Circle Time Summer 2017

Child Care Resources Newsletter                                              Summer 2017

Circle Time: noun 1. a time in which young children sit together and share news and stories

Are We Headed for a Child Care Crisis?

Looking at the supply of child care: the first in a two-part series

Much has been written about the difficulty families face in affording high-quality child care. The cost of quality care is certainly a barrier to access, but less understood is the dwindling supply of accessible child care slots at the same time demand is growing.

According to an October 2016 report from the Center for American Progress, 42 percent of American children under five years of age live in areas where there is an insufficient supply of child care programs while demand for quality child care is high.1 One would therefore predict rising child care costs and increasing profit margins and paychecks for child care providers. However, the law of economics does not seem to apply in the child care field.

Jeffrey Tucker, Director of Content for the Foundation for Economic Education, asserts that child care is one of the most regulated industries in the country and that regulation reduces access to quality care. He further specifies that ever-increasing mandates and intensifying inspections are part of the reason for an increasing shortage of providers.2 For example, basic infant care regulations require two teachers per eight babies. At a $15 minimum wage, the monthly cost of infant care would be $815 per child to cover just the salaries of the required staffing.

Meeting licensing regulations is just one challenge putting financial pressure on child care business owners. Additional factors include: 

  •         Increasing minimum wage requirements
  •         High/increasing taxes –property, employment and business
  •         Skyrocketing insurance rates –business and medical
  •         Expensive lease/property costs
  •         Growing supply costs
  •         Inadequate subsidy reimbursement rates

A survey by Child Care Aware of Washington earlier this year revealed that nearly 80% of child care providers feel the minimum wage increase will raise operating costs “either significantly or somewhat,” and some fear it will force them to close their doors.3

Shelly, who runs a family child care in East King County, is all too familiar with the struggle to provide care for kids and also make money. She employs one teacher to help her take care of 12 children, ranging in age from eight months to four years old. After she is done paying for staff, materials, and keeping up with ever-changing regulations for her child care, there’s not much left over.

 

Family child care providers are hit especially hard by taxes and must pay the Social Security and Medicaid taxes for themselves and any employees. Insurance is essential for a child care business. For family child care providers, business insurance may cost several hundred dollars each year, while child care centers pay upwards of $3,000 annually.

Seattle’s booming real estate market not only forces families to deal with sky-high housing costs, but also means child care centers and family child care businesses face increasing lease and property costs.  

Consumable supplies, such as paper and crayons, are continual expenses. Supply costs could run between $10-$20 per month per child depending on program curriculum. 

"Running a quality child care business often means putting others before myself. I go without many things like a 401k. I do this so that the parents I serve can go to work or school with peace of mind knowing that their children are cared for, nurtured, educated and loved in a safe and quality environment. At the end of the day, I take comfort in knowing I've done something to improve someone else's life." - Patricia B., Seattle Family Home Provider 4

Perhaps the most significant factor shaping child care supply is the sluggish pace at which subsidy reimbursement rates are increasing—far behind the pace of rising costs to do business. Although the newly-passed Washington state budget reflects a slight increase (3%) in child care subsidy reimbursement rates, family child care owners are on average still only receiving $0.75 on the dollar. The average cost of infant care at a child care center that rated a Level 3 or 4 in Early Achievers, Washington State’s Quality Rating and Improvement system, is $1,545 per month. State subsidy reimbursement rates only cover 70% ($1,082) of the full tuition cost.5 Insufficient reimbursement rates have been a problem for years, causing child care providers to rely on full-paying families to make up the difference or choose to limit the number of children on subsidy in their programs.

Staying afloat in the complicated child care business environment requires managing the delicate balance between maintaining affordable child care prices for families, and providers making enough money to keep their doors open. 


Next in this two-part series:  What’s causing the surge in child care demand and how can families find and afford quality care in a “hot” market?


1Malik, R., Hamm, K., Adamu, M., & Morrissey, T. (2016) Center for American Progress, “Child Care Deserts: An Analysis of Child CAre Centers by ZIP Code in 8 States.” 
2Tucker, J. A. (2015) Foundation for Economic Education, “Why Is Day Care Scarce and Unaffordable?” Retrieved from https://fee.org/articles/why-is-day-care-scarce-and-unaffordable/
3“WA’s Child Care System Under Strain Due to Combined Impact of Low State Subsidy Reimbursement Rates, Long-term Effects of Recession and Increased Minimum Wage,” (2017) Child Care Aware of Washington. Retrieved from http://www.childcarenet.org/news/washington2019s-child-care-system-under-strain-due-to-combined-impact-of-low-state-subsidy-reimbursement-rates-long-term-effects-of-recession-and-increased-minimum-wage
4”Child Care in King County,” (2017) Child Care Aware of Washington. Information taken from Infographic: Compensation in 2014.
5Vallestero Keenan, N. (2014) Puget Sound Sage, East African Community Services, Para Los Niños, The Church Council of Greater Seattle, “Between a Rock and a Hard Place.

I recently returned from a conference in Dallas that focused on child care Quality Rating and Improvement Systems (QRIS) across the country. It was really interesting to hear what other states are doing to increase the quality of licensed child care that meets the social, emotional, and cognitive needs of our nation’s youngest children. One of the presentations that has stuck in my mind since the conference covered the issue of Child Care Deserts, which is defined as areas or communities with limited or no access to quality child care. As many of us know, finding licensed child care in King and Pierce Counties that works for families has been difficult for a long time. With upcoming policy shifts in our state, I worry that finding quality child care will become even more difficult unless we address the unintended impact of these positive policy changes on families and providers! 

CCR staff hear many stories from child care providers about the challenges they face—finding affordable facilities to lease, paying staff with increasing minimum wages, hiring staff with higher and more specific education due to state rule changes, low state reimbursement rates for eligible children, and the investment required to rate well as measured by our state’s QRIS. All of these changes are creating tremendous financial pressure on programs whose customers can only pay so much.

CCR staff also hear many stories from families about the challenges they face in finding care; especially if they are looking for infant/toddler care, work a non-traditional schedule, and/or utilize a subsidy to pay for care. A recent study in eight states found that more than 50% of urban, lower income families were faced with finding child care in an area that meets the definition of a child care desert. Families in these situations are required to cobble together care, travel far distances to find care, or place their children in less reliable and potentially lower quality care so they can go to work and meet the financial needs of their family. 

This newsletter includes an extended article taking a look at challenges leading to a dwindling supply of child care slots locally, and our next newsletter will focus on the increasing demand for those child care slots.  I hope you will join me as we work together to address this increasingly concerning issue for our community’s children.

In partnership,

 

Janet Frohnmayer has always prioritized ensuring a strong education for all.  She has served in numerous community leadership roles, working closely with parents, teachers, administrators, students, and the public—including 7 years on the Mercer Island School District's board of directors. Janet has supported Child Care Resources for more than 20 years.

 

“I give to Child Care Resources because I believe every child deserves a great start in school and in life and quality child care is so essential in helping to create that strong foundation. Child Care Resources is the best at creating the services and policies and providing the leadership to ensure Washington State has the high quality child care resources our kids and families need.”   

 

Bob Findlay is a Rating Readiness Consultant who supports child care centers and home-based providers who are applying and preparing for their initial rating in Early Achievers. Bob came to Child Care Resources in 2016 after spending a decade as a Montessori toddler teacher. Like many, he arrived in the education field first as a parent (his child is now 13). Before entering the early learning world, he worked in food service and catering, and has bartended many weddings!

1. What he’s currently working on: I am moving a number of larger centers and family child care programs through the Early Achievers rating process. I’m also training to be a facilitator in the Family Child Care Environmental Rating Scale system and advocating for increased funding for Working Connections’ child care subsidy reimbursements.

2. Favorite thing about his job: Earning the provider’s trust so that they will accept consultation and initiate meaningful, lasting change.

3. A recent challenge in his work: Policy changes from the Department of Early Learning—always keep things interesting…

4. Favorite children’s book or game: My favorite game as child was Monopoly, which I find insanely boring now!

   Congratulations to the Summer 2017 Child Care Careers graduates!