Childcare is freakin’ expensive. Where’s the money going?

Childcare in Denver is expensive. Full-time childcare costs an average of $1,730 a month, according to Brightwheel Connect’s analysis of 377 centers in the city.

The economics of child care centers leave parents – often paying the equivalent of a second mortgage – confused. How rich are these centers getting from vulnerable families’ hard-earned cash?

Not many, it seems.

Profit margins are thin because the cost of running a center is so high, and asking parents to pay more is not realistic, according to a University of Denver research team.

By the start of the pandemic, nearly 10% of child care centers in Colorado had closed, according to the Bell Policy Center, and provider Pam Melot told Denverite that many continue to struggle to keep staff and make ends meet.

Providers told us many early childhood educators are paid close to minimum wage and can’t afford the area, so they leave the field altogether, forcing centers to close classrooms. And centers lack the flexibility in their budgets to offer raises and attractive benefits, according to the Bell Policy Center.

So what does your tuition actually buy?

More than half of a child care center’s budget goes to salaries and benefits, according to the Center for American Progress, which broke down costs in 2018.

For childcare, which has a low student-teacher ratio, 68% of the cost goes to salary and benefits. For childcare, this number is 62%. And for preschool, where student-teacher ratios are higher, it’s 56%. And yet, educators still work well below a living wage and are paid far less than their kindergarten teaching colleagues, according to the Bell Policy Center.

Except for staff, the costs break down as follows, depending on the age of students served:

• Rent, utility and maintenance expenses amount to about 9% to 14% of costs.
• Office and administrative expenses, which include supplies, equipment, telephone, internet, fees and permits, amount to approximately 15% of costs.
• Classroom materials and food are between 8% and 13% of cost.

According to the Center for American Progress, reducing the student-teacher ratio in Colorado, raising salaries, increasing retirement benefits and contributions to health care expenses would all increase dramatically — by about $1,000 per month per child.

Early childhood educator and professor Liliana Flores Amaro at the University of Colorado, Denver, said families and centers are asking each other, “Is it on the agenda to make things more affordable? How much more can parents pay to cover staff salaries, building rent and all that stuff?”

Parents can’t afford to pay more, dozens have told us throughout our series on child care in Denver. And programs need more money to keep operating, directors said.

The solution is more public support, said Flores Amaro and other childcare providers.

The Biden administration has tossed around the idea of ​​free pre-K, but so far it hasn’t caught on.

Governor Jared Polis and state lawmakers passed a bill that would provide 10 hours of free preschool for every four-year-old in Colorado. Denver offers subsidized preschool for all four-year-olds and some three-year-olds, through the Denver Preschool Program.

During this past legislative session, state lawmakers took steps to help fund child care programs, including passing a bill that would give $100 million in federal COVID-19 emergency funds to child care programs — both formal centers and home care.

That policy is being sent to the governor’s desk for review, Polis spokesman Conor Cahill said.

While $100 million is a lot of money, it doesn’t touch the $500 million the Bell Policy Institute said the state is behind in early childhood education funding and the whopping $1.17 billion it will take to help centers pay educators livable wages not pay

“It’s hard to have young kids,” Flores Amaro said. “It is difficult, and many families need a network of care and support. And it doesn’t come cheap. The money is not going to come from parents who are stretched and tied as it is. It is not going to come from the programs, which are stretched and margins [are] thin as it is.”

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