How to Pay Licensing Fees for Family Child Care Homes
By Beth Mork, Grant Coordinator, MLFCCA
During the 2003 Legislative Session,
Many providers felt this legislation would never pass. Other providers felt a licensing fee was inevitable, due to the state of the economy and the political climate. Several providers recognized that many businesses that are licensed, incur a licensing fee and were prepared to pay a licensing fee. However, the feeling was that to go from no licensing fee to $150.00 was a little too much to digest. Providers just look at such a fee and recognize that it is just one more challenge to deal with as a reality of managing a licensed family child care business.
Remember when the Child and Adult Care Food Program was in jeopardy of being cut? If you were not a licensed family child care provider at that time, let me share with you a scenario of how providers dealt with that “crisis.” First we had the group that said the Food Program was the incentive for 95% of providers to get licensed. There was a prediction that providers in mass would drop their license and go underground. Then you had the group that said parents could not afford to pay the increases that would occur if providers raised their rates to cover the loss of income created by the Food Program being dropped. Many providers raised their rates that summer in anticipation of losing the Food Program. The food program went to a Tier I and Tier II, income eligibility program. Providers experienced some loss of income due to the tier structure used for reimbursement; however it was less than the rate increases they had implemented. In the long run, most of those providers received an increase in income greater than the loss expected from the Food Program cuts. Very few, if any providers cut their child care fees back to adjust for the actual Food Program cuts. So in fact, most providers took a small step towards actually getting paid what providers should earn for providing child care.
I challenge you to look at the licensing fee as a good thing. Why?
- A licensing fee is one way of validating that licensed family child care is a professional business.
- It protects children by assuring that funding is still adequate enough to allow the counties to provide the service of licensing in-home child care. Some counties had considered not licensing homes. The fine to counties for not licensing homes was less than the cost of licensing homes. Several counties had considered dropping the licensing of family child care homes as a service just paying the state the fine. The federal government, states and county boards were looking at ways to cut spending to balance their budgets.
- In a state that requires a license to operate a child care business (that cares for children who are not relatives and who come from more than one home), providers with a license have access to other financial resources that more than compensate for the licensing fee. Licensed providers can participate in a Food Program and receive a reimbursement check each month for meeting the nutritional needs of children. Licensed providers have tax benefits in the form of tax deductions associated with operating a business in their home. Licensed providers have liability resources that are not available to unlicensed providers. If being able to charge a fee for licensing assures that counties will still license in-home child care providers, it is a necessary burden for family child care providers.
How can you lessen the burden? Think of this fee as any good business person would think of it. What happens when a large company is faced with new costs of operating a business? They pass it on to the consumer.
Most providers write their contracts, policies, enrollment forms, and other business papers at the time they are renewing a child care license. It is a logical time to review and update information, rates and budgets.
A number of providers have a “Registration Fee” in place in their contracts. If you don’t have one now, perhaps that is something you wish to implement. A registration fee could be calculated to cover the costs of:
1. Licensing fees
2. BCA Charges
3. Liability Insurance for your child care
4. Costs related to reprinting contracts, policies, and advertising for new clients.
Total the costs you wish to have covered by a registration and divide that charge by the number of children you care for.
Another option would be to prepare a budget of your anticipated expenses for the next year. Your rates should reflect the cost of living increases, the additional expenses you have incurred such as the licensing fees, changes in vacation days, professional leave days, or any other changes in your own benefits you wish to add. Adjust your child care client fees to appropriately cover the new costs of providing quality, licensed family child care.
For example:
Licensing fee $150.00
BCA Check $100.00
Insurance (1 Year) $220.00
Total $470.00
$470.00 divided by 10 children = $47.00 per child as a registration fee.
Just as you value your child care license as one way of validating your profession, you need to trust that parents care enough for their children that they would value extra monitoring to assure their children will be cared for in a safe home environment. They will identify their responsibility to pay the costs associated with licensing.
MLFCCA would like to hear from providers on the issue of licensing fees. Has your county implemented the licensing fee? How much and when did it become effective? How are you, as a provider dealing with licensing fees within your child care business? Please direct responses to Beth Mork, Grant Coordinator, MLFCCA 1711 West County Rd B,
