Meeting Five (of six)

Meeting Five (of six)September 25, 2020

Meeting Five AgendaWelcome, Introductions, Opening Comments 11:30

Deliverable: Overview of Emerging Recommendations 11:35

Financing and Policy Levers: Tax Credits, Leave Strategies 11:45

Perspectives: Roles and Responsibilities for Communities 12:15

Resolution and Adjourn 12:45-1

Speaker: Glazer Duration: 2 minutes 2

Chair Welcome and Restatement of Charge

• Impact and implications of child care for Virginia’s workforce and economic productivity and quality of life

• Government• Business/Employers and Economic Developers• Philanthropy• Communities

• Three Horizons• Pre-pandemic (original, insufficient system)• Pandemic era (disrupted system)• Future state (re-imagined system)

Speaker: Dyke Duration: 3 minutes 3

Deliverable: Overview of Emerging RecommendationsProfound Paradigm Shifts

1. Re-frame the value proposition2. Re-engineer policy and governance3. Re-negotiate financing strategies4. Re-determine shared responsibility/accountability

Speaker: Glazer Duration: 10 minutes 4

Deliverable: Overview of Emerging RecommendationsProfound Paradigm Shifts

1. Re-frame the value proposition

Embrace and socialize the concept of child care as primary priority/foundational start of a continuum of human capital development “Promise” by 2030Vision Keepers

Speaker: Glazer Duration: 10 minutes 5

Deliverable: Overview of Emerging RecommendationsProfound Paradigm Shifts

2. Re-engineer Policy and Governance

Set a bold goalArticulate priorityOpportunity of governance shift

Speaker: Glazer Duration: 10 minutes 6

Deliverable: Overview of Emerging RecommendationsProfound Paradigm Shifts

3. Re-negotiate Financing Strategies

Identify cost over10 year span, with phases for incremental scalingMethodology for mandating the study

Speaker: Glazer Duration: 10 minutes 7

Deliverable: Overview of Emerging RecommendationsProfound Paradigm Shifts

4. Re-determine shared responsibility/accountability

• Government• Business/Employers and Economic Developers• Philanthropy• Communities

Speaker: Glazer Duration: 10 minutes 8

Financing and Policy Levers: Tax Credits, Leave StrategiesTax Credit Strategies:

Michael Cassidy, President and CEOChris Wodicka, Tax Policy AnalystThe Commonwealth Institute

Speakers: Cassidy, Wodicka, Healy Duration for Comments and Discussion: 30 minutes 9

September 25, 2020Michael Cassidy and Chris Wodicka

The Commonwealth Institute for Fiscal Analysis

Helping Families in Virginia with Refundable Tax Credits

A Need for Child Care Solutions

The pandemic and recession have exacerbated existing challenges around child care and child care affordability

Estimates from 2019 (Economic Policy Institute)

Federal EITC and CTC

Federal credits for working families EITC amount varies by income, filing status, family size CTC is up to $2,000 per child, but not fully refundable and includes income

requirements

Proven policies to support families, particularly for lifting families out of poverty In 2019 (pre-COVID), the EITC and CTC lifted 7.5 million people out of

poverty nationally (most besides Social Security)

Federal EITC and CTC in Va.

As of most recent IRS data (2018) EITC was received by 597,000 families in Virginia Refundable portion of the CTC was received by 453,000 families in Virginia

Virginia’s EITC

Virginia is one of 29 states + DC + Guam + Puerto Rico with its own version of the EITC Equal to 20% of a filer’s federal EITC E.g., a filer with a $5,000 federal EITC would get up to a $1,000 state EITC

Virginia’s EITC Could be Improved

Racial Equity Implications

Payment frequency

Concern 1: EITC is a lump sum credit, generally received during tax season Potential workaround: implement a “periodic” payment option that would

provide advance payment of some portion of the expected credit E.g., 80% of expected credit divided quarterly

Pilot program was conducted in Chicago Could draw upon lessons from ACA’s premium tax credits

