PDX Parent Investigates: Why is child care so expensive?

Thirty-two-year-old Brittany Witherite opened Little Seeds Farm School in her Sellwood home for all the right reasons. She wanted to give other people’s children the best possible start in life, with personalized attention and creative lesson plans in a homey setting, complete with backyard chickens and goats. (This is Southeast Portland, remember.)

Her vision was clear: “I can pay my bills and follow my educational beliefs in an environment that feels safe.”

A preschool teacher in Portland for two years before partnering with her husband to start Little Seeds, Witherite didn’t fully comprehend one thing: How much it would cost to run the school day in and day out, even with tuition at $850 per month for 10 to 12 preschool-age children.

The surprise set in when Witherite completed her income taxes for 2015. After expenses and taxes, Witherite and her husband, Geoff Fasulo, made a combined salary of $24,000. (Not a typo.)

Witherite’s experience highlights the central dilemma at the heart of the child care industry in the United States. Every month parents fork over huge checks — more than their mortgage or rent, in many cases — to pay for child care. Yet the workers entrusted to care for their children earn meager salaries barely above minimum wage, leading to an industry-wide turnover rate of about 25 percent, according to Child Care Aware of America. Some operators in Portland put the figure higher, at 40 percent.

Ask any parent and they’ll readily acknowledge no teacher is getting rich reading little Eleanor Goodnight, Goodnight, Construction Site, or changing little Finn’s wet diapers. A few owners of large centers or chains may earn comfortable livings, but they are the exception rather than the rule.

So where exactly is the money going? Witherite says she hears that question all the time on tours of her school, which offers all-day care for children ages 2 to 5. It’s one of the first things they want to know, she says: “‘Why is it so expensive?’”

The answers, not surprisingly, isn’t straightforward. It depends on a host of factors, including how much centers pay their workers, what kinds of benefits they offer and what food they serve — organic or conventional.

By far the single biggest expense at any center is staffing, and that springs from something facilities can’t control. Oregon maintains strict limits on the number of children any one person can care for in a certified center. That means for every 4 children under the age of 2, there must be 1 adult. For children ages 2 to 3, the ratio is 1 adult per 5 children. For preschool age children over 3, the ratio is
1 adult per 10 children.

Oregon, compared with the rest of the country, has stricter and costlier standards. In several states, including New Mexico, Louisiana and Nevada, a single person is permitted to care for a whopping 6 infants. In other states, such as Texas, the 1-to-4 ratio for infants starts increasing when the child turns 1, and it goes up sharply from there. A 2-year-old child in Texas can be in a group with 1 adult and 10 other children — more than twice the number for Oregon.

Looser restrictions exist on the West Coast, too. In Washington, the 1-to-4 ratio increases to 1-to-7 when a child reaches the age of 1, and Washington allows 1 person to care for 10 kiddos when they’re 2 ½, six months sooner than in Oregon.

California goes the other direction, with 1 adult responsible for just 3 infants. (It’s joined by only two other states in requiring this tough standard, Maryland and Kansas.)

Lowering Oregon’s standards would help to make child care more affordable, but it’s hardly an inspiring rallying cry.

“I personally doubt that parents want the state to lower its standards to those of low-regulation states,” says Bobbie Weber, a member of Oregon’s Early Learning Council. “It is hard to imagine anyone leaving an infant with a person caring for five babies. If they were not worried about safety they would certainly worry about the amount of attention the baby gets.”

Oregon’s relatively low ratios in part explain why the state ranks near the top of a national tally of childcare tuition.

In 2016, Oregon ranked 15th in the nation for cost, according to a survey by Child Care Aware of America. But when the Virginia-based clearinghouse factored in families’ incomes, Oregon fared even more poorly, rising near the top of the list as the 3rd least affordable state for infant care, after No. 1 Hawaii and No. 2 California. It does only slightly better in the category of preschool affordability, coming in as the fifth least affordable state for families with 4-year-olds.

“Our prices are out of line with household incomes,” says Weber, who is also an early childhood expert at Oregon State University.

Sonya Rheingold lives with these numbers running through her mind. As financial director for ChildRoots, a daycare and preschool with six locations in Portland, she’s responsible for paying bills and setting prices — and she’s not optimistic about the trends.

“They think it’s expensive now,” she says of parents. “They’ve seen nothing yet. All you have to do its look at San Francisco or Seattle to know what’s going to happen to our rates.”

That worry stems largely from attempts by Oregon lawmakers to raise the minimum wage — an effort that aims to improve the livelihood of low-income workers like those in childcare centers, but that will no doubt squeeze parents already struggling to pay for care. Under a 2016 bill, the minimum wage in Portland is set to increase annually until it reaches $14.75 per hour in 2022.

By then, Rheingold predicts, full-time infant care commonly will cost $2,000 a month in Portland, up from the current rate of $1,590 at ChildRoots.

