A New Way of Paying for Child Care?
This story originally appeared in print as part of “Money in the Crib”
When seeking out child care, parents value two factors most frequently and in about equal measure: quality and affordability. But, with child care centers already operating at minimal profit, how can they maintain quality without also maintaining their prices?
More state assistance would help. Missouri ranks 38th in the nation in public pre-kindergarten funding, according to 2014 figures compiled by Raise Your Hands for Kids, a campaign working to pass an amendment to the state constitution that would raise Missouri’s tobacco tax rate with all revenue going directly back into improving the state’s early childhood education.
Carol Scott, CEO of Child Care Aware of Missouri, also thinks the system would benefit from a changing business model. “Most of the managers of these programs, they come into that job because they are the teacher who’s been there the longest when the last director has left,” Scott says. “They’re good at teaching young kids, designing a classroom and a curriculum. They don’t know business management in general, let alone financial planning.
“If you ask the majority of child care center directors, ‘What’s your break-even point on infants?’ they don’t even know what you mean,” Scott says.
Since the state makes it easier to open smaller centers than large ones, Scott says, she’s a proponent of bringing multiple smaller centers in an area together under one umbrella. Then, using organizations such as Child Care Aware to run the financial side of things, they can admit more students and cut down on revenue inefficiencies. A typical center runs at about 15 percent vacancy and 15 percent revenue loss through parents and the state not paying expected fees, Scott says, and consolidating and letting an agency with more financial know-how run the back office could cut those figures down to less than five percent.
“Then the director can start focusing on how good the teachers are and interacting with kids, which is what makes for a quality program,” Scott says.