Children at Mariposa Learning Center in Fitchburg. (2023 file photo by Erik Gunn/Wisconsin Examiner)

While providers, their supporters and Democratic lawmakers are pressing for a substantial continuing direct state investment in Wisconsin’s child care sector, Republicans in the Legislature are pursuing another route: expanding a child care tax credit for employers.

So far, child care providers and some small business owners aren’t interested.

The legislation circulated in draft form in early May. On Friday, May 30, it was formally introduced in the Assembly (AB 283) and the state Senate (SB 291).

“We really think it’s an important opportunity to reward employers for getting involved in child care,” Neil Kline, who says he encouraged GOP lawmakers to draft the tax credit legislation, told the Examiner.

Kline is executive director of Family Friendly Workplaces, a nonprofit based in Woodville that works with businesses in Burnett, Pierce, Polk and St. Croix counties. The organization certifies employers as family-friendly “to support their recruitment and retention efforts,” Kline said. To that end, one of its missions is focusing on workforce-related problems such as housing and child care access.

In early May Sen. Howard Marklein (R-Spring Green) and Rep. Karen Hurd (R-Withee) circulated the proposed bill seeking cosponsors.

The legislation was written “to encourage more businesses to invest in child care in their communities,” Marklein and Hurd wrote in their May 12 cosponsor memo. “These changes will increase the number of available child care slots and provide more options for families.”

Demanding direct support

The legislation has been introduced while child care providers and Democrats are continuing their campaigns to revive direct support for the child care sector.

During the COVID-19 pandemic the Evers administration used federal pandemic relief funds to pay child care providers monthly stipends through the Child Care Counts program. The $20 million a month that the state doled out helped providers stabilize child care, increasing workers’ pay while keeping care more affordable for families.

When Evers tried to use $360 million from the 2023-25 budget to continue Child Care Counts with state money, none of the Legislature’s Republican majority got behind the measure. The governor was later able to reallocate other federal dollars to fund Child Care Counts through June 2025, but at half the original amount: $10 million a month.

With lawmakers now writing the 2025-27 budget, Evers, child care providers and their advocates have been campaigning for $480 million to continue the program for the next two years. A survey commissioned by the state and conducted by the University of Wisconsin Institute for Research on Poverty forecast closures and tuition hikes if the state payments end.  

At their very first budget vote, however, Republicans on the Legislature’s Joint Finance Committee removed the proposal along with more than 600 other items Evers had included in his budget draft. The GOP outnumbers the Democrats 3 to 1 on the committee.

Democratic lawmakers responded by circulating a draft stand-alone bill to reinstate the Evers proposal.

“Child care providers are facing increasing cost to operate while still making poverty-level wages,” said Sen. Sarah Keyeski (D-Lodi) at a May 22 press conference to announce the Democrats’ bill. “This has made it extremely difficult to hire and retain quality staff. [Meanwhile] providers desperately want to avoid rising costs and rates on families already struggling to afford child care.”

Child care as business investment

As yet no Republican lawmakers have gotten behind the Child Care Counts proposal.

Instead, the bills that Marklein and Hurd have introduced would make changes to the Business Development Tax Credit, which is provided through the Wisconsin Economic Development Corporation (WEDC).

That tax credit is granted to reward a variety of business investments and reduces the state income tax that a business pays by the amount of the credit.

Currently, a business that spends money on starting a child care program for its employees can get up to 15% of that cost taken off its tax bill. The credit applies only to capital investments, however — building or remodeling the child care facility.

“Unfortunately, we have heard that the current program parameters limit the incentive for businesses to invest in child care programs,” Marklein and Hurd wrote in their co-sponsor memo. “While many businesses may want to provide child care as a benefit to employees, the current credit limitations reduce the incentive for this investment.”

In addition to capital expenditures, the draft bill would extend the tax credit to cover 15% of several other costs:

• An employer’s spending on child care program operations;
• Spending to reimburse employees for their child care expenses;
• Spending to buy or reserve openings for its employees at a child care center;
• Contributions an employer makes to an employee’s flexible spending account for dependent care.

The draft bill also allows the tax credit for “any other cost or expense incurred due to a benefit provided by an employer to facilitate the provision or utilization by employees of child care services.”

The tax credit would be refundable: Even if the credit totals more than the employer pays in taxes, the company would get its full value back from the Wisconsin Department of Revenue. 

