Hi Melanie,
In our area rent on commercial properties can run anywhere from $6,000.00 to $12,000.00 per month based on the size of the space. However most of these types of locations do not have adequate outdoor space to meet licensing requirements, so multiple classes have to share the same playground space without necessarily having the developmentally appropriate equipment for each of those age groups.
The biggest expenses in operating a childcare center are the rent/mortgage, payroll, utilities, insurance and taxes. If you own the building then you add property taxes on top of that. Most Franchised centers also have to pay a substantial Franchise Fee to the main company.
In my situation, I have one location that was a retro fit back in 1982. My family had purchased an older house in an older neighborhood and then remodeled it to initially accommodate around 32 children. Texas licensing standards were fairly lax at that time. Over the next 30+ years two additional sections were added and with each new addition, other changes would have to be made to accommodate either new licensing standards or other city regulations. The total square footage now is around 3,000 sq ft with 6 different large playgrounds. The center now accommodates around 90 students and the property and building are paid for. However, because it is located in a low income area, there is a limit as to how much we can charge for tuition there, based on what parents are willing and able to pay. We accept subsidy children at that location, but the subsidy rate that we get paid is also low, so it does not allow for us to offer benefits or wages higher than between $9-$11.00 per hour. So even though we don't have the overhead of rent at that location, the revenues that can be generated by tuition leave less than a 10% profit margin to put back into the center.
Our second location was built 7 years ago and is a brand new 10,000 sq foot building 8 classrooms, a cafeteria, and 6 large separate playgrounds. The classrooms are large and the size was based on the current ratio standards for each age group. The center is licensed for 140 but has a capacity of 180.00. It was built in an area that had rapid home growth and development, but no childcare centers located near the new neighborhoods. There was no retail space available to rent nor was there a similar type of building to purchase and retro fit. It was a multi million dollar project funded by the SBA. Since it was built in a higher income area, we are able to charge a higher tuition rate to cover the higher overhead of the building and the higher operating cost of a larger building. The quality of the programs is the same between the two buildings. However the profit margin is about the same at the newer location, because again there is an upper limit to what parents can and are willing to pay for tuition. In order to pay our staff more and add benefits would require us to increase the tuition rates at both locations. We do accept subsidized kids at our new location, but we have to limit the number because the reimbursement rate is so low. This location has been open for 7 years.
In the last 3 years two corporate, franchise locations, have built new locations literally less than a mile from us in either direction. Their building and land costs were 3 X higher than what we paid 7 years ago and their tuition rates are $20.00 to $30.00 higher than ours per week. Neither of those locations has ever really taken off and due to the pandemic and drops in enrollment they are both projected to close later this year. Two other older childcare centers in our area that had been around for 20+ years but were renting their spaces and served primarily subsidized students have also closed this past year.
The formula to make any of this work is extremely complicated and goes way beyond who can do it better between public schools and private centers. Covid 19 is has proven if you do not pay enough for quality childcare, regardless of where it is provided, it will go away. There is no way to reduce what it currently costs to provide even basic childcare. In order to increase childcare wages and benefits to the level of what is provided to public pre-school teachers, tuition rates and subsidy rates will have to be raised significantly to cover those increased overhead costs.
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Tim Kaminski
Director/Owner
Gingerbread Kids Academy
Richmond TX
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Original Message:
Sent: 05-12-2021 03:38 PM
From: Melanie Smith
Subject: The Unintended Consequences of Universal Preschool
Tim,
I think another consideration in looking at the budget is the cost of the building itself. Many schools are built from the ground up and the cost of the building ranges in the millions. That to me is a bad business plan. To build these buildings and have to pay back the loan must be a constant strain on running the preschool. My idea is to take existing buildings and just upgrade or redesign the environment. I think it is more cost-effective than building that big building like so many franchised preschools find themselves in because preschool is not a big profit-making business.
Sincerely,
Melanie
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Melanie Smith
The Preschool Doctor
thepreschooldoctor.com
Original Message:
Sent: 05-12-2021 02:00 PM
From: Tim Kaminski
Subject: The Unintended Consequences of Universal Preschool
Not in Texas. The subsidy program is administered through the Texas Workforce Commission (TWC) via funds sent to Texas by the Federal Government. There are no specific Texas State Funds for early childcare subsidies other than funds that were established to get full day Pre-K going in the public schools 3 years ago, and even that program was way underfunded.
