‘A broken market’: Florida’s childcare system is failing. What can be done about it?

After Hurricane Wilma wiped out much of the Keys’ childcare infrastructure back in 2005, Palma Lopez saw a glaring need — and an opportunity.

Having worked with children for more than 30 years, she decided to open her own childcare business, the Learning Center of Key West.

“I don’t really like dealing with adults, and I love children,” she said of her lifelong draw to early childhood education.

But after nearly 20 years in the industry, Lopez’s business is in dire straits, perpetually teetering on the brink of collapse.

For Lopez, 76, as for many childcare business owners, a precarious industry — made even more so by the pandemic — has hit a breaking point.

COVID fears combined with layoffs and rising prices. Parents could no longer afford to send their kids to daycare, and Lopez’s enrollment numbers started to dwindle.

Her center, licensed to hold 40 students, had routinely been at or very close to full capacity pre-pandemic. She’s now down to 13 students. “I’m one pay period away from closing,” said Lopez.

Diminishing attendance and rising costs, from labor to school supplies, have evaporated her operating margins.

“I don’t even pay myself anymore,” said Lopez, who is operating at a loss in order to keep her three teachers paid.

Lopez isn’t alone in her experience among childcare business owners.

“It’s a broken market,” said Nina Perez, the Florida director of Moms Rising, a mothers and families advocacy organization.

Parents struggle to pay for childcare. Businesses struggle to stay afloat. Many are barely able to pay their staff livable wages, causing rampant turnover and a scarcity of educators, further worsening educational outcomes.

Much of this, added Perez, comes from the fact that the market for childcare is a market at all. “I think it’s supposed to be a public good, for sure,” she said.

The seed of this “broken market” was sown in 1971, when President Richard Nixon vetoed the Comprehensive Child Development Act. That bill, which had bipartisan support, would have implemented a national, public childcare system, effectively mirroring K-12 public education but for infants and toddlers.

Instead, childcare responsibilities were left to families or private childcare businesses, which predominate today.

Part of the challenge is structural. Mandated student-teacher ratios, which are much lower for infants and toddlers than they are for grade-school children, drive up costs but for good reason: child safety.

Younger children, said Perez, require more attention than older kids. In Florida, childcare centers must have one adult present for every four children under the age of 1, six children between 1 and 2 years old, or 11 kids between 2 and 3. Those ratios both are critically important for children’s safety and also drive up businesses’ staffing costs, said Perez.

And parents — for many of whom childcare is already their largest monthly expense — are often unable to absorb price increases, at least not without state assistance.

The School Readiness Program, a federally funded program that helps low-income parents afford their young children’s early education, covers families that earn up to 150% of the federal poverty line. For a three-person household in 2024, that’s $38,730 — a threshold that disqualifies two-income houses where both parents earn Florida’s minimum wage.

For those who make too much to qualify for state assistance programs but not enough to comfortably pay for childcare costs out of pocket, quitting a job to look after their kids sometimes makes the most financial sense. Ultimately, said Perez, this can shortchange children: They’re being looked after rather than educated. It also means fewer customers for childcare centers.

Balancing the books

Robyn Perlman, a Broward County local, sees some fixes for this broken market. Perlman’s Business and Leadership Institute for Early Learning helps childcare center owners improve their business fundamentals and, in turn, their business’ sustainability. More than anything, it offers a mindset shift: from being a “childcare provider” to a “business owner,” one responsible for the health and longevity of the business.

More than 1,200 childcare center owners, directors and industry hopefuls have passed through the Institute’s ranks since its founding in 2013.

On any given Saturday in Florida, dozens of childcare center owners sit in on Perlman’s free masterclasses. Developed with Wells Fargo, a course consists of four all-day bootcamp sessions, during which owners learn how to balance their books, set prices, negotiate leases, market themselves and, most importantly, build assets — be they real estate or a brand.

“It’s an asset-based approach,” said Perlman — business acumen for those who often get into the industry as educators, not businesspeople.

The model builds both better quality and more sustainable childcare, argues Perlman, who hopes to extend the Institute beyond Florida’s border.

Part of the way it does that is by improving funding efficiency — basically, helping childcare center owners access resources that already exist.

Take The Children’s Trust, for instance. A property-tax-funded children’s advocacy organization, the Trust is a major provider of assistance to qualifying childcare centers. Through its Thrive by Five and A$cend programs, it provides financial incentives to business owners and educators who receive advanced training in early childhood education.

Or the Early Learning Coalition of Miami-Dade and Monroe Counties, which pays centers that have Gold Star accreditation — that is, highly trained teachers — an additional 20% of whatever tuition they charge per student. Its Professional Development Institute provides free training to teachers throughout the year, helping them qualify for the state incentives. Perlman helps business owners make those connections and leverage those state resources, which can provide some financial cushioning while simultaneously improving marketability.

Few centers embody Perlman’s vision as much as Liberty Academy, a childcare center in Liberty City. Despite nearly all of their students coming from low-income families, the for-profit business has evaded most of the challenges that other providers face.

“We thought about this like a business,” co-owner Maurice Brazier said of Liberty Academy’s success since he founded it with his wife, Sarah, in 2006. It’s a business that requires compassion, he qualified, but a business nonetheless.

All of Liberty Academy’s teachers are accredited, qualifying them for financial premiums from The Children’s Trust and the Early Learning Coalition. That, in turn, allows Liberty Academy to pay their teachers above market rate, reducing turnover and providing stable employment and quality childcare to the otherwise largely resource-scarce neighborhood.

“Those dollars,” said Liberty Academy co-owner Sarah Brazier, “are a huge blessing to the community and to us.” They allow Brazier and her husband to invest in programs that further buttress Liberty Academy’s quality and brand, like foreign language learning and free after-school care.

While clearing up the supply side of the childcare equation can go a long way to making a more sustainable, thriving early childhood education industry, parents still need to be able to afford childcare.

In Liberty Academy’s case, nearly all of its students receive heavily subsidized tuition thanks to the School Readiness Program.

Some legislators, like state Sen. Alexis Calatayud, a Republican representing parts of Miami-Dade County, hope to address the issue by raising the maximum income to include more families. That proposal has thus far run aground, though, due to its price tag, which Calatayud estimates at $100 million to $150 million annually.

Lopez, the childcare center owner in Key West, is unmoved by those qualms.

“I have at least eight families that need assistance,” she said, adding, “If Tallahassee doesn’t have the money to help the families, to keep the daycares alive, then we’re looking at no daycare at all.”

This story was produced with financial support from supporters including The Green Family Foundation Trust and Ken O’Keefe, in partnership with Journalism Funding Partners. The Miami Herald maintains full editorial control of this work.

This story was originally published December 11, 2024 at 5:00 AM.

Max Klaver

Miami Herald