It also would give a refund to nonprofit employers, which don’t pay taxes.

“While not a silver bullet, these changes are another step in the right direction to address the child care issue in Wisconsin,” Marklein and Hurd wrote in their memo.

Kline, the Family Friendly Workplaces director, said the proposal would help engage employers more directly in addressing child care shortages.

“We really think it lays the groundwork for ongoing, self-sustaining support of child care in Wisconsin,” he said. “The primary goal is to help introduce new money into the child care — really, the child care ecosystem — by rewarding employers to support the ongoing expenses of child care, because the reality is that the sector needs additional money in it.”

Kline said he understands that “the ongoing operational economics” is a central problem for the child care sector. “That’s why we are so focused on helping employers find avenues and be rewarded for helping defray the expenses that are related to child care and helping support that ongoing operational side of child care.”

Chilly reception

To date the existing child care employer tax credit hasn’t had any takers, according to the WEDC. In January, as part of an overall evaluation of the state’s business development tax credit, an outside consultant told WEDC that “due to the high operational costs of childcare centers, affordability would likely be better achieved through subsidy as opposed to a tax incentive.”

The proposal to expand the tax credit isn’t gaining traction with providers or small business owners.

Main Street Alliance, which organizes small business owners to advocate for state and national legislation, has already announced objections to the bill.

“These kinds of programs and tax credits are often advantageous for employers who can afford compliance and the procedural costs and have economies of scale,” said Shawn Phetteplace, MSA’s national campaign director. That leaves out the typical small business, said Phetteplace, who sent lawmakers a memo calling the proposal “deeply unserious.”

Evan Dannells, a chef and owner of two Madison restaurants, questioned how a relatively small business like his would benefit from the tax credit.

Of his eight full-time employees, one has two children. Most of the others are graduate students. Directly paying for the one employee’s child care, even if receiving a tax credit, doesn’t feel fair to the others who don’t have that expense, Dannells said.

“If you put the onus of taking care of child care on the employer, the employer won’t hire people with children,” he said.

Dannells considers the cost of child care a legitimate use of his tax dollars. “This is why government should be doing this,” he said. He observed that children are required to go to school when they reach the age of first grade. “Why can’t we take care of them from age 1 to 5?”

While the tax credit may make it easier for a particular company’s employees to afford child care thanks to the employer’s support, skeptics of the proposal say that assistance only helps some people — not the system as a whole.

“That doesn’t help keep the doors open,” said Heather Murray, who operates a child care center in Waunakee. “We’re hitting crisis mode and centers are shutting down now, and a quarter of them will be gone if [Child Care Counts] isn’t renewed. We need the investment to go directly to providers to make sure that the doors stay open.”

Child care as a public good

National child care analyst Eliot Haspel is also skeptical. Haspel is a fellow at Capita, a think tank that works in the area of family policy. In February 2024, the think tank New America published his report raising questions about the impact of various employer-sponsored child care benefits.

Haspel views child care as a public good that benefits society broadly. For that reason, he contends, it should serve families regardless of whether they work for an employer able to fund a child care benefit.

“Small business will never be able to offer a really robust child care workplace benefit,” Haspel says. That puts small businesses and small business employees at a disadvantage if supporting child care is primarily an employer’s responsibility, he argues.

The large number of low-wage workers and “gig workers” “also raises the specter of increasing inequalities,” he writes in the New America report.

Haspel says that tying child care to a job also locks people into a job — or strands them from needed care if they lose their job. It also disrupts children’s early education at a time when they need consistent and reliable connections with their caregivers, advocates say.

“It’s really bad for workers and it’s really bad for kids for your child care to be tied to your employment,” Sen. Kelda Roys said at the Democrats’ May 22 press conference.

Tying health insurance to employment has been “a disaster,” Roys said. Health care is “rationed based on the job that you have or the wealth that you have,” she added, “and we do not want to exacerbate the current problems in our child care system by tying it to people’s employment.”

In his New America report and in an interview, Haspel says the problem isn’t providing child care at the workplace.

“I’m not against the idea of onsite child care — that can make all the sense in the world,” he says. “You can have an onsite center as part of a publicly funded system” — one to which employers contribute as taxpayers.

Focusing on the employer, however, carries with it “an opportunity cost,” Haspel says. “The more we say child care should be solved primarily through employers, the harder it is to say we need a fully public system that is universal and reaches everyone.”