TWC has a 4 Tiered Star Rating system so that if you participate in the subsidy program, you can be reviewed and rated on your quality. Each time you move up in a Star Rating, you reimbursement rate increase but it is usually just a $1.00 or $2.00 per week per child. Not hardly worth the effort that goes into putting everything into place to achieve the next level.
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Tim Kaminski
Director/Owner
Gingerbread Kids Academy
Richmond TX
Original Message:
Sent: 05-12-2021 01:24 PM
From: Melinda Rossi
Subject: The Unintended Consequences of Universal Preschool
Do you not have voter support to increase funding for early childhood programs? The majority of our funding comes from voter approval for tax increases. I am a special ed preschool teacher in a district, so we also use school bonds.
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Melinda Rossi
ECSE
Denver CO
Original Message:
Sent: 05-12-2021 12:51 PM
From: Tim Kaminski
Subject: The Unintended Consequences of Universal Preschool
Jessica, the government funds or "vouchers" that for profit centers like mine receive for subsidized children is far less than what it cost us to provide the service and what we actually charge our private pay clientele. In some cases it is 25% to 40% less so we actually have to take a loss on subsidized students as we can not collect the difference from their parents. The subsidized parents and children benefit because their child is able to access childcare when they were not able to before. There is no financial benefit or gain to us as a for profit business. In the same vain, public schools will only be able to offer Universal Preschool if they are given adequate money by the Federal or State government to provide those programs.
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Tim Kaminski
Director/Owner
Gingerbread Kids Academy
Richmond TX
Original Message:
Sent: 05-12-2021 12:01 PM
From: Nora Krieger
Subject: The Unintended Consequences of Universal Preschool
Interesting thought. In NJ, the PreK teachers teaching in community early childhood education schools are paid by the school district on par with the teachers who are teaching in the district schools. In the community center in which I am a Board member, medical benefits are not connected to the school district and neither are our teachers members of NJEA, the union that represents many teachers in NJ, including those in this particular early childhood center.
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Nora Krieger, PhD
Associate Professor Emerita/Past Chair NJEEPRE
Bloomfield College/NJ Educators Exploring the Practices of Reggio Emilia
Highland Park, NJ
Original Message:
Sent: 05-12-2021 01:16 AM
From: Jessica Kolva
Subject: The Unintended Consequences of Universal Preschool
Melanie, this would be similar to charter school vouchers, which we know are problematic because they drain public funds and pour them into private for-profit pockets that don't end up being redistributed. This is how hedge-fund managers got into the charter school business game. When the people with more money have an opportunity to earn government dollars by making their programs more enticing, they will. The return on investment is worth it for them. However, as they build their wealth, there is less and less going to programs in historically underserved areas.
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Jessica Kolva
Tacoma WA
Original Message:
Sent: 05-11-2021 05:59 PM
From: Melanie Smith
Subject: The Unintended Consequences of Universal Preschool
Hello from the Preschool Doctor,
I would like to make another suggestion because I do not think young children fit in the universal preschool plan. I have already read here comments that their program is lacking in different ways.
Can we still brainstorm the ideas? It takes time to figure out the correct approach to educating young children.
This is the idea I have for the new program I designed with a new business model. "Universal Tuition"
I think the answer could be "Universal Tuition" that way parents can choose where they want their precious child to go, they could just help out with tuition. That tuition could also help to pay teachers a living wage. Much like college tuition, just let the parents have educational tuition for preschool. Then you don't have to build schools they can go to the excellent private preschools that provide loving care in a smaller setting that's healthier for young children's development.
Time to make changes, let's go with Universal Tuition.
Thank you for your time.
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Melanie Smith
The Preschool Doctor
thepreschooldoctor.com
Original Message:
Sent: 05-10-2021 02:37 PM
From: Jorge Saenz De Viteri
Subject: The Unintended Consequences of Universal Preschool
Excerpt: For universal preschool to be done well, it can't be done halfway or half-heartedly, experts say. That's because a variety of factors contribute to program quality, including appropriate staffing, fair teacher compensation, curriculum, credentialing requirements, staff professional development and child assessments. All of these elements come with a price tag.
https://www.edsurge.com/news/2021-05-10-the-unintended-consequences-of-universal-preschool
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Jorge Saenz De Viteri
http://jorgesaenzdeviteri.com
Pomona NY
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