Financing Child Care in the United States - Ewing Marion Kauffman ...

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GENERATING PUBLIC REVENUE TAX CREDITS, DEDUCTIONS AND EXEMPTIONS POPULATION SERVED Municipalities determine allowable child care within the TIF. STRATEGIC CONSIDERATIONS • A TIF development program can, among other things, provide new employment opportunities, retain existing employment, improve physical facilities or remedy environmental hazards. Moreover, where a TIF is designated, a municipality can use a portion captured assessed value for certain related “project costs,” including quality child care services, together with construction, staffing, training, certification and accreditation costs. • Including child care within the list of TIF project costs that can be covered by municipalities was a significant achievement for child care advocates. Leading the effort was state Senator Susan Longley (D) who, upon studying the first Financing Child Care catalog, authored several pieces of legislation geared toward child care facilities financing. Senator Longley’s legislation became part of a statewide children’s initiative called “Start ME Right,” (profiled on page 78). Many child care advocates are not yet certain about the TIF process. Although they are now aware that child care is an allowable project cost within a TIF, they do not understand the basics of municipal finance and/or the process of designating a TIF. Without training and education, child care advocates fear that innovative financing strategies like the TIF will remain unused for child care facilities. • In Maine, designation of TIF districts falls squarely within the municipal domain. Thus, most TIF projects are approved by town meeting. In order for towns to begin including child care in proposed development projects, child care advocates must make their case to the town planning department (the department that handles real estate development projects) and to town selectmen. Child care advocates should consult their local planning department about pending real estate projects to begin discussions about the inclusion of child care in new projects. CONTACTS Peggy Schaffer Maine Department of Community and Economic Development State House Station 59 Augusta, ME 04333 Phone (207) 287 8480 Fax (207) 287 5701 E–mail Peggy.Schaffer@state.me.us Lee Parker, Executive Director Bath Brunswick Child Care Services (and member of Start ME Right Coalition) 44 Water Street Brunswick, ME 04011 Phone (207) 725 6506 Fax (207) 798 4047 E–mail sparker@clinic.net OTHER SITES WITH SIMILAR STRATEGIES No other examples of child care as a permissible use within a TIF are known. 43
FEES CHILD CARE DEVELOPER FEE LOAN PROGRAM (SANTA CRUZ, CALIFORNIA) DESCRIPTION The Child Care Developer Fee Loan Program requires any new real estate development projects to pay a fair share of the costs resulting from an adverse impact on child care (i.e. any increased demand for child care). This is accomplished by assessing fees or exactions “reasonably related” to the increased use of the child care system over the “useful life” of the project. Fees collected by the program are held in a separate Child Care Fee Trust. Funds in the trust are used for loans or grants to child care centers and family child care homes. Though called a “loan,” the child care loans can be repaid by monthly payment or by providing increased service to children in the county. The majority of recipients opt to offer increased services, and so the loans are more likely to function and be treated as grants. WHEN ESTABLISHED The Child Care Developer Fee Loan Program was established in statute in 1992 by the County of Santa Cruz. ANNUAL AMOUNT The annual loan volume has ranged from $50,000 to $100,000. The average loan amount is approximately $5,000, though loans have been approved for as much as $46,000. Between 1992 and 1998, 44 loans were approved for child care facilities (25 centers and 15 family day care homes). Loan program participants are required to seek additional funds. In 1998, the total loan amount of $80,000 was matched by $194,000 of other funds. In 1999, the loan program had $165,000 available. SERVICES FUNDED Child care loans are available to child care centers and family child care homes, and can be used for construction, repair or rehabilitation costs associated with the site and its buildings, as well as operations costs, such as personnel, shelter, food, education and play opportunities. Through the loan program, 818 child care slots have been maintained, and 346 have been developed. On average, $525 in funding has been contributed per child, per slot. HOW FUNDS DISTRIBUTED Fees collected by the program are held in a separate Child Care Fee Trust maintained by the county auditor– controller in trust for child care purposes and are administered by the County Human Resources Agency, with approval by the Board of Supervisors. Providers apply to the Human Resources Agency for loan funds. In 1999, the loan program received the largest number of applications in its history —17 applications seeking more than $400,000 in funds, although less than half that amount was available. When the requests from applicants outstrip available funding, the loan program bases decisions on community need. For example, priority was given in 1999 to expansion of infant care. POPULATION SERVED Any licensed child care center or licensed family child care home that serves residents of Santa Cruz County and is located in the county can receive funds through the program. Funds are available for infant, toddler, preschool and after–school care programs serving children up to age 14. STRATEGIC CONSIDERATIONS • In the real estate world, this type of fee scheme is called a “linkage program” because it connects the relationship of local services (e.g., garbage pick–up, school busing, traffic flow) to the impact of development and charges the developer a fee to mitigate any adverse effects. • In terms of funds available, the Child Care Developer Fee Loan Program has a relatively small pot. For larger child care programs, the loans function as gap financing or as start–up/seed money used as a means to leverage other funds. Applicants are typically asked to seek matching funds, so that each loan can be leveraged to access other funds. This requirement ensures bigger returns on the loans by encouraging providers to seek other resources to help their programs. • Loan staff have found that the funds are particularly helpful to family child care providers who are able to do significant renovations with small grants under $30,000. Priority also is given to providers who have safety issues that may cause them to close. Thus, the loan funds are used as a type of emergency grant to prevent local centers or programs from closing. They can pay back the loans “in kind,” through increased services, enabling providers who would not be able to get traditional loans to access funds. • Outreach efforts aimed at hard–to–reach providers, particularly those serving the county’s migrant workers, have been fairly fruitful. Direct mailings to family child care and center providers and work with the local child care resource and referral agency to spread the word at provider workshops and forums have been effective. 44
Page 1 and 2: FINANCING CHILD CARE IN THE UNITED
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Page 5 and 6: ABOUT THE GRANTEE PHILADELPHIA CITI
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Page 9 and 10: HOW TO USE THIS CATALOG This catalo
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Page 13 and 14: DIFFERENT EXPECTATIONS The expectat
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Page 17: LEVERAGING Matching and leveraging
Page 20 and 21: TAXES Income taxes are the major so
Page 22 and 23: EMPLOYER INCOME TAXES Twenty-five s
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Page 26 and 27: GENERATING PUBLIC REVENUE LOCAL PRO
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LOCAL GOVERNMENT BEACONS (NEW YORK,
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EMPLOYERS Employers increasingly re
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EMPLOYERS AT&T FAMILY CARE DEVELOPM
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CAPITAL INVESTMENT PARTNERSHIPS CHI
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PUBLIC-PRIVATE PARTNERSHIPS CAPITAL
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LOOKING TO THE FUTURE TAX POLICY Th
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LOOKING TO THE FUTURE THE HOME MORT
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LOOKING TO THE FUTURE HIGHER EDUCAT
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APPENDIX 174
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WHAT YOU OWN Property taxes on real
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INDEX 178
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Child Care Scholarship Fund of the
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lotteries and gaming, 14 Neighborho
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Area, Kansas and Missouri), 133—1
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income tax provisions for child car
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Financing Child Care in the United States - Ewing Marion Kauffman ...

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