Businesses could be key to the child care system
By Britta Arendt
GRAND RAPIDS, Minn. – Families of young people have been struggling to find affordable and accessible child care in the Itasca County area for years. Now, local businesses are starting to share the pain, with employee absences cutting into profit and productivity. To tackle the issue of insufficient child care, chamber of commerce members joined early childhood education professionals to talk about the child care crisis for rural families during a forum convened this Tuesday at the Blandin Foundation.
The message they want to promote is the natural connection between economic development and a healthy child care system.
“For the employers who are here, thank you, for trying to understand the issue,” said Staci Gilpin founder/owner of Rural Pathways, the Duluth consulting firm working to facilitate change in the child care system serving rural northeastern Minnesota.
Emphasizing that child care is an economic issue, Gilpin outlined a three-part foundation for sustainable funding in the child care infrastructure – families, government and businesses make up the three-legged stool with all contributing equally.
The third leg, or business, “has been historically weak or missing,” said Gilpin of the employer’s role in family child care.
When President Trump signed H.R. 1 last year, the bill opened a significant child care tax benefit. In response, Rural Pathways has focused on helping employers, providers and coalitions design and implement child care partnerships that maximize these enhanced tax credits.
Rural Pathways developed a formula, of sorts, for establishing corporate partnership programs between regional employers and nonprofits. The Two-Tier Employer Partnership Model treats child care as “workforce infrastructure.” Rather than relying on a single funding source, the model combines multiple funding streams including employer investment, family contribution and public financing.
“It’s nice because you don’t have to build a center, you just have to show up,” commented Gilpin as she spoke to business leaders about their role in the tier two system.
Tier 1 is direct investment from employers with predictable, flexible operating dollars to child care providers. The employer contributions, according to Rural Pathways, eventually replace unsustainable owner subsidies, support competitive wages and staff retention and stabilize day-to-day operations. This approach, asserts Gilpin, prevents tuition increases that would otherwise reflect the true cost of care.
Beginning in 2026, employer investments in child care are now eligible for the federal Employer-Provided Child Care Tax Credit (Section 45F), allowing employers to recoup up to 50 percent of their contribution or $600,000,
“You don’t have to use it, but it’s something that can make a big difference if you choose to,” said Gilpin of the tax credits for child care investments.
Tier 2 combines family tuition payments (with no increases), state child care subsidies and tax credits with strategic grant support to preserve public participation in the child care system and ensure equitable access regardless of employment status.
Rural Pathways touts this approach for “its built-in flexibility during funding disruptions.” When one funding stream becomes unavailable, such as a federal funding freeze, employer investment in Tier 1 can temporarily expand to bridge gaps in Tier 2. Families would be protected from sudden tuition increases, providers avoid revenue losses, and access to care remains continuous for working families.
Any size employer, from a five-person office to a large manufacturer, may participate in this investment program. A $20,000 investment becomes a $10,000 net cost to the employer with the $10,000 tax credit, or 50% return for small businesses and 40% for large. In return, the employer will see reductions in staff turnover, as seen in the state of Montana where more than 70 companies engaged in employer-sponsored child care. Among those Montana businesses participating, 79% had fewer than 200 employees and the tax incentive program reduced staff turnover to just 1% across all participants.
Tuesday’s forum involved representatives from local employers including Grand Itasca/Fairview Clinic & Hospital, the City of Grand Rapids, Emeralds of Grand Rapids, Essentia Health, L&M Fleet Supply, Hwy 35 Cannabis/Unbound Cannabis Products, and Compeer Financial, as well as leaders from the Grand Rapids Area Chamber of Commerce, Itasca Area Schools Collaborative, Minnesota North College, the Blandin Foundation and the Entrepreneur Fund of Minnesota.
Child care providers invited to participate in the forum spoke about the broken business model that cheats rural providers from collecting the money they’ve earned. While metro providers have established a rate system that allows them to charge up to $20,000 for annual care for one child, rural providers say they cannot charge that much and expect their neighbors to afford it. So, they often self-subsidize and charge less in order to stay open.
Shawntel Gruba, founder and CEO of Iron Range Tykes Learning Center in Mt. Iron, Minn., has developed the two-tier provider partnership model at her day care center with help from Rural Pathways. The private investments to be leveraged by 45F tax credits have ensured living-wage compensation for staff and created sustainable funding for Gruba’s center. With a provider partnership program, Iron Range Tykes can keep tuition stable for the rural families who use the center. It also means Gruba does not have to self-subsidize her center, which she says can be nearly $200,000 a year, to keep her clients happy with a rate they can afford.
In Grand Rapids, Grand Itasca/Fairview Clinic & Hospital has started a partnership with the Itasca Area Family YMCA’s center, Weefolks Childcare. Bri Wagner, Grand Itasca’s Regional Senior Director of Community Relations, said the partnership moved forward after several nurses were scrambling to find alternative care because the child care provider they all shared suddenly closed. Then, other issues such as snow days and later elementary school start times, began to hamper operations at the clinic and hospital when a large number of employees needed to take time off. Then, a nurse practitioner rescinded a job offer at Grand Itasca because she couldn’t find child care in the area.
“It’s been a slow burn,” described Wagner who said Grand Itasca was approached about considering a provider partnership when the YMCA expanded child care services to the Itasca Resource Center (IRC building).
For $16,000, Grand Itasca sponsors a Weefolks classroom for the year. In return, Grand Itasca is guaranteed a number of slots for current and prospective clinic and hospital employees.
“When Grand Itasca employees learn they already have a spot, they are super excited,” said Sarah Schrapp, Weefolks Education Director.
“For employers here, thank you for trying to understand and solve the issue,” commented Gilpin before encouraging those in the room to act and find opportunities to share resources that will result in a stronger workforce. “There’s hope – but, let’s not leave that here in this room.”
Several employers attending the forum showed interest in bringing the concept of provider partnerships back to their leadership. Those with regional reach were especially interested in learning more about a Slot Compact.
As Gilpin explained, the Slot Compact would be a regional pool generated by investments from regional corporate partners to subsidize participating child care providers. She said the investments by employers would stabilize provider reserves, wages and maintenance costs while giving priority access to employees of corporate partners at participating providers. The Slot Compact concept would work across county lines.
Businesses could be key to child care shortages
“This isn’t a story about child care, it’s a story about the economy,” added Gilpin, stressing the responsibility of area employers to respond.