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Cost, Quality and Shared Services

Cost, Quality and Shared Services. Anne Mitchell. The Cost-Quality Gap. Higher quality ECE costs more than most families can afford Market-based ECE encourages low tuition fees and discourages investments in quality Many ECE expenses are fixed (e.g., by regulation or industry practices). .

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Cost, Quality and Shared Services

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  1. Cost, Quality and Shared Services Anne Mitchell

  2. The Cost-Quality Gap Higher quality ECE costs more than most families can afford Market-based ECE encourages low tuition fees and discourages investments in quality Many ECE expenses are fixed (e.g., by regulation or industry practices).

  3. Can shared services help close the gap? Mathematical models of ECE center operations Demonstrate potential savings from sharing services Savings can be used to close the gap and improve quality

  4. An ‘average’ center in the US • Serving the needs of its community • 5 classrooms/75 children/12 teachers • 1 infant room • 1 toddler room • 3 preschool rooms • Acceptable level of quality • Meets state regs for staff qualifications • Meets NAEYC minimums for ratios/group sizes

  5. A ‘better’ center in the US • Same size • 5 classrooms/75 children/12 teachers • 1 infant room • 1 toddler room • 3 preschool rooms • Better level of quality • ½ the teachers have AAs • Wages are 5% better than average • Additional revenue from quality awards

  6. So, how do they fare? The acceptable center: $570,910 Expense $570,608 Revenue $302 Annual Loss The better center: $602,785 Expense $581,809 Revenue $20,976 Annual Loss

  7. What if they share PURCHASING? The acceptable center has a surplus of -- $2,968 The better center has reduced its loss to -- $17,706

  8. What if they also share OFFICE STAFF? The acceptable center has larger surplus -- $12,315 The better center has further reduced its loss -- $7,349

  9. What if they also share DIRECTOR? The acceptable center has even more surplus -- $43,296 AND The better center finally breaks even and has a surplus! -- $24,776

  10. Effect of Shared Services on Center Annual Net Revenue

  11. Other benefits of Shared Services? • Access to staff like nurses, mental health consultants • Direct support to improve the program, like a mentor teacher, quality coach • Ability to apply for grants to benefit the center (and others in the Alliance)

  12. For more info… Anne Mitchell anne@earlychildhoodfinance.org

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