SR-301-001 (7)
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DEC 1 2 1989
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C/ED:CNS:BS:mpccc
City Council Meeting 12/12/89
Santa Monica, California
TO:
Mayor and city Council
FROM:
city staff
SUBJECT:
Recommendation to Approve Operating structure for
Child Care Center at Marine Park and to Authorize
Changes to the City's Employee Dependent Care
Assistance Program
INTRODUCTION
This report outlines a general operating structure for the
proposed childcare center at Marine Park, requests authorlzation
to pursue negotiations with the Santa Monica/Malibu unified
School District to operate the Center, and proposes changes to
the City's Dependent Care Assistance Program which provides
childcare subsidies to lower-income employees.
BACKGROUND
In October of 1988, the City council approved the use of a
portion of Marine Park as the site for a 3,000 square foot child
care center for children of City employees as well as
neighborhood residents and other families in the community. The
approval of this site allowed City staff to begin implementation
of the final phase of its comprehensive Employee Child Care
Benefit Program which provides for up to 53 new child care slots
to serve a mix of infants, toddlers and pre-school children.
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DEC 1 2 1989
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since that time, City staff have completed the following planning
activities for the center:
(1) Meetings have been held with the Recreation and Parks
Commission to outline the operating structure and renovation
plans for the child care center.
(2) A Request for Proposal (RFP) was issued to solicit proposals
from potential operators of the center. The RFP was sent to over
50 providers in Santa Monica and throughout the State, including
non-profit and for-profit providers, child care resource and
referral agencies, child care consulting firms as well as the
Santa Monica/Malibu Unified School District and Santa Monica
College. In response, four proposals were received three from
non-profit providers and one from a private child care consulting
firm.
(3) A proposal review committee was created comprised of
representatives from the City staff, Connections for Children,
Santa Monica Community College Child Development Department, and
two directors of child care centers. The conuni ttee reviewed
proposals, relevant supplementary information, and made site
visits as necessary.
(4) Preliminary planning for renovation of the facility was
conducted by the City'S Engineering Division in consultation with
an architectural firm specializing in child care center design
and with a local child care center director with expertise in
infant care and State licensing requirements. Construction
documents have been completed and Council will be asked to award
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a construction contract in a separate action at the December 12th
council meeting. Construction is projected to begin ln
mid-January of 1990 and to be completed in July of 1990. The
Center will open for operations in September of that year.
(5) City staff have conducted extensive research on the necessary
steps and variables involved in setting up a new child care
center. These activities have included visiting a range of
centers, including two new centers supported by municipalities,
and interviews with child care professionals ln order to fully
develop the operating plan for the center. Recently discussions
with the School District have also been initiated to discuss
possible opportunities for District involvement.
(6) A review has been made of the employee childcare subsidy
portion of the city's Dependent Care Assistance Program (DCAP) to
assess the current level of subsidies in light of the Marine Park
program and current market rates for other child care programs as
well.
DISCUSSION
What appeared to be a relatively straight forward task
identifying an operator for the center -- turned out to require a
great deal of analysis and deliberation. Of the four initial
applicants, two were identified for further review and
interviews. The review committee based its analysis on a variety
of factors including experience, cost effectiveness, curriculum
philosophy and development, staffing and administrative capacity.
As a result, the committee concluded that while the two finalists
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exhibited strengths in a range of areas, the match between the
City's goals and the proposals submitted were not strong enough
to develop a recommendation to select an operator from this group
of applicants.
As a result, alternative approaches were considered including
creation of a new community-based non profit organization,
operation of the center by the city directly under the Department
of Cultural and Recreation Services and, most recently, working
with the Santa Monica/Malibu Unified School District to test the
viability of the District's Early Childhood Education staff
assuming the operation of the Center.
Based on recent exploratory discussions with the School District
regarding this last option, it appears that a collaborative
effort between the city (providing the facility and financial
support) and the school district (providing the expertise in and
responsibility for operations) is the preferred alternative if an
mutually acceptable plan can be negotiated. The District has a
nationwide repution in the early childhood education field and
currently operates State-subsidized preschool, and full cost and
subsidized school-age programs. In addition, District staff is
currently considering the expansion of its mission in early
childhood education beyond its state-subsidized program. This
change now presents the opportunity to introduce the option of
the district operating the City's program.
