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Business Officer Magazine
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Kids on Campus

Stock up on healthy snacks, provide on-site child care, and boost your recruitment results.

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Of course, you’ll need to do some up-front analysis to determine whether or not this kind of undertaking makes sense for your institution. And, if you decide to move forward, the right business model will depend in part on available resources and the specific needs of your campus community. Here’s how some are handling the child-care challenge—and opportunity.

Attracting Faculty

Prospective faculty ask for it. That’s why Bowdoin College, Brunswick, Maine, operates The Children’s Center, now 20 years old.

“Bowdoin generally has from 7 to 10 tenure-track faculty searches annually,” says William Torrey, senior vice president for planning and administration. “At least 2 or 3 in this pool each year request accommodations for their children at the center.”

Such is the commitment to providing care for children of faculty and staff that Bowdoin invested $1.25 million for a permanent child-care facility in 2000, moving the center from two temporary buildings on campus that previously served as quarters.

The 58 available spots accommodate children from three months of age through preschool age. Demand varies from year to year, with the center’s waiting list including as many as 7 infants and up to 10 children each for the other three levels of care provided by the program. The center offers three-, four-, and five-day-per-week options and closes for school holidays and for one week in August. Approximately 75 percent of the children enrolled attend year-round.

Fees for five-day care range from $760 a month for preschoolers to $936 per month for infants. That income sustains the program costs and the salaries of staff, but the college absorbs insurance fees under its general liability policy and pays utility and maintenance costs that range from $25,000 to $50,000 annually.

Serving and Training Students

For Lane Community College, Eugene, Oregon, the objective is less about attracting and retaining faculty and much more about ensuring that students can attend classes. Lane recognizes that for older students, the challenge of what to do with children while fulfilling class commitments is significant. For 15 years, the institution has offered a campus cooperative child-care program that exclusively serves students. The goal: Keep students attending classes. The Associated Students of Lane Community College (an entity composed of members of the student body of the main campus) runs the program with a coordinator, five paid caregivers, and a varying number of work-study students and parent volunteers. Parents can reduce their fees by contributing time. Most students pay $75 per week for full-time care, which is about half the going rate in the local community. The overflow list for the 38 spaces available for children of ages 30 months through 5 years can represent a 6-to-8 month wait, which is usually shorter for spring and summer terms.

Creating dual-purpose programs. While some students seek child care through the co-op, others are in training at another site: Lane’s child development center, in existence since 1969. The center accepts up to 68 children of Lane students and faculty and the community at large, while providing training to 50 students enrolled in the college’s early childhood development program. Formerly housed in two rooms on campus, the center opened a new space in 2000 that includes office space and four classrooms. In addition to a full-time director and office support, the center employs nine full-time teachers. Fees range from $135 per week for a five-day program for preschoolers to $182 per week for children 12 months to 30 months old. Half-day and alternating-day slots are also available.

Paying the bill. “Such programs are high cost for the institution,” says Greg Morgan, Lane’s associate vice president of finance. He estimates the total cost of operations for both programs to be in the neighborhood of $2 million per year. While the co-op draws on the student services budget for supplemental funding, the lab school gets money from the college’s general fund to supplement income received from fees paid by parents. Specifically, the co-op and lab programs have relied on the college to fund facilities, housekeeping, grounds and maintenance fees, and insurance costs. The programs are now being challenged to find ways to become more self-reliant.

To that end, effective this fall, the center will limit care to the same ages as those serviced by the co-op, meaning that children must be at least 30 months old to be accepted. In the past, Lane’s child development center held eight slots for infants as young as two months. However, the higher caregiver-to-child ratio makes infant care the most expensive to maintain. This change is just one measure to help address budget deficit problems, says Jean Bishop, early childhood education coordinator and one of three faculty members who teach in Lane’s program.

Meanwhile, the college is working with a consultant to examine ways to unite the programs. Certain issues related to merging the co-op and the lab school are yet to be resolved, but Morgan points out that combining the child-care programs may create efficiencies not only in areas such as food service but also with grant writing and other revenue streams.

Since both programs meet current licensing standards, quality of care should not be affected. However, the two programs are currently housed in separate facilities. “Our redesign,” says Morgan, “must maintain a good lab for students studying early childhood education while supporting our mission for all Lane students—to transform their lives through education. If they can’t attend classes because child care is an issue, then it’s obviously more difficult to achieve that goal.”

Outsourcing Care and Complexity

Flexible Financing Options

If you develop and operate your child-care center with an outsourcing partner, says Jean Anne Schulte, vice president for higher education partnership services, Bright Horizons Family Solutions, Watertown, Massachusetts, you’ll be able to select from several financial arrangements. “Options correlate,” she says, “to the degree of control your institution has over policies at your child-care center.”

At the most arms-length, explains Schulte, is a simple land or lease arrangement whereby the institution provides minimal support and the provider capitalizes, develops, and operates a center on university-provided land or facilities. More often, she says, centers operate under a sponsorship agreement or on a management-fee basis.

