The harsh economics of child care

NEW LONDON – The state of child care in Waupaca County was discussed at the March 25 New London Economic Development Committee meeting.
During the discussion, Eric Balza from Child Care Resources & Referral (CCRR) provided a presentation to the committee about the child care available in Waupaca County.
He said CCRR finished a survey in February which showed that Waupaca County has 13 group child carecenters, 10 certified family child care centers, and a school-aged child care program.
There are around 2,500 children under the age of five in Waupaca County, but the current child care capacity, without pre-school programs, is only 905, Balza said.
“We have seen an uptick (in capacity) in the last three years,” Balza said. “… But my current fear is with Child Care Accounts, it’s a subsidy the state of Wisconsin is currently putting on, it’s going to hit our rural areas the hardest.”

Balza said CCRR is trying to convince lawmakers to add funds to the state budget for childcare, but it is sounding like there might not be a state budget passed this year. If a state budget isn’t passed this year, the state reverts back to the budget from two years ago.
There are currently 136 children in need of child care on a waitlist, Balza said. He clarified that that number may include the same child on multiple waitlists.
Most program open at 6 a.m., with no programs open for second or third shift, Balza said.
The average wage for a childcare director in the county is around $18 per hour, Balza said.
He added that a lot of childcare centers offer childcare benefit to their staff, which averages around $800 per week.
“On average, a group center is losing a yearly average around $48,000 every year,” Balza said.
Balza said if Child Care Accounts is eliminated by the state, it is expected that child care rates will increase between 10%-20%, depending on the program.
For a child care operation to make a 1%-2% profit, Balza said the operation needs to provide child care service to 100-150 children. The child care business model has about 65% of the tuition brought in, leaving via payroll the following week.
“How do you support a business model that you take in the money, but it’s going out, so the only place they can compress that business model is in the wage,” Balza said. “So, that’s why they’re making so little, because that’s how they make the business model work.”