HomeMy WebLinkAboutNB 7 CHILD DEV PROGRAM 02-05-90'AAU t: IND
/Et
BUSINESS N0. 7
ut9 6 1
DATE:
JANUARY 29, 1990 `� Inter � Com
TO: WILLIAM A. HUSTON: CITY MANAGER
FROM: COMMUNITY SERVICES DEPARTMENT
SUBJECT: CHILD DEVELOPMENT PROGRAM CHANGE
RECOMMENDATION
Pleasure of the City Council.
ALTERNATIVES
1. Implement contract with M.A.W. and subsidize the program.
2. Implement M.A.W. Contract with fee increases as proposed.
3. Direct staff to create a part-time program.
4. Hire instructors as regular City staff and continue to operate
a Child Development Program.
5. Discontinue the program in any form.
6. Continue the program as currently structured.
7. Refer to the Parks and Recreation Commission.
The Tustin City Council adopted Policy No. 4-05 regarding
recreation program fees in April, 1981. Through that policy the
Council directed staff that all fees would be set by staff for
cultural arts classes, special recreation programs and sports
leagues, with the following guidelines:
"Fees for recreation, cultural arts classes, special
recreation programs and sports leagues shall be based on a
cost-plus basis. These particular programs shall be self-
sustaining as far as their direct costs are concerned, and an
appropriate administrative overhead shall be added. It is the
intent of this policy that individuals who benefit directly
from these types of programs shall be the ones to bear the
Page 2
Child Development Program Change
burden of the costs."
Staff recognizes the need for providing quality child care. The
Child Development Program is an excellent program and until last
year had been recovering costs. Staff is committed to serving the
customer, but must work within Council policy and the market
parameters. When the program was reviewed regarding cost -recovery,
and with other escalating costs, i.e. the cost to provide benefits
to the instructors, it was apparent the program would no longer pay
for itself. In order to continue to provide the program,
alternatives had to be studied. These alternatives will be
discussed later in the report.
BACKGROUND
City Council philosophy directs the Community Services staff to
provide recreation programs that are self supporting. The Child
Development Program is expected to cover direct program costs such
_ as instructors, supplies and a portion (approximately 43 percent)
of the Lambert lease cost. In 1989 the program did not operate
according to policy (Attachment A). Four out of the last six
months operated "in the red." Due to Council policy regarding
self -funding, staff was concerned about trend of not recovering
costs for the last six months.
Currently the program is structured with nine independent
contractors. Early last year the instructors approached the City
staff to request benefits. (As independent contractors the
instructors are considered self employed and receive none.) Since
staff was very happy with the performance of the instructors, the
costs of providing benefits were analyzed. If hired as City
employees, program fees would have had to increase 52 percent.
DISCUSSION
The number of staff required is mandated by the State of California
and is based on the number of students allowed in the program.
Staff did a cost analysis of providing benefits (see Attachment B)
to the instructors. To hire the instructors as City staff meant
3 full-time fully benefited instructors, and 4 to 6 partially
benefited part-time staff added to the City budget.
Due to negotiated wage settlements, long-term contracts, and state
and federal mandates, the City has no flexibility regarding which
benefits a full-time employee receives. The City must provide
medical and dental insurance, PERS retirement, life insurance,
worker's compensation, unemployment insurance, COBRA continuation
coverage, general leave (sick and vacation), paid holidays, long-
Page 3
Child Development Program Change
term disability insurance, tuition reimbursement, and other
benefits to all full-time general employees. The City just
approved a three-year contract with this group, giving staff an
accurate projection of these benefit costs.
Staff researched alternatives and found another option to provide
the instructors with benefits: a single service contract with a
non-profit child care provider. Based on information gained from
other service providers, staff estimated this would only increase
fees 25 to 30 percent.
