Cd 38 chapter 7 pp.ppt oct 2016

Chapter 7:
Financing & Budgeting
Planning and Administering Early Childhood Programs
Tenth Edition
Nancy Freeman
Celia A. Decker
John R. Decker
Prepared by:
Nancy K. Freeman
Tere Holmes
Kris Curtis
Adapted by: Katy Kelley

Freeman/Decker/Decker, Planning and Administering Early Childhood Programs, 10e
© 2012, 2008, 2005, 2001, 1995 by Pearson Education, Inc. All Rights Reserved
7-2
Early Childhood Programs are
Expensive
• Many families pay more for child care than
for housing
• Center based infant care can be more
expensive than in-state 4-year college
tuition (in 36 states)
As a result, families are stretched to the limit!

7-3
High quality programs are labor
intensive
• Operating costs reflect staff-child ratio;
they vary by age
• Personnel costs are the largest expense
○ 49% - 77%

7-4
Costs vary depending on . . .
•Program quality (i.e., staff qualifications,
materials, etc.)
•Geographic location
•Ages of the children being served
•Families’ costs may vary:
○Multi-child discount, subsidies (i.e., State
& Federal, TANF), tax credits or
deductions, etc.

7-5
Strategies
○Adequately planning for the program’s
financial health
○Carefully calculate cost per child and
develop an aligned fee structure (if
applicable)
○Actively seek additional revenue streams

7-6
Funding Sources
•Federal assistance: grants, contracts, and
vouchers
•Foundations
•Employer Assistance
•Fees, tuition, miscellaneous sources

Proposal Planning
• Having a clear understanding of the
proposed project before pursuing a funding
source
• Next, describing the population served and
the need
7-7

Writing the Proposal
Most Proposals require the following outline:
1.The Title Page-Title of the project, name of the
agency, etc.
2.Statement of Problem-General and specific
objectives, documentation of the need, etc.
3.Program Goals & Objectives- Broad goals &
outcomes should be measurable
4.Population Served
5.Plan of Procedure-How will each objective get
accomplished
7-8

Writing the Proposal-continued
5. Administration of Project-What staffing is
requirements are being proposed & how will the
program be managed
6. Program Evaluation-What assessment tools will
be used?
7. Future Funding-How will the program sustain
itself after the funding ends?
8. The Budget-Needs to show sound fiscal
management
10. Appendices-These may include job
descriptions, organizational structure, etc.
7-9

7-10
Local Programs’ Costs
• Start-up Costs: Money goes to building, equipment and
supplies, 3 months of planning and the first 6 months or more of
operation.
• Fixed Costs: Cost that do not change based on the number of
children enrolled (program planning).
• Variable Costs: Costs that change with enrollment (supplies,
teacher salaries).
• Capital Costs: Building, furniture & equipment (one-time costs)
• Operating Costs: Recurring costs including salaries, consumable
materials
• Hidden Costs: Costs paid by someone else (the donor of a
facility)

Budgeting
• A budget is a list of goods and services
that a program must pay for.
• The budget is an annual plan for financial
success of the child care program (i.e.,
properly allocating both income and
expenses).
7-11

Reflection
• When I hear the word budget, I
feel……………………….
• Dealing with money makes me
feel…………………
7-12

7-13
Budgeting Overview
•Types of Budgets
○Start-up Budgets
○ Operating Budgets
•Budget Formats
○Functional Budgets
○Line-item Budgets

7-15
Operating Budget
• Income & expenses for the year once the
program is operating near capacity
includes:
○Program summary
○Itemized expenses
○Anticipated revenue and their sources
including in-kind contributions

7-16
Functional Budget Format
Categories are based on how the money is
used:
• Administration, child instruction, family education,
food and health services, and transportation
○ Pro: Easily links categories to program purposes.
○ Con: Somewhat broad, which may raise questions
regarding expenditures within categories.

7-17
Line-item Budget Format
Lists sums allocated to specific aspects of
the program:
• Salaries, fuel, utilities, telephone, postage, etc.
○ Pro: Specific accountability for expenditures.
○ Con: If too narrow, may limit director’s power to
exercise changes in expenditures.

Video Clip-Tips For Managing Your Child
Care Business Income & Expenses
7-18

7-19
Sample Budget Allocations
• Salaries: 49%-77%
• Occupancy costs (rent, mortgage, taxes): 6% - 23%
• Food – 5% - 16%
• Educational equipment & materials – 3%
• Insurance – 2%
• Telephone, utilities, office supplies, maintenance &
repairs – 14%
• Supplementary Services – 3%

7-20
Cash Flow Protection
• To prevent cash flow problems:
○ Refrain from overestimating enrollment
○ Calculate equipment estimates on cost per use
rather than purchase price
○ Hire staff based on initial enrollment projections
○ Expect and budget for enrollment lulls

7-21
Reporting the Budget
• Budget comparison report: Compare previous
month to current month in each category.
• Annual Report: Lists amount budgeted and the
amount spent over the whole year.
• Statement of financial position: Reflects income
and expenses for the entire year showing the
ending balance.

Follow-up
• Review the entire module and then complete
the weekly discussion/exercise (under
discussions).
• Please let me know if you have questions!
7-22

Cd 38 chapter 7 pp.ppt oct 2016

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Cd 38 chapter 7 pp.ppt oct 2016