Fiscal Check-Up for Family Child Care Part 2: Tips for Tracking Actuals and Budgeting

A woman wearing glasses and a suit is smiling in front of a flag.

Sim Loh is a family partnership coordinator at Children’s Village, a nationally-accredited Keystone 4 STARS early learning and school-age enrichment program in Philadelphia, Pennsylvania, serving about 350 children. She supports children and families, including non-English speaking families of immigrant status, by ensuring equitable access to education, health, employment, and legal information and resources on a day-to-day basis. She is a member of the Children First Racial Equity Early Childhood Education Provider Council, a community member representative of Philadelphia School District Multilingual Advisory Council, and a board member of Historic Philadelphia.

Sim explains, “I ensure families know their rights and educate them on ways to speak up for themselves and request for interpretation/translation services. I share families’ stories and experiences with legislators and decision-makers so that their needs are understood. Attending Leadership Connections will help me strengthen and grow my skills in all domains by interacting with and hearing from experienced leaders in different positions. With newly acquired skills, I seek to learn about the systems level while paying close attention to the accessibility and barriers of different systems and resources and their impacts on young children and their families.”

Part 1 in this blog series, When a Budget Isn’t Actually a Budget, focused on the distinction between a budget and actuals, how both documents contribute to keeping your family child care program financially afloat, and how to develop a budget. Now you will learn some tips for working with both your actuals and your budget. But first, a quick reminder of definitions:

A budget is a projection or a plan for the amount of money that will be made (revenue) by the child care business and the amount of money that will be spent (expenditures) to operate the child care business during the fiscal year (Talan & Bloom, 2018).

Actuals reflect how much money (income) has actually been received and how much money (expenses) has been paid out at a given point in time during a fiscal year (Talan & Bloom, 2018).

Tips for Tracking Actuals

Track more than one month of income and expenses. The more months you track your actuals, the more data you have to work with to more accurately estimate your future budget. Ideally you should be tracking for the full year—this will give you the clearest picture of what happens with your program’s money, but even three months will give you more information than one. Remember, the more data collected, the more likely your estimates will be accurate.
Get help tracking income and expenses. There are several websites that offer recommendations about finances. Some of them will not only automatically capture your income and expenses, but with help on your end, will categorize them and assist you in budgeting for the future. Keep in mind that there are also products that are specific to family child care. Calendar-Keeper^TM, Pie for Providers, and KidKare®, to name a few, are all designed for providers and offer various ways of tracking income and expenses. Spend some time researching different options and see which one makes the most sense for you and your business.
Use all your tracking efforts during tax season. Tax season might be the most important season in the fiscal life of a family child care program. Your business taxes are where you should be taking advantage of all sorts of deductions. If you have been tracking all your 100% business-related expenses (e.g., professional development costs, equipment, advertising, toys) throughout the year you can easily claim them on your taxes. Additionally, if you have tracked all your shared expenses (e.g., utilities, mortgage interest/rent, cleaning and laundry supplies, home repairs) you can use your Time-Space Percentage to determine the tax deduction allowed for the business use of your home. For example, being able to write off 25% of a utility bill as a business expense. Tracking your actuals all year means that you have most of the recordkeeping you need at your fingertips come tax time. According to the 2018 reliability study of the Business Administration Scale for Family Child Care (BAS) data, only 29% of providers are reporting their Time-Space Percentage which means there are a lot of providers losing money each tax season!

Tips for Budgeting

Start with a goal in mind. How much do you want to earn from your business in the next fiscal year? Are there big purchases you want to be able to make? Think about the financial goals you want to achieve in the next year and use this as your motivation when you begin to plan your revenue and expenditures.
Don’t automatically multiply by 12. Make sure that you are thinking critically about what your actual income and expenses are each month and not just taking one month of actuals and multiplying it by 12. This will help ensure you capture bills that occur infrequently (i.e., quarterly), like insurance premiums or tax payments and predict shifts in recurring bills like utilities. If you live in Chicago for example, your heating bill is likely to be much higher in January than May. The same holds true for income. Are there months when you know that you will have low enrollment? Maybe there is a week over the summer when you have less children because older siblings watch them. Or maybe you receive an increase in income the week between Christmas and New Year’s when K-12 schools are closed because you enroll school-age children full-time. Also, be sure to reflect on how patterns may change from month to month, this will help you create a more accurate budget and make it more likely that you will achieve your financial goals at the end of the year.
Look at the big picture and make adjustments to meet your needs/plans. Once you have predicted your monthly spending (expenditures) and earnings (revenue), total all expenditures for the year and subtract that number from the total revenue for the year. Is that number bigger than zero? If yes, then great, you have a budget that projects a profit! If the answer is no, then you are operating your budget in a way that actually costs you money to be in business! Does the profit reflect your financial goal(s)? If yes, then great! If not, then you still have some work to do. But that’s the beauty of the budgeting process—you can work to change things in the plan before the plan becomes a reality. Go back and review your projected expenditures and revenue. Ask yourself questions like: where can I cut expenses (can you shop more in bulk or call your internet company and tell them you want a better rate?) and where can I increase revenue (can you increase your late payment or late pick-up fee or claim food expenses on taxes?). Keep asking questions and adjusting the numbers until you have a feasible plan where you’re happy with the projected profit.
Don’t be afraid to make adjustments to your practices and your budget even after the year has begun. Indicator 7.3 in Item 4, Fiscal Management of the BAS states, “income and expenses are summarized on a quarterly basis and compared to cash-flow projections” (Talan & Bloom, 2018). What this entails is summarizing three months of your actuals and comparing that to a summary of your budget’s revenue and expenditures from the same three months (these are called cash-flow projections). If the projected numbers align well with your actuals, great! If on the other hand, your numbers are off in a concerning way, then the good news is you can make adjustments!