“Child care centers will have to deflect that increase in wages,” says Rheingold, “and it will be in tuition.”

ChildRoots, for example, already pays its workers more than the minimum wage of $9.75 — an average of $13.75 an hour, Rheingold says.

ChildRoots also pays its staff equally, unlike other centers that pay significantly less to substitutes or people who provide primary teachers their breaks. “People are doing equal work,” she says, “they need equal pay.”

The company closes between Christmas and New Year’s to give teachers a paid break. And under Oregon law, they’re required to pay wages to teachers who call in sick. On top of that, they must pay for substitutes.

As Oregon’s minimum wage increases, Rheingold says her company plans to stay in step by raising ChildRoots’ wages. The company employs about 100 people, so an increase of $1.00 would cost the company about $200,000 in annual wages. That translates to a $640 annual cost to parents— or an extra $53 per month.

ChildRoots adheres to a child development philosophy that encourages community. That means children who enter as infants stay with the same children until they graduate to kindergarten. But that also costs more. In other centers, for example, when a child turns 2, he’s separated from the younger children and sent over to a classroom where the teacher can care for more kids.

One surprising fact? Employing a staff made up largely of women who are of childbearing age comes with a 4 percent premium on health insurance, according to ChildRoots’ insurance broker.

All of that adds to the single biggest expense at any center — people. But Rheingold says it’s crucial that they not cut corners in that area, because employee satisfaction is a huge determinant of the quality of a child’s experience. “We’re trying to rail against the 40 percent turnover,” Rheingold explains. “We want to retain our staff.”

With the costs of programs falling entirely on parents, some have turned to creative solutions. Susan Eisman is the lead teacher at Hawthorne Family Playschool — and the only paid staff member of the cooperative preschool based in a Southeast Portland church space.

Cleaning? Budgeting? Ordering supplies? All those tasks fall to parents who volunteer to perform certain jobs every month, on top of working in the classroom as teachers on a rotating basis.

Even then, the part-time program for 14 children isn’t cheap. The annual budget for the school is about $100,000, Eisman says.

“Early childhood is super expensive and there are hidden costs people aren’t aware of,” she says.

That includes accident insurance, an ever-rotating supply of toys and craft material that get worn or damaged quickly and rent of $900 per month for use of the church.

There are two things that make Hawthorne Family Playschool financing special. In 2010, parents banded together to find a way to pay Eisman a higher-than-average salary, which is now about $40,000 a year (plus a modest stipend so she can pay for health insurance and retirement).

But they did it in a way that aimed to keep tuition affordable, even for families with more modest incomes. They introduced a sliding scale fee that today lets parents with above-average incomes pay $319 a month for three days of morning care, while parents who make far less pay only $238 per month for the same care.

The strategy actually generated more income for the center, not less, because it educated parents about the center’s costs, Eisman says. “It’s all on the honor system,” says Eisman. “We’re a small community, and it’s worked for us.” Eisman hopes other programs will consider the sliding fee scale option as a way to generate more revenue without out-pricing families that cannot afford to pay more.

Back at Little Seeds Farm School, Witherite realized after her first year that she would have to raise tuition for new students by $100 per month. They’d initially set their tuition after crunching numbers and surveying other facilities, settling for a price in the middle range of comparable programs.

“We felt very confident with that number,” she says of the initial tuition rate, “and it wasn’t enough.”

Even now, she and her husband — who have an infant of their own now — are making less than the median household income in Multnomah County, about $3,500 a month or $42,000 a year, after expenses.

She brings in more money running an in-home center than she did working at a large preschool. But the money goes out the door fast. She estimates she spends $300 to $500 per month on supplies, everything from new MagnaTiles to shaving cream for art projects. Three times a year, she has to lay down new mulch in her backyard, an Oregon safety standard that costs $500 per load. She spends a minimum of $175 per week on children’s food, and her water and electricity bills have increased significantly because she runs the washing machine and dishwasher regularly, she says.

About three times a year she gets an emergency call from a parent who says the family can’t pay. She doesn’t ask parents to put down a deposit to cushion the financial blow. So if a family has to withdraw suddenly, she has to scramble to fill the spot, calling people on the waiting list and scheduling tours. “It’s sad and it’s stressful,” she says.

Different educational groups offer great classes aimed at child care providers on childhood development and fostering children’s emotional health. But that kind of support is lacking on the financial side. “The business support is zero,” Witherite says. “That’s what you have to learn yourself.”

It’s a steep curve, with lots of hard lessons. But Witherite wouldn’t have it any other way.

“I get to spend my days teaching things like meditation and yoga to kids,” she says, “and that, to me, is priceless.”

 

 
 


Beth Slovic

Beth Slovic

Beth Slovic is an investigative reporter at Willamette Week and a mother of a 3-year-old girl.
Beth Slovic