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The state legislature concluded its 2016 work in May, passing a $182 million supplemental budget and cutting taxes $257 million. With these bills come gains for children and families, but missed opportunities, too. Governor Dayton signed the supplemental budget bill but did not sign the tax bill.
Children’s Defense Fund-Minnesota continued to center its work at the capitol this session around two-generation policies and programs, including affordable, accessible child care opportunities through investment in the Child Care Assistance Program and the Child and Dependent Care Tax Credit, creating a Paid Family and Medical Leave insurance program, an improved Working Family Credit, and an increased cash grant for families accessing the Minnesota Family Investment Program.
Of these agenda items, lawmakers passed an increased and expanded Child and Dependent Care Tax Credit and Working Family Credit in their final tax bill. These two credits will help improve the economic security of some of our state’s low- and mid-income families. Though they were not included in end of session agreements, CDF-MN made significant headway on our other priorities and we will build on the momentum gained to achieve victories in the coming session.
Read below for a review of our 2016 legislative agenda and the progress we made in partnership with dedicated coalitions and legislative champions. Find additional details on our legislative agenda here.
Child Care Assistance Program
CCAP helps hard-working, low-income families afford child care for children 0-13. Funding is an urgent issue facing the program and is reflected in low provider reimbursement rates and a 7,200 family wait list for the Basic Sliding Fee (BSF) sub-program.
This session we continued our work with the Kids Can’t Wait coalition, advocating to fully fund and forecast BSF and to raise CCAP provider reimbursement rates. While both Governor Dayton and the Senate recommended increased reimbursement rates for CCAP providers in their budgets in order to help providers serve CCAP families and help CCAP families find affordable care, lawmakers did not include any changes to CCAP rates or funding in their final supplemental budget bill. CCAP will continue to be one of our top priorities in 2017.
Child and Dependent Care Tax Credit
The Child and Dependent Care Tax Credit hasn’t kept up with the rising cost of child care. We are pleased that lawmakers included an increased and expanded Child and Dependent Care Tax Credit in their final tax bill that will help more low- and mid-income families afford the high cost of care. Families with one dependent will be able to access a new maximum credit of $1,050 (up from $720) and the maximum adjusted gross income to qualify for the credit is $44,900 (up from $39,400). Families with two or more dependents can access a new maximum credit of $2,100 (up from $1,440) and the maximum adjusted gross income to qualify for the credit is $51,800 (up from $39,400). See p. 14 for additional detail.
Minnesota workers, including working parents, should be able to work and care for themselves and their families. A Paid Family and Medical Leave insurance program is a fair, common-sense solution proven effective worldwide that would help them do both. Such a program would provide a measure of economic security to workers and families in times of need, allow Minnesotans to care for themselves and others while remaining attached to the workforce, and offer other benefits broad in reach, including improved maternal and child health, increased paternal involvement in children’s lives, and reduced reliance on public assistance programs.
As one of three co-chairs of the Minnesotans for Paid Family Leave coalition, we are proud of the progress we made this session to advance a Paid Family and Medical Leave insurance program in Minnesota. The Paid Family and Medical Leave Act received six Senate hearings and passed the Senate floor as part of their omnibus tax bill. Despite progress in the Senate, however, for the second year in a row the bill received no hearing in the House and was blocked for passage. This issue continues to be one of our key agenda items for the 2017 legislative session. Read the coalition’s response to end of session here. See photos from our May 17, 2016 coalition rally here.
The Working Family Credit is Minnesota’s version of the federal Earned Income Tax Credit. Research on the EITC shows long-lasting positive effects for children in families who receive it, including improved health and academic outcomes and increased earnings as adults.
We are pleased that the legislature included an improved Working Family Credit in their final tax bill. The bill increases the size of the tax credit for most currently eligible individuals and families, raises the income threshold to qualify for the credit, and for workers without dependent children, lowers the age to qualify from 25 to 21. See p. 15 for additional detail. Governor Dayton did not sign the tax bill into law.
Children in households accessing MFIP are at risk of or are already experiencing the harmful effects of living in deep poverty that can last a lifetime. Nearly 71 percent of people in households accessing MFIP are children and most MFIP households have a child under age 6. The cash grant hasn’t been raised since 1986 and doesn’t allow families to meet the barest of budgets.
Governor Dayton included a $100/month cash grant increase in his budget proposal but neither the House nor the Senate included it and it did not pass as part of the supplemental budget agreement. While it was not passed into law this year, we will work with partners to make this issue a priority for lawmakers next session.
In sum, this year’s legislative session yielded tangible gains for Minnesota children and families, including through improvements to the Child and Dependent Care Tax Credit and Working Family Credit, but also missed opportunities. 2016 should have been the year that we invested in affordable, accessible child care and the MFIP cash grant increase. It should have been the year that we gave the workers, children, and families of Minnesota what so much of the world already enjoys: Paid Family and Medical Leave.
In the coming months, we at CDF-MN will build on the momentum achieved around these issues and hope that you will work in partnership with us as we move forward.