Falls Church City Public Schools Extended Day Care Program

Transcription

1 Falls Church City Public Schools Extended Day Care Program (703) To: FCCPS School Board From: Bobby Kaplow Re: Ext. Day Care Business Plan Date: November 8, 2006 For quite some time Hunter Kimble, Joe Walsh and I have been brainstorming ideas and gathering data for inclusion in the Extended Day Care Business Plan, as per the Board s request. Last Thursday I was asked to submit a draft or outline of the document for discussion prior to the School Board meeting on November 14 th. Attached is an early version of the Business Plan. I emphasize that this is just a draft, an unfinished product, to give the reader an idea of the direction in which we are headed and the type of information we will provide. Hopefully, this outline will generate discussion, questions and suggestions regarding information to be included in the final product, which I hope to complete in late December or early January. Thank you for your consideration and please feel free to communicate any additional information or data you would like to see included in the Extended Day Care Business Plan.

2 Falls Church City Public Schools Extended Day Care Program Business Plan

3 Table of Contents Executive Summary.. Objectives Mission Company Summary.. The Customers... The Management Financial Plan Market Analysis.. Projecting Expenses Projecting Revenue Determination of Fees Financial Impact of Reduced Fee Families. Management of Accounts Projected Cash Flow Current Financial Snapshot & Projections for FY07.. Financial Projections for FY08 FY12 Future Actions 2

4 1.0 Executive Summary For over thirty years the Falls Church City Public Schools Extended Day Care Program has provided high quality and affordable child care to City families. The program serves children in kindergarten through seventh grade at three sites, including children with special needs and from families with lower incomes. Almost entirely self supporting, the program raises its operating expenses from fees charged to participating families and has maintained a positive fund balance since Objectives The objectives for the FCCPS Extended Day Care Program are: To provide high quality child care. To meet the child care needs and expectations of City families. To make our services affordable and accessible. To operate a fiscally responsible program in which revenue meets operating expenses 1.2 Mission The mission of the FCCPS Extended Day Care Program is to meet the child care needs and expectations of City families by providing high quality child care that emphasizes the safety and accountability of each child as the highest priority. The program must make every day a special experience for each child by offering fun, interesting and enriching games, projects and activities that are appropriate for all age levels. 2.0 Company Summary The Falls Church City Public Schools Extended Day Care Program operates childcare centers at Mount Daniel School, Thomas Jefferson Elementary and M.E. Henderson Middle School (ASAP). During the school year, service is provided at the elementary schools from 7:00 a.m. until school begins and upon school dismissal until 6:30 p.m. At M.E. Henderson, the Middle School After School Activities Program (ASAP) is open after school each day until 6:30 p.m. Child care is available during Winter and Spring Break, and Professional Development Days from 7:00 a.m. to 6:30 p.m. Even on days when school is canceled or dismissed early due to inclement weather, the programs remain open unless safety concerns arise. 3

5 Unlike most child care programs, the Falls Church City Schools Extended Day Care Program has no waiting list for registration and offers families a variety of enrollment options and special services. For example, children can register to attend on a full time basis (4 5 days per week), a part time basis (2 3 days per week), one day per week or on a drop in basis. Most programs have only the full time options, and fees, regardless of attendance. Falls Church is also unique in that it opens its child care facilities on many days when school is closed, including most days when school is closed due to inclement weather. In addition to recreational, art, drama and music activities, the program offers other enrichment and educational opportunities. Computer and foreign language activities, reading and science projects and many other fun and enriching events occur regularly. At Thomas Jefferson and ASAP one hour a day, Monday through Thursday, is designated for quiet homework time. Summer programs operate at all three sites, beginning the Monday after the final day of school and running until one week prior to the opening of the new school year. During the summer the centers are open from 7 a.m. to 6:30 p.m. each day. The Day Care staff works closely with the instructional staff, the special education specialists and the participating families to ensure that the needs of every student are met. If necessary to meet the specific needs of a child, Day Care staffing is increased at no additional cost to the family. 2.1 The Customers Children in kindergarten through seventh grade, who reside in the City of Falls Church and whose parents are working, looking for work, in school or disabled are eligible to participate in the Extended Day Care Program. Children in kindergarten and first grade attend Day Care at Mount Daniel School. Children in grades 2 4 attend Day Care at Thomas Jefferson Elementary School. And, children in grades 5 7 attend the after school program at M. E. Henderson Middle School. Non city residents, paying a surcharge, may enroll their children in the summer program should space be available after City residents have been offered an opportunity to register. 4

