Financial Analysis of the Proposed Early Learning
and Care Parcel Tax Initiative
Prepared for
City of South San Francisco
Prepared by
Joanne Brion, Brion Economics, Inc.
With Kathleen White
August 10, 2022
City Council Meeting
About Brion Economics, Inc.
Urban Economics Consulting Firm founded in 2000 Independent woman‐owned Expertise includes:
◦ Child Care Planning, Early Learning, and Public Policy ◦ Demographic Forecasting
◦ Financial and Fiscal Analysis
◦ Economic Impact Analysis and Projections
◦ Strategic Planning, Visioning, and Implementation
Relevant Projects:
◦ South San Francisco Child Care Developer Impact Fee – 2002◦ San Mateo County Child Care Needs Assessment – 2022 (current)◦ San Mateo County Child Care Facilities Study – 2017◦ Dozens of child care planning and policy studies BEI Analysis Components
1. Define Approach and Assumptions2. Gather Data and Relevant Information3. Potential Revenue and Adm Costs4. Resident Child Care Tuition Costs5. Child Care Workforce Wage Enhancements6. Non‐Resident Worker Child Care Costs7. Total Initiative Cost8. Estimate Surplus or Shortfall Key Findings
Currently, there is not enough parcel tax revenue to fund all Initiative Objectives.
The estimated shortfall is $10.7M annually under current conditions. Some form of prioritization, lottery, or means testing will be necessary. Over time, the parcel tax revenue will not keep up with inflation, as there is no cost increase or index included in the Initiative’s language. Minimum wage and tuition costs will increase over time. Demand for free preschool spaces from Residents and Workers will also increase over time, putting pressure on funds.
Key Assumptions and Issues
The analysis:
◦ is presented in constant 2022 dollars for current and future conditions. ◦ Analysis uses the most currently available data; not all data is 2022. ◦ Assumes license or license‐exempt care and does not include Friends, Family, and Neighbor (FFN) care.
◦ Does not prioritize residents, wage enhancements, or worker costs – treats equally.
Not all 2.5 to 5‐year‐olds are assumed to need licensed child care. Estimate of non‐resident worker demand is based on std. method. Issues of pay equity amongst different levels of staff will need to be sorted out.
Estimated Parcels and Sqft of Land*
*Prepared by Strategic Economics ‐ 2022
Item
Current or Base
Estimate
Future Estimate w
New Dev.
Parcels Subject to Tax 109 144
Land Sq. Ft. 22,358,978 27,280,859
Parcel Tax Per Land Sq. Ft. $2.50 $2.50
Estimated Annual Revenue and Admin. Costs
Item
Current or Base
Estimate
Future Estimate w
New Dev.
Total Annual Revenue $55,900,000 $68,200,000Funding for Admin. at 10% ($5,590,000) ($6,820,000) Min. Remaining Revenue $50,310,000 $61,380,000
(rounded)
Estimated Eligible Resident Children
2022 Percent Percent Total
Estimate of Preschool Age Children Estimate (1) Distribution Served Served 2022
2.5 years old 438 18% 90% 394
3 years old 1,040 43% 95% 988
4 years old 380 16% 58% 222
5 years old 581 24% 25% 145
Total Children 2,440 100% 72% 1,750
Estimated Preschool Spaces Available
Supply of Preschool Spaces in SSF
Family Child Care Home Spaces 272Center Based Child Care Spaces 2,210 Total Preschool Spaces Available 2,482
Wt. Average Monthly Preschool Fees
Item AmountAverage Center Preschool FT Monthly Fee $1,359Average FCCH Preschool FT Monthly Fee $1,195 Current Center Based Preschool Spaces 2,210Wt. Average FT Monthly Fee $1,341 Resident - Preschool Tuition Costs
Total Children Eligible * 1,462Average cost of Preschool Per Month $1,341Total Monthly Preschool Tuition Remission Cost $1,960,000Annual Tuition Remission Cost $23,520,000 Family Fees for Subsidized Care Remission $396,000Total Tuition Remission Cost $23,916,000 *Minus subsidized spaces and plus SanBruno/Daly City children Teacher and Staff Estimate
Small
FCCHs
Spaces
Large
FCCHs
Spaces
Preschool
Spaces
Subsidized
Preschool
Spaces Totals
Teachers Required 21 64 144 60 289
Estimated Directors na na 17 13 30Aides and Support Staff na na 34 26 60 Total Staff 21 64 195 99 379
Item
MN0
Slide 12
MN0 I replaced this table because the "S" in FCCHS was capital and not lower case.
Michelle Nilsson, 2022-08-05T18:26:08.480
Estimated Changes in Wages by Staff Role*
*Based on current min. wage in SSF; 10% pay increase by level ItemPreschool WorkforceTeacher Aides & Support Staff $15.80 $36.34 $20.54 130% Assist./Assoc. Teacher $17.35 $39.97 $22.62 130%Lead Teachers/Asst. Directors $20.07 $43.97 $23.90 119%FCCH Owners $27.11 $48.37 $21.26 78%Directors $31.77 $53.21 $21.44 67% Current Avg.
Wage / Hr.
230% of
Min. Wage /
Hr.
Estimated
Wage
Increase
Percent
Increase
Estimated Wage Enhancement Costs
CHILD CARE STAFF WAGE ENHANCEMENT ANALYSIS Current Future Estimated Preschool Staff (1) 379 379
Average Currently Hourly Wage $20.21 $20.21Proposed Wage at 230% of Min. Wage $36.34 $36.34 Current Estimated Wages $15,942,000 15,942,000
Child Care Wage Enhancements $17,493,000 $17,493,000
Total Child Care Wages w Enhancements $33,435,000 $33,435,000 Non‐Resident Worker Demand
Item AmountEmployment Estimate ‐ 2022 47,849Percent Non‐Resident (1) 85.0% Non Resident Workers ‐ 2022 40,672
Estimated Demand for Infant/Preschool Care
from Non‐Resident Workers 0 to 5 year olds 5%
Estimated 0‐5 Demand from Non‐Resident Workers 2,034
Costs of Non‐Resident Worker Child Care
Estimated Preschool Spaces Needed* 1,220
Average Cost of Preschool per Month $1,341
Yearly Tuition Remission Cost per Preschooler $16,089
$19,631,000
Total Annual Tuition Remission Cost for Non‐Resident
Employees' Children
*60% of total is preschool demand
Summary of Costs and Revenue
Current Future
Item Estimates EstimatesNet Parcel Tax Revenues for Program Costs $50,310,000 $61,380,000 Resident Preschool Tuition Remission $23,916,000 $23,916,000 Child Care Wage Enhancements $17,493,000 $17,493,000
Non‐Resident Employee Tuition Remission Cost (2) $19,631,000 $19,631,000 Total Estimated Costs of ELC Parcel Tax Program $61,040,000 $61,040,000 Revenue Surplus / (Shortfall) ($10,730,000) $340,000
Percent Shortage ‐21% 1%
Supply and Demand for Preschool Spaces
Current Future
Item Estimates EstimatesSupply and Demand for Child Care Spaces Current Supply 2,482 2,482Current Demand ‐ Resident & Non Resident Workers 2,970 2,970 Surplus or Shortage of Preschool Spaces (488) (488)
Percent Shortage ‐20% ‐20%
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comments!
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