The Center for Postsecondary and Economic Success at CLASP (Center for Law and Social Policy) recently released “Reforming Student Aid: How to Simplify Tax Aid and Use Performance Metrics to Improve College Choices and Completion,” a paper on how the tax aid system can be reworked to make college more affordable. Because many students have unmet financial need, they often have to work while taking classes. Studies show that when students work more than twenty hours a week, academic performance suffers. At the root of the problem is the lack of available funds to support students’ college educations especially when the students demonstrate financial need. Caught between the desire to earn a degree and the desire to remain afloat financially, students are in a Catch 22. Median incomes have not kept pace with the rising cost of attending college so students have to rely on outside grants and loans to finance their education. Although the Pell Grant program is designed to assist students who come from low or modest income backgrounds, the program will experience a funding gap as early as 2015, which is an indication that federal aid reform is needed. In order to reform the tax aid system, CLASP offers a series of proposals including simplifying aid so that it comes from the American Opportunity Tax Credit (AOTC), frontloading refundability of the AOTC, reducing student loan interest, and encouraging transparency in how aid is dispersed. According to the CLASP study, federal student aid should also undergo reforms in order to make it more effective, more efficient, and simpler to understand. Many students do not realize that there are resources available to help them pay for their schooling, but when they have an understanding of their options for federal aid, they can take advantage of the aid before taking out costly loans. Parents and students alike are often baffled by seeking and obtaining financial aid, but with performance metrics and other monitors in place, the aid process will become more streamlined and more accessible. CLASP also recommends performance metrics which monitor aid distribution to maintain accountability and assess how aid is or is not being distributed effectively. Metrics include accountability and performance management, funding access and distribution, continuous improvement and evaluation, and career guidance and public disclosure. Most importantly, metrics can be used to highlight growth while also pointing out ways that the system can be improved. The measures taken from the performance metrics will provide researchers with data to make recommendations for changes and improvements.
On Tuesday, February 19, MassBudget is unveiled a new web resource, a Children’s Budget, which provides information and analysis of the many programs in the Massachusetts state budget which affect children. Using the Children’s Budget you can:
- Learn about all the programs in a particular area, including Early Education & Care, K-12 Education, Health, Housing, Human Services, and Justice.
- Within those areas, you can look at individual programs, like the Newborn Hearing Screening Program. For each program, you will find a full description, information on funding history, proposals for future funding, and links to other online resources. The Children’s budget includes over 150 different programs across the state budget–all of them related to the well-being of children.
MassBudget’s Children’s Budget also allows you to:
- Browse material by age (for instance, all programs for 0-5 year olds)
- See clusters of related programs in our Common Threads
- Learn about tax breaks that affect children in Massachusetts
MassBudget urges visitors to use the site, share it with friends, and then share thoughts and suggestions with them. MassBudget’s Children’s Budget was developed with support from Boston Children’s Hospital and the Annie E. Casey Foundation’s KIDS COUNT initiative. The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state’s economy, and enhancing the quality of life in Massachusetts.
In 2007, the governor of Louisiana signed a bill passing the state’s School Readiness Tax Credit (SRTC). Louisiana is the first state to establish tax credits to encourage private investment to improve the quality and care for young children. The SRTC is a tax credit supporting school readiness and quality child care. It is comprised of four components that include 1) Credits to Providers, 2) Credits to Teachers and Directors, 3) Credits to Business for supporting Child Care, and 4) Credits for Parents/Consumers. In order to get the tax credit the child care facility must be a participant in the Quality Start rating program administered by the Louisiana Department of Social Services. The star rating of a child care program ranges from 1 star to 5 stars. I star programs receives no credit because that program is not a participant in the Quality Start Program. For the 2011 tax year, the SRTC cost the state of Louisiana $12.8 million. 1) Credits to Providers – Child care providers that participate in the Quality Start Program are eligible to receive a refundable tax credit based on the number of stars they earn and the number of children they serve. The value of the credit ranges from $750 per eligible child for a center with a rating of 2 stars and $1,500 per eligible child for a center with a rating of 5 stars. 2) Credits to Teachers and Directors – Child care directors and teachers are eligible for a refundable tax credit if they teach in a center that participates in the Quality Start Program. The refundable tax credit is based on the educational level attained through the Louisiana Pathways Child Care Center Development System. For the 2012 tax year, a level I child care teacher and director is eligible to get a refund of $1,573 while a level IV teacher and director is eligible to get a refund of $3,146. 3) Credits to Business for supporting Child Care – Based on the quality rating of the child care center, a business can receive up to $5,000 refundable credit on their tax return. A 2 stars program allows for a 5% tax credit based on eligible expenses. 3 stars program allows for a 10% tax credit based on eligible expenses. 4 stars programs allows for a 15% tax credit based on eligible expenses. And 5 stars programs allow for a 20% tax credit based on eligible expenses. Businesses have the opportunity to turn their tax liability into an investment in early education and care. 4) Credits for Parents/Consumers – In order to qualify for the SRTC, families must have a Federal Adjusted Gross Income of $25,000 or less and must have incurred child care expenses for a qualified dependent under the age of 6 who attended a child care facility that is participating in the Quality Star rating program. Parents are eligible for 50% of Louisiana’s Child Care Tax Credit for centers that participate in the Quality Start Program with 2 stars and 200% for centers with 5 stars. The Bessie Tartt Wilson Initiative for Children filed proposed legislation to create an Early Educators Earned Income Tax Credit (EE-EITC), which is quite different than Louisiana’s SRTC. Our bill encompasses components of the Federal and State’s EITC bill while the SRTC is an entirely new bill covering a package of tax credits devoted solely to early education and care. The Quality Start Program is something that other states should look into and model. By other state’s modeling Louisiana’s Quality Start Program there is significant room for investment from the private sector, which would in turn improve the quality and care for the most vulnerable population.