Thursday, 11 November 2010

INDEPENDENT INDUSTRY ARTICLE

What’s the Real Cost for 1:4?

We haven’t stopped hearing about the costs to the changing 1:4 ratios! Is it going to $20.00 per day, $40.00 per day or 57 cents per day? Which one is it and what are the costs for my Centre?

Childcare Sales Australia is proud to publish yet another article from Succeed Consultancy. This article is a one off article on the upcoming changes to the industry.

As usual it is sound practical information for owner operators, investors and new buyers alike. You can contact Succeed Consultancy on the numbers provided below or visit the Succeed Consultancy website for more information at:

www.succeedconsultancy.com.au

 
Do I have to raise my fees by $20 to $40 per day?

The answer is no, no, no. The first thing to look at is who is telling us this; the media. What’s the media’s intention? To sell stories. So of course they will extend the truth by exaggerating the prices to sell a story. Question how they have come up with this figure, what facts are they presenting, how have they calculated this? Remember to question the motive behind the media and the likes of the people stating these claims, what’s their motive.

Is it only $0.57 per day I have to raise my fees?

We wish, Federal Child Care Minister Kate Ellis said in the Courier Mail on the 3rd October ‘”Our figures show a family on $80,000 will pay an additional out-of-pocket expense of 57¢ a week in 2010-2011 and $8.67 by 2012 for one child in full-time care,” she said. Courier Mail on the 3rd October.

Remember the Federal Minister has also an agenda to soften the prices; however she is closer to the mark for 2012 when all Long Day Centres will be required to operate at 1:4.

Case Study One: 48 place Centre

Currently the Centre operates at 10 babies, 16 toddlers and 22 Preschool children. The fees are the same across the centre.

The owner faxed her 1:4 ratio review to Succeed, along with the Centre’s plans. Three proposals were presented with a cost analysis on each. The costs on two scenarios were $0.

Why $0.00, the Preschool room had unencumbered play space for 24 children, the Centre already operates this room with three staff. The Centre’s license allows for 30 Preschool children. The Preschool Room operates at full capacity and the owner is confident that two more places can be booked. The owner wasn’t aware that she could move her numbers around in her license. The owner was over the moon, she had a solution. The solution was even better will a no cost outcome.

Case Study Two: 43 Places

This Centre currently operates at 10 babies per day, both the license and play space supports the Centre increasing to twelve babies. A new staff member will be required, it has been decided a Certificate III staff member is an appropriate choice.

Based on 100% occupancy a fee increase to cover the costs will be $4.00 per day, based on the historically average occupancy for the year calculating at 78% a $5.00 per day increase will be set.

Case Study Three: 86 place Centre

Current Operations Planned Changes
Places-10: 0-12 months Places 8: 0-1 months
Places-10: 0-18 months Places-12: 1-18 months
Places-10: 18-2 years Places-12: 18-2 years
Places-16: 2-3 years Places-16: 2-3 years
Places-20: 3-4 years Places-20: 3-4 years
Places-20: 4-5 years Places-20: 4-5 years
Places-86 places Places-88 places

The plans were provided and an extra two places will be able to be achieved, a variation on the license is already in; now the owners are waiting for approval.

Case Study Four: 80 place Centre

There are two babies room, both operating at 10 per day. On analysis in the final proposal one baby room will decrease to 8 and the other will increase to 12. The plans have been provided to support this proposal. There is one extra staff member needed, it has been decided a Certificate III is an appropriate choice. On this scenario there will be a $2.00 increase to cover this cost.

So how do I calculate it for my Centre!

What is the real cost per day, per week, per annum if you decrease or increase numbers?

There are several key items you need to consider when calculating the cost effects on your Centre.

1. Your current room configurations

2. Unencumbered play space indoors in your play rooms

3.

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Unencumbered outdoor play space

4. All possible solutions

5. What are your current fees

6. Are extra staff needed for any of the possible solutions

7. If staff are needed, at what rate of pay and level

8. What other staff costs do I need to consider, superannuation, worker’s compensation, holidays, sick leave, uniforms, training etc

9. Can I increase my babies numbers or will I need to decrease my numbers

10. If I need to decrease my baby numbers, can I pick these up in other rooms

11. What’s my average trading occupancy; a cost analysis at 100% occupancy will differ at 70% occupancy.

Yes, there are some core areas to examine; it may be overwhelming however it is a worthy process to ensure you get the facts right for your individual centre.

NSW will lead the changes from 1st January 2011; by introducing an amendment in the Children’s Service Regulation 2004.

To organise your individual 1:4 review and get the real costs!

There is not one figure that will apply to all services, we are all individual with different

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fees, room configurations and license configurations. Each Centre needs to do an analysis specific to them. You need to get it right for you, your families, your children and your staff!

Unfortunately some centres will see this as an opportunity to cash in at the expense of families

and the industry out of greed and/or out of opportunity!

We all need to be responsible in any fee increases, if child care becomes unaffordable to families, they will cease work to care for their children, families will use back yard babysitters and our children deserve to have the quality care that we have all contributed to, achieving what child care is today. Can you afford the industry to self destruct!

Don’t lose sight of why the changes are coming!
Staff: Child Ratios

Age Group Staff to Child Ratio Implementation Date

Birth to 24 months 1 staff member to 4 children 1 January 2012
25 to 35 months 1 staff member to 5 children 1 January 2016
36 months to school age 1 staff member to 11 children 1 January 2016
Mixed age groups A proportional formula will be 1 January 2012
applied based on the above ratios

1. A staff-to-child ratio of 1:4 for children 25 to 35 months will be retained in Victoria where this ratio currently applies, instead of 1:5 under the National Quality Standard.
2. A staff-to-child ratio of 1:10 for children 36 months to school age will be retained in New South Wales, Western Australia and Tasmania where this ratio currently applies, instead of 1:11 under the National Quality Standard.

If it’s all too hard ! …

Let Succeed Consultancy take away your headache and we will do an analysis for you; presenting a professional report with several options with recommendations based on your Centres needs.

Members Price: $110.00, saving 30%
Non Members: $352.00

*GST inclusive

Plus a further 10% discount for Childcare Sales Australia clientele (see below)

Will you spend more than this working in your own time through all the scenarios? Do you have someone on call to discuss your Centre’s individual needs and pricing strategy?

Succeed Consultancy has already completed over 50 new 1:4 ratio reviews to date.

Date: November 2010

Proudly brought to you by industry expert;
Erin Allen, Director – Succeed Consultancy

Email: enquiries@succeedconsultancy.com.au Web: www.succeedconsultancy.com.au

Phone: 1300 077 248 Fax: (02) 4233 1568

Editors Note

It is worth noting that although Succeed Consultancy is a select preferred supplier of
Childcare Sales Australia, we are pleased to advise that our recommendation of their
services is not based on any financial or other gratuity between the companies.

You see, unlike every other childcare broker, the 10% ‘referrers fee’ normally paid to brokers
by Succeed, we have decided to pass on to you… our clients, in the way of a
10% discount on all of their services for all Childcare Sales Australia clientele.

Because we know that helping you achieve your goals, will help us achieve ours.

Our recommendation of Succeed Consultancy is based on a long and respected appreciation
of the work they perform for both our clients, and within the industry as a whole.

Skilled; Knowledgeable; Reliable; Professional

Succeed Consultancy, a Childcare Sales Australia Preferred Provider

Shane ChambersTencaten, Corporate and Consulting Services

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