In staff's judgement the most cost effective way to provide the
program would be through a single service provider. Staff
contacted the City of Irvine who currently has a single contract
service provider at the City's new child care facility. The Irvine
staff recommended that proposals be requested only from non-profit
service providers as their philosophy more melds with the City
service-oriented philosophy.
Twenty proposals were mailed in September, 1989, with a deadline
date of 10:00 A.M. on October 26, 1989. Two proposals were
delivered on time. One proposal missed the time deadline by a few
hours and asked that their plan be considered in the event that a
suitable proposal was not received by the other two. M.A.W.'s
proposal was the best based on philosophy, curriculum and track
record also the program was the least costly to provide. For
comparison purposes, the City of Irvine's Child Care Program costs
are attached ( Attachment C ) ; this firm was the late proposal. The
costs were compared to M.A.W. and were much higher to the customer.
The Irvine program is full; there is a waiting list; and these
costs will soon increase, according to Irvine officials.
Mothers At Work (M.A.W.) is a non-profit child care providing
agency that has experience working with Lakewood City government
for over 13 years. They also provide a program at a church site
in Garden Grove. M.A.W. has an excellent reputation and has very
strong, positive recommendations.
All costs were based on full-time care, a child care industry
standard. The rationale behind this is whether or not a child is
present all or part of the day, the cost for providing staff,
equipment and rental space remain constant. Under the M.A.W.
contract, part-time care is available for people who wish to use
full days, 2 or 3 days a week. The M.A.W. program can no longer
provide half day care.
A major advantage to the M.A.W. contract is the instructors receive
benefits, which will most likely decrease staff turnover. The City
Page 4
Child Development Program Change
staff will administer one contract instead of nine individual
contracts. The program will operate an additional two hours a day.
Currently the program operates from 7:30 A.M. to 6:00 P.M. Monday
through Friday. With M.A.W. the program will be open from 6:00
A.M. to 6:00 P.M., becoming available to parents who have a longer
commute. The program will expand to provide care to two year olds,
which is not available now. Breakfast will be served and snacks
will be provided. M.A.W. will provide the City a $1 million
liability insurance, naming the City as additional insured.
Currently the Child Development program charges a flat, per month
fee. With M.A.W. the fees will be based on days of operation per
month so that the monthly fee will fluctuate.
Tustin Child Development
- 7:30 A.M. to 6:00 P.M.
- Meals not provided
- Flat fee of $225 per month,
average $10.50 per day or
$52.00 a week.
- Instructors receive no
benefits
- Staff administers nine
individual contracts
- City staff support includes
supervisor and clerical
staff
- Program accommodates 3
to 6 years
- City of Tustin is 100 percent
exposed to all liability to
the extent that each claim
would represent $250,000 of
the City's self insured
retention
PARENT ISSUES
Mothers At Work
6:00 A.M. to 6:30 P.M.,
Breakfast and snacks
Fees per month based
on daily costs, $15.00
per day or $75.00
per week
Instructors receive
benefits
Staff administers one
contract
No clerical support,
one supervisor to
administer the program
Program accommodates 2
to 6 years
M.A.W. provides $1
million liability
insurance
A letter was sent in December, 1989, notifying parents of the
change in the Child Development program structure. On January
Page 5
Child Development Program Change
16, 1990, approximately one month after the letter was sent,
staff met with the parents to discuss the change. The major
concerns of the parents included:
1. "Why is the change happening in the middle of the
school year?"
Some of the parents were concerned about the change occurring
in the middle of the school year instead of June. They felt
with this particular timing there was no choice but to stay
with the program in spite of the cost increase. This seemed
to be more of a problem for parents with children graduating
from the program in June, for parents working for school
districts, and for parents of part-time students. With the
Council's policy regarding cost recovery, staff was concerned
about the program losses and felt that the change should be
implemented as soon as possible.
The change can occur only when the license is changed from
the City's name to M.A.W. The process began in late December
and may take up to 90 days to complete. Licensing is handled
through the State of California, Social Services Department.
