An Overview of Non-Profit Childcare Centre Funding
Licensed non-profit early learning centres in Manitoba (also called: infant centres, preschool centres, school age centres, nursery schools, enhanced nursery schools and “daycares”) all have TWO main sources of Operating Revenue: their Operating Grant and Daily Parent Fees
1. Operating Grant
The annual Operating Grant is given based on the age of the kids, the type of program, and the number of licensed spots in it. Each type of centre gets different amounts per space: infant gets more than preschool because more staff and equipment are required; preschool gets more than enhanced nursery school; enhanced nursery schools get more than nursery schools. But it is a SET AMOUNT. And is not enough to run a centre.
2. Daily Parent Fees
The other half of Operating Revenue comes from Daily Parent Fees (which are also different amounts for different ages and types of centre). However, this is a set amount. Childcare centres cannot change it, the government sets the max that can be charged. For example, an enhanced nursery school can charge $5/day to each family.
Even with the two revenue streams above, centres cannot pay all their expenses. And since they cannot alter either the Operating Grant amount or the Daily Parent Fees, that leaves them with one remaining potential revenue stream as a non-profit: fundraising.
To illustrate, here is an example from a real centre in Manitoba. This centre’s pre-COVID-19 goal for this fiscal year was to raise $19,500 through fundraising and donations. To be clear, achieving this goal would have ONLY allowed the centre to break even, given its necessary operating expenses. And that is with anyone working in the centre being grossly underpaid. Staff could literally make more working at Costco.
So, this financial situation was already stressed, before the pandemic. One more very important piece to understand: non-profit childcare centres need to “zero out” at the end of each Fiscal Year; neither excess funds nor debt can be carried forward. Not-for-profit childcare centres cannot build “rainy day funds”, or “just in case” savings. If they HAVE excess funds at year end, they risk having their Operating Grants reduced, because they are showing that they do not need as much as planned to operate. So saving money from year to year isn’t an option.
- Operating Grants from the Province cover part of childcare centre expenses;
- Parent Daily Fees cover most of the rest of the expenses;
- Childcare centres fundraise and seek donations to make up any additional needed funds to balance the budget.
Childcare centre budgets are already pared to the bone. There is no room for cuts because for the last four years, their operating grants have been frozen. The Manitoba Government stopped giving annual 2% Operating Grant Increases to cover cost of living increases.
As a result, when rent goes up, they need to fundraise or cut expenses in other areas to balance the budget. If, for example, childcare centres want to give staff cost of living raises, which childcare centres want to do because it helps them retain staff, their only choices are to fundraise or cut costs in other areas to balance the budget.
The COVID-19 Crisis
Now, we enter this pandemic. And all early learning and child care centres were initially told to close to help flatten the curve. This made sense to a lot of operators because:
- For most operators, social distancing young children is difficult if not impossible, both due to their age and due to the actual size of the rooms and the number of children per room.
- Operators had not been trained in how to provide Pandemic Child Care Services.
Then the next set of messaging came. Childcare operators and staff were told of the need to “stand up as good Manitobans” and offer Essential Service Care, to help fight the pandemic. The sector was given a new requirement to operate with a maximum of 16 participants per centre, and social distancing guidelines.
Many childcare operators and staff were open to this, but had questions about sustainability and safety. The sector was initially told Operating Grants would be lost if operators closed. After public outcry, it was clarified that Operating Grants would be maintained regardless of whether a centre stayed open or in the case of a reduction of participants. Then the sector was told to refund or credit all parent fees for children for the three weeks that all centres were closed, and for children who still weren’t attending after that time. No emergency funding was offered to refund parent fees, nor make up fundraising budgets, given the obvious challenges of fundraising for centres in a pandemic.
With no acknowledgement of this funding crisis through appropriate government action, centres that opened and followed the new social distancing guidelines would be operating at a loss. This is because income has dropped due to the loss in parent fees, all of the regular costs (rent, insurance, utilities, etc.) are still being charged, and most centres will need to maintain staffing levels even with reduced numbers since working under a pandemic is more work intensive. This increased workload includes: new and increased sanitation practices; a lowering of the staff-to-child ratio; and increased responsibilities in ensuring that children are maintaining social distancing.
Many centres also continue to pay staff even though they are closed. As it has become less and less affordable to work in childcare, staff have left the sector in droves. Many centres are concerned that if they don’t continue to keep staff on the payroll, they will lose them for good; and it will be much harder to get operating again, not to mention, more difficult for returning children to acclimatize back into their old centres.
As a result, many centres are at risk of closing. This is despite continually communicating to government that these spaces of high-quality care are at risk of being lost entirely, at a time when we need more spaces, not less. Now is the time to act.