Louisiana’s unique package of tax credits, the first of its kind in the country, improved the quality of child care in the state in its first four years — including for low-income children — according to a new report just released by the National Women’s Law Center. The report assesses the effectiveness of the credits, known collectively as the School Readiness Tax Credits (SRTC), in improving child care quality in the first four years of their implementation. Between 2008, when the credits took effect, and 2011, the credits provided more than $38 million in new investments in child care quality. Over the same period, there were measurable improvements in the quality of child care in Louisiana.

Louisiana’s strategy to improve child care quality is unique, using a package of tax credits targeted to four different groups of stakeholders, all of whom have a role in increasing the quality of care children receive: child care centers, child care directors and staff who work in these centers, families who enroll their children in child care centers, and the businesses whose employees use child care and whose communities benefit from their investments. Extra Credit: How Louisiana is Improving Child Care finds a direct correlation between the credits and increases in the number of child care centers with higher-level quality ratings, the number of child care directors and staff with higher-level credentials, and the number of low-income children receiving higher-level quality care.

Louisiana’s creative tax strategy has shown encouraging results in its first four years. By providing tax assistance to a broad range of stakeholders, Louisiana improved child care for thousands of its children and parents. But its early promise is threatened by budget cuts that have decreased child care subsidies, making it more difficult for low-income families to afford child care. The tax credits can continue to play an important role in boosting the quality of child care for Louisiana’s families — but only when combined with adequate funding for other parts of the state’s child care program.

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