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  • 1.  Lowering Class Room Ratios and Increasing Teach Pay in ECE an Economic lesson

    Posted 08-16-2017 01:19 PM
    In education, theory and research usually comes before application.  Theory and research suggest best practices and methodology with all things being relatively equal.  However theory and research tend to leave out the practical implementation and application of those best practices and methodology.  There has been a lot of discussion on the need to reduce classroom ratios in ECE and for ECE teachers to be paid more and the need for the ECE field to become professionalized and require caregivers to have a degree in order to be in the classrooms even as young as the infant programs.  With that in mind, let's look at the economics behind those movements.  For this discussion I have only looked at the infant ratios here in Texas.

    Currently in Texas the staff to child ratio for infants is 1-4.  Many groups are advocating for a 1-3 or 1-2 ratio.  No one can argue that those ratios would lead to more direct one on one time between the infant and staff person.  Most childcare centers are open from 6:30-6:30.  For a typical childcare center it takes 1 and 1/2 staff persons over the course of a 12 hour day to meet that 1-4 ratio.  That is one person working 8 hours and the other person working 5 hours in order to cover the lunch break for a total of 13 labor hours for the 1-4 ratio.  For a 5 day period that would be 65 labor hours to take care of 4 children.  The hourly starting pay rate in our area for someone with experience is $9.00 per hour.  So for one week of care for 4 children, just the direct teacher labor cost  alone is $585.00 not including other labor cost such as training, supervision etc.  If you divide the $585.00 by 4 students at a minimum you would have to charge $146.25 per week/per child in order to cover 1 week of care just for the caregivers pay.  In our area the rate we can charge for an infant is around $155.00 per week so for the week we would bill $620.00 for 4 students.  If you subtract the $585.00 labor cost, that leave the business with $35.00 left over for the week to cover the other operating cost such as utilities, supplies, insurance, licensing fees, supervisions cost including the cost of having a director on-site, mortgage etc.

    Now let's lower the infant ratio by 1 child to a 1-3 ratio.  The direct labor hours and cost for a 12 hour period would still be the same which would require 65 labor hours for the week at a cost of $585.00.  However now with only 3 children to bill for that classroom at a minimum we would have to charge $195.00 per week in order to cover just the cost of the staff in the classroom.  That is a $48.75 increase in tuition over the minim $146.25 amount we would have to have charged when the ratio was 1-4.  Not only does that increase the minimum tuition cost just to cover the labor, at $206.66 there is no money left over to cover the other costs.  In order to get back to where there would be at least $35.00 left over the effective new tuition rate would have to be $203.75 per week/per child.  Again that $35.00 would not necessarily cover the other associated cost for operating that classroom for 1 week.  By lowering the classroom ratio by 1 student and without there being a financial subsidy for lowering that ratio, the parents end up having their tuition increased by $48.75 per week or by $195.00 per month.

    In the next scenario, the ratio stays the same at 1-4 but both employees get a modest .25 cent per hourly raise.  At 65 hours per week, that is an over all increase of labor cost to the business of $16.25 per week.  In order to recoup that cost, the business has to increase the week rate of each child in the classroom by $4.00 per week, so the minimum tuition would go from $146.25 to $150.25 or from $155.00 to $159.00 to have some operating income left over.

    However now we bring in a teacher to the infant program that has a CDA or even a bachelors degree and the hourly rate goes from $9.25 to $12.00 per hour.  Now the labor cost to operate the classroom with 65 hours of labor per week for teachers with a degree is $780.00 per week.  If you divide that by 4 students for the 1-4 ratio the minimum tuition rate has to be $195.00 before you add the $35.00 operating margin which would then make the tuition $203.75 per week/per child.  That is the same as when we lowered the ratios but kept the teacher pay the same.

    Now lets lower the ratio to 1-3 and increase the teacher pay.  At 65 hours of labor per week the labor cost at $12.00 per hour would be $780.00.  If you divide that by 3 infants the total minimum tuition cost would be $260.00 just to cover the labor (without benefits) and then to get back to that original $35.00 of available operating cost the tuition would be $271.60.

    At the beginning of this whole process under the current ratios and hour rates we started out with a minimum tuition rate of between $146.25 and $155.00 and with changes to ratios and teacher pay rates even with just a modest .25 increase we ended up with rates of $150.25 to $271.60 per week/ per child.