The exact timing is determined by that agency. Staff can only
estimate the time based on information from the State.
Currently the estimated date is March 1, 1990, but until the
actual license is received the program must continue to
operate as is.
2. "Why is it necessary to increase the fee?"
As mentioned before, the instructors had requested benefits.
Also, the cost of doing business had increased. Costs of
salaries, rent and supplies have increased. Even continuing
to operate the program in the current structure was no longer
covering program costs (see Attachment A). Short of a General
Fund subsidy, contrary to existing Council policy, fees have
to increase, no matter what alternative is chosen.
3. "Why aren't the instructors being retained?"
This is not true, since all nine instructors were invited and
encouraged to stay with M.A.W. Three of the instructors have
found other jobs. One has decided to leave when the program
changes over. The remaining five have met with M.A.W.
regarding wages and benefits and will continue with the
program. All will earn the same hourly wage or more, plus
benefits; the cost of benefits is approximately 25 percent in
addition to salary and includes withholding taxes, paid
Page 6
Child Development Program Change
vacations, paid holidays, sick time, and medical and dental
benefits, all requested by the instructors but not provided
to them as the program is now structured. It is important to
note that in the past staff found it extremely difficult to
hire and recruit instructors and would continually lose
qualified instructors to other schools that could provide
benefits.
ALTERNATIVES
1. Implement contract with M.A.W. and subsidize the program.
Council can subsidize the program with M.A.W. by keeping the
current fee schedule for those now enrolled in the program. Staff
would assist those needing part-time care to find another program,
or after June they must pay full time rates. The subsidy for 4
months would cost the City $25,640.
Staff assumes this would continue only through June as this
alternative addresses the fee and timing issues.
37 Full -Time Students
(4 months only)
Residents - 36
Non Residents - 1
Part Time Students
(4 months only)
Residents - 11
Non Residents - 1
Revenue Based
On Current Fee
Schedule
$32,400
1,000
$4,400
$38,300
Revenue Based
On M.A.W. Fee
Structure
$46,980
1,305
$14,355
$63,945
Cost
Differential
$14,580
305
$9,955
$25,640
Staff suggests that all current participants be included in the
subsidy to avoid any discrimination issues.
Advantaaes
This would alleviate costs for the parents while they adjust
their expenses to accommodate the increase or find alternative
care; and it would address the timing issue, as the subsidy
will last until June.
Page 7
Child Development Program Change
Disadvantages
The City General Fund would subsidize the program for more
than $25,000; this is in conflict with Council's policy
regarding cost recovery for Community Services programs. This
money is not budgeted and a supplemental appropriation would
have to be made.
2. Implement M.A.W. contract with scheduled fee increases.
Staff assumes that the license will be granted by March 1, 1990,
giving parents some advanced notice.
Advantages
Program would become self supporting, provide an additional
2 hours a day for parents who commute, and benefits for the
instructors. The fee at $75.00 per week is still below the
average market price of $80.00 per week (Attachment D).
The program would have field trips, snacks, and breakfast
which are not provided with current program. M.A.W. will
provide $1 million liability insurance naming the City as an
additional insured. City clerical staff support would no
longer be required.
Disadvantages
The fee would be increased. Part-time (1/2 day) care would
no longer be provided.
3. Direct staff to create a part-time program.
Currently there are 12 part-time students enrolled in the program.
Council could direct staff to develop a program for part-time
students. Staff would research the feasibility of providing a
part-time recreation program for the purposes of socialization and
recreation, not child care. This research would include ensuring
that this program would not be in violation of State licensing
laws. Staff assumes the program would be self-supporting, and that
the instructor(s) would be an independent contractor with a 70/30
percentage split, with no benefits.
Advantages
If the program is feasible it could provide a solution for
some of the part-time students, provided the time the program
is offered meets the parents' requirements.
Page 8
Child Development Program Change
Disadvantages
If the program is self-supporting, it must have enough
registration to support an instructor; this may not be
feasible given current number of enrollees.
