic Recovery Act helps to bring quality child care within their reach to support ongoing employment. It also provides tax credits to support child care providers affected by COVID-19 shutdowns. The legislation:
- Makes the child and dependent care tax credit (CDCTC) refundable, allowing many low- and middle-income families to claim the credit for the first time.
- Expands the dependent care flexible spending accounts (FSA), roughly doubles the amount that can be contributed to a dependent care FSA and provides flexibility for families who have unforeseen changes in dependent care needs as a result of COVID-19. It also permits employers to allow employees with dependent care flexible spending arrangements to carry over unused benefits or contributions from 2020 to 2021, and allows a grace period for expenses incurred up to 12 months after the end of the plan year.
- Creates a new 30 percent refundable payroll tax credit for eligible employee dependent care benefits paid by employers.
- Creates a 50 percent refundable payroll tax credit for mortgage obligations, rent obligations, and utility payments incurred by child care facilities that have suffered a reduction in revenue or are subject to a COVID-19 related closure.
- Expands the employee retention tax credit (ERTC) to incentivize employers of household domestic workers to continue to pay those employees. Employers can receive the credit on wages they pay domestic workers who cannot work due to a governmental order.
- Increases guaranteed federal funding for the Child Care Entitlement to States (CCES) up to $10 billion per year for FY2020 – FY2024, and waives state match requirements for the additional funds for FY2020 and FY2021, in order to provide sustained and predictable support.
- Provides $850 million to states, the District of Columbia, and all U.S. territories to fill in gaps in dependent care for essential workers during the COVID-19 pandemic.
- Includes a $10 billion investment over the 2020-2024 period to improve child care facilities and infrastructure, both to address long standing inadequacies of child care facilities and also to respond to the immediate infrastructure needs that the COVID-19 pandemic has caused, including structural changes to facilitate social distancing and improve sanitation.