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Child Care Businesses Nearing Crisis Mode as Funding Lags

Who will be the thought leaders of tomorrow? Soon enough, today’s business people, lawmakers, educators, and military leaders will hand the reins of this country to a new generation. Some of us worry that we’re not preparing our youngest children for leadership despite evidence that the academic skills and character traits needed for lifetime success are instilled in early childhood.

In short, the better our child care, the better prepared children are for school and life. Child care businesses provide a vital service that Philadelphia cannot do without, and yet we are in crisis, with the entire community feeling the repercussions.

The problem is state funding for child care. Every month, Pennsylvania provides child care assistance for 66,700 low-income children to age 5. That’s admirable, but the need is much greater. Children wait an average of five months for child care assistance, and some wait a year. More than 14,000 children are on the statewide waiting list, which continues to grow.

In the meantime, the state’s base subsidy rate has not risen in 10 years. Now, a possible $28 million cut could further erode our fragile system.

I got into the child care business in 2004 out of a desire to engage bright teachers and offer children the benefits of quality care. After years in corporate America, I sought something more meaningful than making money. I have never looked back.

In the years from birth to 5, the brain is building the connections that support a lifetime of learning. Quality child care, we know, improves children’s math and language abilities, supports healthy development, and promotes reduced grade repetition when children enter school.

I own two Northeast Philadelphia child care facilities, and in both approximately 40 percent of children come from families that receive subsidy. In these families, parents to go to work every day knowing that their children are safe and learning. When quality child care businesses such as mine are available, the Philadelphia region enjoys increased employment and tax revenue, increased job retention and productivity for employers, and higher earning potential for parents.

In my view, subsidy rates for child care aren’t just stagnating but declining because the purchasing power of the subsidies diminishes with each year of rising costs. As those dollars buy less and less, one of the areas worst hit in my business is teacher salaries, pitifully low for anyone who has earned a bachelor’s degree. Too often, these degreed people have no choice but to take better paying jobs, usually offered in school districts, even though they love working with our youngest kids.

With the decline in subsidy rates, I see increased pressures on the midsized businesses that give the child care system its vitality. A child care business run out of a storefront, for instance, can serve about 30 children and provide a nice living for the operators, but that number of enrollees doesn’t generate the revenue stream needed to reinvest to improve quality, including paying competitive salaries for top talent. Businesses serving 100 or more children can achieve the economies of scale needed to support quality investments. In between is an expanding no-man’s land where shrinking resources mean that the business plan just doesn’t work.

At that point, where do parents turn? These parents epitomize the famous American middle class that’s vital to our economic vibrancy. When parents can’t find high-quality, trusted care, they become less reliable on the job, and employers struggle to fill their positions.

The question is this: Do our elected leaders see education as a cost or as an investment? I urge my staff and all others to vote and to let lawmakers know that their constituents value education and see it as an investment in the future.

It’s time to restore the $28 million cut from the 2017–18 budget proposal and to increase state funding by $35 million. An increase would replace lost federal funds to protect the subsidies for about 1,900 children and remove children from that stubborn waiting list. And it could make a dent in subsidy rates that haven’t risen in a decade, even while our costs keep climbing.

When our child care system runs in high-quality mode, businesses get the best people possible, now and in years to come. The best people, in turn, spark the innovations that keep our economy bustling. Investments in quality child care support families, enliven communities, and promote economic development that benefits everyone.

bborensteinBob Borenstein is an entrepreneur and owner of Apple Child Care Center and Appletree Childcare & Learning Center. Located in N.E. Philadelphia, the centers are Keystone Star-3 certified and provide safe, activity-based educational classroom experiences for preschool children.

Mr. Borenstein is also treasurer of the Settlement Music School board of directors, Kardon N.E. branch. He also serves as a business advisor to the Goldman Sachs 10,000 Small Business national education program that helps entrepreneurs develop growth opportunities for their businesses and create jobs in their communities by providing greater access to education, capital and business support services.


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