Transcript It’s Not Just About Money

Investing in Child Care
Why Employers Should Support
Publicly-Funded Child Care
Louise Stoney
Alliance for Early Childhood Finance
ABC Webcast
February 11, 2003
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Child care is many things
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Child care centers
Family child care homes
Head Start & public prekindergarten
School-age child care & recreation
Summer camps
“Informal” care (relatives, friends and
neighbors)
Parental leave
Flex-time & other family friendly
policies
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Child care programs provide
early education
Children don’t wait until school
starts to begin learning...
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Child care is important because...
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Your future employees are enrolled in
child care today.
Many of your current employees rely on
child care so they can work.
Supporting child care is good business.
The economic viability of our communities
-- and the country as a whole -- is
strengthened by the child care industry.
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Child Care is Expensive
Market Price of Child Care vs College Tuition, 2000
$8,121
$5,096
$4,858
$4,255
$2,755
Colorado
$2,559
California
$4,105
$4,160
$2,644
$2,244
Florida
Child Care (4 yr old in center-based care)
Massachusetts
Texas
Public College Tuition
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It doesn’t make sense….How could child
care possibly cost more than college?
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Good question -- and you are right. It
doesn’t cost more to provide early
education than higher education. But the
price is higher. Why?
College education is heavily subsidized.
Colleges have access to a host of revenue
sources. As a result, tuition revenues cover
only a small percentage of the total cost.
Child care, on the other had, has almost no
direct subsidies. Tuition is the primary -and sometimes the only -- revenue source.
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Cost/Price Analysis in Child Care and Higher
Education
Tuition &
Fees
Institutional
Subsidy
100
90
70
60
50
42
Total Cost
80
87
40
58
30
20
10
13
0
All Child Care Centers 199394
All private non-profit
colleges 1995-96
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Factors that drive child care costs
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Staff to child ratios are mandated.
Personnel costs are the largest item in a
budget (often 70% +) and wages are
already too low.
Occupancy costs are second largest
budget item.
Centers are very small -- almost no
economies of scale.
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Major Revenue Sources for Child
Care (1995)
Government
39%
Families
60%
Private Sector
1%
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Key points
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The private sector can’t “bail government out”.
Even if private funds increased four-fold they
would still represent a small slice of the overall
child care finance pie.
Government funds are largely targeted to lowincome families, and are paid to child care
providers in lieu of parent fees. Thus, they don’t
help the bottom line.
Still, publicly-funded child care scholarships are
an important support for some industries-especially services and retail trade.
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Families who receive public child care
subsidies are clustered in the services &
retail trade industries
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Alabama
California
Services
DC
Retail
Florida
Oregon
Other Industries
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A Case for Action
In most states, the services & retail trade
sectors are leading job growth
50%
45%
Georgia Industry Employment Growth,
1996-2006
44%
40%
35%
30%
Percentage
Change
25%
25%
22%
20%
15%
27%
17%
16%
14%
12%
10%
5%
0%
Construction
Agriculture,
Forestry, Fishing
Finance,
Insurance, Real
Estate
Wholesale Trade
Transportation
Communications, Public
Utilities
Services
Retail Trade
Source: Occupational Outlook, 1996-2006
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Child care supports economic
development
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A healthy economy requires strong businesses and productive
workers. Child care not only fuels that strength, it's an industry
that provides positive, short term returns.
While typically not viewed as such, child care businesses
comprise a rapidly growing industry that contributes a significant
amount of economic activity by developing jobs, generating tax
dollars, and pumping money into local economies through the
purchase of goods and services.
Just as roads, airports, and bridges enable people to get to work
and businesses to get their supplies, child care enables parents
to work.
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The child care industry
contributes to the economy
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In Kansas, the child care industry employs more people
than important industries like hotels, farm machinery and oil
bearing crops.
In Milwaukee, Wisconsin, the child care industry generates
almost $204 million in gross receipts--more than spectator
sports, hotels, & engineering firms.
In San Antonio, Texas, every $1 invested in child care
returns $1.46 to the city in additional tax revenue.
In Tompkins County, New York, every $1 spent on publicly
funded child care scholarships returns as much as $3.60 to
the local economy.
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The bottom line: If we separate employersupported child care and publicly-funded child
care strategies, we are missing the boat.
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For businesses that hire lower-wage workers,
publicly-funded child care is an important
employer support.
And for businesses that hire moderate and
middle-income families, the lack of public support
for child care is not only a serious problem, it’s a
missed economic opportunity.
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So….what can be done about this?
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Child care needs more broad-based public
funding (in other words, not just funds for
poor families).
Child care needs new, innovative financing
strategies that involve strategic alliances
among the public and private sectors.
Child care providers need new fiscal and
management approaches that promote
stability and economies of scale.
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What companies can do
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Spearhead new partnerships that
leverage public and private funds for
child care. Examples: the Florida Executive
Partnership,Colorado Educare, Kansas City Ready for
School partnership.
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Support public child care funding.
Examples: Florida: “An Hour a Week for Kids” initiative,
Massachusetts: Early Education for All campaign, National:
Corporate Voices for Working Families and Committee for
Economic Development.
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What companies can do
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Help craft new financing strategies that
build on successful models from other
fields. Examples: innovative use of tax policy, like
Oregon’s new child care investment tax credit or Colorado’s
proposal for a new school-readiness tax credit.
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Encourage state & community economic
development agencies to work with the
child care industry. Examples: Maine Business
Commission, California LINCC projects.
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What companies can do
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Help the child care industry craft new
fiscal and administrative strategies that
can stabilize the industry and allow
these small businesses to reach some
economies of scale.
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