LB 889, the School Readiness Tax Credit Act (SRTC), introduced and personally prioritized by Senator Heath Mello and cosponsored by Senators Campbell, Cook, Kolowski, Kolterman, McCollister, Stinner and Sullivan, is modeled after a nationally recognized and successful package of tax credits in Louisiana to provide economic incentives directly linked to improvement in the quality of early childhood care and education programs and the early childhood workforce.
We are pleased to announce that LB 889 has advanced out of the Revenue Committee by a unanimous 8-0 vote with a committee amendment. The committee amendment (AM 2490) makes several changes to the original bill, but still provides a positive impact on improving the wages of the early childhood professional workforce and the quality of early childhood education in Nebraska.
For more specific information on the bill and the proposed amendment read below or click here for a downloadable pdf.
Nebraska’s Child Care Industry as an Economic Driver
- In Nebraska, child care industry revenue combined with spillover effects have a nearly $460 million impact on the economy.1
Throughout Nebraska, there are 7,794 child care programs with revenue of $286.7 million.2
- The child care industry employs 14,409 individuals supporting an additional 3,200 jobs in other industry sectors.3
Quality Child Care Matters!
- Families and employers depend on quality child care for more stability for today’s employees and to lay the foundation for tomorrow’s workforce.
- Research is clear that low-income children who have access to high-quality child care are less likely to be retained in grade, less likely to be referred to special education, less likely to go to jail, more likely to graduate high school, and more likely to attend college – all leading to higher earnings.
The impact of LB 889 with AM 2490 will provide a positive and enduring impact on quality early childhood education. AM 2490 would make the changes outlined below.
*Removes both the Business Expenses Tax Credit and the Individual (Parent) Tax Credit.
Changes to the Staff Tax Credit:
- Reduces credit amounts.
- Inserts a “floor” or starting point for eligibility based on a minimum certification.
- Excludes from the definition of eligible staff, certificated teaching and administrative staff employed by programs established pursuant to section 79-1104 to exclude school district staff with the salaries and benefits that child care employees do not enjoy.
Changes to the Program Tax Credit:
- Reduces credit amounts.
- Eliminates eligibility for Step 2 programs.
- Adds “or operates” to the definition of child care and education providers to include nonprofit child care and education providers.
- Inserts a 5 year sunset on the tax credits.
- Places a $5 million annual cap on the funds available to be used for the credits.
- Makes the provider credit non-refundable.
School Readiness Tax Credit for the Early Childhood Workforce
This tax credit would be available to early childhood professionals who have attained at least a Child Development Associate (CDA) credential or one year certificate/diploma in early childhood education or child development, and are employed in early childhood programs participating in Step Up to Quality. The credit encourages teachers and directors to improve their knowledge, skills and abilities, thereby enhancing the quality for the programs and enabling those programs to increase their Step Up to Quality ratings.
- To be a teacher in a Nebraska child care center the minimum requirements are to be 18, pass a criminal background check, have a high school diploma or GED and have a plan for 45 hours of training in administration, early childhood education, or child/youth development in a period not to exceed six months.
- Many early childhood education teachers earn little more than minimum wage with no benefits.
- Nebraska is in need of 7,900 additional qualified early childhood workers to ensure all children at-risk age 0 to 5 have access to high-quality services.
- The SRTC for the early childhood workforce provides incentives to improve the knowledge, skills and abilities of the early childhood workforce.
School Readiness Tax Credit for Early Childhood Programs
This non-refundable tax credit is available to programs with at least a Step Three quality rating and is based on the number of low-income children served through the state child care subsidy program. The value of the credit increases with the star-level and is designed to help address the higher expenses associated with providing higher quality services to low-income children.
- Most early childhood programs for children under age four in Nebraska are privately run small businesses.
- The child care sector is a significant contributor to Nebraska’s economic development in addition to providing early education and care to young children.
- Although the average private annual cost for an infant in center-based care is $7,900, the average annual child care subsidy payment per child is $2,880 , a $5,000 difference.
- The SRTC for early childhood programs helps these small businesses to 1) be sustainable financially 2) offer high quality care to ensure school readiness and 3) serve the most at-risk children.