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The business of early child care

J.P. Power
Special to the Daily
Vail CO, Colorado

In my last business assignment before moving to Vail, I served as the general manager of administration for AK (Armco/Kawasaki) Steel’s flagship 8,000-employee production operation in southern Ohio. During a traumatic downsizing period in our industry, my team was asked to drive down cost while at the same time raising quality and productivity. In the process, Kawasaki sent me and my industrial engineering staff to the 20,000-employee Mitzushima Works plant in Japan.

Before entering this incredible “city” of production efficiency, we passed through the company-owned employee child care and housing facilities. Our international competition understood long ago that child care was an important employee recruitment and retention tool.

That was my wake-up call to the business of child care. Today, I serve as president of the Eagle Valley Child Care Association. The association’s board oversees the Vail and Miller Ranch child-care centers. Our centers provide care to over 100 children, infant through pre-school. Our public/private partnership has been the key to our success. While the Town of Vail and Eagle County have provided facilities, our business partners have provided operating capital that comes in the form of a quarterly pre-billing system. That system has produced a healthy balance sheet for the child care association since its birth in 2001 and allowed businesses to pass through and/or write off child care costs.

Despite this, we don’t break even largely because of the higher cost of infant care ” which is a function of new state-mandated lower teacher/infant ratios. That’s why an important piece of the child-care budget proposal being pitched to the county commissioners goes to giving incentives to centers to provide infant care.

So, let’s get to the numbers that show why the day-to-day child care battle is such a struggle and why our commissioners should pass the child-care initiative which is before them now.

First, families needing full-time child care so that parents can work. They work an average of 250 days per year. To break even, our centers will need to charge $55 per day at some point for infant care and that does not include putting aside enough money to cover the cost of upgrading facilities. That $55-per-day charge equals $13,750 per year, per child, $27,500 per year for two children, or $2,292 per month. That’s a mortgage payment!

Second, the rule of thumb is that for every 10 employees, at least one will be using some form of a child-care program and many businesses plan on having 15 to 20 percent of their employees use child care. In a tight labor market like ours, the loss of any employees, let alone 10 percent, results in reduced service levels and/or increased over-time rates.

Third, at the Eagle Valley Child Care Association, we are controlling our costs and raising our quality standards. Because we are the only multiple-facility operation in Eagle County, we are able to shift director-qualified personnel between facilities to maintain the director on-site hours required by the state without having to add staff. We have cut costs by combining payroll and accounting systems. We analyze each center on its own financial merits, yet maintain a consolidated balance sheet to more effectively manage total cash. We make joint purchases and share technical systems support. While doing this, our Vail center achieved the three-star Qualistar rating (go to Qualistar.org to learn more) which recognizes excellence in early childhood education.

Think of the competitive advantage employers in our county would have if our employees would have a real choice in where their children receive care: near work or near home!

Business partners also could pay the same rate, regardless of center location, yet can make the business choice of passing the cost on to employees or to offer discounted rates and take the Colorado tax credit. That’s the business of early child-care education.

J.P. Power is the president of the Eagle Valley Child Care Association.


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