The future of child care as a business in BC: $10aDay Plan Recommendations
BC is on the road to significant and systemic child care change. Building on broad public support, both the federal and BC governments have made substantial commitments to move from the longstanding, failed, market-based approach to a high quality, inclusive and publicly-funded $10aDay child care system. (1)
The purpose of this blog post is to share information about how the $10aDay system can be achieved - with public accountability for the increase in taxpayer funding - while acknowledging the hard work and investment of current child care owners, who are asking: “How does my business fit into the $10aDay Plan?”
We outline recommendations to the BC government (2) that give child care businesses - like all child care operators - a range of options to consider and choose from as they decide about their place in BC’s new child care system.
How does my business fit into the $10aDay Plan?
First, we must acknowledge that the child care sector, like many sectors, is facing significant disruption and change. From the pandemic to climate disasters to the ongoing recruitment and retention crisis, there’s a lot on people's plates right now, and it can be challenging to think about what the future holds.
With that in mind, what follows is a high-level overview of how child care businesses can find a home in the $10aDay Plan.
The $10aDay Plan includes 3 key recommendations:
- Build on existing strengths by welcoming in all current licensed child care programs - for-profit, non-profit, public, Indigenous, family, multi-age & centre-based – who want to participate in the new system. These programs are needed and valued, and should have the opportunity to receive fair and equitable public funding with accountability measures that respect their diversity and support their transition into a publicly managed $10aDay system.
- Create new non-profit, public and Indigenous child care programs. (1) Given that there are currently licensed spaces for only 20% of BC children, over time, this means that a significant proportion of child care programs and facilities will be publicly owned, managed and/or delivered—all key elements of effective child care systems.
- Enable current child care operators to provide licensed programs outside the $10aDay system if they prefer. They would still be required to meet licensing standards but would not receive new $10aDay public funding. Rather, operators could maintain 2021 levels of provincial funding (CCOF, CCFRI and WE) and, working within current accountability requirements, determine the level of fees charged and wages paid. Parents in their programs will continue to be eligible for the Affordable Child Care Benefit.
The detailed $10aDay Roadmap includes a range of options for child care operators and government to consider as they work to resolve the challenges associated with bringing existing centres located in privately-owned facilities into the new system.
Suggested options include:
- For privately owned centres without mortgages or leases at market rates: On the condition that the space remains available for child care use over the long term, these programs could move to $10aDay sites on comparable terms as those in public/non-profit facilities.
- For privately owned centres with outstanding mortgages or leases at market rates: Government could enter into negotiations with interested operators (3) to resolve how they may become eligible to operate as $10aDay sites. Options for consideration and negotiation include, but are not limited to:
- The centre agrees to operate as a $10aDay site at the same level of public funding received by programs in public facilities, with the same accountability requirements. The centre remains privately-owned, covering any remaining capital costs (mortgages, lease agreements) through other sources.
- Government assumes temporary responsibility for the lease, or rents space in the privately owned centre, until a publicly owned centre is available or the lease expires.
- Government assumes the remaining mortgage, acquiring the related share of public equity in the centre.
- If the owner wishes to sell the centre, government could purchase it and bring it into public ownership.
The $10aDay Plan also includes licensed family and multi-age child care that operates in homes that will remain privately-owned. We recommend an equitable funding formula which is fair for both taxpayers and these home-based operators.
We welcome discussions between government and interested child care operators about additional or modified options for consideration, with the understanding that all options are consistent with two fundamental principles: (1) they are fair to taxpayers and operators, and (2) they ensure that public funds are used to create public assets.
Why these Recommendations and Options?
Until recently, child care businesses in BC were typically owned by individuals, usually an ECE with one or two centres. These owner/operator programs have always been part of communities. Owner/operators expect to earn a reasonable income while providing a critical service to families and children.
For years, like the rest of the child care sector, these small business owners struggled to achieve their goals. Despite promotion of women’s entrepreneurship in child care as a path to gender equity, child care business owners often learned the hard way that the longstanding market-based approach to child care is actually unfair to women. In order to earn a return on their investment, child care entrepreneurs are forced to choose between paying the women who work for them low wages and/or charging the mothers who use their services high fees. Or, by trying to keep fees lower and wages higher, child care entrepreneurs could not pay themselves fairly. This dilemma is even more challenging when entrepreneurs are carrying a significant mortgage on their facility or making rent/lease payments at market rates.
It doesn't have to be this way. The $10aDay Plan invites all existing providers to participate in creating a publicly-funded system that is affordable for mothers, pays fair wages and benefits to educators, includes families in all their diversities and provides career paths for ECEs with management skills and experience. This will be a welcome opportunity for child care operators who share these goals.
However, since the introduction of significant new public funding in 2018, BC has experienced rapid growth in a different kind of child care business. Larger corporate entities - with multiple programs, including national and international chains, franchises and anonymous numbered companies - have entered the sector. Some of this growth also includes women entrepreneurs.
These larger child care businesses are designed to generate a profit for individual owners, franchisees and/or shareholders. In child care, profit-making involves high parent fees, low educator wages, standardized curricula, fees for additional services, and/or purchasing goods and services from related companies.
A common and explicit strategy for corporate child care is to use high parent fees and public funding (preferably, for them, in the form of market-based fee subsidies and tax credits) to support the purchase of privately-owned buildings and/or land. The corporation then benefits further as the value of their real estate assets increases.
As a result, many child care businesses have taken on significant mortgages in order to acquire privately-owned centres. The mortgage costs are typically included in the program operating budgets, which helps explain why parent fees in for-profit child care programs are 20 – 60% higher than in non-profit programs in BC (which generally operate in public or community-owned facilities).
Research from around the world shows that the expansion and profit-generating approaches of corporate child care are not compatible with the quality, inclusion, affordability and accountability goals of a publicly-funded system. This is why it’s important that the BC and federal governments have committed to ensuring that new government funding is used to create new public, non-profit and Indigenous-led child care.
The opportunity that’s before us today has taken 50 years of advocacy to achieve. We respect BC’s child care operators, who have done so much work over the years with so little public support. We hope all will join us in working with the BC government to develop a fair and equitable funding model that will help build the high quality, affordable, inclusive system that families need, ensuring that educators are well-compensated and child care programs in communities across the province are sustainable and valued for their contributions.
(1) An extensive body of research and evidence highlights the many ways that a market-based approach fails children, families, educators and our economy, pointing to the importance of building a publicly-funded and managed system of services of which a significant majority are public and non-profit.
(3) If the facilities are not owned and operated by the same organization, the facility owner may be involved in the negotiations as well.