6 2.2 The Management The Extended Day Care Program is operated by the Falls Church City Public Schools under the office of the Assistant Superintendent of Finance and Operations. The Day Care Program is directly supervised by a full time Program Coordinator and Assistant to the Program Coordinator. At each school there is a Center Supervisor and Assistant Center Supervisor to oversee the daily operations and activities. Staff size varies depending upon enrollment, as a staff to child ratio of approximately 1:8 at Mt. Daniel, and 1:10 at TJ and ASAP is desired. The program is licensed by the Virginia Department of Social Services and subject to at least two unannounced compliance inspections annually. 3.0 Financial Plan Under the Code of Virginia school sponsored child care programs are prohibited from receiving funding from the school district and its budget must remain separate from the schools operating budget. Thus, the Extended Day Care Program s budget is incorporated into the Community Services Fund and is not included in the school system's operating budget. With the exception of a small subsidy from the City government ($37,000 in ), the program is self sufficient and raises its operating revenue from fees charged to participating families. The subsidy from the regular City government is designed to offset the revenue not realized due to the participation of families that qualify for reduced fees. 3.1 Market Analysis An assessment of the program s market is critical to the creation of the program s annual budget. Therefore, an exhaustive review of a number of factors and data is reviewed and collected to allow educated expense and revenue projections. Historical Day Care enrollment and attendance data and school enrollment are critical to estimating costs, as that information is used to determine staff costs, the largest single expense to the program. Attendance projections also significantly impact virtually all other expense projections. Other data that is collected and reviewed to assess the market include: 5

7 The total actual student enrollment of each school The percentage of student enrollment that participates in the Day Care Program Historical data regarding the percentage of children enrolled at the various enrollment options (full time, part time, one day per week, drop in) Historical data FY05 & FY 06 a. Income received from fees and other items b. Billing data showing: number of clients amounts billed breakdown of billing per month Census data regarding household income in the City of Falls Church Day Care Program survey results regarding household income of participating families Number of students that qualify for reduced fees, thus requiring a subsidy Subsidy requirements for each reduced fee family Operating procedures and policies of other area programs Fees charged by other similar programs in the area Reduced fee scales of similar programs Number of employees in similar programs 3.2 Projecting Expenses When projecting expenses a number of factors are considered, including: Historical data from FY05 & FY06 Percentage of increase/decrease of expenses in recent years Breakdown of expenses by account Breakdown of expenses by month Expense comparison with budget Expense comparison with budget by month Current enrollment (which impacts attendance) 6

8 Current attendance (which impacts staff size) Necessary staff size (determined by child to staff ratios) number of children requiring special care or supervision wage and salary increases increasing cost of benefits Inflation Overhead Transfer cost Staff salaries and wages, and the accompanying benefits, comprise between 80 85% of the total budget. Therefore, changes to the size of the staff have the greatest impact on the program s operating expenses. The annual budget is carefully constructed to account for every hour that each employee will work during the 12 month period, based on the projected attendance and current average wage. However, because staff size directly impacts the safety and supervision of the children, reductions in staff must be carefully considered before implementation. The Program also pays back an indirect cost in excess of $83,000 to the schools Operating Budget to offset charges incurred by business applications, custodial services, insurance and utilities. This fee was originally established in 1990 and was to increase by 3% each year. However, last year the School Board requested that the actual overhead expense be calculated and implemented, so this charge increased by $43,000 (108% increase). Food for the daily snack comprises the next largest expense, followed by Professional Services (field trips, special events, guests) and educational materials. These expenses are also determined by attendance projections and included in the annual budget. 3.3 Projecting Revenue A complicating aspect of projecting program revenue is that many of the unique variables that are regarded as benefits to the participating families (for example, the variety of enrollment options and reduced fees) fluctuate or are difficult to predict as people s childcare needs and financial situations change throughout the year. Thus, historical data is reviewed and compared to actual current information in an effort to most accurately determine the challenging variables indicated below: 7

9 School enrollment Day Care enrollment Type of enrollment Monthly school year fees Weekly summer fees Number of families qualifying for reduced fees Number of children qualifying for reduced fees at each income level Type of enrollment at each income level Using the data described in 3.1 and 3.2 above, revenue projections are made regarding the number of: Children attending full time Children attending part time Children attending one day per week Children attending on a drop in basis Percentage of children in each income level on the Reduced Fee Scale Additional analysis is conducted in projecting revenue, including a review and analysis of: Fees: Projections for 1 years and 5 years Income for Summer program Income for School year program Possible need for income level increase Possible need for percentage of income increase Impact/effect of increasing fee levels Subsidies: Monthly unrealized revenue, requiring subsidy How estimated Other income sources: Monthly fees Effect of increasing fee levels on subsidies Registration fees Drop in fees 8

