NEW ULM – A child care crisis is affecting Minnesota – insufficient providers to meet current demand is preventing some parents from returning to the workforce.
The New Ulm Economic Development Authority has studied different methods to expand access to childcare services in the community. Last month, the board discussed the daycare pod model.
This model is different from the home day care model and the day care center model. Under the pod model, multiple home child care providers operate different providers under the same roof. The idea would be to have two or more child care businesses operating in the same space, using shared resources.
The EDA has requested more information on the pod model. Amber English from Children’s First Finance gave a presentation explaining how the pod model could work. She gave the example of a hypothetical daycare center operating with four classroom modules. In this scenario, each pod was managed by a different vendor with a different business structure. This means that each pod can charge a different fee for daycare or choose to be part of the state-run food program.
In each scenario, the individual modules have 12 children each; one infant, two toddlers, five preschoolers and two school-aged children during the school year and two school-aged children during the summer. This is the maximum number of children a single provider can monitor. The annual expenses are the same for each pod. Some expenses could be shared between suppliers, such as Wi-Fi access, kitchen space and play equipment
In the first module, the provider had the lowest weekly rate at $140 for a baby; $135 for a toddler; $130 for preschoolers; $125 for school-aged children during the summer and $42 for school-aged children during the school year. This provider does not charge any additional activity fees and is not part of the state food program.
English said this example was not viable. A business operating in a cluster would lose money with such low costs and no food program funding.
The second example charged higher prices with $150 for infants, decreasing by $5 per week for older children. The second example was part of the food program and also charged a $500 activity fee. English said this supplier would see a profit at the end of the year.
The third scenario starts at $155 for infants, charges annual activity with no feeding program. This supplier would almost break even.
The fourth scenario charges $162 for infants per week, which decreases as the child ages. This example had annual fees for activities and is part of the food program. English said it was the most profitable of the businesses, estimating an annual profit of $7,000.
Chairman Daniel Braam asked if there was a financial advantage for a family license provider to be in a group versus operating from home.
English said there was not necessarily a financial benefit to operating in a pod. Suppliers would lose tax reductions if they did not operate from home. The advantage of the pod model is that it allows daycare people to run a business if they don’t have the space for it. She thought that was the type of person most likely to work in the pod model.
English said some families like to send kids to pod daycare because potential back-up care is available. If one of the module vendors is unavailable, one of the other vendors may be able to serve as a backup if open that day.
Asked why some vendors might not participate in the food program, English said the food program requires vendors to take on an additional charge. They must record food menus and certain foods are restricted.
English said there is a change in daycare licenses coming this summer. Currently, a different owner must own each pod even if they are in the same building with a separate address. Starting in July, one individual could be the owner of all pods.
English said the biggest difference between the pod model and a daycare center is the ratio of staff to children. Cash flow could be an issue for small daycares. In one centre, the ratio is one adult for four children. A center will often lose money on infant care.
Preschoolers are where daycare operations make a profit and can offset the loss on infant care. School-aged children can also be a source of profit, but many participate in after-school programs and daycare is unnecessary.
The pod model has the same restriction as a family license provider and there is more flexibility in mixed age groups and can generally be up and running faster than a center.