Blair Miller

(Daily Montanan) After hearing for months about widespread issues facing Montana parents and businesses surrounding childcare, and listening to presentations about what other states have been doing successfully to solve their issues, Republicans on the Economic Affairs Interim Committee on Tuesday shot down a proposal to craft a package of bills that would have tried to mirror some of those other states’ policies.

Rep. Jonathan Karlen, D-Missoula, proposed that the committee work toward drafting bills to expand the Best Beginnings scholarship eligibility window; implement various types of tax credits to help parents pay for care and providers to retain workers and stay open; and to explore public-private partnerships in childcare that policy experts earlier in the meeting said had proven beneficial in other states.

“I don’t believe that this should be a committee bill. If this is something that Rep. Karlen wants to bring on his own, in his own bill drafts, that’s completely fine, but I will not be supporting any of the proposed committee legislation that he’s bringing forward,” Rep. Brandon Ler, R-Savage, said in response.

Karlen and Sen. Shane Morigeau, D-Missoula, told the Republicans that the committee was still in the process of simply crafting the ideas that could become bills, and that the committee had heard for months, if not years, about the issues surrounding childcare affordability. Karlen said the discussions could lead to a more collaborative bill during the 2025 session that more lawmakers could support in an area that needs to be addressed.

But all seven Republicans on the 10-member committee voted against Karlen’s proposal without any further discussion beyond Ler’s comments. The vote does not put an end to the committee potentially drafting bills involving things like child tax credits, tax credits for childcare workers, or putting together a trust for childcare that could backfill itself, but the Republicans were nonplussed by the Democrat’s proposal.

The Republican supermajority during the 2023 session restructured interim committees so the majority party carries the number of seats reflected in the whole legislative body and can push four of their own partisan bills out of each committee. Karlen had contended that the definitions in that revised statute said that Democrats would still be allowed to bring their own bill, but Senate Majority Leader Steve Fitzpatrick, R-Great Falls, said the GOP had reserved those powers for themselves.

“I think the four were always intended to be for the majority party, I guess in this case, it’s Republicans,” Fitzpatrick said. “But, you know, maybe in 30 years, it might be Democrats.”

Karlen said he did not want the committee to give up on his proposals – which mirrored policies in other states that people from Zero to Five Montana, KIDS COUNT, and the Children’s Funding Project said would greatly benefit Montanans who might be just outside of qualifying for extra childcare assistance.

While the committee did vote to move forward on trying to craft a bill around reinsurance or captive insurance so insurers are not leaving childcare businesses out to dry, he said it was clear more would be needed.

“I think the insurance is good, but I think what we’ve heard about over the last almost a year is a lot more than just insurance that’s needed to solve this issue,” Karlen said. “… If there’s any piece of these other solutions that people think they are amenable to, I hope we can continue to move ahead with that because I think just focusing on insurance is not going to meet the problem.”

Rep. Josh Kassmier, R-Fort Benton, who chairs the committee, ended the meeting by saying he essentially agreed, though he voted against Karlen’s proposal.

“We’ve had a lot of presenters. It’d be kind of a shame, I think, if we didn’t come out and have some sort of committee solution or idea,” Kassmier said. “So the next couple of months, I would encourage everybody to come up with some sort of idea so we have some sort of bill to maybe help the childcare industry — affordability, accessibility, something.”

Earlier in the meeting, several experts said Montana could model what states like Nebraska, Louisiana, Kentucky and some others are doing to take pressure off parents and business owners struggling with the rising cost, and decreasing availability, of childcare.

They suggested that while no state has found a silver bullet to fix the multifaceted issue, some of the comprehensive tax credit programs states have implemented, along with public-private partnerships and trust funds that can compound interest, have been beneficial in greatly expanding access to childcare while also bringing in more money to the state to fund such programs.

Addressing Montana’s childcare issues is one of the committee’s main tasks during the interim. The state’s licensed childcare capacity met 43% of the demand last year; childcare is costing nearly 30% of the median household income in the Treasure State; and the lack of available childcare is causing major issues in the workforce, especially for lower- and middle-income families that might have to choose to keep one parent at home instead of paying for care, the committee has heard over the past several months.