This alternative is recommended as it is evident from the low
response to the three RFP's issued by the city for various child
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care programs over the past several years, that there is a
critical scarcity of experienced child care operators available
to take on another site and also able to meet the specific goals
outlined for the city's proposed center. Given the high level of
professional expertise in the School District and its stability
as an educational institution, (as well as the recently expressed
interest by the District staff to consider childcare programs
beyond their current scope), it is recommended that the City
formally begin negotiations with the School District regarding a
collaborative effort in order to implement the following
city-supported effort.
operatinq Structure
(1) Center Operator: If successfully negotiated, the Center
would be operated by the Santa Monica/Malibu School District's
Childhood Development Services Program. Once the center is
operational, a parent resource committee will be developed so
that the program refelcts the needs and views of parents.
2) Center Goals: In approving the initial concept of the
program, the City Council asked for the creation of a program
that stressed both quality and affordability. While certainly
not mutually exclusive, the balancing of these two important
variables is an extremely difficult challenge one that is
currently being debated by child care professionals both locally
and nationally. The quality of services provided are very much
impacted by the experience and training of staff (and the salary
levels needed to recruit and retain this staff), the ratio of
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teachers to children, and classroom size. Affordability involves
a fee schedule that does not prohibit access by lower income
families. Thus pressure is put on center administrators to
either keep staffing costs lower or seek subsidies for operations
from other sources. Given the Council direction to address both
of these issues, city staff have worked closely with childcare
professionals to prioritize these needs and to develop a program
that provides a quality program for the children and their
parents yet also addresses the critical issue of affordability.
(3) Center Staffing: If operated by the School District, primary
responsibility for staffing, staff supervision, and program
operations would lie with the Director of Child Development
Services. In addition, key to the successful operation of the
program will be the hiring of a site coordinator who will be
responsible for onsite operation of the center and daily
supervision of the child development staff.
Proposed salaries for teaching staff for the purpose of initial
budget projections would be consistent with the District's salary
ranges for teachers and aides. This salary structure provides for
somewhat higher hourly rates than the average in the Santa Monica
area (ranging from 20 to 25% depending upon the classification).
This decision was reached after analyzing the severe negative
impacts that high staff turnover (oftentimes caused by the
notoriously low salaries of the childcare field) would have on
center operations. A recently completed national study by the
Child Care Employee Project, liThe National Childcare Staffing
study," indicated an average teaching staff turnover rate of 41%
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in 1988 as compared to a rate of l5% in 1977. Critical to the
success of any center is the training and commitment of its
teachers -- thus the salary schedule for the Marine Park center
and throughout the District's early childhood development
programs, while still low compared to other educational
professionals, addresses this need through adequate salary
levels.
(4) Center Curriculum: The center's philosophy and curriculum
will reflect a child-centered, developmental program that
provides children with a range of choices based on age and the
uniqueness of each child. While a general curriculum will be
developed prior to center operations, over time the curriculum
will further "evolve" based on the preferences of the children
and parents as well as the innovation of the teaching staff.
Flexibility and sensitivity to the range of parental preferences
will be incorporated.
(5) Age Groups and staff/Child Ratios: As approved earlier by
the Council, the program is designed to serve a mix of age
groups including: 12 infants (under 24 months), 21 toddlers (2l
months to 3 1/2 years) and 20 pre-schoolers (3 1/2 years to
kindergarten). Factors used in arriving at this mix included the
current space constraints at the Marine Park facility, the
maximum number of children allowable in each space, the
appropriate class sizes, the need to address the variability in
development among children of the same age, and the need to
ensure adequate spaces in the next classroom to each enrolled
child as they get older.
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Few centers offer infant programs, in particular, and therefore
the design of the infant area and the development of staffing and
operating procedures for this group will be especially important.
A critical issue in implementing the program is the number of
teaching staff to children in each classroom. The proposed
ratios (teaching staff:children) are as follows: infants (1:3),
toddlers (1:7), and preschoolers (l:lO). The ratios for infants
and toddlers are consistent with those standards established by
the state of California for state-subsidized programs as well as
those of the National Association for the Education of Young
Children (NAEYC). The preschool ratio approaches these standards
and exceeds those minimal state requirements required for the
licensing of non-state supported programs.
In negotiating the program with the School District, discussions
will continue regarding staffing ratios and classroom size, as
well as how the mix of ages at Marine Park can best be
coordinated with other District sites.
(6) Affordability In general, affordability is addressed
through setting the general monthly parent fees at or below
market rates for this area. Pending a final determination of the
level of subsidy available for the program and further
discussions with the School District, monthly fees have been
initially proposed to range from approximately $400 for
preschoolers to approximately $600 for infants.
