|
|
 |
      |
      |
| PART-TIME
CHILDCARE - FINANCIAL ISSUES (May
1996) Metro Toronto plans to
implement the Ontario Works program effective January 1, 1998. All
individuals who have children and are required to participate in the
Ontario Works program are eligible to receive subsidized childcare from
their municipality. We understand that the number of children requiring
subsidized care in Metro will jump from roughly 23,000 serviced in 1997 to
approximately 45,000. Unfortunately, it is highly unlikely that Metro
Children's Services will have its funding doubled to accommodate the
increase in required care. Consequently, Metro Children's Services will be
looking for innovative ways to double its client load with fewer dollars
per client. Metro is likely to
start purchasing part-time as well as full-time care for children eligible
for subsidy. Given the requirements of Ontario Works, many families will
not receive full-time childcare for their children. As it is unlikely that
families participating in Ontario Works will be able to pay full fees for
the unsubsidized portion of the day or week, centres may find themselves
with two or perhaps even three children filling one full-time equivalent
space. Part-time care raises a
number of financial, not to mention programming, issues that are not
present when your centre is filled with full-time children. It is
important to discuss the implications with your Board and staff and plan
for an increase in part-time care before you find yourself in the midst of
it in 1998. We might add that there are already many centres that cater to
the ever increasing demand for part-time care. Budgeting You must know what
programs your organization is going to offer before you can prepare a
budget. There are two basic types of part-time care, each with its own
budgeting challenges. First, you can offer full-day care for fewer than
five days a week. For example, you could offer care for Mondays and
Fridays only or Tuesday, Wednesday and Thursday only. Second, you could
choose to offer care for blocks of time during the day. For example, you
could offer toddler care from 7 am to mid-day, 10 am to 3 pm and 1 pm to 6
pm. It is likely that your centre will offer both full and part-time care
to meet the needs of your clients. Once you have decided on the type of
part-time care you will offer you can work towards preparing a budget. We have assumed
throughout this article that care provided to children will be
developmentally appropriate professional childcare. Consequently, it is
assumed that parents purchasing part-time care will enroll their children
on a regular long-term basis over a number of months or years, albeit on a
part-time basis. This consistent care allows for the development of
long-term relationships between staff, children and parents and is
different from hourly care purchased, for example, through a drop-in
centre or from a babysitter. We will not be dealing with issues of
budgeting for sporadic hourly paid care in this article. The basic elements of
estimating fee revenue from regular part-time care are no different than
those for estimating revenue from full-time care. Fee revenue continues to
be calculated as the fee charged times the number of children. However,
how you determine part-time fees and how you estimate the number of
children in care requires more detailed consideration. Setting part-day
fees When setting fees for
part-day childcare you could consider dividing your daily fee by the
number of hours the centre is open and calculating the fee for a block of
time (e.g. 4 hours) accordingly. However, most centres do not have all of
their children in care for the full-day. Correspondingly, most centres are
not staffed for full capacity for the full-day. To arrive at a part-time
fee rate you should therefore consider determining the average number of
hours children are actually at your centre and divide the full-day rate by
that number. As an example, consider a centre:
You could consider
setting a four hour part-day fee at $23.16 ($55 per day divided by 9.5
hours times 4). If you end up filling the centre for more than 9.5 hours
of operation you will have additional revenue to pay for the additional
required salary costs. Setting full-day
part-week fees The easiest way to set
a full-day fee is to divide your weekly rate by five or your monthly rate
by 21.75 - the average number of care days in a month over the year. While
this method is straightforward, it does not take into account the
additional administrative and programming costs associated with having
more children and families to deal with on a regular basis at the centre.
We suggest that you consider charging an administrative premium of between
5% and 10% to help defray the additional costs involved. Using the above
example where infants are charged $55 per day for full-week care, you
should consider charging between $57.75 and $60.50 per day for infants
enrolled in regular part-week care. The above examples are
only relevant for non-subsidized parents. We assume that Metro will set
the fee structure for subsidized care and that Metro=s rates will continue
to be a reflection of the centre's rates. As long as your part-day and
part-week fee to full-fee paying parents is in excess of the Metro rate,
you should be eligible for their full offered rate. Estimating enrolment Estimating the number
of children in any given week will be more complicated with a significant
part-day or part-week care component. Most centres currently think of
requiring a certain number of children per day to break-even. You should
shift your focus to thinking of requiring a certain number of child hours
per day. For example, in an infant program with ten available spaces you
might require nine children on average to break-even. If each child spends
on average 92 hours in the centre then you need to be paid for about 430
care hours a week to balance revenue and expenses. Your job as
administrator would then be to make sure that in every given week you bill
at least 430 care hours, whether you bill for full or part-time care. Again, the focus on
hours does not imply that you will offer sporadic hourly care. It is
merely a method of allowing you to quickly and effectively compute and
monitor the amount of care for which you need to be paid to break-even. The true managerial
skill in offering part-day and part-week care is being able to juggle
enrolment to effectively fill your centre. If you have one full-time
full-week space vacant and a parent requires two days a week, do you put
the parent on hold until you can also fill up the other three days, turn
the parent away and hope that you get an application for full-week care or
accept the placement and hope for the best? Part of the decision will be
based on your staffing requirements. If you have to add additional staff
to accept the part-week care then you would probably not accept the child.
If, on the other hand, you have room to take the child without incurring
additional staff costs then it is usually better to be paid for two days a
week than none. Also, keep in mind that
no matter how many children are registered, the number of children in
attendance at any given time must not exceed your licensed operating
capacity. Other costs There are few
significant additional financial costs involved with a move to providing
part-day or part-week care. As your full-time equivalent numbers of
children remain the same your food costs and play supplies should also
remain roughly the same. In addition, staffing costs should not increase
unless your centre is full all day long. Programming issues, on
the other hand, are likely to be significant. Staff and children will have
to manage more transitions than they are currently used to as the
part-time children will be coming and going during the day. You may also
be somewhat limited in your ability to provide out-of-centre trips and
other full-day programming events. Record keeping There will be an
increase in the amount of record keeping required with a large part-time
care component. If the number of children at the centre increases by
one-third then the Administrator/Supervisor will have to keep one-third
more medical records, keep track of one-third more fee receipts and
accounts receivable and, even more significantly, spend time with many
more children and parents. These issues must be addressed at the outset of
offering a part-time care program. Reporting It is critical that
your Board receive sufficient enrolment information to monitor the ongoing
financial status of the centre. As with other reports, you should strive
for a format that is readily understandable and easy to complete. For
enrolment reporting we recommend using the actual versus budgeted number
of care hours per week or month which is more accurate than full-time
equivalents and is an easier measurement to understand. |
|
 |
