Do It Yourself
Contracting with outside vendors isn’t the only option. Because in-house backup centers are subject to less-stringent licensing standards than those that apply to full-service centers, which may host a large group of children full time, companies find they typically cost less to design and build. Industry experts suggest that a typical full-service center requires about 10,000 square feet of dedicated space, while an in-house backup center can be created with as little as 2,500 square feet.
Although licensing regulations vary from state to state, day-care regulations that mandate minimum square footage per child, outdoor play areas, or staff-to-child ratios—or those that prohibit the mixing of age groups within a classroom—are usually more relaxed in backup-care environments. As a result, backup centers typically cost less to design and build. And under the Economic Growth and Tax Relief Reconciliation Act of 2001, companies can also take advantage of the same 25 percent federal tax credit (up to $150,000 per year) for qualified employer-sponsored child-care expenses, whether for full-service or backup care.
Backup care does have its limitations. Because demand varies and enrollment can fluctuate seasonally at backup centers, such as during school vacations, waiting lists may be common during high-demand periods. Furthermore, most center-based care, whether full-service or backup, is restricted by state or local health regulations from accepting sick children if there is a danger of contagious illness. In these situations, referral services for in-home sick-child care by trained providers could be considered.
Finally, as with full-service care, employers shouldn’t rely on parents to fund the cost of a backup center benefit. As an incentive for use, companies usually choose to keep parents’ co-payments low, and these fees can cover only a small fraction of the cost of the benefit, usually ranging from 1 to 10 percent of the employer’s investment.
For many employers, backup child care may be a trend whose time has come. For Mehrtens, whose nanny had to return home, backup care saved the day. “I don’t know what I would have done without it,” she says.
Melissa Hennessy is a freelance writer in Grafton, Massachusetts.
Handle with Care
Once expected to become the next “hot” benefit provided to employees, employer-sponsored child care has largely failed to take off for two reasons: high costs and liability concerns associated with building and operating full-care centers.
For some companies, however, offering state-of-the-art, full-service child care has more to do with corporate culture than with verifiable return on investment. The Islandia, New York, headquarters of Computer Associates International Inc. boasts a 110,000-square-foot (including indoor and outdoor space), full-service center serving 370 children. The center, heavily subsidized by the company, features a high-quality, educationally focused curriculum and employs 115 teachers, who are all on CA’s payroll. “We really want to be different—a unique and special place to work,” says Lisa Mars, CA’s vice president for corporate child care. “I’m not aware of many other companies willing to commit the dollars and effort to running this type of program.” CA has six child-care centers that serve more than 600 children.
While the cost is significant, Mars says the center gives the company a unique advantage in attracting and retaining talent. CA isn’t concerned about getting a tangible financial return on the investment; rather, says Mars, “our primary goal is to support the needs of parents.” In 2003, the company was named one of the 100 best companies for working mothers by Working Mother magazine, thanks, in part, to its child-care center.—M.H.
Typical Models For Backup Child Care
A group of companies pools members’ dollars to create and operate a center. Consortium members act as owners and collectively assume start-up and overhead costs as well as liability risks.
A sponsoring company fully owns and manages the center, operating it internally or outsourcing it to a service provider. The sponsoring company may choose to sell membership spaces to other companies to offset operating costs.
This is the most popular model. Companies purchase memberships from an external vendor, buying spaces for their employees in a center. The care provider—not the employer—retains profit-and-loss responsibility for the center. Contracts with vendors can often be adjusted from year to year to reflect the company’s needs.
Flexible Or Mixed.
A combination of approaches, this model provides a tailored web of services for parents. For instance, a company may purchase a membership space in a local backup center, as well as offer access to child-care resource and referral hotlines and dependent-care tax-savings accounts. Employers may also partner with external services that offer in-home emergency care, such as Parents in a Pinch or Caregivers on Call.—M.H.