Iowa Child Care Business Incentive Grants

25 Mar

Overview

The Iowa Child Care Business Incentive Grant Program (CCBI) provides funds to Iowa businesses to build or expand licensed childcare centers either on site or in the local community. This employer-focused initiative helps address Iowa's childcare shortage by encouraging businesses to invest in building new childcare facilities for their employees and communities. Projects include on-site employer centers, community partnerships, and school-based facilities.

Why It Matters

Iowa faces a critical childcare shortage with a deficit of nearly 48,000 state-licensed slots beyond the 115,535 available, representing a more than 40% gap statewide. This shortage makes it hard for parents with young children to work.

CCBI's public-private partnership model addresses this problem through an employer-centered approach, positioning businesses as active participants in creating childcare solutions. By providing matching grants to employers, the program helps build new childcare facilities.

Quick Facts

Core Model: Public-private cost sharing between the state and employers.
Notable Feature: Directly engages businesses in building new childcare facilities for their employees
Launch Date: 2022, with an expanded, enhanced program (CCBI 2.0) launched in 2024
Eligibility: Iowa businesses with at least 75 full-time employees that are not primarily childcare providers
Current Funding: $10.3 million allocated in 2024 for CCBI 2.0: $22.6 million allocated for 2022 CCBI.
Participants:
- Businesses: Sub-recipients in the latest funding round for CCBI 2.0: 14 sub-recipients for CCBI.
Program Coverage: Statewide, with priority for counties that have the greatest need for more childcare capacity

Background

The Child Care Business Incentive Grant Program (CCBI) was established in 2022 under the administration of Governor Kim Reynolds with initial funding of $22.6 million from American Rescue Plan Act (ARPA) funds.

The program was created to address Iowa's significant childcare shortage by encouraging businesses to invest in building childcare facilities for their employees.

In November 2024, Governor Reynolds announced the re-opening of the grant program with CCBI 2.0. This led to the announcement in 2025 of $10.3 million in new awards to create nearly 875 additional childcare slots across the state for a total of over 2300 new slots from these awards.

How it Works

The CCBI program operates through a matching grant structure:

The business is required to pay for 50% of th awarded amount.
To ensure accountability:
- No grant funds are released until the match requirement is validated
- The program operates on a reimbursement basis with no advance payments

Iowa Workforce Development (IWD) administers the program. Businesses apply during designated application periods and, if selected, must complete construction, obtain licensing as a childcare center, and open for operation by the established program deadline. Recipients must maintain a state childcare license and operate at over 50% capacity for at least five years following the award.

Key Features

Employer-Driven Model: Engages businesses as active participants in addressing childcare needs for their employees
Infrastructure Focus: Funds are used exclusively to build new or expanded facilities including on-site employer centers, community partnerships, and school-based facilities
Targeted Funding Levels: Maximum award amounts of $3 million for new facilities and $1.5 million for expansions
Reimbursement Structure: Program operates on a reimbursement basis with no advance payments, ensuring financial accountability

Policy Levers

Funding Allocation: Initial $22.6 million authorized in 2022 and additional $10.3 million allocated in 2024 from ARPA State and Local Fiscal Recovery Funds
Eligibility Parameters: Minimum business size requirement of 75 full-time employees ensures focus on employers with substantial workforce needs
Match Requirement: 50/50 private match doubles the impact of public funding while ensuring employer commitment
Geographic Priorities: Prioritizes projects in counties with high childcare needs, focusing on areas showing the greatest documented gaps between childcare demand and supply

Results

The Iowa CCBI program has shown measurable progress in addressing childcare shortages:

Capacity Creation:2024 grant is projected to create 225 new childcare slots statewide; previous CCBI grant is expected to create roughly 1,525 slots (2022).
Business Participation: 9 new businesses received funding in the latest round, bringing total participation to approximately 24 employer projects since 2022
Facility Development: Projects include diverse childcare settings such as on-site employer centers, community partnerships, and school-based facilities
Public-Private Investment: 50/50 match requirement has effectively doubled the program's financial impact, with the total investment reaching approximately $33 million across all funding rounds