Recently the press has devoted much time and many column inches to the federal budget proposal on childcare fees. Amongst this wall-to-wall coverage, we hear (read?) again and again about how unaffordable childcare is, and tisis frequently framed as being wrong, unjustifiable, excessive profit-taking and capitalism gone. Is it? I not seen (heard?) any explanation of childcare pricing; again, things are not what they seem.
I'm going to give examples from my own former life so they are (a) not current (b) probably incomplete and (c) likely mis-remembered. However, they will provide an illustration which I trust will be informative. Remember that 12 months' annual and fixed costs must be divided over 10 months; variable costs and income of course apply to 10 months.
Building costs - we rented a six-classroom facility and were responsible for all Repairs and Maintenance, all costs associated with Pre-School fixtures, licencing reequirements etc. We did not pay for taxes, buildings insurance, roof or structural repairs.
Rent = $60,000 annually (+ COLA)
Repairs & Maintenance = unpredictable. We budgetted the same as rent to include annual painting, HVAC servicing, filters, window and door repairs, play-yard repairs, parking-lot re-sealing and striping etc = $60,000
Cleaning = $60.,00 annually for a service including supplies, our own cleaning supplies for "accidents", soap, paper towels, toilet paper etc
Total = $180,000 or $18,000 a month. Over six classes, this is $3000 per class.
Salary costs = our Preschool teachers all had degrees, certification, and were on the same payscale as our Elementary teachers. Many people are unaware that as well as gross salary, employers must pay payroll taxes, unemployment insurance and other costs which total approximately 50% of the gross. Hiring untrained, unqualified and uncertified teachers would of course lower the payroll. Our salary costs were low compared to the rest of the US; most states would be paying anbother 50% or more
Teacher = $60,000 annually total
Teacher Assistant = $40,000 annually total
Total = $600,000 (for six classes) or $60.000 a month per class.
Admin salary costs
Secretary = $40,000
Director = $100,000
Total = $140,000 or $14,000 a month. Over six classes. $2500 a month.
Overhead costs
Liability Insurance = $20,000 annually
Property, fire and theft and other insurance $10,000
Total = $30,000 or $3,000 a month. Over six classes, $500 a month.
So far, $12,000 a month per class
Our state's class size limits are 16 students. We budgetted on 2/3 enrolment thus 11 students, so the costs per student so far are over $1000 a month. Centers which do not have annual enrolment must factor in periods aroind holidays when students do not attend, so their per student costs would be higher.
Other overhead
Licencing
Bank
Accounting
Legal
Marketing
Memberships
Accreditation
Programme Fees
Play-yard equipment (amortized)
Classroom furniture and equipment
Office, teacher lounge, waiting room furniture and equipment
Equipment repairs and maintenance
Utilities (preschoolers use a lot of water!)
Office supplies
Toys
Books
Teacher materials
Supplies
Subscriptions and licensing fees
Parent meetings and evetns
Student meetings and events
Field trips
Teacher professional development
These costs can easily add up to more than $200.000 annually (have you priced a preschool table or bookcase or a box of tempera paint?) or $20.000 a month or $1600 per class or $150 per student.
Just on these rough numbers, without any profit, we are looking at over $11,500 a year in fees or $1150 a month. If enrolmenr drops below 2/3, or your play-yard equipment or HVAC outside units are stolen, or you need to update all your computers at once, or you implement a new program, you will be in financial peril. The only area you can cut is program which is a small chunk of your costs, and the most visible. Any cuts in program, will lead to further enrolment drops.
My last school kept to $10,000 annual fees because of high enrolment, holiday programs, an additional premium for monthly payment, uniform sales and of course fundraising. We never made a Preschool "profit" (a surplus in non-profit terms) and in fact, the Preschool was often subsidized by the Elementary program with its lower staffing costs (no Teacher Assistants) and larger class sizes because we used Preschool as the gatweay to the rest of the school. I see that today they are now $11,500.
About 10 years ago, I once had a long meeting with a new Board Chiar who wanted to do this, that and the other and also to srop fundraising. I remember costing just some some of his ideas and the fees would have been north of $15,000 or in his case $45.000. He changed his mind.
Preschool is expensive. There is no way around it.
**Pleasel eave your comment and queries below.**
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