How Do Childcare Centers and Preschools Weather Funding Disruptions?

Abstract

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.

The results help decision makers understand which funding sources directors believed were most often delayed and how they perceived those delays to impact their programs.