  • A sponsorship agreement may or may not include in-kind or financial support from the institution. The service provider, says Schulte, consults with the institution but makes the final decisions about tuitions, teacher wages, hours of operation, and other economic factors. The provider’s compensation is calculated in terms of the profit that results from revenue and costs associated with the annual operating budget.
  • A management-fee agreement provides the college or university with ultimate control, while relieving the institution of day-to-day operational responsibility. A budget is developed based on the institution’s economic and policy decisions for the child-care center. The institution pays a predetermined annual management fee to the service provider and is then responsible for the resulting operating surplus or deficit generated from the operation of the child-care center.

For institutions that want to offer child-care services but don’t have an interest in starting a program from scratch, alternatives do exist. Chief among those options are campus day-care centers operated independently by franchisers, service chains, or private companies.

Bright Horizons Family Solutions, Watertown, Massachusetts, operates centers at Duke University, Durham, North Carolina; and the Massachusetts Institute of Technology, Cambridge. The impetus for such programs, says Jean Ann Schulte, Bright Horizons’s vice president for higher education partnership services, often emanates from the human resources department, a women’s initiative, the faculty senate, or the student government. Regardless of the plan’s origin, using an outsourcing partner to help you establish the program is one way to roll it out quickly.

Schulte notes several ways to identify the right outsourcing partner for your campus. “Some institutions,” she says, “issue a preliminary request for information to become familiar with the general philosophy and approach of the providers being considered as well as their qualifications and client list.” These responses, she says, can help narrow the list of potential recipients of a more detailed request for proposal (RFP).

Schulte notes that the RFP presents an opportunity to solicit ideas and suggestions from service providers. It also provides the basis for a dialog between your institution and possible providers to determine the most compatible fit. Remember, she says, “provision of child care will affect members of your campus community much more personally than provision of other outsourced services, such as food operations or a bookstore, so a shared vision of the potential child-care center is very important.”

Whether you decide to use an outsourcing partner or do your own thing, Schulte advises that you do your homework before launching into the child-care arena. For example, she says, “There is no metric for estimating start-up expense, because much of [the expense] is driven by facility costs, which can vary greatly.” A variety of other policies can affect the operating budget: hours of operation, numbers and ages of children being served, ratios of teachers to children, meal service, and so forth.

Schulte recommends that institutions conduct initial studies to determine demand among faculty, staff, students, or others who may be potential clients and to pinpoint available resources in the community. Then decide where the program will be housed—whether in a new facility, in existing structures that may require renovation, or in modular buildings. Finally—and most important to the chief business officer, notes Schulte—is how the program will be funded initially and sustained for the long term. When outsourcing, financial-arrangement options vary and correlate to the degree of control the institution has over policies at its child-care center (see sidebar, “Flexible Financing Options”).

That said, even if your estimated financial returns are not compelling, other positive benefits may be significant enough to support moving forward. Bright Horizons has conducted impact studies that show how lack of convenient and affordable child-care options can result in loss of talent, reduced productivity, higher stress, and less participation in the cultural and social life of institutions. Such study results added to potential demand voiced by target-market groups, says Schulte, are important for convincing the administration to invest in a child-care program—no matter who runs it.

Program Pointers

If convinced to offer child care, how does your institution develop a program tailored to the needs of its campus? Here are helpful tips.

Location. Recognize that space determines how many children you can accommodate. A general rule is to provide 90-100 square feet per child. This estimate includes classrooms, closets, bathrooms, and kitchen and office space.

Participation. Decide which groups are eligible to participate, including faculty, staff, and students. If enough spaces are available, you might also consider opening your program to the surrounding community.

Age parameters. Determine what ages you will accommodate and how many spaces you’ll include for each age. The younger the child, the higher the caregiver-to-child ratio and, thus, the need for more staff and higher per-child costs.

Hours of operation. Establish a calendar and operating hours. Some institutions follow the academic calendar, closing for scheduled school breaks. Others remain open 52 weeks per year. Most operate 10–12 hours per day, which is similar to the practice of community child-care centers.

Fee structure. Set fees based on program variables, such as half-day, two-, three-, or five-day options or drop-in care. Factor in any additional charges or subsidies—for example, fees for late pickup of children.

Income. Estimate income that will be generated from client fees so that you know what portion of your operational expense is covered by fees and what balance you’ll need to cover from other revenue sources.

In-kind services. Consider the value of in-kind services provided by the institution, such as space, utilities, janitorial services, maintenance, and so on. Although some institutions do not track these expenses, the value of in-kind services reflects your true operating overhead. Calculate their estimated dollar value and examine those numbers in determining the real costs for establishing a program.

Fill-in funding. Find revenue to fill the gaps. Grants, benefactors, discretionary funds, and funds for recruiting women and minorities are potential sources.

LINDA C. CHANDLER, Tyler, Texas, covers higher education business issues for Business Officer.