AN ACT Relating to child care; amending RCW 74.13.095; adding a new section to chapter 82.04 RCW; creating new sections; making an appropriation; providing an effective date; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. Section 3, chapter 213, Laws of 1988 and RCW 74.13.095 are each amended to read as follows:

(1) The legislature recognizes that a severe shortage of child care exists to the detriment of all families and employers throughout the state. Many workers are unable to enter or remain in the work force due to a shortage of child care resources. The high costs of starting a child care business create a barrier to the creation of new slots, especially for children with special needs. The purpose of this section is to foster a healthy state economic climate by facilitating the development of affordable, quality child care to benefit workers, including public assistance recipients who are entering or reentering the labor market, businesses, and the general public.

(2) ((A child care expansion grant fund is created in the custody of the secretary of the department of social and health services. Grants shall be awarded on a one-time only basis to persons, organizations, or schools needing assistance to start a child care center or mini-center as defined by the department by rule, or to existing licensed child care providers, including family home providers, for the purpose of making capital improvements in order to accommodate handicapped children as defined under chapter 72.40 RCW, sick children, or infant care, or children needing night time care. No grant may exceed ten thousand dollars. Start-up costs shall not include operational costs after the first three months of business.

~~(3) Child care expansion grants shall be awarded on the basis of need for the proposed services in the community, within appropriated funds.~~

~~(4)~~)) For the purposes of this section, the following words have the meanings indicated.

(a) "Department" means the department of social and health services.

(b) "Guarantee fund" means the child care facilities loan guarantee fund established in subsection (3) of this section.

(3)(a) A child care facilities loan guarantee fund is created in the custody of the secretary of the department of social and health services. All receipts designated for the guarantee fund shall be placed in the guarantee fund and shall be administered by the department including:

(i) Premiums and fees for guaranteeing loans;

(ii) Income from investments that the state treasurer, on instruction of the department, makes for the department under this section;

(iii) Proceeds from the sale, disposition, lease, or rental of collateral relating to loan guarantees;

(iv) Moneys appropriated by the state to the guarantee fund; and

(v) Any other moneys made available to the guarantee fund.

!ixDisbursements from the guarantee fund shall be on authorization by the secretary. The guarantee fund shall be subject in all respects to chapter 43.88 RCW, but no appropriation shall be required to permit expenditures and payment of obligations from the fund.

(b) The guarantee fund shall be used to pay all expenses and disbursements authorized by the department for administering the guarantee fund and financing the expansion, renovation, capital improvement or development of child care facilities in this state, including, but not limited to:

(i) Guaranty payments required by loan defaults; and

(ii) Expenses for administrative, legal, actuarial, technical assistance, and other services.

(c) If at any time the amount of money in the guarantee fund exceeds the amount that the department finds necessary to meet its current expenses and obligations, the excess shall be deposited with the state treasurer to the credit of the fund and invested in the manner provided for by law.

(4)(a) Subject to the restrictions of this subsection (4), the department, on application, may provide a guarantee of a loan made to an applicant. The department may guarantee a loan only if the applicant meets the qualifications required by this section and the loan is to be used for expansion, renovation, capital improvement, or financing of a child care facility.

(b) To apply for a loan guarantee, an applicant shall submit an application to the department on the form required by the department. The application shall include, at a minimum:

(i) A detailed description of the proposed or existing day care facility, including the categories of children served or to be served and documentation of licensing pursuant to chapter 74.15 RCW;

(ii) An itemization of known and estimated costs;

(iii) The total amount of investment required to expand or develop the day care facility;

(iv) The funds available to the applicant without loan guarantee assistance from the department;

(v) The amount of loan guarantee assistance sought from the department;

(vi) Information about the inability of the applicant to obtain the financing necessary for the facility on reasonable terms through conventional lending channels;

(vii) Information on the financial status of the applicant, including, if applicable:

(A) A current balance sheet;

(B) A profit and loss statement;

(D) Any other relevant information required by the department.

(i) Geographic distribution of child care facilities;

(ii) Community need in the community in which the facility is or will be located;

(iii) Community income, with special weight given to those communities with the lowest median family income; and

(iv) Commitment by the applicant as a condition of the loan guarantee to serve a reasonable number of: Handicapped children, as defined under chapter 72.40 RCW; sick children; infants; children requiring night time or weekend care; or children whose costs of care are subsidized by the department.