4. Hire instructors as regular City staff.
Advantages
The instructors would receive benefits.
Disadvantages
Fees would have to increase at least 52 percent to cover costs
of hiring staff (Attachment B). This is higher than the cost
to provide the same program with M.A.W. Additional support
costs include providing clerical staff and requiring more
supervision.
The City will have total liability exposure. Benefits paid
holidays, vacations, medical and dental benefits, and sick
time would be available to full-time employees only and not
for part-time as provided with M.A.W. contract.
The City has signed a contract with M.A.W. Cancellation of
the agreement may put the City at risk. M.A.W. has incurred
some costs for licensing.
5. Discontinue the program in any form.
Advantages
The City would no longer subsidize the program. There would
be no liability issues or risks without a program.
Disadvantages
There is an apparent need for child care, as evidenced by the
Child Care Study done by American Association of University
Women, as well as by the current enrollment. Without a
program, these children would have nowhere to go, and it would
impose an undue hardship on the parents.
The City may be at risk, if contract with M.A.W. contract is
cancelled.
Page 9
Child Development Program Change
6. Continue the program as currently structured.
Advantages
The parents are comfortable with the current program
structure.
Disadvantages
The program has not been cost effective, losing an average of
$2400 a month during the last three months. That figure does
not include any of the overhead costs, only direct costs.
The instructors would not receive benefits as they have
requested. It is staff's opinion that most instructors will
not stay if the program does not change to provide some sort
of benefits.
Again, M.A.W. has a signed agreement. The City may be at risk
if the contract is cancelled.
If fees were not increased the City would have to continue to
subsidize the program. Staff estimates this cost to be
$20,000 to $30,000 per year.
7. Refer to the Parks and Recreation Commission.
Advantages
The Parks and Recreation Commission is the advisory group to
the City Council regarding parks and recreation matters. It
might be appropriate to ask the Parks and Recreation
Commission to review Council policy regarding self-
supporting programs.
Disadvantages
This would add one or two months to the decision making
process. Action regarding City policy may only be taken by
the City Council; therefore, the City Council deciding the
matter is the most expeditious solution.
SUMMARY
Staff recommends that the Council move forward with the contract
as planned. M.A.W. is a reputable organization and will only
enhance the existing program. Staff feels, this is the most cost
Page 10
Child Development Program Change
effective way to provide an excellent program.
Susan M. Jon s Royleen A. W ite, Director
Recreation Superintendent Community & Administrative Services
RAW/SMJ/bw
Attachments: Attachment A - Child Development Program Cost
Breakdown 1989
Attachment B - 1990 Costs - Instructors as Regular
City Staff
Attachment C - Irvine Child Development
Attachment D - Child Care Program Cost - Programs
Listed in Tustin Area Child Care
Directory
a:cd.pro
Attachment A
CHILD DEVELOPMENT
PROGRAM COST BREAKDOWN 1989
#
Part-time
# Full-time
Revenue
Expense (Over
Differential
Students
Students
Cost of Instruc-
tors and Supplies)
Janaury
20
20
$ 6371
$ 5511
$860
February
21
24
6077
4063
2014
March
20
24
5112
5804
(692)
April
21
28
6726
4443
2283
May
22
27
6863
5916
947
June
24
20
6071
5447
624
July
20
19
3941
5754
(1813)
August
20
19
4743
4490
253
September 18
30
7394
6691
703
October
16
29
7692
11545
(3853)
November
16
29
7536
8418
(882)
December
12
29
5637
8151
(2514)
Total
230
298
74,163
76,233
(21070)
Additional Costs
43% of Lambert Lease $9,056
Capital Outlay
(mats and storage) 1,931
Total
a:cd. bre
$10,987
Total Program Loss: $13,057
Attachment B
1990 COSTS
INSTRUCTORS AS REGULAR CITY STAFF
Personnel Costs
Full Time
(1) Director salary $24,956
benefits 8,709
$33,665
(2) Instructors salary $40,010
benefits 14J27
$88,102
Total Full Time $72,923
Part-time
6 positions ranging
$5.50 to $7.25 an hour
total 7,000 hours
Salary
(2) aids $5.50 $11,000
(4) assistant instructors 36,250
Benefits
$47,250
$ 21481
Total Part Time
Total Personnel
$49,731
$137,833
Page 2
1990 Costs - Instructors
Supplies and Services
Supplies
Portion of Lambert Lease
Capital Outlay (varies from
year to year, average)
Total Supplies and Services
$4,000
9,701
2,000
$15,701
Total Program Cost $1538534*
*These costs do not reflect the Department staff costs (supervisor,
clerical support, phones, etc.)