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State Sen. Kelda Roys, holding her toddler, speaks about legislation Democrats are proposing to provide ongoing funding for child care providers. (Photo by Erik Gunn/Wisconsin Examiner)

Democratic lawmakers are circulating a draft bill to extend the soon-to-end state child care support program and fund it with $480 million that was stripped from the 2025-27 state budget.

The proposed legislation follows action earlier this month by Republican lawmakers to remove child care support and more than 600 other items that Gov. Tony Evers included in his draft budget.

Both Evers’ proposal and the Democrats’ bill aim to continue support that child care providers have been receiving since 2020 as part of federal pandemic relief.

“This funding has been essential in continuing successful programs that support our early educators, child care providers, parents, and most importantly, our kids,” said state Rep. Alex Joers (D-Middleton) at a Capitol news conference Thursday announcing the legislation.

The $20 million that Wisconsin paid out each month to providers through mid-2023 “kept our early educators in the workforce, held tuition down for parents and provided a direct investment in our children during the most crucial years of their childhood development,” Joers said.

Payments were cut to $10 million a month in June 2023, and the last of those funds will be paid out by early July.

“But with this impending deadline, child care providers and early educators are faced with the impossible decision to either raise rates or have to close altogether,” Joers said. “Without assurance of this funding lifeline, many have already made that decision and have devastatingly shut their doors forever.”

Citing recent reports, Joers said that there are 48,000 children on waiting lists for child care in Wisconsin. In a survey of providers, 78% said they would have to raise fees for infant care — the most expensive age group in most child care programs.

“Altogether, if nothing changes, parents are looking at having to find an additional up to $2,600 in their yearly budget,” Joers said.

First-term Sen. Sarah Keyeski (D-Lodi), the lead state Senate author on the legislation, said that when she was running for office last year, voters repeatedly shared their concerns about the cost and scarcity of child care.

“We have historically undervalued and underpaid child care and early education professionals,” Keyeski said. “This is no longer tenable.”

She described the plight of one constituent who had to change providers three times after the first and then the second provider went out of business because of financial difficulties or other constraints. The mother told her that her current provider — the third — had rates that are “at the top” of what the family could afford.

Keyeski said the provider has told the woman that unless the state can continue with its support, the center’s rates will go up $40 a week, or $160 a month. For the couple, “this increase is unsustainable,” she said. “Her family is left wondering, what to do next?”

Wisconsin’s rural communities have been especially hard hit, she added: In 70% of them, there are three or more children for every child care opening.

“In my district alone, over 34,000 children need care, but there are only about 26,000 available slots,” Keyeski said.

Child care should be viewed as essential infrastructure, said state Rep. Renuka Mayadev (D-Madison).

“And as a state, we support infrastructure. We maintain roads, we maintain bridges. Why is funding childcare such a fight?” Mayadev said.

Wages of less than $14 an hour are driving child care workers out of the field, she added. “There is no other industry where such high value work is being done at such dismal low wages.”

Sen. Kelda Roys (D-Madison) — accompanied by her toddler son before she took him to his child care provider near the Capitol — said the legislation calls for $480 million in state funds over the next two years.

“But I think the real question is what it will cost the state if we don’t do it,” Roys said. She forecast “continued massive closures” of child care centers.

“Already over 60% of child care providers have classrooms sitting empty or slots that can’t be filled because they don’t have the teachers to fill them,” she added.

Roys said child care was a critical need in order for the state to address persistent shortages of people to fill jobs.

“In critical areas like public safety, in K-12 education, in health care — what is it going to mean if the parents of even more kids can’t get child care?” Roys said. “We can’t afford that. We have to make this investment.”

Brynne Schieffer is a child care provider in Cameron, Wisconsin. She addressed a gathering outside the state Capitol on Friday, May 16, 2025. (Photo by Erik Gunn/Wisconsin Examiner)

After a week at the state Capitol to draw attention to their demand for a robust state fund for child care providers, advocates will spend the next couple of weeks back home to amplify their message.

Child care centers will reopen this week after closing their doors for all or part of the past week as providers sought to underscore the urgency of additional support for child care.

Providers will focus on raising more awareness in their local communities, said Corrine Hendrickson, co-founder of Wisconsin Early Childhood Action Needed (WECAN), a coalition of providers and parents. Federal pandemic relief money that has bolstered providers since 2021 will run out completely by early July.

