TKW Consulting

Running a child care facility can put owners in a difficult financial situation
By Christina Knottcknott@newstribune.com

When Dorcas Gudde founded the Small World Child Development Center in Jefferson City, she knew she wouldn't get rich, and at the last second, she couldn't help but wonder what she'd gotten herself in to.“I was standing there, ready to meet the parents I thought, ‘Dear Lord, what have I done?'” Gudde said.

Providing professional child care is an especially challenging businesses, particularly when it comes to funding.

Gudde is one of several local child care business owners who say they are in a constant
challenge to provide the best service they can while staying affordable for parents.

“There's months that it wasn't easy,” Gudde said. “There's so much that a person doesn't even think of.”There are the obvious costs - food, rent or mortgage, utilities and staff. But overhead costs also include laundry, building maintenance, cleaning supplies, insurance, first aid supplies, office equipment, art and craft supplies, paper and postage.

Startup costs can include playground equipment, toys, stocking the kitchen, cots, tables, chairs and at least one vehicle for field trips.

Also increasing expenses, this year's state law requires booster seats for all children younger than 12 or under 80 pounds.As the price of higher education continues to rise faster than inflation, the profit margin for early childhood educators remains comparatively tiny.

“It is really hard. There are times when I barely pay myself and I'm the owner,” said Cynthia White of Sunrise Sunset Child Care Center.

White said she has even browsed the classified section, thinking about getting a second job to help make ends meet.

The situation doesn't seem to be getting any easier. “Actually,” White said, “it seems to be getting worse.”

Fuel prices have increased by leaps lately, driving up the cost of building utilities and transportation for field trips. The cost of living also continues to grow at a faster rate than wages.

At Apple Tree Academy, owner Karen Werner said 75 percent of her staff have degrees. Her education has taught her the early years are critical to a person's development. Werner said children learn more in their first three years than they do the rest of their lives.

To attract and retain workers, many agencies try to offer fringe benefits including flexible schedules, vacation time and a pleasant atmosphere.

Werner offers half-price child care for children of workers. Few depend on their salary alone to make ends meet.“It's very rewarding work, (but) we all have to be married to a man who makes the money,” Werner laughed.

Most agencies prefer to hire workers with a degree in early childhood education, but they aren't able to offer the wages a recent graduate would expect.

According to the U.S. Department of Labor, 45 percent of workers in this field have a high school diploma or less.

The 2004 Occupational Outlook Handbook, published by the labor department, lists the median income for child care workers as $8.06 an hour, or $16,764 a year working full time. The federal poverty level for a family of three was $16,090 in 2005.In contrast, the handbook records the median wage of bus drivers as $14.30 an hour, non-farm animal caretakers as $8.39 an hour and clothing store retail workers as $8.17 an hour.

Low wages not only fail to attract highly qualified staff, they also lead to high turnover rates, which can cause stress for the children.Amanda Hutchcraft switched day care centers after her 4-year-old daughter went through five teachers in six months.

“My daughter hated going to school that whole six months and it terrified her,” Hutchcraft said. “That happens a lot in day cares because they don't pay very well.”

White, who starts her workers at $5.50 an hour, said she struggles to maintain a low
turnover while staying affordable to her families.

“We have some good workers now, but I don't know how long they'll stay because I can't pay them more,” White said. At $90 a week, she is one of the least expensive child care centers in the city.

While statistics vary, turnover rates in the child care industry are estimated between 20 and 40 percent by various experts.

The U.S. Department of Labor cites dissatisfaction with benefits, pay and stressful working conditions as the reason many leave the child care industry. The percentage of child care workers with a college degree fell by a third since 1983. At the same time, the number of college graduates in the general work force increased by a third.

“If you raise your rates so you can pay your staff more, are the parents going to be able to pay that?” asked Nena Koelling, owner of Learning Connection.

That's the eternal question for those in the child care industry.Some government grants do exist to supplement owners' cost, but the day care directors interviewed all said help is difficult to find and requires them to follow too many regulations.Parents end up paying for nearly all day care expenses. For some families, child care is the largest cost besides rent or mortgages.

Shawn Rush said he and his wife spend nearly $1,000 a month on child care for their children, a 4-month-old boy an a 4-year old girl.“I would love for my wife to be able to stay home, but in this day and age, it's essential for both of us to work,” he said.

Particularly for those in lower-income jobs, child care can almost be a catch-22. The more they work, the more they need to invest in child care.

“We depend almost totally on tuition. It's a vicious cycle,” Koelling said.

Two decades after opening, Gudde said she had enough memories to last her a lifetime. This summer, she finally closed her doors.Though it wasn't her only reason for retiring, Gudde was relieved to end the eternal struggle to keep her business in the black.“I will tell you, that has played some part in it. The money's just not there,” Gudde said. “After 20 years, I'm tired.”