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With An Amendment, We Strongly Support the School Readiness Tax Credit Portion of LB1108

Editor’s Note: First Five Nebraska testified in support of LB1108 today. Introduced by Senator Burke Harr, we testified on the portion of the bill dealing with the School Readiness Tax Credit Act. This blog post is adapted from Senior Policy Associate Jen Goettemoeller’s testimony today.

First Five Nebraska focuses exclusively on policies impacting young children at risk of failing in school, and the high-quality early experiences that close the achievement gap at the time it is most effective and least expensive to do so.

A few years ago, the Nebraska Legislature passed the School Readiness Tax Credit Act to address workforce barriers for early childhood providers, as well as provide incentives for programs to improve their quality and serve the children most at risk of failing in school. Last year was the first year these tax credits were available, and the information we have suggests 142 early childhood providers located across the state (not just urban areas) will receive the credit. That’s great news.

Regarding the proposed changes to the tax credit act in LB1108, we support removing the sunset, as well as increasing the tax credit rates for one main reason: the tax credits are specifically tied to levels of quality that close the achievement gap. The single most important factor in early childhood programs that successfully close that gap is the quality of the staff in those programs—and that’s exactly what the increased rates in the School Readiness Tax Credits Act will purchase. We know what we’re getting in exchange for the tax credits we extend to providers. We’re not just hoping to incentivize what we think will work. We’re actually rewarding child care providers who provide the product we want.

First Five Nebraska strongly believes children should receive quality early childhood experiences in their natural and inclusive environments. That means serving children where they are, not moving them to new programs or suggesting one type of setting is “better” than another. It doesn’t matter if the child is in a home-based child care or in a preschool offered by the school district. Both of those environments can provide the level of quality that supports a child’s healthy development. Both environments can provide the level of quality that reduces the achievement gap.

Right now, home-based child care providers are encountering difficulty accessing the tax credits. We would like to see that remedied. The challenge arises because of the way many home care providers’ businesses are structured. Typically, they set up their businesses without the structure that qualifies them as an employee, and therefore they’re unable to access the refundable tax credit aimed at an individual member of the early childhood workforce.

We’re confident the tax credit was intended for all members of the early childhood workforce, including home-based providers. We are committed to working with Senator Harr, the Revenue Committee, and the Departments of Revenue and Education to remedy this situation.

With an amendment to address this access issue for home-based child care providers, we strongly support the School Readiness Tax Credit portion of this bill and urge its advancement.   

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