topic 6-financial and administration 1

8/2/2019 Topic 6-Financial and Administration 1

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Topic 6: Financial and administration

Early childhood programs are expensive. The cost keeps on increasing through the yeardue to the certain related factors. The major factors can be recognized are as follows:

(a) Childrens need for services(b) Staffs need for satisfactory payment

(c) Parents need for affordable program

Costs of early childhood programs show extensive variation. There factors thatcontributing the differences of costs:

(a) Type of program

(b) The level of training of the staff

(c) Size of staff

(d) Sponsorship (a federal program, public school or parent cooperative)

(e) Delivery system (center based, home visitor)

(f) The children enrolled (age and with or without disability)

(g) Salaries of planning personel

(h) Initial expenditures for housing

(i) Equipping

(j) Advertising

(k) Geographic location(l) General economic

It is important to analyze before funding the early childhood programs. The decisions tofund an early childhood program depend on answers based on cost analyses. Costanalyses are of several types. The reason for doing a cost analysis determines the typeof analysis employed:

(a) Cost-effectiveness analysis compares the costs of two or more programs thathave the same or similar goals to find the least-cost method of reaching aparticular goal. Programs that offer a low-cost approach compared with otherapproaches to achieve certain objectives are referred to as cost-effectivesprograms.

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(b) Cost-efficiency analysis usually follows cost-effectiveness analysis. Cost-effective programs can further reduce costs by developing a least-cost, within-program management plan. Cost efficiency is achieved when all programcomponents are optimally used (e.g. staffing patterns, curriculum, scheduling).

(c) Cost-benefit analysis the most difficult analysis, measures the value of theprogram to child and his or her family and to society minus the costs of theprogram.

The cost analysis of a program varies greatly with the elements included in the analysis.The following differences must be made in an analysis:

1) Start-up costs are the monies that must be available before a program is underway. Even after the program begins, most programs underenroll for 6 months ofoperation, and monies form promised funding sources are often delayed. Start-

up costs include monies for the building, equipment and supplies, 3 months ofplanning, and the first 6 months or longer of operation.

2) Fixed and variable costs are fixed costs (e.g. program planning) do not varywith the number of children served, but variable costs (e.g. building, teachersalaries, equipment) vary with the number of children served.

3) Marginal costs are the increased cost per unit (total program cost divided bythe number of recipients) of expending a program beyond a given size. Marginalcosts may decrease to a given point and then increase when additional staff or

housing is required.

4) Capital verses operating costs (e.g. building) are basically one-time costs,wheareas operating costs (e.g. salaries, consumable materials) are repeated.

5) Hidden costs are cost free to a program but paid by someone else (e.g.religious organizations that permit free use of their facilities). Joint costs aresomewhat hidden too because they are shared costs (e.g. two separatelyfunded programs that share a staff workroom or audiovisual equipment).

Forgone income costs (e.g. income foregone because of services or goodsprovided a program) are difficult to calculate.

Early childhood programs receive funds from several resources:

(a) Local

(b) State

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(c) Federal Government

(d) Foundations

(e) Corporate employers

(f) Fee and tuition

(g) Miscellaneous

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List example early childhood program receive from local resources:1) ______________________________________________________2) ______________________________________________________

3) ______________________________________________________4) ______________________________________________________

List example early childhood program receive from state resources:1) _______________________________________________________2) _______________________________________________________3) _______________________________________________________4) _______________________________________________________

List example early childhood program receive from federal government resources:1) __________________________________________________________________

2) __________________________________________________________________3) __________________________________________________________________4) __________________________________________________________________

List example early childhood program receive from foundations resources:1) ___________________________________________________________2) ___________________________________________________________3) ___________________________________________________________4) ___________________________________________________________

List example early childhood program receive from corporate employers resources:1) ____________________________________________________________2) ____________________________________________________________3) ____________________________________________________________4) ____________________________________________________________


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Budgeting

A budget is a list of all goods and services for which payment may be made. In earlychildhood program often have two types of budgets:

i. The start-up budget

ii. The operating budget

A start-up budgetis all the income and expenses incurred in starting a program.

The operating budgetis all the income and expenses for one calendar year (Januarythrough December).

Budgets usually have three components:

(a) A synopsis of the program

(b) Specifically itemized expenditures for operating the program, including directcosts and indirect costs.

Direct costs: item attributed to a particular aspect of the program, such aspersonal salaries.

Indirect costs: overhead items not attributed to a particular aspect of theprogram, such as interest of bank loan, utility costs and advertisement.

(c) Anticipated revenues and their sources, including in-kind contributions.

Activity

Student need to read on related topic about budgeting and financial at early childhoodprogram. Extra readings please refer to the www.bustamkamri.blogspot.com.

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List example early childhood program receive from miscellaneous resources:1) _____________________________________________________________2) _____________________________________________________________3) _____________________________________________________________

4) ____________________________________________________________________
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Example of an Annual Budget Format

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ANNUAL BUDGET FORMAT

IncomeRegistration fee

_____________________________Application fee

_____________________________Fund-raising _____________________________ Investment income _____________________________ Grants _____________________________

_______________________________________ ______________________Others: _________________________________ _____________________________

_______________________________________ ______________________Total Income _____________________________

*****************************Expenses

SalariesManager _____________________________ Coodinator _____________________________

Teacher_____________________________Workers compensation and other benefits

_____________________________Subtitutes _____________________________

Staff training including consultant fees_____________________________

Professional memberships & fees_____________________________

Medical insurance _____________________________

Other:__________________________________ _____________________________ _______________________________________ ______________________Total staffing expenses_____________________________

*****************************Operating expensesRent/mortgage

_______________________________Building insurance _______________________________ Children equipment/materials/supplies (excluding food)

_______________________________Field trips _______________________________

Foods and snacks_______________________________Utilities

topic 6-financial and administration 1

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