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This year’s legislative session demonstrated that Indiana is not immune to the headwinds facing our national economy, as both uncertainty and federal policy choices created a need for restraint in spending. Families and kids, though, still have real needs, and we now have fewer public resources upon which to draw.
Fortunately, the General Assembly also provided some tax changes that could empower the business community to expand its engagement with a pro-family and pro-economic development policy area: early care and learning.
Indiana’s child care landscape remains challenging, despite the good work of Hoosier child care providers and high family demand for seats. Indiana’s child care sector currently can provide care for only about two-thirds of the children who need it.
According to a recently published brief from Early Learning Indiana, even that capacity is under pressure, as the overwhelming majority of child care providers accept Child Care and Developm ent Fund and/or On My Way Pre-K vouchers. With the recent cuts and the continued wait lists for these programs, providers face potential losses of families and the dollars that make it possible to serve self-pay families, as well.
The business community has a strong track record of recognizing the value of child care as a benefit for employees. Many employers, including Eli Lilly and Co. and Cummins, have created on-site or near-site child care options for their employees. The General Assembly’s work in Senate Enrolled Act 463 and House Enrolled Act 1427 extend or create new tax-credit and -exemption opportunities for the business community to further their investments in this space.
SEA 463 extends the state’s child care expenditure tax credit, which allows a business to claim a credit of up to 50% of qualified expenditures to help set up on-site or near-site child care facilities for the business’s employees. HEA 1427 creates a partial property tax exemption for the portion of a business’s property that is used to provide child care for the company’s employees.
The Legislature’s message to the business community is clear: In an era of limited public resources, employers play an important role in providing child care benefits for their employees. Such investments have a double benefit: They create capacity in the child care sector and provide stability for families. They also directly benefit employers’ ability to attract and retain high-quality talent.
Indiana’s child care shortages have an enormous impact on Indiana’s business community, resulting in an estimated $3 billion in losses to employers because of employee absenteeism and turnover. Twenty-seven percent of Hoosier parents have experienced employment changes because of child care challenges, and 11% are considering leaving employment altogether over the next 12 months because of these challenges, according to a 2024 report from the U.S. Chamber of Commerce Foundation, Indiana Chamber of Commerce and Early Learning Indiana.
With Indiana continuing to face workforce difficulties, the time for further employer engagement in addressing the child care issue is now. The General Assembly has equipped the business community with additional tools. Businesses must now build the capacity and services that will allow their employees, Hoosier taxpayers and families to find stability. It will create a competitive advantage for Hoosier businesses and lead to more opportunities for growth and employee retention.
Our state’s economic future depends on the government, employers and providers working together to meet this moment.•
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Snideman is vice president of government relations at United Way of Central Indiana.
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