Planning day care involves many steps that a crucial for a successful day care. The cost

and logistics elements are an important part of the plan. A study of Northville city indicates that

the lack of Daycare leads to absenteeism and lateness among city employees. For a Daycare to

operate in Northville, it must meet the following requirements per year. First, to be licensed and

inspected annually. Secondly, to ensure all new daycare workers take part in a three-day state-

certified training program. Lastly, the child/daycare giver ratio be no greater than 8 to 1. The

proposed Daycare have negotiated for a ratio of 6 children to 1 worker.

Further below the following cost elements apply to the Daycare;

Employees= 1800 employees

Female employees = 35% of 1800 = 630 employees

Survey for affordable health care indicates that 40% of 1800 = 720 employees; advocate for

affordable day care.

Inspection fee- $500/year

Cost of 3 day training per employee= $200/employee

Administrative costs;

Ms. Perfekt = $1,300 a month.

Ms. Nemet's salary = $2,400 a month

Employee's benefits for all Tiny Tots Inc. employees

7.15 percent of their salaries in the form of a social security contribution

8 percent for unemployment and disability benefits

6 percent of salaries goes to a pension fund

$60 per month for health benefits is paid for each of them

DAYCARE COMES TO NORTHVILLE

3

Day care Costs

20 days every month.

Snack + Lunch = $ 3/child/day

Cost of supplies= $1.50 per child per day

Cost of Equipment (costs and desks) = increase by $50 per child as the enrollment goes up

Space and utilities = Free for the first year of operation

Revenues

Number of children's

Jan- 120 children

Feb-May= 10% increase in every month

June-Dec= 5% increase in every month

Fee per child/ month= $200

Grants (City of Northville) = $2,000 a month

Grant (Union) = $1.00 per child per day for the children of union members (70 percent will be

children of union members)

Grant (State) = $90,000 a year for the first year of operation

EXERCISE PART 1

1) Prepare the baseline 2000 monthly budget for the daycare. (You can assume a calendar

year.) Determine the total surplus and deficit for each month.

1. Suppose the child/staff ratio were changed to the maximum allowed by law. What impact would this have on the budget?
2. What would happen to the deficit if the enrollment increased by only 5 percent per month for all months?
3. What other changes can be made to balance the budget? What are the advantages and disadvantages of these changes? Produce a balanced budget and defend your choice of changes.