Challenges

Access, Scalability, Worker Issues

Location

Iowa

Stakeholders

Businesses, State Government

Beneficiaries

Parents, Children

Share

Overview

The state of Iowa is incentivizing employers to create or expand childcare for their workers through its Child Care Business Incentive (CCBI) Grant program.

Key Impact Metrics

  • 1K+
    new childcare slots have been created since the inception of the policy
  • 80+
    employers have received funds

Problem

Iowa was facing a severe childcare crisis, yet there were insufficient childcare slots to meet demand. This shortage forced parents, particularly women, to leave jobs or reduce hours, exacerbating labor shortages. Governor Kim Reynolds noted that businesses identified childcare as a “major factor” in employees’ ability to work, impacting recruitment and retention. Many employers in Iowa’s smaller communities wanted to help but lacked the capital to invest in on-site daycare facilities. The government believed these barriers affected economic growth.

Solution

The state introduced the Child Care Business Incentive (CCBI) Grant program, where employers—or groups of employers, or employers partnering with existing childcare centers—could apply for funding to support new childcare capacity for their employees. Furthermore, the program typically requires applicants to also invest their own funds in a 1-to-1 ratio to ensure their financial buy-in. Grants can be used for facility construction, renovation, or other infrastructure needs to create on-site or near-site childcare. Many projects involve employers building centers at workplaces or collaborating with local daycare providers to expand their facilities in exchange for reserved slots. In 2022, the first round of grants distributed about $25 million, and in 2025, a second round of grants added another $10 million.

Results

  • Beneficiary Impact1,000+ new childcare slots created since the inception of the policy and a goal of 10,000 childcare slots to be created by 2026
  • Employee Impact5,000 parents have benefited from the program and 80+ employers have received funds
  • Financial Results$35 million+ of government funds disbursed and $35 million+ of potential private sector capital mobilized

Replication Tips

  • Make it competitive and goal-driven: Iowa’s grants were competitive, which spurred employers to put forth strong proposals. Other states should set clear criteria (e.g., number of slots to be created, employer match amount, serving high-need areas) to ensure funds go to impactful projects.
  • Incentivize private sector participation: The state of Iowa required companies to contribute financially—matching the government’s financial contribution—to receive grants. Such a strategy is important in ensuring business buy-in for the program.
  • Consider ongoing support or creative operating models: Capital helps build centers, but think about operations. Iowa’s model expects employers to handle operations (directly or via a partner). Replicating states might also consider offering temporary operating subsidies or connecting projects to other programs (like apprentice programs for childcare workers to staff the centers). This ensures projects don’t falter after construction due to staffing or budget shortfalls.

Suggested Implementation Timeline

~9-12 months per cycle

Sources