The Pre-K Peril

Providers say city funding isn’t enough to stay afloat

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In the same month he took office, New York City Mayor Bill de Blasio unveiled a bold plan to provide some 73,000 free, full-time, high-quality universal pre-K seats in New York City before the end of the following year. That was in January 2014, when there were 19,483 full-time seats in the system.

Since district schools lacked the capacity to accommodate a ramp-up of that magnitude, community-based organizations, or CBOs, were called upon to perform a critical role in the expanded delivery system. The Department of Education anticipates that 1,150 CBOs will provide universal pre-K programming in the coming school year.

Despite constituting over half of the total universal pre-K sites, many contracted CBOs now claim they are facing distinct challenges in the disrupted prekindergarten landscape emerging out of the Pre-K for All initiative.

“CBOs have to pay rent, and many CBOs have other kinds of overhead costs that (Education Department) programs may not, and so the per-child rate may not be completely equitable for CBOs versus non-CBOs,” said Jeremy Kaplan, senior director of schools and community education at Phipps Houses, which operates universal pre-K sites in the Bronx.

The per-child rate the Education Department offers its universal pre-K providers is typically capped at $10,000, though many providers are offered less and, under certain circumstances, some receive more. Yessenia Rosario, the executive director of Nicholas Cardell Day Care Center in Inwood, recalls contacting the Education Department when her school’s lease expired and a $3,500 rent increase went into effect – around the same time her insurance rates also rose. Rosario asked the Education Department for an increase on her current funding rate of $9,997 per child, which she claims is insufficient to cover her operating expenses.

“All that I’m told is, you’ve got to make it work with what you have,” Rosario said. “So if I’m getting paid a set amount for the next three years, but every year my insurance is going to go up, every year my rent is going to go up, how am I going to pay for those increases if you’re not going to change your rate?”

The situation confronting Nicholas Cardell Day Care Center is, according to multiple accounts, not unique. “There are issues around expirations of leases and a lot of the centers remain fiscally unstable,” said Gregory Brender, co-director of policy and advocacy at United Neighborhood Houses, which oversees 38 CBOs.

In many cases, the challenge stems, at least in part, from the strain some providers were already under from EarlyLearn, a program run by the city Administration for Children’s Services that provides child care and early childhood education services to mostly low-income families.

“The implementation of universal full-day prekindergarten was layered on top of the EarlyLearn early childhood system, which was extremely fragile,” said Stephanie Gendell, associate executive director at the Citizens’ Committee for Children of New York. “Because of numerous issues related to EarlyLearn – including inadequate rates for providers and salaries and benefits for staff – the implementation of expanded prekindergarten created more instability in many instances. While the CBO community stepped up to be critical partners in implementing this priority mayoral initiative, many continue to struggle due to inadequate rates and poor compensation for staff.”

One of the most widely reported sources of systematic instability is the disparity between teacher salaries and benefits across the early the childhood education system. Last year the city took a step toward narrowing the gap by granting substantial pay increases to lead universal pre-K teachers in CBOs, bring their starting salaries nearly in line with their counterparts with similar credentials at district schools. In July, the administration announced it would offer signing and retention bonuses – of $2,500 and $3,5000, respectively – to CBO teachers. The benefit packages those teachers receive, however, still lag well behind their Education Department counterparts, as does their potential for salary growth. And despite addressing certain salary inequities, the mayor’s initiatives have exacerbated others. Within a given center, for instance, a teacher who works with 3-year-olds may earn almost $10,000 less than a colleague working with 4-year olds – even if they hold the same credentials. Many CBO teachers, represented by DC 1707, haven’t gotten a new contract since 2006 and, according to the Council of School Supervisors and Administrators, the directors it represents haven’t received a pay raise in 10 years.

“Now the (universal pre-K) teacher’s salary is very far above the contractual base for a CBO director,” said Randi Herman, first vice president of CSA. “There has been no movement to rebalance those scales.”

CBO directors claim that the effect of equally credentialed teachers being held to the same quality standards as their Education Department counterparts without receiving commensurate salary and benefits has led to diminished morale and high turnover. “Because of their credentials, (the teachers) almost always end up going to the Department of Education,” said Marcia Lawrence, program director of the BronxWorks Early Childhood Learning Center.