    You can not have a conversation about "quality care", "lowering ratios", requiring ECE teachers to have a degree, or increasing caregiver pay and benefits without having a thorough understanding of the financial impact this would have on the businesses that provide those services and the families that use those services.  Even if ECE would be moved into the public school system arena, there would be an associated cost that most school districts are not financially equipped to take on at this time.

    Some of my numbers may be off, so I welcome reviews and critiques of those scenarios as well as look forward to different perspectives on how others see the associated and where the money might come from if we continue to mover forward in trying to "professionalize" the ECE field.

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    Tim Kaminski
    Gingerbread Kids Academy
    Richmond TX
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  • 2.  RE: Lowering Class Room Ratios and Increasing Teach Pay in ECE an Economic lesson

    Posted 08-17-2017 08:58 AM
    ​Tim,

    What you shared reveals the truth about where we are today.  Your numbers seem reasonably close to reality, even the unfortunate salary of $9 an hour.

    I am currently working in the civilian sector of early childhood, but I spent the last twenty four years working in the military child care system.  The Department of Defense is able to compensate their teachers and assistant teachers very well (Assistant teachers $11-$!4 an hour and Lead Teachers $15-21), but that is because they have DoD dollars paying many of the bills.

    The majority of the federal child care centers are located on federal lands, which means there is no rent or mortgages on those properties. The only expenses related to the building would be renovations, major repairs, electricity, and heating.  Construction, renovations, and major projects are covered directly by funds that are awarded to the installation by the DoD.  Electricity, minor repairs, and heating costs are built into the budget.

    The fees for each child are determined by TFI or the families total family income. So if the families income has them paying $350 a month for an infant spot and the actual cost of care for that spot is $1350, the DoD subsidizes the remainder of that cost of care to ensure that the facility is getting their total cost of care for each space.  This makes paying teachers what they are worth easy because its not built directly into the fees we charge parents, because lets face it the majority of parents cannot afford to pay us what the space is actually worth.  Additionally, the government builds the cost of quality program supplies, furniture, staff training, food, well paid directors, and on site Training and Curriculum Specialists to support staff in providing quality programs into the cost of care.

    So the military Child Development Centers prepare their budgets and they are closely scrutinized to ensure funds are being spent wisely and within government guidelines.  However,  when the bottom line is reached if they are short they are given funds to make up that shortfall.  In the Child Youth Programs on most installations many of those funds come from the income that the School Age Programs make, due to their lower ratios and ability to take more children with less over head or from the activities like the bowling alley on base that make a profit.

    I said all of that to say, the only way this works out favorably for both parents and early childhood professionals is if there is outside funding.  The military childcare system and the benefits it offers service members is directly related to the benefits package that is offered to service members, because if we are honest with ourselves we cannot pay them in direct cash what they are worth.  The question then becomes, is the government responsible for funding all child care, to which I would have to say no.

    But what are the alternatives?  Tax breaks and legislation that would benefit those who mortgage or rent spaces for child care facilities? Similar tax breaks for medical and financial organizations that provide lower costing medical plans and retirement funds to child care organizations?  Larger tax credits for those who pay child care costs, so that event though they are paying more monthly, they are getting more of it back at the end of the year?

    I am not sure what the answers are. I am a tad bit frustrated with state and federal teacher requirements, NOT because I believe we shouldn't pay our teachers what they are worth and YES they should all have degrees, but because they do not offer any financial support to make this happen.

    As it is in Connecticut they have cut the child care subsidies to the absolute bare minimum, leaving those most needy families without the ability to secure safe, licensed childcare. They feel that the state budget will benefit more from those subsidy dollars than the families who need them to go to work.  I can't fathom why they don't understand that their actions will have two results, one being a higher unemployment rate and more seeking public assistance and two the potential of children being left in unsafe situations which will result in injuries.  Not to mention all the children who will be missing the foundation a quality early childhood program offers.

    So if parent fees cannot cover the actual real cost of that space, where does the money come from?



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    Jill Marini
    Hartford YWCA
    Hartford CT
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  • 3.  RE: Lowering Class Room Ratios and Increasing Teach Pay in ECE an Economic lesson

    Posted 08-18-2017 09:43 AM
    Tim,
    I am so glad you brought this up. I have been tasked with develop a training for Primary care giving and smaller group sizes. I want to address the very topic you are talking about. How do "High Quality Childcare Programs" keep ratios low while  been financially feasible? I have found so much research on the benefits of low ratios, but nothing on how to support the practice with staff salaries or staffing schedules. How do others tackle this problem?

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    Patti Longman, Statewide Trainer
    Association for Supportive Child Care
    Tempe AZ
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