This document discusses strategies for managing a childcare center's budget and labor costs. It examines common budgeting challenges like not having a written budget or planning for unexpected expenses. The largest costs are typically salaries and classroom materials (50-60% of expenditures). Labor is the highest investment but also highest return through retaining enrollment. The document reviews labor laws around exempt vs non-exempt employees, overtime pay, and breaks. Best practices include overestimating expenses, knowing enrollment cycles, and constantly revisiting the budget.

1. Budget and Labor Management
Audrey Rowland, MS MBA
www.greenspacetx.com

2. Objectives
• Examine current budget challenges
• Discuss strategies for controlling cost and forecasting revenue
• Review labor laws and compliance
• Identify the best practices for successful budgeting

3. Discussion
Do you work from an annual budget?
What are your biggest budgeting challenges?

4. Common Mistakes
• Not writing a budget
• Not calculating cost of services/tuition
• Not planning for unplanned expenses
• Not investing in labor

5. The challenge it to figure out how to run a quality program
that parents can afford to use and teachers can afford to
work in.
Affordability  Accessibility  Quality

6. Revenue
Tuition
• Actual cost per child
• Amount parents in the community can pay
• Fees charged by nearby programs
• Subsidies
• Cost of care in each program

7. Fixed vs. Variable Costs
Fixed:
• Administrative salaries
• Occupancy costs
• Insurance
Variable:
• Teacher labor
• Food
• Materials/Supplies

8. Expenditures
Salaries and Classroom Materials 50-60%
Administrative Cost 12-20%
Food 6%-19%
Occupancy 10-20%
Other (transportation, health, etc) 5-20%

9. Controllable Costs
Calculate per child
• Food
• Supplies
• Labor Cost
Divide average annual salary by the number of children per teacher and double.
Ratio 8:1
Average Salary $20,000
Cost per child $5000

10. Labor
• Largest expense
• Highest Return on Investment (ROI)
• Great teachers retain enrollment

11. Best Practices
• Know and understand your risks
• Overestimate your expenses
• Know your enrollment/sales cycle
• Plan for large purchases carefully and early
• Remember that time is money
• Constantly revisit your budget

12. Labor Law
Texas Payday Law – Texas Workforce Commission
U.S. Department of Labor – US Wage and Hour Division

13. Exempt vs. Non-Exempt
Employees exempt from minimum wage and overtime benefits.
• Job title does not determine status
• Administrative or professional
• Teachers are exempt if their primary duty is teaching, tutoring,
instructing or lecturing in the activity of imparting knowledge, and if
they are employed and engaged in this activity as a teacher in an
educational establishment.

14. Learned Professional Exemption
To qualify for the learned professional employee exemption, all of the
following tests must be met:
• The employee must be compensated at a rate not less than $455 per
week
• The employee’s primary duty must be the performance of work
requiring advanced knowledge, defined as work which is
predominantly intellectual in character and which includes work
requiring the consistent exercise of discretion and judgment
• The advanced knowledge must be in a field of science or learning
• The advanced knowledge must be customarily acquired by a
prolonged course of specialized intellectual instruction.

15. Paying for training
You must pay unless all 4 of the following are met:
(1) it occurs outside normal scheduled hours of work
(2) it is completely voluntary
(3) it is not job-related (unless the employee attends an independent
school or college on his/her own initiative outside work hours)
(4) no other work is performed during the period.
The time spent attending training that is required by the state for day
care center licensing is working time for which employees must be
compensated.

16. Paying for Training
• Training rate of pay
• Flex time
• Planning time/nap time
• Budget accordingly

17. Overtime
• Employees must be paid for all hours worked
• Overtime is paid after 40 hours in one work week
• Employees must be paid hourly, rather than at a ‘flat-rate’ or salary,
unless their position qualifies as exempt

18. Breaks
• Unpaid breaks must be at least 30 minutes
• Unpaid breaks must be taken outside of the work space/classroom
• Unpaid breaks should not include any work-related tasks
• Required for nursing mothers
Short breaks increase productivity, alleviate stress
and reduce illness

19. Reducing Labor Costs
• Substitute teachers
• Reduce turnover
• Invest in training
• Improve hiring/onboarding
• Creative/Flexible scheduling

20. Conclusion
• Share Best Practices
• Questions
• Action Plan