Making Sense of Child Care Expense   By Bonnie Servais

The price of childcare can be very shocking, especially to first time parents.  Each provider runs her own business and as such can charge what she sees as reasonable.  But in general terms, there are a few explanations that may help to make sense as to why childcare costs what it does.

One consideration is the particular license class the provider holds.  Many parents do not realize that there are 7 different licenses in MN.  What a provider charges may be based on her license and the number of children she cares for in many instances.  For example, a provider that elects to take care of infants only can only have 3 infants; and as such charges much more for these infants than a provider that takes care of 12 children of all ages.  When an infant/toddler provider loses l of the 3 children she cares for, one third of her income is lost!  Parents have the decision to make whether they want more individualized care for their infants and toddlers, or if they feel comfortable having their child in a larger group setting with the provider taking care of more children and paying a little less money. With the specialized infant/toddler provider, these children will be moving on to another childcare when they are older.

There is a C3 license that allows a provider to care for 14 children, with an adult helper.  To enable the provider to pay for a helper, she must charge enough to make to cover her expenses and also pay her employee’s wage.

The expense of before and after school care can also be surprising for parents.  Many providers do not charge by the hour.  They charge by the spot.  If they have a Class A license (caring for a total of 10 with 4 being school aged) they may charge by the spot.  The provider has 10 spots per day.  Even though the school aged child may not be at her home long, they still take a spot that she cannot fill with another child.

The same holds true for part-time care.  If you do not need daycare 5 days a week and yet your schedule varies, the provider may charge you a full-time rate because you would then have the guarantee that a spot would be available no matter what days you work that week.  In the case of people requesting part-time care and their working days are always the same, a provider can charge a part-time daily rate that is a little higher than the full time daily rate, but it is less than paying for a full time 5 day week.  The provider then has the option of taking another family on the opposite days.  Finding such a mix does not always come about, however, for the provider.  If she cannot find an opposite family, she is actually losing money taking a part time family rather than holding out for a full time family.  For this reason many providers may not be interested in taking part time families as they need income they can count on.

A provider may only figure that one third to one half of what she receives in payments from families is what she actually gets to keep as income.  The other half to two thirds goes to pay daycare liability insurance, food for children, paper products, higher utilities, our social security taxes, state and federal taxes, toys, preschool curriculum, holiday party supplies and gifts for birthdays and Christmas and the wear and tear expense of maintaining a home filled with beautiful children.

Is a provider worth the expense?  Of course she is!  After all, what is more important than your children?   A provider that is able to have a dependable income will be more successful and be in the childcare field for a longer period of time, thus increasing the quality your child receives.