Isn’t it interesting that the number one challenge of Round 1 Early Head Start – Child Care Partnership (EHS-CCP) grantees is fiscal – and the number one reason community-based child care fails is because of poor fiscal management? There is a direction connection. Centers that achieve a higher rating in their state’s quality rating and improvement system (QRIS) actually go out of business faster than those with lower levels of quality. How can this be? It’s simple; quality is more expensive.

Consider where funds come from to cover increasing costs of quality. Child care subsidy and parent fees and/or tuition are limited, especially in poorer communities where many Early Head Start (EHS) programs operate. And typically, state’s quality enhancement payments are quite low, if they exist at all. If you are struggling fiscally to begin with, which is the norm in child care sector, achieving higher but more expensive quality care isn’t going to improve your financial situation. It will more than likely make it worse. Estimating the precise cost of delivering higher quality services can be challenging for child care providers, and this was a particular area of struggle for many Round 1 EHS-CCP grantees.

One fundamental lesson learned in Round 1 is that very few applicants could tell you what it costs to operate a high quality classroom compliant with Head Start Program Performance Standards (HSPPS) within the context of a child care partner’s business. What method did you use to identify the costs and justify them in your proposal budget justification and narrative? It’s critical to figure out what it actually costs to operate a classroom in your service area to serve the most needy infants and toddlers whose families need full-time care, 10 hours day. To do so, you must have methods you and your child care partners understand and that you can repeat to identify these costs and justify them. The key to this “method” is having a highly detailed budget capturing all possible revenues and expenses, and deciding upon assumptions that inform the estimates. This is not an easy exercise. Any misguided assumptions or inaccurate numbers will undermine the most important factor we believe you must get reasonably right to achieve success in EHS-CCP.

Foundations for Families has fined-tuned its approach by developing a “Standard Classroom/Home Budget” model that identifies, specifically and locally, the costs and revenues of a high quality classroom and/or home. The “Standard Classroom/Home Budget” model serves several important purposes:

  • It projects priorities, such as meeting Head Start Program Performance Standards and, perhaps, a particular level of your state QRIS
  • It projects all and fine tunes all revenue and expenses
  • It informs the calculation of a fair, reasonable and justified payment rate for the child care partner or family provider
  • It recognizes the payment rate as an essential variable ensuring quality – it closes the cost-quality gap
  • It aims to fit into the overall Center/Home’s budget and foster financial health for the partners
  • It is accompanied with a written budget narrative that clearly articulates each line item in more ways than just an excel budget spreadsheet

Your detailed budget should be developed in collaboration with your child care partners. And, it should be based on a carefully defined set of assumptions, for example, number of days of operation, hours, holidays, training hours, and meals to name a few. This is where the new OHS Cost Estimation Tool can be used as a guide along with other supplementary supports. Remember, the detailed budget is based on data you get from your partners, not numbers you give to them. It reflects their reality, as much as possible, and makes some best guesses about what it will take to achieve a Head Start Program Performance Standard level of quality.

Let’s dig a little deeper. Personnel is a good example of where budget adjustments will be likely given that most child care centers do not pay for qualified teachers nor staff quality throughout day, as defined by the HSPPS. It is likely that those qualified teachers are more expensive. So, the budget figures will need to reflect the assumption that the center will hire and pay for the more highly qualified and, and thus expensive, teachers.

It is reasonable to expect that if you are partnering with five child care partners, regardless of how many EHS classrooms each center has in the project, that you might have five similar but distinct budgets. Maybe one has higher occupancy costs, one is in an area where you are competing for qualified staff, or one might get their space at a reduced rate. The more you know about each of your partners, the more you’ll know about what it costs them to operate right now. But remember, we aren’t talking about the status quo in this project. We are talking quality care compliant with the HSPPS. That’s going to cost more. You’ll know what that amount is when you complete a comprehensive, tailored Standard Center/Family Home budget that aligns with all expectations of participation in the EHS-CCP project.

Thank you.

Contact Us

Foundations for Families offers EHS-CCP grantees targeted technical assistance and strength-based coaching of key start-up staff. We have helped multiple organizations design, plan for, and draft successful proposals for EHS-CCP. Please be in touch with Amy Augenblick, Executive Director, at 703-599-4329 or Augenblick@foundationsforfamilies.com to learn about how we can support you and your program.

They [Foundations for Families] offered respectful and unbiased measured advice and caution where warranted and worked in a highly collaborative way with all members of our team. Their approach to development and management of policies and procedures was a welcomed paradigms shift for SCFS and my previous understanding that will save the program tremendous time. What particularly astonished me was their “classroom budget model” to inform our child care partner payment rate.   It was elegant, fair and transparent, and instructive for creating the foundational soundness to our relationship with our child care partners.

Rebecca Brown, Early Head Start Director

South Carolina First Steps to School Readiness, South Carolina

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