10 Breakeven analysis Late pick up fees Late payment fees Professional Days fees Winter Break fees Spring Break fees Interest PP carryover Fees vs. expenses Using the projections determined above, models are constructed using proposed fees at each income level Determination of Fees Fees are set at the levels that are projected to generate enough revenue to cover annual expenses. But, because of the volatile nature of the variables used to project the program s financial information, the Day Care Program s annual financial position can vary widely from year to year. Although the program has maintained a net/cumulative positive financial position over the last nine years, for four of those years the program ended with a deficit (see chart x). The program currently carries a fund balance of $36,000, which serves as a buffer for unforeseen expenses or significant shifts in participation, which impact revenue. Numerous scenarios are run using different fee proposals, enrollment and attendance data and household income information, resulting in a number of revenue totals. Fees are determined by finding the fees that generate the revenue necessary to meet the operating expenses projected in the budget. Fees are generally calculated and approved in late spring because the information used to determined fees is not available until the budget has been approved. For example, staff salaries and wages comprise between percent of the Day Care budget. Yet, information regarding salary and wage increases is not finalized until the budget is approved. In addition, often the cost of employee benefits is not determined until late in the budget cycle. In programs 9

11 that do not have to raise their own revenue, this information does not have great impact. But, the Day Care Program must wait until this information is available to accurately determine fees. Recently the Program Coordinator and the Day Care Advisory Board completed an exhaustive study and assessment of the program s reduced fee scale. The result was a complete revision of the scale, which more accurately reflects the household income levels for families in the City of Falls Church. Subsequently, the fee structure and fees were revised to more equitably impose charges on participating families and more effectively generate revenue. In revising the Fee Chart, an effort was made to meet the following goals: Better reflect actual household income levels in the City. According to the 2000 Census, the median household income in the City of Falls Church was $97,200. Also, a recent survey of Day Care parents indicated that over 23 percent of participating families have a household income above $200,000. Thus, the top income level on the Fee Chart was increased from $40,000 to $80,000 to prevent families with large discrepancies in income from paying identical fees. Previously, families with a household income of $40,001 were paying the same fees as those with a household income of $80,000 and above. Make fees equitable to all families. Previously families paid varying percentages of their income. The new scale allows fees to be standardized and calculated as a percentage of household income. Provide flexibility for future years. Should actual household income levels change the fee scale will be adjusted to reflect the changes. In adjusting fees, an effort was made to meet the following goals: Keep fees affordable. Fees were set at 3.5% of household income. The national average for school age child care fees is between 5 9% of household income. Create fees that will meet operating expenses. The Day Care Program is required to create fees that meet operating expenses and cannot receive funding from the school district s operating budget. However, school sponsored programs can receive funding from their local governments. Currently, the City subsidy to the Day Care Program is less than four percent of its operating budget. To relieve the burden from participating families, we are working towards acquiring a greater subsidy from the City. Neighboring programs receive as much as a 30% of their revenue from local government subsidies. Make fees fair to all participants. The new fees require all participants to pay an equal percentage of household income regardless of income level on the fee scale. 10

