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The Appaloosa County Day Care Center, Inc. (ACDC)

began operations in a vacant warehouse retrofitted with

bathrooms and kitchen facilities. ACDC’s mission is to

provide quality, affordable childcare to the residents of the

community and surrounding area. The service area is a

rural, economically depressed county that continually ranks

in the lowest 10 percent of per-capita income in the state.

The organization’s seven-member board of directors is

comprised of volunteer representatives from various agencies

throughout the community–the school district, community

college, hospital, Department of Human Services, etc.

The board members bring a breadth of human services

experience to the oversight of the day care, but most do not

possess an accounting or financial background. While they

were committed to the financial viability of the day care,

they initially focused on the center’s mission–to provide

affordable childcare to working-class families. As a result, the

board set childcare rates to achieve their goal of affordability

rather than assuring adequate revenues to provide highquality

services while reaching breakeven points.

From its founding, the center faced another

significant challenge. The center was the first of its kind

in the community, so negative perceptions about using

“institutionally” provided day care were prevalent. Local

families preferred to use in-home childcare provided by

friends or relatives. These perceptions and preferences,

coupled with poor administrative practices, caused the center

to struggle continually to meet its financial obligations.

ACDC was almost forced to close its doors on more than

one occasion. The financial performance of ACDC is not

unusual, as many community-based day care facilities

struggle to remain open.

Day Care Industry Revenue and Cost Patterns

As an industry, day care facilities generally operate with

very low profit margins. Typical for-profit day care profit

margins are...