Axne, Ernst introduce bipartisan legislation to help Iowa families keep up with rising child care costs

March 21, 2021
In The News

Tuesday, Rep. Cindy Axne (IA-03) and Sen. Joni Ernst (R-IA) introduced bipartisan legislation, the Improving Child Care for Working Families Act, to expand Iowa families’ ability to pay for child care expenses.

The legislation, co-led with Rep. Brian Fitzpatrick (PA-01) and Sens. Maggie Hassan (D-NH), Thom Tills (R-NC), and Kyrsten Sinema (D-AZ), would more than double the amount of money families can place in dependent care assistance plans (DCAPs) to allow families to keep up with the rising cost of child care.

The Improving Child Care for Working Families Act would permanently increase the cap on how much families can place in their DCAPs to $10,500 in order to cover the current costs of child care. The DCAP contribution limit was recently raised to $10,500 as part of the American Rescue Plan, but this change only applies for 2021.

“Access to child care will make the difference in keeping Iowa on a pathway to full economic recovery – but when the cost of care is higher than the average rent, families need help keeping up with skyrocketing costs,” said Rep. Axne. “I know how nerve-racking it can be as a new parent to have to budget for the rising costs of care every year – and I’m proud to introduce the commonsense legislation to give Iowa families the tools they need to afford the current cost of child care by updating existing solutions to reflect the realities of a modern family budget.”

“We know that child care has long been an issue in states like Iowa, and across the country, which is why, even before this pandemic, I’ve worked across the aisle to address this crisis. This bipartisan bill is a commonsense solution that will benefit both our small businesses and working moms and dads – and has the support of many state and national organizations. I’m proud to join my colleagues in the House and Senate to put forward this proposal that will allow our working families and small businesses to use more of their hard-earned dollars, taxfree, to get their kiddos the best quality care possible,” said Sen. Ernst.

Employers offer DCAPs, a type of flexible spending account, to give parents the ability to set aside pretax income for child care and other qualifying dependent care expenses.

For 2021, the temporary contribution limit is $10,500. However, the permanent contribution limit, set at $5,000, has not changed since the Internal Revenue Service first set it in 1986. Child care costs have risen consistently over recent years, and the average cost for infant care in Iowa is $865 per month – just over $10,000 per year.

According to the Economic Policy Institute, infant care in Iowa cost 18% more per year than in-state tuition for a four-year public college. Care also costs 12 percent more than average rent in Iowa.

This legislation will expand families’ potential savings through these accounts, allowing them to better afford the cost of child care at no cost to employees or employers who utilize DCAPs.

Rep. Axne also worked last year to preserve unused savings in DCAP accounts for families who weren’t able to access care during the COVID-19 pandemic.