Date:

October 4, 2015

To:

Local Parents of Young Children

From:

Lara Tinsley, Mother of Three

Subject:

Recommendation Memo

Purpose
The purpose of this memo is to present the results of child care costs and expenses research.
Summary
I have found that child care providers who care for infants or those that do not maximize their capacity have a much harder time
making a profit than those who have older children, and lots of them. One reason for this is because of the requirement to have 1
provider for every 4 infants. Child care providers should meet the needs of parents to include adequate supervision, activities, and
nutrition beyond ordinary babysitters obligations. They are also required to plan activities and schedules to enhance the development
and growth of the youth. Parents should weigh the qualifications of the provider against their values to ensure the best value for their
investment.

Memo to Parents of Young ChildrenOctober 7, 2015

Introduction
The average cost of child care in a licensed center ranges from $500-$800 per month per kid. There are an estimated 14,141 children
in Kennewick under the age 11. Many families find it more affordable to quit their jobs than to pay such high prices for child care,
while some are fortunate to have extended relatives available to watch their children.
In my personal experience, I make too much money to qualify for state assistance, yet I live paycheck to paycheck and I do not have
extra frivolous expenses such as television, car payments, or even a home phone. I have had to rely on neighborhood teens to be
willing to watch my kids for $200-$300 per month. This sometimes creates an unsettling feeling when I know that my kids are not
always eating a good breakfast, or that they are watching Netflix all day instead of playing with their toys, art supplies, or running
around outside.
You will find in the following sections detailed information about the research and results that were conducted regarding child care
expenses.
Research Methods
In order to determine the costs, expenses and profits of child care providers I took the following steps of research:
Task 1: Acquire initial intelligence of child care options.
I gained initial intelligence of child care financials by looking up care providers in the Kennewick/Pasco area and taking note of their
pricing systems. I was also able to find online Washington State regulations as to how many children can be in the care of one provider
with specific regulations based on ages of the children and certifications and experience of the individual providers. I also emailed a
list of questions to a local child care owner, Mr. Bachofner, who was able to roughly explain all of the information I had requested
including expenses like utilities, rent, food, supplies for the children, and business expenses such as maintenance, office,
administration, and most importantly salary/compensation. These will be examined and discussed further in task 3.

Task 2: Determine state and/or local regulations that restrict provider abilities.

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Memo to Parents of Young ChildrenOctober 7, 2015

Taking my initial understanding of child care regulations into further consideration, I found that child care providers have certain
requirements in how they operate, including napping areas, sanitation standards, regulatory inspections, first aid readiness, and an
organized system that allows them to access authorized adults of the minors, emergency contacts, medical providers, etc. Some of
these regulations can impose extra time, money and/or space capacity to the providers to adequately care for the children. Mr.
Bachofner was also able to provide me with a link to the all of the Washington State Codes in this regard (see bibliography).
Task 3: Assess the expenditures for regulations and supplies against the prices charged for child care at full capacity of the
provider.
I created a few charts to show what child care pricing looks like (Figure 1), what expenses centers incur (Figure 2), and how they all
compare to each other (Figure 3). Mr. Bachofner was able to provide me with approximations of how many kids enroll in each
category as well as how much of their capacity (available child care spots per state registration) is generally utilized. Of course these
numbers will vary between locations and are likely to fluctuate dependent upon the number and age of children enrolled.
Task 4: Analyze the data of my research and prepare a recommendation report.
I used Microsoft Word and Excel for this portion to create an organized report with graphs that would make understanding the
financial side of this business easier.
Results
This analysis is limited to the extent of the child care providers that I was able to converse with and study. As a minority examination
these results are subject to a higher margin of error, and it is important to remember that there could be a correlation of cost of care to
services rendered. If any parent finds it in their childs best interest to receive more or less accommodations, then those considerations
should be made on a case-by-case basis.
Task 1: Acquire initial intelligence of child care options.
This step showed me that center prices are roughly the same from location to location. I also found that infants are the most expensive
to care for and also get the most stringent legislation for how many infants can be watched per adult. Toddlers are the next most
expensive and tend to need full time day services. Luckily toddlers are able to move into preschool usually around 3 or 4, which is less
expensive than toddler care, but could also result in the need for after school care depending on the parents schedule. Summer care is
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Memo to Parents of Young ChildrenOctober 7, 2015

another option that is available. For the purposes of my study I assumed that any child receiving after school care would also need
summer care, and I did not take into account any sibling discounts that are offered by many providers.
Task 2: Determine state and/or local regulations that restrict provider abilities.
The web access to WAC Chapter 170-295 was very helpful in seeing all of the different rules that providers are expected to know and
abide. There are too many details to list, however specific regulations include the types of materials required, the types of plans
required, and even daily schedules and toys that can be used in certain age groups to build and develop socially and physically
(muscular development both large and small). Mr. Bachofner was able to summarize some of these processes like his basic yearly
inspections and licensing needs, as well as staffing requirements such as one staff for every four infants.
Task 3: Assess the expenditures for regulations and supplies against the prices charged for child care at full capacity of the
provider.
When I initially began my assessment I operated under the assumption that child care centers should be operating under full capacity
to get the best financial stamina. After I did this I realized that it seemed like a huge amount of profit to the owner. This did not seem
right to me, so I sent Mr. Bachofner another email and he was able to clarify that he generally operates his facilities at about 70%
capacity. I decided at this point to add another column to my chart to show the potential amount of profit available at full capacity. A
probable disclaimer to this huge difference is the incremental price increases in most expense categories that would be incurred at a
30% enrollment increase.
Task 4: Analyze the data of my research and prepare a recommendation report.
After speaking with child care providers, more fully comprehending state regulations, and interpreting the costs associated with this
business, I have found that there is a wide margin of uncertainty that providers face in filling their space, and being able to maximize
their profit potential through the best combination of age groups. With most expenses on a fixed budget and only a few as variables, it
is important that providers try to keep as many kids in their care as they can. Figure 3 shows my research and analysis of how child
care providers must allocate their finances, and how much of it could potentially be actually salary for the provider. Readers will
notice the shocking difference between estimated actual earnings to the owner pretax versus estimated potential earning based on full
capacity.
Figures

