The New World of Early Learning in Louisiana

 

School Readiness Tax Credits  

 

The School Readiness Tax Credits (SRTC) are a creative package of tax credits, started in 2008, that are unique to Louisiana and have received national recognition. In addition to providing economic incentives directly linked to improvement in the quality of early care and education, they have been used as the state match for the over $80,000,000 in federal dollars of the Child Care and Development Fund Block Grant.  

                                                       

The SRTC are comprised of 4 tax credits as follows:

 

School Readiness Tax Credit for Child Care Teachers/Directors

 

This tax credit is available to teachers and directors who have attained higher training and education, as measured by the Louisiana early care and education career ladder, and are employed in centers participating in the quality rating system. The credit encourages teachers and directors to improve their knowledge, skills and abilities, thereby enhancing the quality of their centers and enabling those centers to increase their star ratings.

 

  • Over 4000 teachers/directors claimed the credit in 2016.

  • To be a teacher in a child care center the only requirements are to be 18 and pass a criminal background check—not even a high school education is required. 

  • Many early childhood education teachers earn little more than minimum wage with no benefits.

  • To improve child outcomes and achieve school readiness for our children, Louisiana must build a qualified workforce and improve teacher compensation.

  • The SRTC for Teachers/Directors provides incentives to improve the knowledge, skills and abilities of the early childhood education and care workforce.

  • Click here for more information on the SRTC for Teachers/Directors.

 

School Readiness Tax Credit for Parents/Families

 

This tax credit is available to parents who purchase child care services

at a child care center with at least a two star rating quality rating. The amount of the credit increases with a greater number of stars (the qualityof the center), but decreases with the parents’ income. This credit is a market-based incentive for parents to choose higher quality centers.
 

  • Over 13,000 parents claimed the credit in 2016. 

  • The average price of child care in Louisiana for parents is almost as much as the average tuition at a public college in the state.

  • The available public funding through child care assistance only covers a percentage of the tuition. 

  • 67% of Louisiana children birth through age 5 have all available parents in the labor force. 

  • The SRTC for parents/families supports low-income parents so that they can access higher quality early childhood care and education for their children.
     

School Readiness Tax Credit for Child Care Providers

 

This tax credit is available to programs with at least a two-star quality

rating, and is based on the number of low-income children served (as determined by participation in the state child care assistance program or foster care). The value of the credit increases with the star-level, and is designed to help address the higher expenses associated with providing higher quality services to low-income children.

 

  • Over 450 child care providers claimed the credit in 2016.

  • Most early childhood education programs for children under age four in Louisiana are privately run small businesses.

  • The child care sector is a significant contributor to Louisiana’s economic development in addition to providing early education and care to children ages birth through 4. 

  • Every dollar that is spent in the child care sector results in $1.72 of economic activity in local economies. Similarly, for each new child care job that is created, 1.27 jobs are created in the larger economy.[5]

  • The SRTC for Providers helps these businesses to 1) be sustainable financially 2) offer high quality care to ensure school readiness and 3) serve the most at-risk children.

 

School Readiness Tax Credit for Businesses

 

This tax credit is available to businesses that support quality child care or make donations to Child Care Resource and Referral Agencies--non-profit, community based organizations that provide training, technical assistance and other supports to child care centers and parents of young children.

 

  • Over 250 businesses claimed the credit in 2016.

  • This credit encourages private sector support for early childhood education and has played a critical role in engaging businesses in early childhood education in their local communities. 

 
Additional Resources:​

Giving Credit Where It's Due-School Readiness Tax Credits Benefit Louisiana Families and

Communitiesa report by the Louisiana Policy Institute for Children

Handout on the Louisiana School Readiness Tax Credits Linked Here

 

Louisiana Department of Education: School Readiness Tax Credits Guidance  Linked Here

 

Louisiana Department of Revenue: (type school readiness tax credits in the search bar) Linked Here 

Early Childhood Finance website: (type school readiness tax credits in the search bar) Linked Here 

National Women's Law Center Report: Extra Credit: How Louisiana Is Improving Child Care Linked here

Revisions made to the School Readiness Tax Credits in 2017. Linked Here

Louisiana Senate Revenue and Fiscal Affairs Committee: Testimony on the School Readiness Tax Credits (April 4, 2016)

Including Child Care Providers, Advocates, Resource and Referral Agencies and other Stakeholders. 

Click here and go to the 58 minute mark.

Louisiana Revenue Study Commission: Testimony on the School Readiness Tax Credits (October 12, 2012)

Including Child Care Providers, Advocates, Resource and Referral Agencies and other Stakeholders

For the entire session, click here.

For the individual testimony clips, click here.