An Innovative Strategy
Two-thirds of children under five are in non-parental care
There is a commonly expressed view that America is experiencing market failure in the child care sector. Economists describe market failure as a situation in which a market left on its own fails to allocate resources efficiently and effectively.
Although child care providers are among the state’s lowest-paid workers, parents still struggle to afford the cost of care. Conversely, if parents want high quality care for their children, the cost is often beyond their financial means.
In 2003, the state legislature recognized this disparity in the child care system by enacting the Oregon Child Care Contribution Tax Credit. By making a contribution to the program, taxpayers receive an Oregon state tax credit of 75 cents for each dollar contributed.
Proceeds from the credits were used in demonstration projects from 2004 - 2009. These projects have provided valuable information on the true cost of child care, which has led to a statewide strategy to increase provider compensation, improve the quality of child care environments and inform public policy on child care subsidies.