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Memo to Parents of Young ChildrenOctober 7, 2015

Figure 1: Chart of center fees for Country Kids Daycare

Rates
Infants
Toddlers
Preschool
Before & After
School
Summer School Age

Monthl
y
$750.0
0
$550.0
0
$510.0
0
$295.0
0
$455.0
0

13 Days

Half Days (5
hours or less)

$494.00

$375.00

$364.00

$275.00

$338.00

$255.00

$208.00

$299.00

$227.50

Figure 2: Chart of costs, expenses, and salaries.

Expenses

Month

Year

5,952

Rent

15,000

180,000

Food

10,000

120,000

Employees

50,000

600,000

Utilities

5,000

60,000

Miscellaneous

3,000

36,000

Payroll Taxes

16,000

192,000

License

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Memo to Parents of Young ChildrenOctober 7, 2015

Given Approximation of Enrollment Groups: 15% school care, 40% preschool, 35% toddler, 10% infants @
70% capacity. Center licensed for 248 kids.
Total
1,193,952
#
price/mont99,000
kids h
price/kid/month price/year
@ capacity
750.
13,020.
156,240.0
223,200.0
12 months of infants
10%
17
00
00
0
0
Figure
550.
33,418.
401,016.0
572,880.0
Final
12 months of toddlers
35%
61
00
00
0
0
510.
35,414.
424,972.8
607,104.0
9 months of preschool
40%
69
00
40
0
0
15%
455.
11,848.
142,178.4
203,112.0
3 months with summer care
*
26*
00
20
0
0
9 months with School Aged
295.
7,681.
92,181.6
131,688.0
Children
15%
26
00
80
0
0
1,216,588.8 1,737,984.0
Total Income
*same # as school care
0
0
1,193,952.0 1,190,952.0
Less Expenses
0
0
22,636.8
Expected approximate income to owner before taxes
0
544,032.00
business income to owner after all incomes and deductions, before business taxes.

3:

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Memo to Parents of Young ChildrenOctober 7, 2015

Conclusions
This research has shown that child care providers have a potential make a decent living, however because the chances of reaching full
capacity is usually low it is reasonable that prices would have to be raised just to stay in business. With the current minimum wage in
Washington State at $9.47 an hour, an employee at this wage could gross almost $20,000 in a year. The approximate income that my
research came up with is only about 15% higher, and does not account for the fact that child care providers put in many overtime
hours each week. As a parent I know that it is hard for us sometimes to be able to cover all of the expenses associated with the basic
needs of our children, but with the numbers shown I do not think that it is unreasonable for the providers to expect more gain then
what they are currently looking at.
Recommendation
It is my recommendation that parents analyze the results to accommodate the specific needs of their children. In general my findings
suggest that it is best for caregivers to maximize the capacity of their facility and faculty to provide the best experience to parents and
caregivers equally.
References
Beyond The Rainbow, October 4, 2015. < http://www.beyondtherainbow.biz/hours-and-rates.html>.
Chapter 170-295 WAC, Minimum Licensing Requirements for Child Care Centers. Washington State Legislature, October 20, 2015.
<http://apps.leg.wa.gov/wac/default.aspx?cite=170-295>.

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Memo to Parents of Young ChildrenOctober 7, 2015

Great Beginnings Childrens Center, Inc., gbchildrenscenter.com. October 4, 2015.

<http://www.gbchildrenscenter.com/enrollment.html>.
Kennewick City, Washington, census.gov, October 7, 2015. <http://factfinder.census.gov/faces/nav/jsf/pages/community_facts.xhtml>.
Kennewick Nannies, care.com, October 7, 2015. <https://www.care.com/nannies/kennewick-wa>.
Kennewick, WA, forbes.com, October 7, 2015. <http://www.forbes.com/places/wa/kennewick/>.
Logo, Washington State University, October 4, 2015. <www.wsu.edu>.
Parents and the High Cost of Child Care: 2014 Report, Child Care Aware of America, October 7, 2015. <
http://www.usa.childcareaware.org/advocacy/reports-research/costofcare/>.
Tubbs, Melanie. Cheaper Daycare Prices in Tri-Cities, KEPRTV.com, published August 15, 2011, accessed October 7, 2015. <
http://www.keprtv.com/news/local/127701223.html>.
Washington State Requirements, daycare.com, October 4, 2015. <http://daycare.com/washington/>.

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