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Increase in minimum wage prompts ABSS to seek 15 percent hike in ABSS daycare rates

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A plan to increase the minimum hourly wage for state government employees from $13 to $15 an hour is prompting Alamance-Burlington school officials to ask school board members to raise daycare rates by 15 percent.

The minimum hourly wage for state government employees will rise to $15 an hour for the fiscal year that begins July 1, as required under the state budget that the General Assembly passed last year.

That new $15 an hour minimum wage also applies to non-certified school employees such as school daycare assistants, according to the state budget that was passed in November 2021. Non-certified school employees are typically paid by the hour, according to the state Department of Public Instruction (DPI). Public school personnel are not considered state employees, but their wages are set by the General Assembly each year as part of the state budget process.

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The school system was able to absorb the additional costs for an earlier hike in the state’s minimum wage for non-certified school employees – it rose to $13 an hour for the current fiscal year – but it won’t be able to cover the costs when the minimum wage jumps to $15 an hour, ABSS chief business officer Jeremy Teetor told school board members last week.

“The $15 an hour minimum wage for this program is very competitive and much higher than when we were left to [setting our own wages],” Teetor told school board members during an earlier discussion about the proposed daycare rate increase.

The chief business officer said that the financial impact for ABSS will have a “six-figure implication” once the $15/hour minimum wage takes effect.

There are 18 ABSS elementary schools and one middle school, Hawfields Middle School, that operate daycare programs, based on a breakdown that Teetor provided to school board members during their latest semi-monthly meeting. ABSS daycare programs are funded by daycare fees and/or supplemental federal Title I funding for qualifying schools, which generally refers to those with a certain percentage of low-income students, according to Teetor’s breakdown.

Six ABSS schools that offer daycare receive supplemental federal Title I funding to offset the costs to operate the program; seven ABSS schools rely exclusively on daycare fees to operate their programs, based on a breakdown that Teetor presented last week (see accompanying chart).

“With no change in the fee structure, there would be a $49,000 loss” at the end of the 2022-23 fiscal year, Teetor said. By comparison, he’s projecting that ABSS will end the current fiscal year on June 30 with an overall profit of about $81,000 in the daycare program.

Teetor said during an earlier discussion that between the two increases in the state’s minimum wage (first to $13/hour and then to $15/hour starting July 1), he is projecting “an overall 60 percent increase in costs” to operate the daycare program. In addition to before- and after-school daycare during the school year, several ABSS schools offer “several weeks of [full-time] daycare in the summer,” he said.

School business accounting rules established by DPI require before and after-school programs to be self-supporting, Teetor said the initial discussion about the proposed rate increase.

The daycare program began prior to the merger of the former Burlington city schools and Alamance County schools in 1996, Teetor recalled during the earlier discussion. “It continued after the merger as part of a sincere effort to provide childcare before and after school,” he said.

School board member Wayne Beam, a retired ABSS administrator, said he’d started several daycare programs during his time as an ABSS principal.

“It is a tremendous amount of work,” Beam recalled, “but we did it to make money.”

ABSS has approximately 363 students in after-school daycare programs and more than 400 students enrolled in both before- and after-school daycare programs, according to the chief business officer.

Several school board members had previously asked Teetor to see what can be done to soften the financial blow for families that are already struggling with record inflation at the gas pump and the grocery store. The chief business officer told the board last week that he’s still gathering information about that aspect.

“Revenue has begun to rebound from the Covid closure,” Teetor said last week, referring to the statewide school closure that, for ABSS, ran from March 2020 until March 2021. Some schools have operated their programs “with the philosophy of being very conservative with their reserves” (i.e., “rainy-day” savings), he added.

The proposed increase in ABSS daycare rates wasn’t presented for a vote last week, but Teetor told school board members he’d like them to vote on it at their upcoming meeting Monday night.

Daycare registration for the 2022-23 school year started earlier this month, Teetor said last week, “with the understanding that the fees could change.”

Meanwhile, Teetor has announced his intention to resign as the chief business officer for ABSS, effective June 30, based on the personnel report that the board approved at its latest semi-monthly meeting. Teetor has served as the chief business officer for ABSS since July 2018.

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