Nebraska Legislature gutted funding from key child care bills before passage

Before they adjourned last month, state lawmakers passed two of their biggest proposals to address the lack of affordable child care in Nebraska.

But they steered $0 to those new efforts, casting doubt on whether either law will have a meaningful impact on a growing crisis.

Despite broad support for the policies, money proved to be the sticking point in a year when Gov. Jim Pillen, a Republican who proposed child care legislation, had big goals for property tax relief.

In the two weeks after the legislative session ended, two more Lincoln child care centers announced they’re shutting down, bringing the total to five closures announced in six months in that city, according to the nonprofit Lincoln Littles. 

Those are just the latest in a long-term trend: The state lost nearly 12% of its providers for kids ages 5 and under between 2019 and 2023. As of January, nine counties didn’t have any licensed providers, according to nonprofit First Five Nebraska.

The governor, stakeholders and lawmakers said they’ll continue to work on the issue, and advocates welcomed the incremental changes as a net positive. 

Efforts to pass property tax relief this year stifled any bills with a projected fiscal impact – not just child care bills, senators said.

“Long story short, anything that had a fiscal note attached to it either didn’t make it out of committee or was reduced on the floor,” said Sen. Teresa Ibach, a Republican from Sumner. 

One of the biggest child care bills, Legislative Bill 856, would’ve made most child care workers eligible for the state’s child care subsidy – potentially opening up that resource for 4,400-plus parents, according to an estimate.

The Department of Health and Human Services estimated it to cost about $21 million a year. An amendment capped that cost at $10 million a year, before lawmakers ultimately cut any costs associated with the bill.

In the end, it makes a technical change to the subsidy aimed at helping rural providers.

“Obviously, where it landed is not what I had hoped for and what I had initially intended to do,” said sponsor Sen. John Fredrickson. “That said, I’m proud that the bill was able to pass in some capacity … and at least do something at this point.”

Pillen requested the other major bill that ran into a funding roadblock, Legislative Bill 1416. It created two grant programs – considered a potential “game-changer” by advocates.

One of the programs provides matching grants to cities, nonprofits or other organizations and prioritizes efforts that increase capacity to care for kids under 4, support the industry’s workforce and create programs in child care deserts. The other grant program is supposed to support small providers and create regional hubs to handle their administrative tasks.

Lawmakers indicated support for putting $5 million into those programs, but they ultimately didn’t include any funding.

An empty fund now exists for these two new grant programs. 

Pillen’s office said the state will look for other ways to fund the programs, including “federal, philanthropic and other state cash funds.” 

Sen. Eliot Bostar, a Lincoln Democrat who sponsored the bill, sounded almost certain they would find money in other state funds for this purpose soon.

Once that money is secured, he said he’ll consider the bill a success – none of the actual policy was pared down.

“I feel OK,” Bostar said. “I think we will identify meaningful money to use for this.”

Another Pillen proposal that, in part, would’ve allowed business incentive tax credits to be used for employees’ child care, didn’t make it out of committee. Sponsor Sen. Lou Ann Linehan of Elkhorn, a Republican, said she doesn’t think it’s “off the table for the future.”

Ibach also sponsored a bill that failed to make it out of committee. It would have put $2 million toward supplementing child care and education workers’ salaries. Those workers in Nebraska made an average annual salary of $29,000 in 2023, according to the U.S. Bureau of Labor Statistics, about the same as a fast food cook or cashier.

Lawmakers did pass other child care-related bills with significantly smaller price tags.

Sen. Wendy DeBoer, a Democrat from Omaha, hopes a successful bill she sponsored will eventually bring the state’s subsidy rate more in-line with providers’ costs – a step that’s key to helping providers, she said. With fairer reimbursement from the state, child care providers could find it more attractive to accept subsidy-eligible families.

DeBoer’s bill also included a proposal from Lincoln Sen. Anna Wishart, a Democrat, which created a grant program to help nursing homes add child care to their buildings. It passed with a $330,000 one-time appropriation.

Another Bostar bill that passed this session got rid of some regulations that burdened child care providers, with no cost associated.

Elizabeth Everett, deputy director of nonprofit First Five Nebraska, said she remains hopeful – and that “any success in this area is helpful.” And Pillen lauded the bills that made it into law.

“The passed Legislation is a great continued step (along with the childcare tax credits passed last year) to ensure that Nebraskans can find the right fit for their child in the early childcare and education space,” Pillen said in a statement.

Bryan Slone, president of the Nebraska Chamber of Commerce and Industry, said this session signaled bipartisan momentum on a critical issue.

“Affordable, available child care continues to be one of the top barriers to growth among Nebraska’s businesses statewide,” Slone said in a statement. 

Taxes take priority

Pillen agreed that his property tax relief goals got in the way of key child care bills this session, but the governor called high property taxes “the number one issue facing Nebraskans.”

“I will continue to fight for less general fund spending, across government, until we are able to cut Nebraskan’s property tax bill by 40%,” he said.

Negotiations around a property tax relief bill were ongoing until the final day of session. It ultimately failed. That same day, the Legislature passed a $10 million proposal to fund scholarships for private school students.

Fredrickson, a Democrat from Omaha, had low expectations for the bill its first year, he said, especially given the governor’s goal to cut property taxes by 40%. But he worries that passing legislation without funding could create confusion.

“I have concern that we start to have this narrative that’s: ‘Well, we’ve already done all these things – do we need to do more?’” he said.

The millions the state avoided spending in the child care bills is a small fraction of the money that experts say would be needed to ideally fund the state’s early childhood care and education system. 

The Buffett Early Childhood Institute at the University of Nebraska found that it would take an additional $569.2 million in state, federal and private money to reach that goal in 2021.

Several legislators are poised to look more at the problem and potential solutions between now and next January, when they’ll reconvene for another regular session.

Fredrickson introduced an interim study to look more at how child care subsidy programs can help with child care worker recruitment and retention. He’s planning to introduce his bill again next year, but could alter it based on the study.

Linehan, who is term-limited and won’t be back next year, introduced an interim study to look at funding sources for early childhood education programs. 

“I’m not going to be in the Legislature, but I’ve been active for 30 years – so I will be active,” she said. She said she’s going to work on one or two topics on her own “to make the world a better place,” including child care.

There’s a couple other child care-related interim studies, too, from Republican Sens. Brian Hardin of Gering and Ben Hansen of Blair. Hardin’s will look at the availability and affordability of child care providers’ liability insurance. Hansen’s aims to examine why there’s a shortage of providers in rural areas.

Even though no money is attached to the bills passed this year, Bostar said he’s glad that legislators are now making child care a priority.

“Until we see this critical industry start to turn around, I will continue to introduce bills to improve access to and affordability of child care,” he said.