This story is part of an ongoing series evaluating Smart Start and related early childcare programs in an attempt to improve their efficiency and priorities. Related articles and presentations can be found here and here.
Smart Start and the Division of Child Development (DCD) both administer state childcare subsidy funds to needy children, yet DCD spends considerably less to administer the same sorts of subsidies than Smart Start does. Childcare subsidies provide affordable childcare to eligible families in severe financial circumstances. In fiscal year 2008-09, before the budget crunch brought on by the recession, there was an extremely large disparity in administrative costs between Smart Start and DCD. While DCD spent 4.56 percent of its budget on administration, Smart Start spent a hefty 10.07 percent. Comparing these administrative rates, simple math shows that if Smart Start lowered its administrative expenses to be on par with DCD, $4.3 million could have been freed up to assist more needy children. According to a DCD report of the average subsidy amount per child, this funding could have extended subsidy services to an additional 935 children.
The recession has caused these numbers to even out somewhat, but a large disparity still exists that reduces the amount of subsidies able to reach children. Today, Smart Start administers subsidies at a rate of 8.33 percent of their budget, in contrast to DCD’s more modest 5.37 percent. If these subsidies were administered at the DCD rate, the state would save an immediate $2.3 million, which could provide almost 500 extra subsidies to needy children.
Especially in the course of a recession, North Carolina needs to ensure that more of its funding goes to children and families struggling to make ends meet. Large administrative expenditures do nothing to improve the lives of children, but rather siphons off critical tax dollars from the most needy and vulnerable in our society. Administrative costs should be universally lowered, prioritizing direct services to children and daycare providers. It is imperative that the state looks inward during this economic downturn to iron out inefficiencies and duplicative programs, saving the state money and providing more services to those who need them.