Alaska Lawmakers Approve Child Care Legislation to Support Struggling Sector

Around twelve young children frolicked in the melting snow in the outdoor area of Hillcrest Children’s Center in Anchorage this April. Dressed in heavy-duty winter gear to combat the lingering spring cold, they were all adorned with patches of mud.

“Embracing mud is one of our core principles,” remarked Christina Eubanks, the center’s director, just before a spirited child, covered in mud, tugged her aside to share his day’s adventures and offer her a piece of the muffin served as part of the afternoon snack.

Operating a childcare center requires financial resources. Following a review of the budget approved by the center’s board the previous night, Eubanks stepped out into the yard. Although the financial statement shows numerous negative digits, Hillcrest is expected to end the year in the black, thanks to nearly $200,000 in federal pandemic aid grants used to supplement tuition fees. “We don’t anticipate receiving a similar windfall next year,” Eubanks disclosed.

The state will disburse the final portion of federal aid to child care facilities this summer.

“We’re optimistic that this funding will help balance this year’s budget. It would be fantastic if additional funds could be allocated for next year as well,” Eubanks expressed.

Hillcrest had to raise employee salaries to align with unemployment benefits during the pandemic. Eubanks acknowledged that childcare costs are approaching the threshold of affordability for families; nevertheless, the board, led by parents, voted to raise monthly rates up to $1,850 to cover operational expenses.

Under these precarious circumstances, Alaska lawmakers enacted the child care legislation. The proposed law broadens the eligibility criteria for families seeking financial aid for child care, provides tax incentives for businesses investing in child care services, and allows the state to consider the actual cost of care, rather than market rates, when determining rates.

The state budget includes $7.5 million earmarked for grants supporting child care centers.

Stephanie Berglund, the head of a nonprofit resource center for child care in Alaska, applauded the legislative move. “This marks a pivotal moment for Alaska,” she declared. “Acknowledging the significance and value of working families and the necessity for our state to invest in essential child care support.”

She estimates that the modifications could potentially double the number of Alaskan families eligible for child care subsidies and aid. However, Berglund noted that nearly a quarter of Alaska’s small child care enterprises have shuttered since the pandemic, with no new ones emerging to fill the void. She warned that without initiatives to bolster existing child care facilities and establish new ones, there may not be enough programs available for newly qualified families to utilize their benefits.

“This legislation is just a fraction of what’s required. The child care sector in Alaska remains in dire straits,” she emphasized.

Not a Panacea

Representative Julie Coulombe, R-Anchorage, sponsored the legislation, initially introduced as House Bill 89 — and acknowledges that it is not a comprehensive remedy. “HB 89 doesn’t resolve all issues. But it’s a step in the right direction,” she acknowledged. “It injects hope into many that we can sustain this positive momentum.”

Coulombe is a member of the governor’s child care task force and noted the bill’s reception at a recent meeting was celebratory, highlighting the collaborative effort involving state officials and child care center operators across Alaska.

She is particularly enthusiastic about the public-private partnership offering tax incentives to businesses making payments or contributions to support child care and child care facilities. “In my view, this will have the most significant impact, as it directly involves employees and their employers. It’s a game-changer,” she remarked.

Another proponent of the legislation, Representative Zack Fields, D-Anchorage, indicated that the bill’s provisions draw from successful legislative strategies in various states, regardless of political affiliations. “It demonstrates what is achievable in Republican-led legislatures,” Fields stated.

He stressed the imperative of expanding child care services. “Merely stabilizing the sector won’t suffice; the current capacity is vastly insufficient,” Fields emphasized, pointing to the importance of tax credits.

“The pivotal question is: How many companies will avail of these tax incentives to expand child care services?” Fields queried. “The optimal scenario would see numerous firms investing in new child care facilities.”

The introduction of tax credits garnered enthusiastic support from Kati Capozzi, president of the Alaska Chamber, who actively championed the bill. She affirmed its significance for the chamber’s membership, indicating that businesses paying taxes in the state would likely capitalize on the incentives.

“Having assessed the available tax credits, businesses have encouraged the chamber to back the bill, presumably with the intent to utilize the tax benefits included,” Capozzi noted.

Statistics reveal that unaffordable or inaccessible child care poses challenges to Alaska’s workforce, with 77% of parents in one study reporting work disruptions due to child care issues.

‘Hail Mary’

The landmark legislation didn’t progress as a standalone measure; instead, lawmakers incorporated it into a larger bill during the final hours of the legislative session. Coulombe described this tactic as a “Hail Mary” pass, emphasizing that as long as the bill is effective, the method of passage is secondary.

Following approval by the House, HB 89 faced obstacles in the Senate Finance Committee. Senator Cathy Giessel, R-Anchorage, attempted to incorporate the bill’s provisions into a Medicaid-related bill for schools, but the proposition fell short of the required votes. Consequently, Fields sought Coulombe’s authorization to attach it as an amendment to a bill extending board terms, reasoning, “It’s the final day, and we have nothing to lose. Let’s give it a shot.” The amendment sailed through the House and received Senate assent just before the session adjourned close to midnight.

Fields characterized the amendment’s approval as a stroke of luck, although an additional hurdle remains before the bill is enacted. The bill, which served as a conduit for HB 89, also integrated an extensive assortment of other legislation items. This practice of appending amendments to probable passage bills, known as “bill stuffing,” is a common occurrence; however, in this instance, it tested the boundaries of legislative constraints. Lawmakers are restricted to a single subject for amendments. Consequently, Senate Bill 189 now spans board extensions, child care, big game permitting, and marijuana taxes.

“The governor has consistently voiced support for HB 89,” the original bill, disclosed Coulombe, speculating that the administration will conduct a thorough evaluation of the legislation.