There is also evidence that the reported migration from existing CBO programs to district schools is not limited to teachers. Many centers report declining student enrollment in the fee-based EarlyLearn program, which offers pre-K programming to 4-year-olds with extended hours of care. According to a brief prepared by Bruce Fuller, a professor of education and public policy at the University of California, Berkeley, enrollment of 4-year-olds in ACS-run programs dropped from 14,195 to 11,425 between November 2013 and November 2014, though the report acknowledges that factors other than universal pre-K expansion could have impacted the decline.

The fact that EarlyLearn is funded on a pay-for-enrollment basis in which providers receive per-child reimbursement can cause budgetary strains when enrollment drops without a corresponding decline in fixed costs, such as salaries and facility-related overhead. In an effort to lessen a portion of the fixed-cost burden, the city announced in June that it would provide reimbursement for allowable expenses, independent of enrollment. An ACS spokesman said the agency plans to implement the policy this fall.

To recruit and enroll families in the expanded universal pre-K program, the Mayor’s Community Affairs Unit and the Education Department initiated an outreach campaign, staffed by enrollment specialists with experience in political organizing as well as personal ties to particular communities. Among CBO directors, one frequent gripe is that Education Department recruiters have targeted students already enrolled in their programs.

“We have had families who have been enrolled in our programs receive calls from the (Education Department) saying, ‘We know that you are at this site, but we have (an Education Department) program that’s three blocks away that you can enroll in and if you go there then your child will continue in that school for kindergarten,’” said Linda Rodriguez, associate executive director of early childhood services at The Child Center of NY. “In communities where it’s very difficult to get in to certain schools, that becomes very enticing to a family.”

Numerous providers attest to the challenges of maintaining their enrollment amid that competitive climate. According to Rosario, Education Department staff has persistently recruited from her 3-year-old class. “Even when the family expressed that they wanted to stay where they were, they continued to get recruiting phone calls asking them to consider signing up for P.S. 5 or Washington Heights Academy,” she said.

Rosario recalled a recent episode in which one of her classrooms was fully enrolled until an Education Department recruiter contacted the mother of one of her students. “She dropped me like a hot potato,” Rosario said. “I thought I was all set and done; now I have to aggressively go into my wait list.”

According to an Education Department official, enrollment specialists have been “counseling” families through the application process to find the right program for them. 

“We are meeting families where they are, and in doing so, we are fulfilling our commitment to provide every family with access to free, full-day, high-quality programs,” the official stated. “Our goal is provide parents with options, in all communities.”

Others raised doubts around the motivation underlying the Education Department outreach campaign. “The mayor has made a commitment to put a certain number of kids into a certain number of seats. The political implications of not being able to do what he says he’s going to do would be significant, no?” Herman said.

Since they are reimbursed on a per-student basis, providers claim that losing enrolled students at the last minute can erode their bottom line. Enrollment uncertainty, however, is not limited to the publicly funded system. Wendy Cole, director of the Maple Street School, a parent cooperative preschool located in Lefferts Gardens, Brooklyn, believes there should be greater collaboration between private providers and the Education Department in certain areas, including coordination of enrollment.

“It would be great to know by July what school 4-year-olds are going to, so all of us can make sure that we’re having our schools filled with children,” she said. “In fact, if they could do it more like May or June, that would be great.”

Since there might be 115,000-120,000 4-year-olds living in New York City, and the current target for universal pre-K enrollment is in the 70,000 range, experts confirmed that the full citywide delivery of pre-K education will remain – even after the Pre-K for All rollout is complete – reliant upon a diverse ecosystem of private providers.

“By offering families pre-K options outside of the private-pay model, Pre-K for All is disrupting the pre-K space in New York City and driving competition and raising the bar of quality,” an Education Department official said.

In some parts of the city the supply of new universal pre-K slots and demand for them is yet to fully align. Established centers in some neighborhoods worry that new universal pre-K sites will chip away at their enrollment. In certain communities, the current number of universal pre-K seats may exceed demand. Other providers report a scarcity of slots in their service areas and wait lists in the hundreds.

Lois Lee, director of the Queens Corona Early Childhood Center, recalled families coming to her on the first day of enrollment and “begging” to stay on her waiting list. “Parents were bringing me acceptance letters and they were sent to JFK, Manhattan, all sorts of places,” she recalled.

