This article is part of Louise Stoney’s Iron Triangle series, which presents a three-part formula to use as a pathway to business sustainability in early education in child care.
In this story, the second of the series, Louise will explain why it’s so important that you’re regularly checking your child care enrollment numbers — and what tools you can use to make it even easier.
To read part one of this series, which gives an overview of the Iron Triangle formula, click here. Stay tuned for part three!
In the first part of this series, we took a broad look at the three elements of the Iron Triangle of Early Care and Education Finance: Full enrollment, full fee collection and making sure your tuition covers your costs. Now let’s take a deeper look at the first point on the triangle—full enrollment—and explore strategies for tracking progress and leading success.
Full enrollment is a cornerstone of ECE finance, regardless of whether your program relies mainly on public funds, on parent fees, or a combination of the two. Even if you get government funds for a classroom of children (as is the case with Head Start or Public PreKindergarten), service providers must meet enrollment targets.
The bottom line is that if children are not enrolled, the funding does not flow.
So how do we make sure our enrollment is as high as possible? And how do we know what we should aim for, if we’re setting goals for our enrollment? That’s what we will be exploring today.
What should your enrollment target be?
Some experts suggest that a well-run center can operate at 95% enrollment.
Reaching a benchmark this high might be possible in classrooms that receive contracts or grants, offer services free or at very low cost, or where demand is consistently very high. In most cases, however, the industry standard of 85% enrollment is a more appropriate benchmark.
However, this number isn’t universal. During our recovery from the COVID-19 pandemic, or in classrooms where enrollment has been historically low, it may be necessary to drop the benchmark even lower. It is entirely possible, and in many cases appropriate, for enrollment benchmarks to vary by site or even by classroom.
That said, it’s essential that you regularly track enrollment and be prepared to take steps to adjust program staffing or structure, or raise money to fill funding gaps, when enrollment levels are consistently low. National data suggest that enrollment in child care centers is still only about 50% of capacity. Child care centers that have adjusted staffing patterns, classroom age mix, hours, or other policies to account for lower enrollment (and the consequential drop in revenue) may find it possible to operate in the black at 50% utilization. However, without modifications to staffing or services, such a significant drop in enrollment will make it impossible to balance the budget.
What do you do if your enrollment is going down?
Any time enrollment drops below the budgeted target, an ECE program is losing money.
Thus, it’s essential to set enrollment benchmarks that are informed by revenue projections, monitor enrollment on a regular basis, and be prepared to take corrective action if enrollment targets are consistently missed.
If it becomes clear that enrollment is consistently below your benchmark, changes must be made to ensure sustainability. A range of options are possible. You could potentially combine classrooms and mix age groups. Indeed, many ECE leaders extoll the benefits of mixed age groups as an effective strategy to strengthen intellectual and behavior skills, build confidence in younger children and empathy in older children. You could re-structure staffing patterns — perhaps reducing some administrative positions (where tasks can be handled electronically or virtually) or employing a teacher or director who spends part of the time in the classroom and part on administrative tasks. You might consider joining together with other small centers to share a back office or other support staff, in a strategy called Shared Services. In general, right-sizing your center will require that you revisit previous assumptions about staffing and explore a range of alternative strategies.
How to get a handle on your enrollment numbers
Early childhood program managers use a variety of tools to track enrollment.
Some providers created ‘home-grown’ dashboards that use Excel tables to monitor enrollment by classroom each week.
Others use an automated Child Care Management System (CCMS) like Famly to generate weekly reports. A growing body of ECE leaders are learning that CCMS automation makes it possible to more easily manage routine tasks, track trends, and benchmark progress. Famly, for example, has a number of features that can help you manage your enrollment:
Attendance forecasting. This can help you get a long-term idea of your enrollment, and match that with your staff schedules to make sure you’re not over- or understaffed.
Generating occupancy reports. This feature allows you to track your occupancy both by a percentage of your max capacity, or by your full-time equivalent (FTE).
Automated occupancy planning. This helps you see exactly how many open spots you’ll have available, either next week or further in the future.
Automatic age group moving. With this feature, you won’t have to track each child’s birthday to move them into a different pricing group as they grow older. The platform will keep track for you, and automatically move children into the appropriate rooms and tuition plans.
In short, keeping track of your metrics matters. And tracking enrollment — every week, for every classroom — is key to ensuring long-term sustainability of your early childhood program. With child care management systems like Famly, you can make enrollment tracking a simple and effective part of your weekly duties.
However, enrollment is not the only metric that should be tracked on a regular basis. In my next blog, I will focus on the second leg of the Iron Triangle of Finance: Full fee collection.
Louise Stoney is an independent consultant with over 30 years’ experience in early care and education finance and policy. In 2009, Louise co-founded Opportunities Exchange, a non-profit organization focused on transforming the business of early care and education to improve outcomes for children.You can learn more and get in touch with Louise at www.stoneyassociates.com or www.opportunities-exchange.org.
Official Danish Government Reopening Advice
Guidance from the Danish Health Ministry, translated in full to English.
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