How Dallas-Fort Worth employers are helping prevent a child care ‘catastrophe’

Dallas Morning News | In the absence of comprehensive legislative solutions in Texas, some employers are helping to cover the cost of child care.

In Dallas County, parents pay around $11,000 a year on child care. With federal pandemic-era funding running out for child care providers across the country, that cost is expected to rise as providers raise rates to cover the lost funds. Child care businesses that can’t afford to raise tuition could be forced to shut down, leaving parents to scramble for reliable care elsewhere.

It’s estimated that Texas loses around $7.59 billion annually in productivity due to employee absences caused by lack of reliable child care and an estimated $1.8 billion annually in tax revenue from parents who could have worked but choose not to because they don’t have child care, according to the U.S. Chamber of Commerce.

Efforts by Texas legislators to help cushion the blow failed this year. Instead, some employers have stepped in.

Legislative inaction

In the May legislative session, state Rep. Armando Walle, a Houston Democrat, proposed a $2.3 billion budget rider to help fund child care providers but it was eventually left out. It would have given providers direct payments of about $1,000 per child per year based on how many children each facility is licensed to care for. Providers could have used the payments to raise average pay for early childhood educators to $15 an hour. “It’s really expensive to get any decent child care in this state and we do get some federal dollars through the Texas Workforce Commission, but it’s just not enough,” Walle said. “The state needs to step up.”

Groups outside of the child care sector, like the Texas Restaurant Association, were advocates of the plan because it would have indirectly made care more affordable for them and helped with staffing shortages. Another bill, sponsored by Rep. Julie Johnson, a Democrat whose district includes Addison, Carrollton, Coppell, Dallas, Irving and Farmers Branch, would have made child care more affordable by incentivizing private employers to contribute to employee child care costs with state matching contributions. It didn’t pass.

In November, Texas voters will cast ballots on a constitutional amendment that could provide some relief for child care providers. Proposition 2, based on a bill proposed by Sen. Royce West, a Democrat who represents parts of Dallas, Cedar Hill and Duncanville, would give city and county authorities the ability to exempt owners of child care businesses from paying 50% to 100% of the property taxes on their facilities. One child care provider interviewed by The Dallas Morning News said she pays around $14,000 a year in property taxes.

For child care businesses to be eligible for the exemption, at least 20% of the children they serve must be on subsidies. Providers would still have to pay school district taxes.

Employer solutions

So where does that leave workers needing child care to do their jobs? Some employers are getting involved.

Richardson ISD provides employees on-site child care to help mitigate the teacher shortages.

Similarly, the nonprofit Annie’s Place has partnered with Parkland Health since 2020 to provide child care to health care workers. It will soon expand to provide on-site child care at Baylor Scott and White as well.

Children’s Health provides its employees up to 100 hours of subsidized back-up child care annually. Employers contract with child care companies like BrightHorizons and KinderCare that have multiple locations and hold a certain number of slots to accommodate children who need one-off backup care.

The pediatric health system also provides up to $1,000 of tax-free money for employees in flexible spending accounts to use to offset child care costs.

“With small businesses and even micro businesses, we’re seeing that back-up care is where they lean in because they may not be able to do some of the more financially intense pieces,” said Sadie Funk, national director of the Best Place for Working Parents initiative.

Funk’s team found that when employers cover a portion of child care costs, it results in a favorable return on investment. Companies offering dependent care flexible spending accounts can save up to $382 per employee. Businesses with 250 employees could save up to $75,000 per year in lost work time by subsidizing care for employees’ sick children, according to an analysis by the Best Place for Working Parents.

Employers providing flexible spending accounts is a more holistic solution, said Cody Summerville, executive director of Texas Association for the Education of Young Children, which works to increase access to high-quality early childhood education.

“We know there’s great child care programs already out in the community,” Summerville said, “so I think a more winning solution than on-site child care is really giving parents the funds in their paychecks or through flexible spending accounts to choose a child care program that best meets a family’s needs.”

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