How can the city make sure publicly funded day care centers are fully enrolled?

That's the question the Administration for Children's Services (ACS), which operates more than 300 centers across the city, has been struggling with over the past few years.

At a press conference at ACS headquarters last week, Commissioner John Mattingly revealed the city's latest answer: a new funding model intended to increase enrollment by changing the way city-sponsored day care centers are paid.

As part of a unique funding plan developed about 40 years ago, the city's day care centers have traditionally been reimbursed at a flat rate based on their capacity, or total number of slots available. But starting this September, ACS will only pay centers for the actual number of children enrolled in their programs, reducing funding for those not operating at full capacity.

"This is the way we must go or else the system will become so expensive and under-serving that it won't be able to continue indefinitely," Mattingly said.

By linking funding to enrollment levels, ACS expects centers to become more accountable and have a greater incentive to focus on bringing more children in the door. Mattingly said it's an improvement on the current system, which he called inefficient and wasteful.

As of last week, the enrollment rate at centers across the city was 86 percent, or close to 20,000 slots filled out of a total capacity of more than 23,000 slots, according to ACS. The city pays about $13,000 a year for each child in center-based care, with vacancies costing the city $40 million in 2007 alone, said Mattingly.

Neal Tepel, assistant to the executive director at DC1707, a union representing many childcare workers, sees this policy as just the latest step in the agency's efforts to distance itself from center-based child care. "ACS is feeling a lot of pressure to balance the budget," Tepel said. "You have to think that it's a concerted effort to close day care centers."

ACS maintains that the new funding formula is intended to increase enrollment at day care centers, and is not related to the city's budget problems. But, like other city agencies, ACS has been told by the Bloomberg administration to cut spending by 5 percent in the coming fiscal year, and it expects to save $4 million with the roll-out of the new funding plan, said ACS budget director Denise Borak.

According to DC 1707, 17 centers have been closed for a variety of reasons since 2004, with more than 1,000 day care slots lost in the process. The most recent closing, at Lucille Murray Child Development Center in the Bronx, occurred just last month. (See City Limits Weekly #621, Jan. 7, 2008, Day Care Realignments Spark Citywide Concern.) Many are predicting that this new policy will lead to even more closures.

City-funded day care centers rely on current funding levels to meet fixed costs, such as facilities, staffing and administration, noted Nancy Kolben, executive director of Child Care, Inc., a childcare resource and referral nonprofit. These expenses are written into centers' budgets to reflect the full cost of care, and do not fluctuate based on enrollment.

In other words, even if a class only has 10 out of 20 slots filled, the center can't decide to pay for half a classroom or half a teacher. "Unless their fixed costs can be met, there is no way these centers can survive," said Sandy Socolar, senior policy analyst at DC 1707.

"I think it's pretty high-handed for the city to undo a 39-year-old funding policy by edict, instead of having a full disclosure of pros and cons and thinking of possible unintended consequences, like centers closing," Socolar said.

Mattingly acknowledged that some centers will be forced to merge, move or shut down as a result of the new funding model, but did not cite an estimate of how many. "We expect there will be some that don't make it," he said.

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