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License Crisis Averted?

Child-care providers say a proposed state-fee increase could have led to an 'unintended nightmare'

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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."

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