In addition, support to low-income community residents is
proposed through the use of a sliding-scale based on the family's
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income and number of children. The schedule will be consistent
with state-subsidized programs operated by the School District.
As budgeted, this support is equivalent to support for nine
families at a 50% subsidy level (or more or less depending upon
the income level of the interested families).
Affordability for lower-income city employees will be addressed
through the City's Employee Dependent Care Assistance Program
(D-CAP) . currently, the program provides monthly subsidies of
$lOO for any qualifying employees whose annual household income
is less than $45,000. In light of the opening of the Marine Park
center and also given the availability of more detailed data on
child care needs and household income for the employee workforce
as a part of the recently-conducted Traffic Management Program
survey, the following changes to the employee subsidy program are
proposed to ensure maximum participation from those in need of
financial assistance to obtain quality childcare: (a) increase
the annual household income cap from $45,000 to $50,000, (b)
provide the subsidy for each qualifying child in the family as
opposed to a flat subsidy for a family regardless of the number
of children in eligible care, (c) provide different levels of
subsidy for infant, preschool and sChool-aged care based on an
analysis of the actual market rate cost of care for each
category, and (d) provide these subsidies on a sliding scale
based on the level of household income for each qualifying
family. The schedule (included as Attachment I) provides for a
maximum per child of a $200jmonth and a minimum of $76jmonth per
child.
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These changes are proposed in order to address current equity
issues within the existing structure (the same amount of subsidy
is received regardless of the number of children in care, the
type of care, or the specific income level of a qualifying
family) and in order to ensure affordability of care, including
but not limited to the Marine Park center.
FISCAL/BUDGETARY IMPACT
Included in the initial City Employee Child Care Benefit Program
approved by the Council several years ago was the assumption
that both start-up and operating subsidies would be necessary for
the expansion of the supply of childcare for City employees and
residents. As stated previously, the specific amount of start-up
and operating subsidy necessary is highly dependent on such
factors as staff salaries and fringe benefits, staff/child
ratios, classroom sizes and special programs such as infant care
and financial support for low-income families. The amount of
revenues generated to cover these costs is primarily dependent on
parent fees as well as available subsidies. In addition, final
expenditure and revenue projections can not be finalized until
formal negotiations are underway with the School District.
However, based on initial projected budgets for the center
developed for the purposes of estimating financial needs of the
proposed program, start up costs ( incl uding furnishings,
equipment, and staff time prior to opening) will total $64,917 in
FY 1989-90 and $27,696 in FY 1990-91 for a total of $92,613.
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On an annual basis, the operating budget is estimated at
approximately $437,891 with estimated parent-generated revenues
ranging from $254,196 to $306,660 depending on a variety of
factors including vacancy rates, number of part-time spaces
available at higher hourly rates, and the number of low-income
families utilizing the center on a sliding fee basis. The annual
operating subsidy could range from $l3l,231 to $183,695 depending
upon these factors. The percentage of the operating budget which
will have to be subsidized, therefore, ranges from 30% to 42%
consistent with the level of subsidy for many employer-based
programs (for example, UCLA's Childcare Center).
The FY 1990-91 ten-month operating budget, beginning in September
of 1990, is projected to be $354,355. Because enrollment will be
phased in over several months to ensure a successful start-up
period, revenues will be somewhat decreased over the annual
projection. Revenues from parent and registration fees for that
year are estimated to be $197,431 (minimum revenues). Thus an
operating subsidy of $156,924 is estimated to be required during
the first year of partial operation.
As mentioned previously, the operating plan and budgets are based
on the desire to contribute to the expansion of both high quality
and affordable childcare, including much-needed infant care. An
analysis of the required annual operating subsidy indicates that
approximately 53% of the subsidy is attributable to the goal of
providing quality care (33% to salary and fringe benefit
enhancements and 20% to adequate staff/child ratios), 20% to the
inclusion of infant care, and 27% to address affordability
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through reduced fees.
Final decisions regarding the level of
subsidy will be proposed in the context of the FY 1990-91 budget
and will also depend upon the outcome of negotiations with the
School District.
Initial budget proj ections are included as
Attachment II. Final budgets will be brought back to the council
after negotiations with the school District within the next two
months.
The impact of the changes in the city's D-CAP program is
difficult to project. However, based on an analysis of workforce
composition, it is projected that these changes will not result
in any substantial cost increases -- a 25% increase would result
in a $9,000 overall increase to the D-CAP program.