This week, WECAN is encouraging providers to do “larger [local] community actions to help inform the community,” Hendrickson told the Wisconsin Examiner. “We’re also going to be calling other child care programs, making sure they even know this funding’s ending.”

WECAN organized the week of action in Madison, calling it “State Without Child Care.”

A small group of providers shut down for the week to dramatize the loss of child care that they contend will be inevitable without strong state support. Others closed for a day or two, and still others opted to stay open while also endorsing the funding demand.

Earlier this month leaders of the Legislature’s Joint Finance Committee removed a $480 million child care funding provision from Gov. Tony Evers’ proposed 2025-27 state budget, along with more than 600 other items.

On Friday, Hendrickson and WECAN cofounder Brooke Legler were joined by parents and other providers in front of the Capitol to reiterate their case for restoring the funds.

“My family still currently pays 25% of our monthly income towards child care, and honestly that’s just after-school care and then summer camps,” said Katy Dicks of Sun Prairie, who has a 10-year-old daughter and a 6-year-old son. When the children were younger, child care accounted for a third of the family’s income, she said — while “it has been suggested that 7% of a family’s income is what is affordable.”

Dicks leads the Wisconsin chapter of Mother Forward, a national advocacy group for child care, paid family leave and other policies to support families.

“We need policy that works for all families,” she said. “The quality of care for children approximately 3 months to 5 years should not be based on a child’s parents’ income.”

Also at the Capitol were Rochelle Navin and her husband. They have a 2-year-old daughter, and Navin is expecting twins. Their daughter is usually at Legler’s New Glarus child care center, The Growing Tree, while her parents work, but they juggled home care arrangements to support Legler’s decision to close the center for the week.

Navin told the Wisconsin Examiner it was disruptive to their routine, but the couple understood why Legler took that step.

“There’s two sides of it, right?” Navin said. “You fully understand why it’s gotten to this point, and why the extreme [response] needed to be taken, while at the same time being scared about what the future looks like.”

Evers’ proposal was to extend the Child Care Counts program, originally funded by federal pandemic relief money. The subsidy — originally $20 million a month, then cut back to $10 million a month in mid-2023 — enabled providers to raise wages without having to increase the fees parents pay for care.

A statewide survey conducted by the University of Wisconsin-Madison Institute for Research on Poverty found that 25% of providers said they might close if the revenue isn’t replaced.

Hendrickson said in the coming weeks she and other providers who have been active in campaigning for the support will reach out to operators with messaging guidance for talking to parents as well as to their local lawmakers.

“This week was definitely about coming together as a group in solidarity and really standing up for ourselves and for our children and our families and our communities,” Hendrickson said Friday.

Over the course of the week at the Capitol, “we visited almost every single office, dropped off information, talked to staffers and really helped them see who it is that they’re hurting,” she said.

The providers who engaged in those conversations also aimed to show legislators “that their constituents actually know what they’re talking about — we know what we’re talking about with our businesses, we can speak to it and the reason why we need the funding, and it’s not a handout,” Hendrickson added.

In the Institute for Research on Poverty study, up to 40% of rural providers said they might close if the additional funding stops. That’s  nearly twice the projected closure rate of urban providers.

Brynne Schieffer operates a child care program in the community of Cameron, near Rice Lake in Northwestern Wisconsin.

“I have spent the entirety of my adult life caring for not only my own children, but other people’s children, raising them, raising them to be kind human beings that will hopefully one day go out and be carers themselves,” Schieffer told the group gathered on the Capitol steps Friday.

“The funding runs out in July, and to avoid closure we have to raise our rates between $35 and $50 per child per week. Whose pocketbook can handle that?”

Hendrickson told the Wisconsin Examiner that if rural providers have to raise their rates, they’re more likely to lose families who can’t afford the increase, with no one to replace them. In cities, she said, moderate- and low-income families will be hurt by the loss of child care, but there are likely to be more high-income families able to keep up with rising costs, so fewer providers would have to close.

All but one of the providers who made the trip to Madison last week were from rural communities around the state, Hendrickson said.

“People drove four or five hours to get here,” she said. “It’s because they don’t feel listened to [back in their districts]. And that’s what they said — ‘I’ve had to come all the way down here to get them to listen to me.’”

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