Let’s say in January a family left your program and it took you three weeks to fill that child care slot. As a result, your summarized actuals for the first quarter of the year are lower than your cash-flow projections. Yes, it is unfortunate that you did not earn what you had planned in January, but that does not mean the whole budget goes in the trash. Instead, take the time to make adjustments. Ask yourself, what are some creative ways I can make up that missing income? Can I host a drop-in child care night where I charge families an extra fee and allow children to come to stay at my program in the evening or weekend and families can have a date-night or extra child-free time? Is there a new fee I could introduce or an old fee I could increase slightly? Also ask, where can I cut expenses? Can I hold a supplies drive where I ask families to donate items like paper towels, markers, etc., so I don’t have to purchase them? Can I find materials on a nature walk to use in my next big art project rather than spending money to buy materials at the store? The beauty of tracking your actuals and comparing them to cash-flow projections is that you can catch possible problems and make adjustments before you get too far off track.

Do not forget to budget for the Big R. The Big R?!? Yes, RETIREMENT! Only 55% of women report that they are confident about retiring comfortably (Eisenberg, 2016). That’s barely half, and I would guess that statistic is even lower in the field of family child care because it is unlikely that providers have an employer-offered plan. The solution is to get a qualified retirement plan and then add a line item to your budget for it. Maybe that means you budget to contribute $10.00 a month to your retirement plan or maybe you budget to contribute $1,000 once a year. The frequency and amount are completely up to you, but by adding it as a line item to the budget you are prioritizing your retirement well-being. After a long career of taking care of others, we want to make sure you will be all set to take care of yourself!

References

Talan, T.T. & Bloom, P.J. (2018). Business Administration Scale for Family Child Care (2^nd ed.). New York: NY: Teachers College Press.

Eisenberg, R. (2016). Women and Retirement: Saving Less, Worrying More. Forbes: https://www.forbes.com/sites/nextavenue/2016/12/14/women-and-retirement-saving-less-worrying-more/#22646fba601d.

Robyn Kelton, M.A., is a Quality Training Specialist for the McCormick Center for Early Childhood Leadership at National Louis University (NLU). Robyn conducts training and research on the Business Administration Scale for Family Child Care (BAS) and the Program Administration Scale (PAS) and serves as a national reliability anchor for both tools. In addition, Robyn reviews BAS and PAS assessments for the assessor certification system. Robyn holds a Bachelor of Arts degree in psychology from the University of Kansas and a Master of Arts degree in psychology with an advanced certificate of study in organizational psychology from NLU. Robyn is currently a doctoral student in the brain, behavior, and quantitative science psychology program at the University of Kansas. Prior to joining the McCormick Center, Robyn spent three years as a lead teacher in a kindergarten classroom for an after-school program. Robyn’s research interests include leadership in early care and education, family child care, child development, and autobiographical memory.

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Measuring Organizational Conditions for Improving Quality