Adequate
funds are appropriated in the FY 1989-90 budget in account number
01-700-274-00000-1197-00000 to cover the projected increase.
RECOMMENDATIONS
City staff recommends that the City Council: (1) approve the
ini tial operating structure for a child care center at Marine
Park; (2) authorize the City Manager to pursue negotiations with
the Santa Monica/Malibu Unified School District for operation of
the program and return to Council wi thin two months with the
final recommendation for operator and necessary appropriations
for startup in FY 1989-90, and (3) approve changes in the D-CAP
Program as specified.
Prepared by: Barbara stinchfield, Community Development Manager
Department of Community and Economic Development
Kate Spellman, Senior Management Analyst
City Manager's Office
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Attachment I
Revised
PROPOSED SUBSIDY SCHEDULE
CITY DEPENDENT CARE ASSISTANCE PROGRAM
Income Infants Pre-School SChool-Aqe
$30,000 or less $200 $148 $l16
$30,OOl-$35,OOO $175 $136 $l06
$35,001-$40,000 $150 $124 $ 96
$40,001-$45,000 $125 $112 $ 86
$45,001-$50,000 $100 $100 $ 76
Note: Employees currently on the program for school-age care
will continue to receive the maximum SlOO/month subsidy
regardless of income level. Newly enrolled employees will be
reimbursed based on the new proposed schedule.
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MARINE PARK CHILDCARE CENTER
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Attachment IIA
INITIAL STARTUP BUDGET
staffing
Program Coordinator - salary
benefits
staff Asst. II (.5) - salary
benefits
Teachers (2 weeks training)
Training Consultant
Equipment and Furnishinqs
Office Equipment
Office Furniture/Applicance
Indoor Play Equipment/Furniture
Outdoor Play Equipment
Telephone Installation
Supplies
Publicity
TOTAL START UP
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FY 89-90
Jan.- June
FY 90-91
July-Aug.
l4,920
5,222
5,968
2,088
879
351
6,760
1,000
$ l7,046
$ 20,142
$ 8,l75
10,600
25,000
$ 6,000
650
4,000
l,OOO
$ 44,775 $ 10,650
~ 64,917
~ 27,696
~92,613
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Attachment lIB
MARINE PARK CHILDCARE CENTER - 12 MONTH OPERATING BUDGET
EXPENSES:
Staffing
Program Coordinator
staff Assistant II (.5 FTE)
Lead Teacher
Teachers (5.0 FTE)
Aides (7. 0 FTE)
Fringe Benefits
Substitutes
Overtime
Total Staffing
operating
Telephone
Computer/Telephone Lines
Office Supplies
Curriculum Supplies
Staff Training
Parent Education
Nutrition (Snacks)
Hygenic Supplies
Prof. Memberships and Publ.
Equipment Replacement
TOTAL OPERATING BUDGET (12 MONTHS)
REVENUES:
Parent Fees
Part-Time Fees
Registration Fees
Vacancy Factor 5%
Sliding Scale Fee Reduction
$35,808
lO,554
27,036
109,602
ll6,424
$299,424
92,671
13,872
2,800
$408,767
$ l,440
384
2,000
5,000
4,000
l,OOO
8,500
5,000
300
1,500
29,124
$437,891
$293,280
ll,880
1,500
(l4,664)
(25,920)
Maximimum Revenues (including part-time fee rates,
lOOt capacity, and no sliding scale fee reductions)
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$306,660
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Min1rnurn Revenues (1ncluding 5% vacancy factor, no
part-time fees, and maximum use of sliding scale
fee reductions)
PROJECTED OPERATING SUBSIDY:
Based on maximum revenue projections
Based on minimum revenue projections
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$254,196
($13l,231)
($183,695)
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Attachment lIe
MARINE PARK CHILDCARE CENTER - TEN MONTH OPERATING BUDGET
FY 1990-91
EXPENSES:
staffing
Program Coordinator
.5 Staff Asst. II
Lead Teacher
5 Teachers
7 Aides
Fringe Benefits
Substitutes
Operating Expenses
TOTAL EXPENSES (lO months)
REVENUES:
Parent Fees
Registration Fees
Vacancy 5%
Sliding Scale Fee Reductions
TOTAL REVENUES (lO months)
PROJECTED OPERATING SUBSIDY
$29,840
8,795
22,530
9l,3l0
97,020
Based on minimum revenue projections and
phased enrollment
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$249,495
77,220
3,468
24,172
$354,355
$228,980
1,500
(11,449)
(21,600)
$197,431
($156,924)