At Tuesday’s meeting, the committee heard from the Department of Labor and Industry, the State auditor’s Office, and several policy specialists who focus their work on funding childcare and different policies lawmakers in other states are implementing to successfully solve their own childcare issues.

Eric Syverson with the National Conference of State Legislators and Bruno Showers of the Children’s Funding Project walked through what states are utilizing their own child tax credits, earned income tax credits, early childhood tax credits and credits and how they interact with federal credits, as well as how various states use different income levels and phase-outs to broaden the pool of people who are eligible for financial support.

Showers showed the lawmakers examples from Nebraska and Louisiana in which the states both implemented comprehensive programs to subsidize business, families, childcare providers and staff.

Nebraska’s programs are costing the state about $700,000 annually, and Showers said it likely will need more public funding to continue the expansion, but said the “all-of-the-above” approach has been helpful in expanding access. He also pointed to the state’s early childhood endowment fund – initially a $40 million public and $20 million private investment – that he said was now generating $4 million a year for childcare and could be an option for Montana.

The Louisiana tax credit program costs $25 million a year, he said, but the public fund that brings in funds from sports betting and casinos brings in $50 million a year.

Both states’ programs prioritize credits for the highest quality care and early-childhood educators, but help bring in more money than they expend, and the credits are indexed to inflation to keep up with family and business needs, Showers said.

The Louisiana and Nebraska programs drew the interests of some lawmakers on the committee, as both states have similar rural-urban divides and Montana has seen some success in public-private partnerships, lawmakers said.

Xanna Burg, the director of KIDS COUNT, pointed lawmakers to North Dakota’s recently passed $66 million childcare package that expands childcare assistance, gives direct financial support to providers, incentivizes worker training and offers employer benefits.

Burg said two-thirds of that money goes to expanding eligibility for childcare assistance under North Dakota’s “Best Beginnings” type of program because it allows families earning up to 300% of the Federal Poverty Level to receive assistance, compared to the 185% FPL that is the eligibility cap in Montana.

Burg said 43% of North Dakota participants in the state’s program would not be eligible to receive that assistance if they lived in Montana because of the cap on Best Beginnings scholarship eligibility.

In Kentucky, Burg said, the state has expanded eligibility for its childcare program to any childcare worker or staff member regardless of their income, and Minnesota is providing money to boost wages and benefits for childcare workers rather than relying on one-time annual raises.

Republicans last session knocked down Bozeman Democratic Rep. Alice Buckley’s proposal to expand the Best Beginnings eligibility to up to 200% of the Federal Poverty Level, saying they were concerned about the extra spending. The final version of the bill that did pass and was signed by Gov. Greg Gianforte re-expanded eligibility to the 185% FPL that it was during the COVID-19 pandemic.

But the committee heard about how some states have expanded their programs to up to 300% or even 400% of the FPL, and how other states are basing their childcare grant or scholarship incentives on the state median income instead.

Brandi Thomas, a provider services coordinator with Child Care Connections, which helps administer the Best Beginnings Scholarship in six counties, said the organization had had to turn down 77 clients for the program since October because they were slightly over the income levels. But she said if Montana used the 85% of the state median income instead, 61% of those people would qualify.

The state is also piloting a subsidy program in which childcare workers can receive the benefit at up to 250% of the FPL, and said that programs could show lawmakers how beneficial it would be to expand eligibility – especially in places where people earn more because they have a higher cost of living.

According to the Legislative Fiscal Division, only $1.7 million of the $7 million appropriation for the Best Beginnings scholarship expansion had been spent so far in the biennium, leading Karlen to question how much money the state actually was spending on childcare if it had only in October started drawing down money from the $7 million appropriation.

Despite the disagreement on how the committee will move forward at the end of the meeting, Morigeau and Kassmier said it was good to have the discussion in the interim and that each were happy they had at least settled on moving forward on the insurance piece.

“I think we have something to continue to move along, and I think it doesn’t stop us from working on other stuff,” Morigeau said.

“Nothing’s dead until sine die, right?” Kassmier responded.