Weak job market

Concern 2: EITC is tied to employment Families without employment would be excluded Federal Reserve projects U.S. unemployment rate to remain above pre-

pandemic level through 2023 Potential workaround: implement a similar state tax credit that has broader

eligibility rules E.g., all families below certain income level or under x% of federal poverty

guidelines

Other considerations

Existing state tax provisions Deduction for “household and dependent care services”(subdivision 3 of §

58.1-322.03. ) Deduction likely does not provide much help Equals about $345 max. tax benefit for 2 or more children Small or no benefit for families with lower incomes, like many EITC recipients

Recent proposals to temporarily suspend the deduction and establish a refundable credit Still would have issue of payment infrequency

Questions?

michael@thecommonwealthinstitute.org

www.thecommonwealthinstitute.org

804-396-2051

Michael Cassidy, President & CEOThe Commonwealth Institute for Fiscal Analysis

Perspectives: Roles and Responsibilities for Communities

Mildred Warner, Professor of City and Regional PlanningCornell University

21Speakers: Warner, Lynch, Bennett, Regimbal Duration for Comments and Discussion: 30 minutes

A Holistic Approach to Thinking about ECE

Mildred E. WarnerCornell University

mwarner@cornell.edu

Virginia Early Childhood FoundationSept 25, 2020

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Child Care is Foundational to the Economy and Society

• Children –• Human development

• Parents –• Labor mobilization, • career ladders and • support as caregivers

• Regional Economy –• Businesses and employment, • social infrastructure

• A nested view is ecological and sustainable.

Warner, Mildred E. 2006. “Putting Child Care in the Regional Economy: Empirical and Conceptual Challenges and Economic Development Prospects,” Community Development, 37 (2): 7-22.

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Need a Comprehensive View

Quality child care is provided in the home, in the market and in public preschool. We need a comprehensive system that supports all three.

Regional Economy, PolicyECE system – quality, supply

Parent Support Workplace policy

Child Development child care

Morrissey, Taryn and M.E. Warner 2007. “Why Early Care and Education Deserves as Much Attention, or More, than Prekindergarten Alone” Applied Developmental Science, 11(2): 57-70.

What Can We Do?

• Local – Planning (siting child care, multi-use zoning, building codes)

• Planners – Child care in Transportation Plans, in Economic Development Plans

• Economic Developers – support the child care sector, require businesses receiving econ dev subsidies support child care

• Schools• Serve as hubs for child care classrooms – Shared

Services

• http://www.mildredwarner.org/econdev/child-care

Need a Multi-level Governance Approach• State

• Include child care in age friendly initiatives – all ages

• Increase public funding• Child care tax credits (refundable)• Child care subsidies

• Extend public school to age three• Expanded Medicaid access for child

care providers

• Federal• Increase public funding• Increase tax credits and make

refundable• Require paid leave by all employers• Expand health insurance access

There is a Private Role

• Private Real Estate• Real Estate Developers – build for child care• Multi-family Building Owners – leases allow

for child care• Private Employers

• Paid Leave • Child care subsidies • Support work-life balance for families

• Families• Support informal family, friend and

neighbor networks

http://www.mildredwarner.org/econdev/work-life

Be wary of marketization – Social Impact Bonds

Tse, Allison; Warner, Mildred: The razor’s edge: Social impact bonds and the financialization of early childhood services. https://juablog.com/2020/08/21/socialimpactbonds/

Tse, A. & Warner, M. A Policy Outcomes Comparison: Does SIB Market Discipline Narrow Social Rights? https://www.tandfonline.com/toc/fcpa20/22/2?nav=tocList

RESOURCESAvailable at www.mildredwarner.org

• Contact: • Mildred Warner mwarner@cornell.edu

• Funding provided by the USDA National Institute for • Food and Agriculture

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Resolution and Recommendations

• Recommendations for a child care renaissance for Virginia’s workforce and economic productivity and quality of life

• Government• Business/Employers and Economic Developers• Philanthropy• Communities

Speaker: Dyke, Glazer, Members Duration: 10 minutes 30

Adjourn

• Executive Briefing, October 13, 2020

• Next BTW Meeting: October 23, 2020

Speaker: Dyke Duration: 2 minutes 31