Quality child care is more expensive than most people realize. Naturally, efficient and careful management will help hold costs down, and donations of goods and services -- while still part of the cost of running the program -- can help reduce the amount of money required. Nevertheless, a number of studies have failed to turn up one program which was both inexpensive in cost per child, and good enough to be recommended as an example of quality child care.
The cost of quality care for one preschool child for one year has been estimated at a range of $2,000 to $4,000. By far the major cost is for staff salaries. In comparison with salaries, components or supplementary services such as health and parent involvement add little to the cost of the program. Despite high costs, however, the hope of quality child care does not have to be abandoned by any community, rich or poor. Those who set out to provide child-care services for a community must count on devoting a considerable part of their time to financing and fundraising. In most communities, the economics of child care require both a carefully planned budget and the successful pursuit of funds from more than one source.
Budgeting and funding are tied together in an obvious way -- the total of incoming funds must at least equal the total of expenditures in the budget. They are further bound together by the fact that most funding sources -- including some parents -- will want to inspect the budget before committing any money. A wise planner will find out what the prospective contributor wants to know and choose a budget format that displays that information most clearly.
The element of cost enters into almost every aspect of the planning of a program. Costs will affect the answers to any number of questions. How many children can you serve? How many children must be enrolled in order to break even? Will you need more space, and can you afford it? How many staff can you employ? If you plan field trips, what will have to be cut from the program to compensate for the added costs of transportation, fees and extra insurance? Such questions should not be decided in dollar terms alone, but the costs of the various alternatives must be considered.
THE BUDGET
A budget is a tool to help in the weighing of alternatives. It shows where the program's money comes from and where it goes. It tells how much each part of the program costs, how money spent in one part of the program must be taken away from another, whether there will be enough or more than enough money to operate for the rest of the year, and how heavily the program depends on donations of goods and services. In addition, a good budget is the objective basis needed for setting fees, discussing fees and services with parents, and applying for funds and donations. The budget for a small program may be simpler than that for a large one, but the same elements of cost need to be considered and the same care should be used in preparing it.
When starting the budgeting process, it is extremely important to start out with your goals and objectives and develop your budget to fit those goals and objectives. Too often this is done exactly opposite, where you know just how much money you have and create and fit your goals and objectives into that amount of money. This can be self-defeating, the goals have to come first and the question of raising the funds, second. Often if compromises are made before the budget is completed, changes may be made which save little money but which significantly affect the quality of the program.
Calculation of the program's cost per child will be useful in comparing costs with other programs and is required by many funding agencies. However, comparisons of cost per child can be misleading since there are many different ways to calculate the figure. It might seem straightforward to divide the total budget by the number of children served to reach cost per child, but that method overlooks several problems. You may count either the number of children enrolled or those who actually attend. The choice of method may make a 10 to 20 percent variance in the final result. What about half-day children? If one child attends the program in the morning and another takes his place in the afternoon, you must decide whether to count one or two children. This choice can make a difference of as much as 50 percent in the final result. Cost per child may be figured on a yearly, monthly, weekly, daily, or an hourly basis. The cost per day is usually calculated by dividing the total costs by the number of child days of enrollment (not child days of attendance), since costs continue whether the child attends or not. When you apply to an agency for funds, the cost per child of your program should be recalculated, if possible, according to the method favored by that agency. Different public agencies have different guidelines. Whatever the method chosen, it should be spelled out in detail to permit accurate comparison with other cost-per-child estimates.
SOURCES OF FUNDING
Since quality child care is expensive, most programs have to rely on more than one source of funds. While the most obvious contributors are the parents of the children in the program, few parents can afford to pay their child's share of the total cost of a quality program, and some can afford nothing at all. In setting its fee schedule and deciding whether those parents who are financially able should pay more than their proportionate fee, each program effectively determines what mix of children it will accept. As the fee charged to parents increases, the number of children who will be priced out of the program also increases. The objective of most programs, then, will be to minimize the parents' fee by getting as much funding as possible from other sources.
Most public funds are available to families whose incomes fall below or near the officially defined poverty levels. Guidelines and information about public sources of funding change frequently, so it is important for child-care programs to know about current resources and, where possible, to anticipate changes.
Private philanthropic agencies, such as the United Way, join in an annual appeal for money, To receive any of these funds, a child-care program is usually required to meet a community need and to operate on a non-profit basis. Funds are usually granted only as a means to relieve the deficit between annual operating expenses and income from all other sources.
Some child-care organizations undertake their own campaigns to raise money. These efforts usually have limited success. Unless run by a group with considerable experience, the project may actually produce expenses higher than the income generated.
Very few child-care programs are lucky enough to have endowments or income-producing property. For those few, sound investments will provide funds which can help the program but can seldom support it entirely, especially since costs continue to rise.
Many foundations and organizations make grants to education and child welfare programs that provide a unique service, such as child care for children of adolescent mothers or children of migrant workers or child care for physically handicapped children. Applying for such a grant is frequently a long, complicated process and usually involves submitting a detailed proposal and a budget. Guidelines differ widely and should be obtained from each organization or foundation separately.
Gifts of goods or services are frequently available in the community, especially if a child-care organization uses good advertising and public relations techniques to inform the community about its program and is willing to make public recognition of donations.
Setting the fee which parents are to be charged is usually touchy. The fees must be set high enough to make up the difference between total expenses and the funds available from all other sources, which puts pressure on the child-care organization to use all sources of funds to the utmost. An organization serving the community must try to keep its fees as low as possible, since those who need child care most are often those who can least afford it.
Parent fees are frequently set by some form of a sliding-scale. Fees range between a minimum sometimes set at zero and a maximum, which may be set at the actual cost of the care. Between these extremes, the fee for each family is set on the basis of family income. A number of other factors may be considered at the option of the organization. Sometimes net income is the basis rather than gross income. Sometimes the number of children and other dependents' can be applied to offset income, or cost of training and education may be deducted. Most programs continue to charge the fee when the child is absent, either in full or at a reduced level, reserving the child's place in the program, but sometimes the fee may be waived.
A sliding-scale, or any similar device, always carries the possibility of resentment and controversy by families who feel their fees are too high or by those who feel that the process attacks their dignity or their privacy. These negative feelings may become a critical problem, particularly in communities with a wide range of income. A high level of parent involvement in the program will help to improve understanding and maintain balance. The director of a center or network, as well as all those engaged in recruiting families, should make sure that all staff members and all parents have a clear explanation, in writing, of the fee-setting procedure preferably with tables which will permit each family to verify the fee it pays and foresee changes. All parents, from their first contact with the organization, should be made aware of the fee structure.
The information in this article was taken from the study guide which accompanies correspondence study course HD 439 Administration of Child Care Centers offered by Colorado State University Continuing Education. For more information on this or other child care related courses, call (800) 525-4950 or send email to:inquiries@vines.colostate.edu.