(d) Except as otherwise required in this subsection (4), the department may set the terms and conditions for guarantees of loans. The total aggregate amount of the loan guarantee for any applicant may not exceed eighty percent of the loan.

(5) The total aggregate amount of insurance from the guarantee fund, with respect to the insured portions of loans, may not exceed at any time an amount equal to five times the balance in the guarantee fund.

(6) The department shall adopt rules under chapter ((~~34.04~~)) 34.05 RCW setting forth criteria, application procedures, and methods to assure compliance with the purposes described in this section.

NEW SECTION. Sec. 2. (1) The secretary of social and health services shall appoint a child care resource coordinator who shall, within appropriated funds:

(a) Seek public or private moneys for operating a child care information and referral system and for conducting a business outreach program to assist in providing for the child care needs of businesses and families.

(b) Maintain a state-wide child care referral data bank and provide information to local information and referral systems about all licensed child care providers in the state.

(d) Under the business outreach program, collect, develop, and disseminate information to encourage employer involvement in child care, to assist in development of employer-sponsored child care programs, and to foster a public-private partnership to increase and improve available child care in the state. Services may include, but are not limited to:

(i) Technical assistance in assessing child care needs of employees;

(ii) Information about options available to employers to assist employees with affordable, quality child care, including cost-effective child care options for small businesses;

(iii) Assistance in developing public-private partnerships, including assistance to applicants for available grant or loan funding.

(e) Collect and assemble information regarding the availability of insurance and of federal and other child care funding to assist the department, businesses, and other providers in offering child care related services.

(f) Report by December 1 each year to the appropriate committees of the legislature and the governor on the quantity and quality of child care available in the state and make recommendations for statutory and administrative changes needed to encourage employer-provided assistance for child care.

(2) This section shall expire June 30, 1993, unless extended by law for an additional fixed period of time.

NEW SECTION. Sec. 3. In addition to the responsibilities listed in RCW 74.13.090, the child care coordinating committee shall review the feasibility of establishing a child care social insurance program. The committee's review shall include, but not be limited to, the following possible program parameters: Voluntary participation by employers and employees; joint employer/employee contributions; and the collection of contributions from employers and employees by the state and disbursement as vouchers for child care expenses. As deemed appropriate by the committee, the committee shall study other possible child care funding proposals. The committee shall report to the appropriate committees of the legislature and the governor by January 1, 1991, making recommendations for a child care social insurance program or other child care funding programs.

NEW SECTION. Sec. 4. A new section is added to chapter 82.04 RCW to read as follows:

(1) In computing tax due under this chapter, a credit against the amount of tax is allowed for fifty percent of the amount paid by the taxpayer during the reporting period for child care assistance provided to an employee of the taxpayer. In computing the credit, the taxpayer may not claim more than two thousand five hundred dollars of assistance for any employee in any tax year. The credit allowed under this section shall not exceed thirty thousand dollars for any taxpayer in any tax year.

(2) For the purposes of this section, "child care assistance" shall include, but not be limited to, the provision of an on-site or off-site child care facility, subsidies for home-provider care or center-based care, reimbursements to employees for child care expenses, or the provision of information and referral services to assist the taxpayer's employees to obtain child care. Under rules adopted by the department, credit for an on-site or off-site employee child care facility shall be based, with respect to any employee, on the use and value of the service provided to the employee at the facility.

(3) If the credit allowed under this section exceeds the tax imposed by this chapter, that portion of the credit that exceeds the taxes may be carried over to the taxes imposed by this chapter in the next five succeeding tax years. The credit shall be applied first to the earliest income years possible.

(4) This section shall not apply to expenditures for:

(a) Child care services or facilities provided out-of-state;

(b) Child care services that are not licensed pursuant to the requirements of chapter 74.15 RCW;

(d) A salary reduction plan.

NEW SECTION. Sec. 5. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 6. The sum of .......... dollars, or so much thereof as may be necessary, is appropriated from the general fund to the department of social and health services for the biennium ending June 30, 1991, for the purposes of sections 1 through 3 of this act.

NEW SECTION. Sec. 7. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1989.