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Child Care Programs Forced to Balance Quality and Financial Stability

childcare-blog.jpgChild-care providers operate close to the financial edge, and investing in quality—such as hiring more-educated teachers or reducing class sizes—doesn't always bring in more money, according a report that examined child-care programs in Pennsylvania. 

The report from the Nonprofit Finance Fund, Overcoming Financial Barriers to Expanding High-Quality Early Care & Education in Southeastern Pennsylvania, focuses on child-care programs in and around Philadelphia. But many of the challenges in the report go beyond Philadelphia, including low teacher pay, public support that doesn't account for the full cost of care, and strict rules that bounce some children in and out of eligibility for public subsidies. 

Pennsylvania has a progressive reimbursement policy that gives child-care providers more money if they meet certain quality standards, said Kristine Alvarez, the associate director of the fund and the lead author of the report, released July 27. NFF, which supports organizations around the country, wrote the report at the request of the William Penn Foundation, a Philadelphia philanthropy.

But those subsidies still don't cover the entire cost of providing a year's worth of care for a child. For example, Pennsylvania rates child-care centers from 1 to 4 stars. A 1-star-rated center could receive up to $8,580 in subsidies for a full-time, preschool age child from a low-income family—but the full cost of care for that child is estimated at $10,320. A 4-star-rated center would be rewarded by the state with a higher subsidy of up to $9,789 per child. But the cost of care for that child is $12,789. 

"For as generous and progressive as [Pennsylvania] is, there is still a fairly substantial gap that is left," Alvarez said. 

To be sure, some centers are still aiming for high quality, Alvarez said, even to the point of teachers paying for supplies themselves, and keeping some children enrolled even if parents can't pay the full cost of care after a family loses eligibility for a subsidy.

"There's just a lot of stories about providers going to heroic levels to maintain care for kids who need a lot," Alvarez said.

But policymakers need to do more to make sure their calls for quality are reasonable for providers, the report says. That would include increasing both the base subsidy for children from low-income families and the financial benefit to a center for getting a high-quality rating. Lawmakers can also make it easier for a child to retain his or her subsidy so that a child-care provider as well as a family can count on that support. 

Philanthropies that work with early-childhood providers also have to ensure that programs don't expand before they have a road map for financial stability, the report says. They can also help programs build reserves so that they can better weather volatility in funding. 

Photo: Katherine Stimpson, a teacher in the pre-toddler classroom at Educare in the District of Columbia, reads a book with Xavier Monk in 2012. Educare, based in Chicago, uses Head Start, private, and public money to pay for its 20 early-childhood programs across the country.—Lexey Swall for Education Week

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