Imagine the impact to New Jersey’s workforce if 60% of childcare centers were unavailable.
That is a reality Racheal Fosu, president of the Galileo Preschools, said New Jersey is staring down as the costs to run childcare facilities become unsustainable during the COVID-19 pandemic.
“While our business grew, legislative wage increases started to erode at our margins,” she said during a recent New Jersey Business Coalition Town Hall meeting. “Subsidies were underfunded, payroll became our biggest cost, parents’ incomes did not rise proportionately and, before long, a lot of centers were closing prior to COVID-19. This year, due to some previously passed legislation, we now can anticipate another 3–5% increase in costs.
“Enter COVID-19.”
When the pandemic hit, the Galileo Preschools had to go virtual or close overnight, eventually reopening at 40–50% capacity. With payroll already strained prior to the pandemic, Fosu said she depended on government grants to help keep the doors open, but the funds were limited.
“[Paycheck Protection Program] payments came in and they covered eight weeks of payroll. We perhaps got two grants from NJEDA and some PPE assistance,” she said. “If you add it all up, probably about three months’ support over a 10–month, going on 18–month, pandemic.”
This comes, as she said, with brand new costs associated with COVID-19 safety upgrades and a newly expanded need for their services.
“PPE costs are killing us, administrative costs are killing us, caring for a bigger range of children from newborn to school-age children who need to be virtual learners so their parents can go to work is at play, and we’re not breaking even,” she said. “We’re renegotiating leases to stay open and… we’re funding business continuation from our pockets while we’re not being paid.”
In order to avert more closures, Fosu said childcare centers will need sustained stimulus payments until business picks back up in September.
“Out of 4,200 registered childcare centers, 1,800 have not opened, so 42% are still closed. Those that are open are on the brink of closure due to insufficient revenue. Revenues are down 50-60%, revenue will not begin to come back realistically until September of this year… We could be down another 20% in closures this year alone,” she said.
If nothing else, Fosu pleaded for state legislators to “stop the bleeding” and work with business owners rather than against them.
“We need no more new legislation that increases our costs further. We have no room to bear it,” she said. “Simply put, we need our legislators to get in the boat and row with us. We need to row together.”
The New Jersey Business Coalition’s “State of New Jersey Business” online town hall provided an opportunity for business owners and coalition members to discuss the current and future needs of the business community. More than 150 people attended the virtual event on Jan. 11, including a dozen state legislators and administration officials who were also on the call.
To listen to Fosu’s full presentation, click here.