1989/90 Program Cost
Current Budget (1989/90) $63,750
Portion of lease 92056
Capital equipment 21,000
Total $74,806
a:instructors.cos
Attachment C -
IRVINE CHILD DEVELOPMENT
Hours of operation: Monday through Friday, 6:30 am to 6:00 pm
Costs:
Infant (2 months to 2 yrs)
$610 a month, $141 a week
Class holds 16 children
2 years to 3 years old
$490 a month, $113 a week
Class holds 16 children
3 1/4 years to 4 1/4 years old
$415 a month, $96.00 week
Class holds 16 children
4 1Z4 years to 5 years old
$395 a month, $91.00 a week
Class holds 24 children
Rates are paid monthly and are paid whether or not the child is
present (if they are sick or on vacation).
The staff is an independent contractor.
a:irvinecd.l
Attachment D
CHILD CARE PROGRAM COST - PROGRAMS LISTED IN TUSTIN AREA
CHILD CARE DIRECTORY*
grunnT. FEE HOLIDAYS OPENINGS SNACKS
Children's Center
$85-90/wk
8
Limited
Milk &
Snacks
lam - 6 pm
1 wk
vacation
(free)
Cinnamon Tree
$65/wk
Standard
No
Hot Lunch &
6:30am - 6pm
Snacks
Edge Private
School
$94.62/wk
Standard
No
Hot Lunch &
lam - 6pm
Snacks
Foothill
Mont.
$90/wk
Standard
Yes
Milk
lam - 6pm
Sept -June Summer S
hool available
Gerber
$87/wk
6
Yes
Milk &
Snacks
lam - 6pm
Kindercare
$85/wk
6
Yes
Lunch &
6:30am - 6pm
Limited
Snacks
The Learning
Village
$83.30/wk
11
No
Milk &
Snacks
lam - 6pm
L'Estonnac
$64.62/wk
Closed
No
Lunch &
7:30am - 5:30pm
August
Snacks
Newport Ave
Day Care
$65/wk
Standard
Snacks
6:30am - 6pm
Peace Lutheran
$87.86/wk
Standard
No
Snacks
lam - 6pm
Pine Tree
Children's Ctr
$70/wk
7
Yes
Snacks
lam - 6 pm
Limited
Plumfield
$90/wk
Standard
No
Snacks
lam - 6pm
vacation
allowance
July/August
Red Hill
Lutheran
$76.15/wk
TUSD
No
Snacks
lam - 6pm
alt. fee
for holiday
services
summer pro-
gram pays
by week
Tustin Preschool
73/wk
5
No
Breakfast
6:30am - 6pm
Lunch
Snacks
Tustin Child
Development
Full Time
TUSD
Yes
Parents
7:30am - 6pm
Res-$52/wk
holiday
provide
Non -Res
schedule
$58/wk
Part -Time
Res -$20
Non Res
$28
Average = $80.00 per week
Standard = 6 holidays
* For purposes of comparison the weekly costs were calculated.
Some schools charge flat monthly fees, some charge per week, and
others charge for the number of days operated each month.
The costs were compared to provide care a minimum of 11 hours per
day.
a: cd. fee