How do childcare centers and preschools weather funding disruptions?

March 18, 2014

How do childcare centers and preschools weather funding disruptions?

Statistics and voices from the north and west sides of the Chicago area

Authors

This Preschool Policy Forum documents the many funding sources for Chicago area childcare centers and preschools as well as the frequency and impact of funding disruptions between 2011 and 2012. The study surveyed 229 center directors in 33 ZIP Codes on the west and north sides of Chicago as part of the Chicago Area Study series at the University of Illinois at Chicago. The policy brief takes a close look at how public and private centers and preschools weathered the recession and resulting funding delays, and provides clues about how the state can assist such organizations in the future.

Major findings include:

  • Funding sources differed in expected but stark ways between centers located in poor versus affluent areas. Centers in the poorest areas relied largely on publicly funded programs. Nearly one-third of centers located in the wealthiest areas received public funding in addition to private tuition.
  • The majority of centers reported delayed payments both from government sources and from parents in 2011-2012. Most center directors reported negative consequences of these delays for their financial stability. Centers located in higher-income areas were not immune to these disruptions.
  • Both participation and delays were most common in the Child Care Assistance Program (CCAP) and from parents. Nearly every director who participated in CCAP reported delays in 2011-2012; and, almost three-quarters of all directors reported that parental tuition payments sometimes came in late. Frequent delays from parents often coincided with significant CCAP delays, and directors with this double blow reported the greatest worries about their finances.
  • Effects of slow payments rippled out to program staff, families, and children. Delayed staff paychecks and staff layoffs were particularly common. Directors viewed these as reducing morale and increasing turnover. Directors had difficulty paying bills and purchasing supplies, and believed program quality suffered as a result. Some center directors were able to tap into cash reserves and lines of credit, whereas others had little cushion and directors sometimes filled the gap out of their own pockets.
  • In both lower- and higher-income areas, centers that were part of larger organizations––including schools and religious organizations–– and directors with greater support from their professional networks, reported less distress from delayed payments than those without such relationships.

“We do not know exactly how and why these payment delays occurred,” wrote Dr. Rachel Gordon, the lead author of the policy brief. “Whatever the reason, our results help decision makers understand which funding sources directors believed were most often delayed and how they perceived those delays to impact their programs.” For example, according to Gordon, it is possible that parents attending centers that experienced both CCAP and parental delays could have been experiencing frequent job changes. This may have combined with other stresses that left the parents strapped for cash; facing altered eligibility for CCAP; or distracted from completing CCAP paperwork. “Furthermore, it may be that centers experiencing the most extensive delays are understaffed and under-resourced, making it hard for them to organize their processes for collecting tuition and submitting government forms,” Gordon concluded.

Gordon further suggested that rule changes that lengthen the eligibility period for CCAP might reduce the burden of eligibility and attendance documentation, although such changes can be politically difficult in the face of calls for increased accountability. Business strategies that help centers stay on top of paperwork and build up cash reserves or lines of credit may also be beneficial, especially among the most isolated centers that the study found are especially vulnerable to payment delays.


Download

(.PDF 809.3 KB)

Research Area: Social Policy

Policy Initiative: none

Share: