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The Iron Triangle
November 1, 2010
Fall seven times, stand up eight.
-Japanese proverb
-Japanese proverb
"When seeking to balance their budgets, early childhood program directors typically focus on their rate — the price charged to parents or received as reimbursement from government. Rates are indeed important; however early care and education program income is also profoundly influenced by two other factors: enrollment and fee collection. These three factors form the “iron triangle” of early care and education (ECE) finance. Paying close attention to the three sides of the iron triangle is key to sound fiscal management....
"Both enrollment and fee collection impact actual per-child costs. If a program is not fully enrolled, the per-child cost increases. If bad debts go up (fees are not being collected), the per-child cost increases. In some cases, a budget gap can be addressed by boosting enrollment and/or lowering bad debt rather than raising fees. The three factors are interrelated. In tough fiscal times, when third-party funders are cutting budgets and parents are squeezed financially, ECE programs often face a difficult choice: keep fees high and risk increased vacancy rates and higher bad debt, or lower fees to boost cash flow. Unfortunately, the right answer is not simple or obvious, and it may vary from center to center based on the services offered and the families served.
"The iron triangle is a simple formula for a complex issue. It can be a helpful way to stay on track, to remember what’s important, but should not replace the many steps involved in sound fiscal management. Gwen Morgan and Bess Emmanuel have co-authored an excellent handbook, The Bottom Line for Children’s Programs: What You Need to Know to Manage the Money, which should be an essential text for any program director involved in the business side of early care and education."
The Bottom Line for Children's Programs: What You Need to Know to Manage Your Money by Gwen Morgan and Bess Emanuel will tell you what you need to know to manage money in a program for young children. All the dreams and aspirations we have for our schools, Head Start programs, early learning centers, and other programs for children are expressed in the budget in the language of money. Among the many topics covered are:
- Making and balancing budgets
- Starting up a new program
- Staffing patterns that work
- Identifying break-even points
- Analyzing costs by function
- Predicting cash flow
- Reporting monthly and/or annually
- Using forms, worksheets, and checklists
- Tracking enrollment and attendance
- Learning from case examples
- Tax information
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Comments (2)
Displaying All 2 CommentsShishu Vikash Kendra
Kolkata, West Bengal, India
This system depends on socio-economic status of locality.
mosdoth day care
Brooklyn, new york, United States
you don't always have to push some book on us that is relating to the subject you are discussing it does feel objective at all
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