Indiana businesses are increasingly looking to internal solutions to address the state’s significant childcare shortage, a challenge estimated to cost Indiana $4.2 billion annually. Employers gathered last Wednesday at a childcare summit hosted by the Indiana Chamber of Commerce to share strategies and raise concerns about a state tax credit that has gone unused since its inception.
The Indianapolis Airport Authority, which operates multiple public airports in central Indiana, faced high employee turnover, reaching 30%, in 2019. Rachel Stevens, the senior director of human resources, reported that many departing employees cited an inability to find affordable or high-quality childcare. With half of the municipal corporation’s workforce approaching retirement age, the authority recognized that their younger successors would require different support, including childcare. To address this, the airport authority now reimburses up to $10,000 annually per child for after-school care and summer camps, among other services. Stevens noted that this initiative, along with reimbursements for elder care, has dramatically reduced turnover to under 10%, stating, “We are hardly losing anybody.” The airport authority, however, has decided not to directly operate childcare facilities, concluding it was “beyond” the organization’s best interests.
Another major employer, Parkview Health, a healthcare system with 18,000 staff across northeast Indiana and northwest Ohio, found that many exiting employees were leaving not for new jobs, but to care for family. Kristen Ruble, a well-being manager, emphasized the importance of staff retention due to recruitment challenges and local competition. Parkview Health implemented backup childcare as a key retention tool, a significant effort given their “all day, all night” operational schedule. They partnered with local childcare facilities that had capacity for backup care and subsidize the cost for employees. Additionally, Parkview participates in Tri-Share+, a regional initiative that splits childcare costs, and offers employees financial incentives for healthy habits, matching amounts spent on childcare. An internal social network also facilitates babysitter sharing among employees.
Some companies have taken even more direct approaches. Cummins, an engine manufacturer, operates its own childcare facilities for staff. John Havenaar, the company’s vice president of total rewards, stated that one site in Columbus, Indiana, serves between 100 and 150 children daily, though demand is closer to 1,500 seats. Havenaar indicated interest in expanding their “brick and mortar facilities.” Panelists at the summit also highlighted flexibility, such as allowing remote work for parents of sick children, as a low-budget solution.
While employers are innovating, state officials are also pushing for business involvement. Governor Mike Braun has urged companies to contribute to childcare solutions, especially after securing a $200 million infusion for a government-run voucher program for low-income children. In March, Gov. Braun signed House Enrolled Act 1177, which expanded eligibility for Indiana’s employer child care tax credit to small businesses with up to 500 employees and broadened the types of spending eligible for the credit. The credit allows employers to claim up to half of their qualified spending on licensed childcare for employees’ children, with an annual cap of $100,000 per firm and a statewide cap of $2.5 million. The changes were retroactive to the beginning of the year, making the credit available for the 2024 taxable year.
Despite these incentives, the employer child care tax credit has never been used, according to the Department of Revenue. Senator Kyle Walker (R-Lawrence), who authored the credit, attributed this to the credit being less attractive before recent changes and an ongoing “awareness issue.” Summit attendees expressed concern about what would happen if the statewide cap is eventually reached. Collin Davis, Tax Policy Director for the Department of Revenue, explained that credits are processed in the order tax returns are received, meaning businesses could be “out of luck” if they file after the cap is met. Davis noted that because the credit has never been claimed, the risk of the cap being hit this upcoming tax year is unknown. The Department of Revenue is keeping tabs on the credit and “evaluating options for making this information more accessible,” as no public dashboard currently exists to track claims. Camille Blunt, the Indiana Chamber’s vice president of government affairs, encouraged businesses to utilize the credit to demonstrate its need, stating, “We’re not utilizing it, so we don’t have a good case or a basis for increasing that amount.”