Child care: Why does it cost so much?

For some Iowa centers, personnel costs drive child care rates

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This is second of two stories on child care in the Corridor.

Kelsey Fisher is studying full time to be an X-ray technician. Her schedule means that the Cedar Rapids resident needs someone to watch her four-year-old son during the day.

In the past, when she was working, that meant sending her son to a private child care center.

“My whole paycheck of my job went to his day care,” Fisher recalled.

Her situation isn’t unique. According to the Iowa Data Center, for 2011, 74.3 percent of the state’s parents were in the labor force. A July 2013 fact sheet from Iowa Child Care Resource and Referral, a state government program dedicated to maintaining quality child care options and making them available to families, shows that 78 percent of Linn County families have all parents working and children under age 6.

“The majority of Iowa children spend time outside their home during the day,” said Amy Bruner, child care programs manager for the Hawkeye Area Community Action Program, which serves people living in poverty in six counties including Linn.

“The majority of Iowa children are in some kind of care outside the home. It’s in our best interest to offer high-quality environments.”

Those “high-quality environments” aren’t cheap to provide. Shawn Hauskins, owner and co-director of Kids Kampus Learning Center in Cedar Rapids, said the child care center goes through 40 to 45 gallons of milk each week.

“It blows your mind,” she said.

All that milk factors into the $4,000 each month Hauskins estimated the center spends on groceries for the 131 children, ranging in age from infants to 12 years old, who attend Kids Kampus. The private center also must allocate dollars for building repairs, utility and other facility expenditures, as well as new toys, books and equipment for the children.

“The average center lives paycheck to paycheck. They live week to week just like people do at home,” Hauskins said. “If you’re a good quality day care putting money into the business, there is no leftover.”

Hauskins’s biggest expense, however, can’t be purchased in a store.

“Payroll in this building takes basically a whole week’s tuition, what we get for a whole week in tuition,” she said. “And our people aren’t high paid. I wish I could do more.”

Kids Kampus’s rates, which Hauskins said are dictated by the center’s expenses, range from $210 a week for an infant to $101 weekly for children ages 6 through 12. She estimated that the average hourly pay for a staff member was $10.

“It’s the most important job for the least amount of pay,” she said, noting that stability is important for children in child care. “You don’t want turnover. As a director, turnover is hard because it’s retraining, it’s a nonstop circle if you’re constantly retaining people … .

"We have a lot of long-term staff, but if you can’t treat your people right, and that’s not just with pay, that’s with benefits, the way you run your business, ... they’re going to leave, and if you don’t pay them enough they’re going to leave.”

Expenses and expenditures

The July 2013 fact sheet from Iowa Child Care Resource and Referral also shows that Linn County families have a median income of $72,255. If one of those families has an infant in child care, they will average spending 9 percent of their pre-tax income on placing that child in an in-home child care registered with the Iowa Department of Human Services.

That portion increases to 13 percent if the child is in a licensed center. Infant care – which, in Linn County, averages a weekly tuition of $129.91 for a registered in-home provider and $178.98 for a licensed center – is the most expensive form of day care, with rates decreasing as children get older.

Data from the U.S. Census Bureau shows that from 2007-11, 9.9 percent of people in Linn County lived below the poverty level. The 2013 federal poverty level for a family of four is an annual income of $23,550.

Families whose annual income is 145 percent of the federal poverty level or less are eligible for Child Care Assistance. Information from the Iowa Department of Human Services says that 13,955 families received Child Care Assistance in August 2013.

Registered centers’ current reimbursement rate, which reflects a 6 percent increase from 2012, is $16.78 for a half-day of infant care, $13.53 for a half-day of preschool-aged care and $12.18 for a half-day of care for a school-aged child.

Sheila Hansen, director of Every Child Counts, would like to see that number increase. She and her colleagues at the self-described “advocacy network,” which is part of the state’s Child and Family Policy Center, are planning to request that legislators increase child care assistance access to families who are making 185 percent of the federal poverty level or lower by the 2017 fiscal year.

She also would like to see a rise in the state’s reimbursement rate to centers who care for children through assistance. Both of those changes would mean significant funding commitments from the state, which already allocates $130 million each year for child care assistance.

“There’s just this huge disconnect between what people can afford and what child care costs,” Hansen said when asked why child care is so pricey. “Most of the time, people who are having young children are young themselves. They’re early in their careers, they don’t have a lot of money.

"It’s a significant part of your income and you can’t afford it. But you have to remember that the child care providers have to make a living too.”

Alternatives and solutions

For parents such as Kelsey Fisher, there’s another option — the Linn County Child Development Center, which provides care for 60 children ages 3 through 5.

“It is nice to have now that I’m not working,” Fisher said of the center. “I wouldn’t be able to afford child care because I’m in school.”

Center Director Chris Carman estimated that 80 percent of the youth attending the center are funded through Child Care Assistance or another outside source at no cost to their families. The remaining 20 percent are parents who pay the full $130 weekly rate per child or a reduced rate based on income.

“It really is almost all going to classroom staff salaries,” he said of tuition. “That’s where it takes some level of outside support to address the other operational costs … . We use other funding to par for food and keep the lights on.”

The center participates in a number of programs and partnerships – such as Head Start, the Shared Visions Preschool Program and the Statewide Voluntary Preschool program – and receives additional monetary support through those sources.

Hauskins said the only solution to make child care more affordable for families is for the federal government to approach it the same as it did health care. In essence, it would be the Affordable Child Care Act.

For her, being a child care provider isn’t about the bottom line.

“If you’re going to do everything that’s best for the kids, you’re not going to make any money,” she said. “It’s definitely not a moneymaking business.”

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