Guest post by Louise Stoney
Since my focus is finance, I always worry about sustainability. As states craft QRIS, they struggle with the inevitable financial trade-offs. Most states are challenged with budget deficits and hesitant to make long-term financial commitments. They frequently structure QRIS technical assistance as a short-term intervention from a contractor (such as a CCR&R or educational institution) and QRIS financial incentives as small grants, often one-time, focused largely on materials. This is understandable, given resource limitations. But unfortunately this approach doesn't address the very real institutional capacity challenges. To stay focused on continuous quality improvement, most ECE teachers need strong, consistent leadership and supervision on a daily basis - not just a coach who comes into the center for a short stint. And to recruit and retain skilled teaching staff, ECE programs need increased operating revenues for better wages and benefits, not just small, time-limited grants to buy more toys or manipulatives.
Recently I've been working with my colleague, Anne Mitchell, on modeling the cost of QRIS compliance from a provider perspective. That is, what does it actually cost to provide services at each level of a QRIS? While the answer to this question varies across states, a few lessons are emerging. Key factors include the size of the program and the power of what we refer to as the Iron Triangle of ECE Finance: full enrollment, full fee collection, and rates that cover costs (or grants to cover the gap.) Operating a small, financially sustainable, high-quality ECE program is extremely difficult. Cost models suggest that in states with best practice staff:child ratios (i.e. close to those recommended by NAEYC), a center-based program must serve more than 100 children, maintain enrollment at 95% or higher, and collect all fees in full just to break even. But the average US ECE program enrolls only 75 children; many are even smaller. Given frequent changes in family circumstances, a recession economy, and state CCDF policies that reimburse at rates below market tuition and base payment on attendance rather than enrollment, even centers in high demand find it hard to keep every slot full and collect every tuition dollar, every day of the year.
Some would argue that the appropriate response is to forget about market-based ECE and focus on building supply in school-based PreK programs or in larger, more stable organizations. I don't share that view. There are many parts of the US where this institutional infrastructure simply doesn't exist. And schools aren't like to serve infants and toddlers or offer full-day, year-round ECE. But more importantly, there are many small ECE providers who have deep and meaningful connections with the children and families they serve and who work, against all odds, to keep their programs open. These programs and practitioners are often rooted in communities, connected to faith and neighborhood-based service providers, and trusted by families. They offer families a diverse array of services that may meet the unique needs of their child(ren) or reflect their family culture, ethnicity, language or values. Additionally, small ECE programs - like small businesses across the United States - make an important economic contribution to regional economies, creating jobs, purchases and tax dollars.
The financial challenges faced by small, independent ECE providers have led me to rethink the typical business model and begin to work on an alternative approach called Shared Service Alliances. A Shared Services Alliance is a community-based partnership comprised of small businesses within a sector working together to share costs and deliver services in a more streamlined and efficient way. Shared Services supports both ECE program sustainability and educational leadership. It enables programs to attain the economies of scale needed to lower costs (e.g. better food prices from bulk purchasing), as well as the economies of specialization needed to perform at higher standard (e.g. a shared mentor teacher to help improve classroom interactions). By participating in an Alliance, center- and home-based ECE providers can remain independent and offer the intimate, relationship-based services that families seek in a small program, but also reap the benefits of a larger, more financially sound, well-staffed, efficient business.
ECE leaders across the US are experimenting with Shared Services in a variety of ways. Sound Child Care Solutions in Seattle, used a Shared Services approach to open bi-lingual classrooms in neighborhoods that had previously been unable to support high quality ECE, and their classroom assessment scores are among the highest in the city. The Children's Home Alliance in Chattanooga provides management services to small, community-based programs that, prior to joining the Alliance, were struggling financially and unable to maintain staff or provide quality services. Today the centers are providing top-quality services, staff receives competitive wages and benefits and families have access to a host of comprehensive health, mental health and social services. The Infant Toddler Family Day Care Alliance in Fairfax, VA has helped families access high quality ECE and also helped home-based providers (many of whom are new immigrants) operate successful businesses and serve a market sector that they were previously unable to reach.
A Shared Services approach helps create the infrastructure and supports that small ECE businesses need to achieve sustainability and remain focused on continuous quality improvement. But it also challenges previous assumptions about QRIS implementation. For example, States currently rate programs by site, so an Alliance or multi-site service provider must document evidence of compliance at each individual site. When administration is centralized and jobs are shared, this approach is unnecessarily burdensome. QRIS Leaders need to think strategically about how a shared approach can both streamline compliance and offer opportunities to meet standards in creative, new ways. Indeed, using Shared Services or other strategies to build systemic capacity for the ECE industry is an important step, and one that has implications for policy and finance in many arenas.