While Arizona is at or near the bottom of many national
social-service rankings, the state almost became the leader in one
dubious category: the cost of licenses for child-care facilities.

“The proposed fee increases are absurdly large,” wrote a coalition
of child-care advocates to Gov. Jan Brewer a few weeks ago, “with
virtually no time for phase-in.”

The cause of this concern was licensing-fee increases recently
proposed by the Arizona Department of Health Services (DHS). However,
the agency earlier this week altered the proposal by giving child-care
facilities a chance to decrease the new fees.

Due to the state’s budget shortfall, the Legislature reduced DHS
funding for the task of licensing the agencies it regulates, from $11
million to $6 million.

To help make up the $5 million difference, the Legislature permitted
the department to raise licensing fees on child-care facilities to
cover the department’s actual cost of providing this service.

For Pima County’s almost 400 licensed child-care centers and 108
group homes, those services include initial inspections of proposed
facilities, and annual and mid-year inspections of existing ones. It
also includes investigating complaints and taking enforcement
actions.

The current three-year fee of $150 for child-care facilities was set
more than 30 years ago. To cover its present licensing and inspection
costs, DHS officials last month proposed a new sliding scale of
fees.

The new three-year fee schedule ranged from $581 for a center with a
total capacity of between five and 10 children, increasing to $13,442
for those with a capacity of more than 150. The fees would be assessed
beginning in January, and because licenses are granted for three-year
periods, some centers wouldn’t see an increase until 2012.

The proposed costs, according to the letter sent to Brewer, would
have meant that “Arizona’s maximum licensing fees will be the highest
in the country.”

Those in the child-care industry weren’t only upset about the size
of the increase; they also claimed the proposed fees were based on
unrealistic information. Instead of charging centers for the number of
children actually enrolled, the fees were determined by the amount of
square footage—referred to as capacity—available for
use.

Statistics supplied by the social-service nonprofit Child and Family
Resources show that enrollment is presently at 82 percent of capacity
in Pima County.

“If the costs were based on enrollment instead of capacity, it would
be fairer,” suggests LaVonne Douville, of the United Way of Tucson.

Eric Schindler, CEO of Child and Family Resources, provides an
example of what the proposed fee increases would have meant. His agency
operates an afterschool center at Jefferson Park Elementary School that
has a capacity of 145, but an enrollment of only 13. If the proposed
fee increase would have gone into effect, the cost of the license when
it came up for renewal in 2012 would have risen to $7,380—or an
extra $190 per year, per child.

DHS officials claim on a fact sheet that weekly tuition at
child-care centers now ranges from $125 to $175. Under their original
proposal, the calculated fees “would be increased by approximately 40
cents per child per week,” or about $21 per year.

“That would be true,” counters Penelope Jacks of the Children’s
Action Alliance, “if every facility were filled to capacity every day.”
But that’s obviously not the case.

If the fees would have been increased as initially proposed,
Douville predicts some child-care centers will have simply shut down.
“They’re businesses,” she says, “and will make business decisions.”

If that had happened, or if tuition were to rise beyond the reach of
some parents because of the licensing-fee increases, child-care
advocates said the consequences could have been dire. Jacks points out
that child-care enrollment has already decreased because of the poor
economy, and substantial fee increases would only make things
worse.

Drastic changes in child care, Jacks believes, are not beneficial.
“Stability is one of the most important criteria with child care,” she
stresses.

While child-care advocates predicted bad things would happen had the
proposed fee increases gone into effect, they’re not arguing that the
status quo should be maintained.

“Nobody’s saying, ‘Don’t increase the fees,'” Jacks declares, “but
not by up to 90 times.”

In response to all the concerns expressed, DHS officials on Monday,
Nov. 16, announced modifications to their original fee-increase
proposal. In general, if facilities participate in the state’s Empower
Pack public-health program, the fee increase will be cut approximately
in half.

Schlinder is somewhat pleased by the new proposals.

“They’re not perfect,” he reflects, “and it’s still a lot of money.
But they’re much more tenable.”

This article appears in Nov 19-25, 2009.