12 Keep fees competitive relative to other area programs, while maintaining the services unique to our program. The fees have not been increased significantly for many years, resulting in fees much lower than neighboring programs. However, for two years operating expenses exceeded revenue. The new fees will keep our fees very comparable to, or slightly lower than, other programs in the area. At the same time the program will be able to maintain the unique aspects that have made it so attractive to parents, such as part time fees (most programs require full payment regardless of the child s attendance), sibling discounts and child care service on days when school is closed Financial Impact of Reduced Fee Families As noted above, the Reduced Fee Scale was revised recently to better reflect the household income distribution in the City of Falls Church and more equitably charge fees. The top level of the scale was increased from $40,000 to $80,000, with additional income levels added. Therefore, the Day Care Program offers a reduction in fees to families that can verify a household income below $80,000. The fee reduction ranges from 87.5% to 20% of the standard fee. However, at each level of the scale, fees are calculated at 3.5% of the household income. The result of increasing the household income levels on the reduced fee scale is an increase in the number of children that qualify for reduced fees from about 7% to about 17% of the total enrollment. In other words, a significant number of children qualify for reduced fees in the income levels between $40,000 and $80,000. Currently 61 children qualify for reduced fees. In contrast to similar programs in other localities, the Falls Church Day Care Program is almost completely self supporting, generating its operating funds from fees to participating families. Prior to this year, the program received a subsidy from the City of $5,000 to offset the cost to the program from the unrealized revenue of reduced fee families. This year, the subsidy was increased to $37,000 or about 3.5 percent of the program s budget. By contrast, Arlington County s Extended Day Program receives well over $2 million, about 30 percent of its operating costs, from the County to subsidize its reduced fee families. The Day Care Program carefully monitors the unrealized revenue (the difference in revenue between families paying reduced fees and the revenue that would be collected if those families were paying the standard fee) resulting from the availability of reduced fees. During the current school year, the unrealized revenue, and necessary subsidy, is approximately $6,500 per month. 11

13 The Superintendent has asked that the actual amount of unrealized revenue be reflected in the program s budget request for next year as the Interfund Operating Transfer. 3.4 Current Financial Snapshot and Projections for FY07 Each month a summary of expenses and revenue is presented to the Extended Day Care Advisory Board. This summary includes figures for the previous month, as well as, year to date totals. A summary of current revenue vs. current expenses will be included in the final version of the Business Plan. 3.5 Financial Projections for FY08 FY12 Using the various types of data discussed in this document, financial projections for the next five years will be developed and included in the final version of the Business Plan. 4.0 Management of Accounts The Finance Secretary in the Extended Day Care Office manages financial accounts for each participating family. Each account includes: the name and address of the person responsible for payment the name of the child or children participating in the program the child s enrollment (full time, part time, one day/week, drop in) the income level of the family a history of charges a history of payments received the account balance Each month during the school year billing statements are distributed on, or about, the 15 th of the month. Payments are due by the first day of the following month. When payments are not received on time, the parents/guardians are assessed a $20.00 late payment fee and contacted in person, by e mail or telephone as a reminder of the outstanding payment. If fees are not submitted within a few days, the parents are contacted again. If payment remains outstanding, the Program Coordinator contacts the parents/guardians, usually by mail, to inform them that payment must be submitted by a specific date or their child s enrollment in the program will be suspended until full payment is received by the Extended Day Care Office. 12

14 During the summer program, fees are collected weekly. Thus, billing statements are not distributed. Fees are due on Thursdays, prior to attendance the following week. If fees are outstanding, the parents are contacted and the child cannot attend until the payment is received. Other topics to be covered under Management of Accounts and included in the final version of the Business Plan include: Account receivables aging per month summary Uncollectible accounts (a) Definition (b) Where shown (c) How accounted for (The Extended Day Care Fund has been remarkably efficient in collecting fees from participating families. In FY06, fees charged to parents exceeded of which less than $xxx remains outstanding.) 4.0 Projected Cash Flow: The Program Coordinator and Finance Secretary closely monitor the program s cash flow throughout the year. The issues noted below will be discussed in the final version of the Business Plan: Cash flow is effected by the timing of the receipts Disbursement of cash Indicates whether expense can be met Fluctuates month to month Factors influencing change in cash flow Changes in payroll Collection of receipts Accrued expenses Cash flow projections will show, at end of period Net cash flow Cash balance Cash flow will require a Balance Sheet statement which is not currently available 13

15 There are several proposals that are being considered to more effectively and efficiently manage the Day Care accounts. These proposals include: Changing the current system of depositing revenue to Improve efficiency of deposit receipts Assessing the feasibility of allowing families to make payments using credit cards Assessing the feasibility of allowing Electronic Fund Transfer payments Levying finance charges for late payments, instead of a $20 late payment fee Calculating the Average Collection period quarterly to show actual period Increase cash flow 6.0 Future Actions The Assistant Superintendent, the Program Coordinator and the Finance Secretary have set the following goals for the coming year. The issues will be discussed in more detail in the final version of the Business Plan. Continue to monitor Day Care enrollment, staffing and revenue to ensure the continued viability of a self supporting program. Track actual non realized revenue from families paying reduced fees to request accurate revenue (subsidy) from the City. Though it is unknown how changes to the eligibility requirements would effect expenses and revenue, a review of current School Board policies 5.36 and will be conducted to ensure compliance with the Code of Virginia and reflect current practice. 14