According to Lee, infrastructure limitations have been the major obstacle thus far to a more balanced distribution of universal pre-K slots. But according to another contracted provider, who also runs a universal pre-K site in Corona, the funding rate the Education Department offers prospective providers could also limit supply.

“Last year we were awarded two direct (universal pre-K) contracts – one for Astoria and one in South Jamaica,” said Rodriguez, “but because the cost-per-child rate was too low we had to turn them back. Because they were not self-sufficient, the cost-per-child rate was not enough to be able to pay for the operation of the site.”

According to an Education Department official, the city negotiates contracts with CBOs “to ensure they offer free, full-day, high-quality pre-K education.” The official said that the Education Department assesses per-student “costs for vendors based on a detailed analysis around the specific needs and operational expenses each program will incur. These expenses can vary throughout New York City.”

Sherry Cleary, the executive director of New York Early Childhood Professional Development Institute at CUNY and a member of the mayor’s Universal Pre-Kindergarten Implementation Working Group, noted that the per-child rate of $10,000 offered to universal pre-K providers is “more than I’m aware that anybody else pays for six hours and 20 minutes of school programming for 4-year-olds.”

Cleary added that the federal government reimburses child care for poor families at a national average of $5,000 per year for a 10-hour day, for 12 months.

“There are providers who have to turn down a contract because the rate did not work,” United Neighborhood Houses’ Brender said. “There are also providers who are either using creativity or plain old private fundraising to supplement programs.”

Some programs in middle- or upper-income areas have the ability to supplement public funding through fee-for-service programs during non-pre-K hours – which may not be an option in more disadvantaged communities.

“We don’t want to put another burden on these parents,” Lee said.

Lee says her school struggled with an initial per-child rate of $8,000. Later, the rate was bumped to $9,000.

“We can get by,” she said. “That doesn’t mean it’s wonderful.”

Lee insisted, however, that providing education to a community in need has to come first. “You have to do the best you can with whatever they give you,” she said.

While some providers maintain that the reimbursement they receive is inadequate to cover the full scope of program costs, others say more funding should be deployed toward additional resources – such as increased access to social workers in low-income communities.

“There is an algorithm that the (Education Department) uses to factor their rate for each organization, and I think that has contributed to some challenges in the program,” Phipps Houses’ Kaplan said. “We have one site where we get $11,200 per child and we have another site where we get $10,000 per child. That’s a pretty significant difference in per-child funding, and that site that has $11,200 per child is going to have access to different types of resources than the sites that have $10,000 per child.”

According to a report by Child Care Aware, the average annual cost of center-based care for a 4-year-old in New York was $12,355 in 2012 – the highest in the country. 

Some community centers have apparently reached the conclusion that the reimbursement rate offered by EarlyLearn – which is typically higher than the universal pre-K rate, but also covers extended service – is a better option for their pre-K programs. 

“Some directors I spoke with actually gave back some of the classrooms that they were awarded with the (Education Department) and went into the ACS, because once they did the math they were actually going to be losing revenue by going the (Education Department) route,” Rosario said.

In January, the Campaign for Children, a 150-member coalition of advocates, civic leaders and early childhood providers, released a report that concluded: “the current EarlyLearn rate is insufficient for agencies to be able to provide a high-quality early childhood education to children and to adequately hire and compensate well-trained, qualified staff. The current rate structure leaves many agencies with budget deficits and makes the current system unsustainable.”

That report further noted: “EarlyLearn providers have also been essential to the implementation of the full-day prekindergarten expansion for 4-year-olds, as all of the 4-year olds in EarlyLearn programs are also part of the pre-K program. Thus at the same time as the providers have been trying to sustain their program with the EarlyLearn rate, they have also been dealing with the challenges and opportunities presented by the pre-K expansion.”

According to Rosario, when her school’s board decided to contract with the Education Department, she told them, “‘You do understand that by getting an (Education Department) contract you’re going to lose $50,000 from the bottom line?’ And that's a hard thing to swallow. But they did it because everyone else was doing it. But, financially, it wasn’t a good move.”

“If you’re the only program in town charging a fee,” she added, “where are parents going to go?”

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