Cd 38 chapter 7 pp.ppt oct 2016

Chapter 7: Financing & Budgeting

Planning and Administering Early Childhood ProgramsTenth Edition

Nancy FreemanCelia A. DeckerJohn R. Decker

Prepared by:Nancy K. Freeman

Tere HolmesKris Curtis

Adapted by: Katy Kelley

Freeman/Decker/Decker, Planning and Administering Early Childhood Programs, 10e© 2012, 2008, 2005, 2001, 1995 by Pearson Education, Inc. All Rights Reserved

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Early Childhood Programs are Expensive

• Many families pay more for child care than for housing

• Center based infant care can be more expensive than in-state 4-year college tuition (in 36 states)

As a result, families are stretched to the limit!


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High quality programs are labor intensive

• Operating costs reflect staff-child ratio; they vary by age

• Personnel costs are the largest expense○ 49% - 77%


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Costs vary depending on . . .•Program quality (i.e., staff qualifications, materials, etc.)

•Geographic location •Ages of the children being served•Families’ costs may vary:○Multi-child discount, subsidies (i.e., State & Federal, TANF), tax credits or deductions, etc.


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Strategies ○Adequately planning for the program’s financial health ○Carefully calculate cost per child and develop an aligned fee structure (if applicable)○Actively seek additional revenue streams


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Funding Sources

•Federal assistance: grants, contracts, and vouchers

•Foundations•Employer Assistance •Fees, tuition, miscellaneous sources


Proposal Planning• Having a clear understanding of the

proposed project before pursuing a funding source

• Next, describing the population served and the need

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Activity-Find a Partner • There is a small grant opportunity (up to

$3,000) for classroom curriculum materials. Based on your program, describe the following: #1-The population being served; #2. The need for the resources; #3. How the resources will benefit your program; #4. How the program will spend the resources from the grant (i.e., list the materials and estimated cost).

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Writing the Proposal Most Proposals require the following outline:1.The Title Page-Title of the project, name of the agency, etc.2.Statement of Problem-General and specific objectives, documentation of the need, etc.3.Program Goals & Objectives- Broad goals & outcomes should be measurable 4.Population Served5.Plan of Procedure-How will each objective get accomplished

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Writing the Proposal-continued 5. Administration of Project-What staffing is requirements are being proposed & how will the program be managed 6. Program Evaluation-What assessment tools will be used?7. Future Funding-How will the program sustain itself after the funding ends?8. The Budget-Needs to show sound fiscal management10. Appendices-These may include job descriptions, organizational structure, etc.

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Local Programs’ Costs• Start-up Costs: Money goes to building, equipment and

supplies, 3 months of planning and the first 6 months or more of operation.

• Fixed Costs: Cost that do not change based on the number of children enrolled (program planning).

• Variable Costs: Costs that change with enrollment (supplies, teacher salaries).

• Capital Costs: Building, furniture & equipment (one-time costs) • Operating Costs: Recurring costs including salaries,

consumable materials • Hidden Costs: Costs paid by someone else (the donor of a

facility)


Budgeting • A budget is a list of goods and services

that a program must pay for.• The budget is an annual plan for financial

success of the child care program (i.e., properly allocating both income and expenses).

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Reflection • When I hear the word budget, I

feel……………………….

• Dealing with money makes me feel…………………

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Budgeting Overview

•Types of Budgets○Start-up Budgets○ Operating Budgets

•Budget Formats○Functional Budgets○Line-item Budgets


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Operating Budget• Income & expenses for the year once the program is operating near capacity includes:○Program summary○Itemized expenses○Anticipated revenue and their sources including in-kind contributions


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Functional Budget Format

Categories are based on how the money is used:•Administration, child instruction, family education, food and health services, and transportation

○Pro: Easily links categories to program purposes.

○Con: Somewhat broad, which may raise questions regarding expenditures within categories.


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Line-item Budget Format

Lists sums allocated to specific aspects of the program:•Salaries, fuel, utilities, telephone, postage, etc.

○Pro: Specific accountability for expenditures.

○Con: If too narrow, may limit director’s power to exercise changes in expenditures.


Video Clip-Tips For Managing Your Child Care Business Income & Expenses

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Sample Budget Allocations

•Salaries: 49%-77%•Occupancy costs (rent, mortgage, taxes): 6% - 23%•Food – 5% - 16%•Educational equipment & materials – 3%• Insurance – 2%•Telephone, utilities, office supplies, maintenance & repairs – 14%

•Supplementary Services – 3%


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Cash Flow Protection• To prevent cash flow problems:

○ Refrain from overestimating enrollment○ Calculate equipment estimates on cost per use

rather than purchase price○ Hire staff based on initial enrollment projections○ Expect and budget for enrollment lulls


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Reporting the Budget•Budget comparison report: Compare previous month to current month in each category.

•Annual Report: Lists amount budgeted and the amount spent over the whole year.

•Statement of financial position: Reflects income and expenses for the entire year showing the ending balance.


Class Activity-Create a Budget for Your Program

Using your selected child care program, estimated your total yearly revenue from all sources (i.e., tuition, grants, fundraising, etc.).

Next, list your budget categories (i.e., line items-staffing, educational supplies, etc.) and % amounts for each category (i.e., estimated cost).

Are there are gaps based on your yearly revenue and your program expenses? If so, how will you resolve this?

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Follow-up• Read Chapter 7 & review this weeks PowerPoint• Start working on assignment-Create a Budget for

Your Program due-11/8• Continue working on assignment- Creating a Mini

Staff Handbook due-11/1 Let me know if you have any questions!

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