Investing in Child Care

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Investing in Child Care

• Why Employers Should Support Publicly-Funded
  Child Care
• Louise Stoney
• Alliance for Early Childhood Finance
• ABC Webcast
• February 11, 2003

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Child care is many things

• Child care centers
• Family child care homes
• Head Start public prekindergarten
• School-age child care recreation
• Summer camps
• Informal care (relatives, friends and
  neighbors)
• Parental leave
• Flex-time other family friendly policies

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Child care programs provide early education

• Children dont wait until school starts to begin
  learning...

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Child care is important because...

• Your future employees are enrolled in child care
  today.
• Many of your current employees rely on child care
  so they can work.
• Supporting child care is good business.
• The economic viability of our communities -- and
  the country as a whole -- is strengthened by the
  child care industry.

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It doesnt make sense.How could child care
possibly cost more than college?

• Good question -- and you are right. It doesnt
  cost more to provide early education than higher
  education. But the price is higher. Why?
• College education is heavily subsidized. Colleges
  have access to a host of revenue sources. As a
  result, tuition revenues cover only a small
  percentage of the total cost.
• Child care, on the other had, has almost no
  direct subsidies. Tuition is the primary -- and
  sometimes the only -- revenue source.

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Factors that drive child care costs

• Staff to child ratios are mandated.
• Personnel costs are the largest item in a budget
  (often 70 ) and wages are already too low.
• Occupancy costs are second largest budget item.
• Centers are very small -- almost no economies of
  scale.

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Key points

• The private sector cant bail government out.
  Even if private funds increased four-fold they
  would still represent a small slice of the
  overall child care finance pie.
• Government funds are largely targeted to
  low-income families, and are paid to child care
  providers in lieu of parent fees. Thus, they
  dont help the bottom line.
• Still, publicly-funded child care scholarships
  are an important support for some
  industries--especially services and retail trade.

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Families who receive public child care subsidies
are clustered in the services retail trade
industries
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A Case for Action
In most states, the services retail trade
sectors are leading job growth
Georgia Industry Employment Growth,1996-2006
Percentage Change
Construction
Finance, Insurance, Real Estate
Transportation
Services
Agriculture, Forestry, Fishing
Wholesale Trade
Communications, Public Utilities
Retail Trade
Source Occupational Outlook, 1996-2006
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Child care supports economic development

• A healthy economy requires strong businesses and
  productive workers. Child care not only fuels
  that strength, it's an industry that provides
  positive, short term returns.
• While typically not viewed as such, child care
  businesses comprise a rapidly growing industry
  that contributes a significant amount of economic
  activity by developing jobs, generating tax
  dollars, and pumping money into local economies
  through the purchase of goods and services.
• Just as roads, airports, and bridges enable
  people to get to work and businesses to get their
  supplies, child care enables parents to work.

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The child care industry contributes to the economy

• In Kansas, the child care industry employs more
  people than important industries like hotels,
  farm machinery and oil bearing crops.
• In Milwaukee, Wisconsin, the child care industry
  generates almost 204 million in gross
  receipts--more than spectator sports, hotels,
  engineering firms.
• In San Antonio, Texas, every 1 invested in child
  care returns 1.46 to the city in additional tax
  revenue.
• In Tompkins County, New York, every 1 spent on
  publicly funded child care scholarships returns
  as much as 3.60 to the local economy.

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The bottom line If we separate
employer-supported child care and publicly-funded
child care strategies, we are missing the boat.

• For businesses that hire lower-wage workers,
  publicly-funded child care is an important
  employer support.
• And for businesses that hire moderate and
  middle-income families, the lack of public
  support for child care is not only a serious
  problem, its a missed economic opportunity.

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So.what can be done about this?

• Child care needs more broad-based public funding
  (in other words, not just funds for poor
  families).
• Child care needs new, innovative financing
  strategies that involve strategic alliances among
  the public and private sectors.
• Child care providers need new fiscal and
  management approaches that promote stability and
  economies of scale.

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What companies can do

• Spearhead new partnerships that leverage public
  and private funds for child care. Examples the
  Florida Executive Partnership,Colorado Educare,
  Kansas City Ready for School partnership.
• Support public child care funding. Examples
  Florida An Hour a Week for Kids initiative,
  Massachusetts Early Education for All campaign,
  National Corporate Voices for Working Families
  and Committee for Economic Development.

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What companies can do

• Help craft new financing strategies that build on
  successful models from other fields. Examples
  innovative use of tax policy, like Oregons new
  child care investment tax credit or Colorados
  proposal for a new school-readiness tax credit.
• Encourage state community economic development
  agencies to work with the child care industry.
  Examples Maine Business Commission, California
  LINCC projects.
• Help the child care industry craft new fiscal and
  administrative strategies to reach economies of
  scale.
• Maybe add something from NC? Ask Abby, Anne,
  others...

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What companies can do

• Help the child care industry craft new fiscal and
  administrative strategies that can stabilize the
  industry and allow these small businesses to
  reach some economies of scale.