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Across the U.S. there are thousands of women struggling to keep their child care programs open. Most are working hard and following the rules. But what these child care business owners don’t know is they’ve been fighting an uphill battle from the start. The very structure of their business — with revenues based on market demand and pricing, but costs driven by quality teaching standards and administrative requirements beyond the capacity of a small child care program — often dooms them to failure. 

The pandemic has laid bare the value of child care in the United States while underscoring a systemic challenge — small child care programs rarely generate enough tuition revenue to pay the bills. When enrollment drops, cash flow plummets and these vulnerable businesses quickly go belly up. Moreover, small child care sites are typically required to comply with the same standards and staffing requirements as centers five times larger. That compliance includes meeting licensing and quality rating requirements, hiring staff who meet minimum qualifications, providing professional development, sending financial reports to the government and more. While well-intentioned, the long list of hurdles is often an impossible challenge for small programs.

As the U.S. emerges from the pandemic and begins to rebuild the child care systems that support our economy, it’s time to rethink how we structure, regulate and finance small child care settings. Early in the pandemic I wrote an issue brief, Reinvent vs Rebuild: Let’s Fix the Child Care System, that offered a playbook for change. The Biden administration’s American Rescue Plan includes funds that can be used to implement many of the innovations I recommended.

Independent, small child care businesses can succeed if we are willing to challenge some long-held beliefs.

States can use federal funds to ensure that every child care program has state-of-the-art technology to manage their businesses more efficiently. Individualized business coaching can be linked to child care management software to help child care administrators adopt new technology and generate reports to track key business metrics. Regulations regarding staff supervision and leadership can be revised to embrace the power of technology to enable remote supervision and support. With technology at the center, small sites can form networks that share a “back office” to support their administrative and business functions.

A networked approach enables small business owners to maintain more stable finances and allows providers to focus on caring for kids. Network hubs can manage family enrolment and work to keep costs affordable. Per-child rates for government reimbursement based on the cost of providing high-quality child care (rather than market prices) can be established for the network as a whole.

Ultimately, networks can make it possible for owners of small child care programs to stay independent, but also have the opportunity to tap needed benefits and share human resources costs such as recruiting and on-boarding staff, securing janitorial and maintenance services and offering needed health, mental health and family supports.

Related: Four ways to rebuild a better early ed system

Universal access to child care management software can also make it possible to collect “real-time” data on the availability of child care by the age of the child and location. Families conducting on-line searches can learn about child care options in their neighborhood, find an available slot, request a (perhaps virtual) tour, reserve a slot, enroll their child and pay tuition. Once the child is enrolled, child care directors and teachers can communicate with the parents via electronic apps and share photos and progress reports.

In short, everyone can spend more time on what matters most — relationships with children and families — rather than compliance reporting and administrative paperwork.

In most of the U.S. this vision is currently impossible to put in place, given old-school thinking about how child care programs are regulated and administered, limited technology capacity and inadequate, siloed funding that varies based on each child’s age or family income and, in some cases, their daily attendance. But change is possible.

Independent small child care businesses can succeed if we are willing to challenge some long-held beliefs, including how we think about finances and accountability. The coronavirus pandemic has had a devastating impact on the child care industry, but it has also taught us that small group learning is a great option, that technology can connect us, that many activities can be performed virtually and that sustainability is a collective endeavor.

Let’s use funding from the American Rescue Plan to shape those lessons into a new child care system that works for everyone.

Louise Stoney is co-founder of Opportunities Exchange, a nonprofit focused on transforming the business of early care and education.

This story about small child care programs was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for the Hechinger newsletter.

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