By McCormick Center • May 13, 2025

Leaders, policymakers, and systems developers seek to improve early childhood programs through data-driven decision-making. Data can be useful for informing continuous quality improvement efforts at the classroom and program level and for creating support for workforce development at the system level. Early childhood program leaders use assessments to help them understand their programs’ strengths and to draw attention to where supports are needed. Assessment data is particularly useful in understanding the complexity of organizational climate and the organizational conditions that lead to successful outcomes for children and families. Several tools are available for program leaders to assess organizational structures, processes, and workplace conditions, including: Preschool Program Quality Assessment (PQA) 1 Program Administration Scale (PAS) 2 Child Care Worker Job Stress Inventory (ECWJSI) 3 Early Childhood Job Satisfaction Survey (ECJSS) 4 Early Childhood Work Environment Survey (ECWES) 5 Supportive Environmental Quality Underlying Adult Learning (SEQUAL) 6 The Early Education Essentials is a recently developed tool to examine program conditions that affect early childhood education instructional and emotional quality. It is patterned after the Five Essentials Framework, 7 which is widely used to measure instructional supports in K-12 schools. The Early Education Essentials measures six dimensions of quality in early childhood programs: Effective instructional leaders Collaborative teachers Supportive environment Ambitious instruction Involved families Parent voice A recently published validation study for the Early Education Essentials 8 demonstrates that it is a valid and reliable instrument that can be used to assess early childhood programs to improve teaching and learning outcomes. METHODOLOGY For this validation study, two sets of surveys were administered in one Midwestern city; one for teachers/staff in early childhood settings and one for parents/guardians of preschool-aged children. A stratified random sampling method was used to select sites with an oversampling for the percentage of children who spoke Spanish. The teacher surveys included 164 items within 26 scales and were made available online for a three-month period in the public schools. In community-based sites, data collectors administered the surveys to staff. Data collectors also administered the parent surveys in all sites. The parent survey was shorter, with 54 items within nine scales. Rasch analyses was used to combine items into scales. In addition to the surveys, administrative data were analyzed regarding school attendance. Classroom observational assessments were performed to measure teacher-child interactions. The Classroom Assessment Scoring System TM (CLASS) 9 was used to assess the interactions. Early Education Essentials surveys were analyzed from 81 early childhood program sites (41 school-based programs and 40 community-based programs), serving 3- and 4-year old children. Only publicly funded programs (e.g., state-funded preschool and/or Head Start) were included in the study. The average enrollment for the programs was 109 (sd = 64); 91% of the children were from minority backgrounds; and 38% came from non-English speaking homes. Of the 746 teacher surveys collected, 451 (61%) were from school-based sites and 294 (39%) were from community-based sites. There were 2,464 parent surveys collected (59% school; 41% community). About one-third of the parent surveys were conducted in Spanish. Data were analyzed to determine reliability, internal validity, group differences, and sensitivity across sites. Child outcome results were used to examine if positive scores on the surveys were related to desirable outcomes for children (attendance and teacher-child interactions). Hierarchical linear modeling (HLM) was used to compute average site-level CLASS scores to account for the shared variance among classrooms within the same school. Exploratory factor analysis was performed to group the scales. RESULTS The surveys performed well in the measurement characteristics of scale reliability, internal validity, differential item functioning, and sensitivity across sites . Reliability was measured for 25 scales with Rasch Person Reliability scores ranging from .73 to .92; with only two scales falling below the preferred .80 threshold. The Rasch analysis also provided assessment of internal validity showing that 97% of the items fell in an acceptable range of >0.7 to <1.3 (infit mean squares). The Teacher/Staff survey could detect differences across sites, however the Parent Survey was less effective in detecting differences across sites. Differential item functioning (DIF) was used to compare if individual responses differed for school- versus community-based settings and primary language (English versus Spanish speakers). Results showed that 18 scales had no or only one large DIF on the Teacher/Staff Survey related to setting. There were no large DIFs found related to setting on the Parent Survey and only one scale that had more than one large DIF related to primary language. The authors decided to leave the large DIF items in the scale because the number of large DIFs were minimal and they fit well with the various groups. The factor analysis aligned closely with the five essentials in the K-12 model . However, researchers also identified a sixth factor—parent voice—which factored differently from involved families on the Parent Survey. Therefore, the Early Education Essentials have an additional dimension in contrast to the K-12 Five Essentials Framework. Outcomes related to CLASS scores were found for two of the six essential supports . Positive associations were found for Effective Instructional Leaders and Collaborative Teachers and all three of the CLASS domains (Emotional Support, Classroom Organization, and Instructional Support). Significant associations with CLASS scores were not found for the Supportive Environment, Involved Families, or Parent Voice essentials. Ambitious Instruction was not associated with any of the three domains of the CLASS scores. Table 1. HLM Coefficients Relating Essential Scores to CLASS Scores (Model 1) shows the results of the analysis showing these associations. Outcomes related to student attendance were found for four of the six essential supports . Effective Instructional Leaders, Collaborative Teachers, Supportive Environment, and Involved Families were positively associated with student attendance. Ambitious Instruction and Parent Voice were not found to be associated with student attendance. The authors are continuing to examine and improve the tool to better measure developmentally appropriate instruction and to adapt the Parent Survey so that it will perform across sites. There are a few limitations to this study that should be considered. Since the research is based on correlations, the direction of the relationship between factors and organizational conditions is not evident. It is unknown whether the Early Education Essentials survey is detecting factors that affect outcomes (e.g., engaged families or positive teacher-child interactions) or whether the organizational conditions predict these outcomes. This study was limited to one large city and a specific set of early childhood education settings. It has not been tested with early childhood centers that do not receive Head Start or state pre-K funding. DISCUSSION The Early Education Essentials survey expands the capacity of early childhood program leaders, policymakers, systems developers, and researchers to assess organizational conditions that specifically affect instructional quality. It is likely to be a useful tool for administrators seeking to evaluate the effects of their pedagogical leadership—one of the three domains of whole leadership. 10 When used with additional measures to assess whole leadership—administrative leadership, leadership essentials, as well as pedagogical leadership—stakeholders will be able to understand the organizational conditions and supports that positively impact child and family outcomes. Many quality initiatives focus on assessment at the classroom level, but examining quality with a wider lens at the site level expands the opportunity for sustainable change and improvement. The availability of valid and reliable instruments to assess the organizational structures, processes, and conditions within early childhood programs is necessary for data-driven improvement of programs as well as systems development and applied research. Findings from this validation study confirm that strong instructional leadership and teacher collaboration are good predictors of effective teaching and learning practices, evidenced in supportive teacher-child interactions and student attendance. 11 This evidence is an important contribution to the growing body of knowledge to inform embedded continuous quality improvement efforts. It also suggests that leadership to support teacher collaboration like professional learning communities (PLCs) and communities of practice (CoPs) may have an effect on outcomes for children. This study raises questions for future research. The addition of the “parent voice” essential support should be further explored. If parent voice is an essential support why was it not related to CLASS scores or student attendance? With the introduction of the Early Education Essentials survey to the existing battery of program assessment tools (PQA, PAS, ECWJSI, ECWES, ECJSS and SEQUAL), a concurrent validity study is needed to determine how these tools are related and how they can best be used to examine early childhood leadership from a whole leadership perspective. ENDNOTES 1 High/Scope Educational Research Foundation, 2003 2 Talan & Bloom, 2011 3 Curbow, Spratt, Ungaretti, McDonnell, & Breckler, 2000 4 Bloom, 2016 5 Bloom, 2016 6 Whitebook & Ryan, 2012 7 Bryk, Sebring, Allensworth, Luppescu, & Easton, 2010 8 Ehrlich, Pacchiano, Stein, Wagner, Park, Frank, et al., 2018 9 Pianta, La Paro, & Hamre, 2008 10 Abel, Talan, & Masterson, 2017 11 Bloom, 2016; Lower & Cassidy, 2007 REFERENCES Abel, M. B., Talan, T. N., & Masterson, M. (2017, Jan/Feb). Whole leadership: A framework for early childhood programs. Exchange(19460406), 39(233), 22-25. Bloom, P. J. (2016). Measuring work attitudes in early childhood settings: Technical manual for the Early Childhood Job Satisfaction Survey (ECJSS) and the Early Childhood Work Environment Survey (ECWES), (3rd ed.). Lake Forest, IL: New Horizons. Bryk, A. S., Sebring, P. B., Allensworth, E., Luppescu, S., & Easton, J. Q. (2010). Organizing schools for improvement: Lessons from Chicago. Chicago, IL: The University of Chicago Press. Curbow, B., Spratt, K., Ungaretti, A., McDonnell, K., & Breckler, S. (2000). Development of the Child Care Worker Job Stress Inventory. Early Childhood Research Quarterly, 15, 515-536. DOI: 10.1016/S0885-2006(01)00068-0 Ehrlich, S. B., Pacchiano, D., Stein, A. G., Wagner, M. R., Park, S., Frank, E., et al., (in press). Early Education Essentials: Validation of a new survey tool of early education organizational conditions. Early Education and Development. High/Scope Educational Research Foundation (2003). Preschool Program Quality Assessment, 2nd Edition (PQA) administration manual. Ypsilanti, MI: High/Scope Press. Lower, J. K. & Cassidy, D. J. (2007). Child care work environments: The relationship with learning environments. Journal of Research in Childhood Education, 22(2), 189-204. DOI: 10.1080/02568540709594621 Pianta, R. C., La Paro, K. M., & Hamre, B. K. (2008). Classroom Assessment Scoring System (CLASS). Baltimore, MD: Paul H. Brookes Publishing Co. Talan, T. N., & Bloom, P. J. (2011). Program Administration Scale: Measuring early childhood leadership and management (2 nd ed.). New York, NY: Teachers College Press. Whitebook, M., & Ryan, S. (2012). Supportive Environmental Quality Underlying Adult Learning (SEQUAL). Berkeley, CA: Center for the Study of Child Care Employment, University of California.