Despite new facility, Madison child care provider feels strain of nationwide crisis

Oct. 2—While child care costs skyrocket and providers across the state struggle to stay afloat, Red Caboose Child Care Center in Madison appears to be bucking the trend — moving into a brand-new facility that triples its enrollment capacity, while offering affordable tuition.

But in reality, the nonprofit that has called Madison home since 1972 is "just hanging on," according to Aaron Stephenson, board president of Red Caboose.

Like providers around the state, Red Caboose has struggled to find staff and maintain enrollment, especially since the COVID-19 pandemic. The federal aid program that helped providers with operating and personnel costs during the pandemic will soon run out. In Wisconsin, the Republican-led Legislature has rejected Democratic Gov. Tony Evers' call for more than $300 million in additional child care subsidies.

The number of child care workers dropped nearly 30% between 2020 and 2021, and last year the median wage was just over $26,000 a year, according to a recent report from the Wisconsin Counties Association's nonpartisan research arm Forward Analytics.

Declining numbers of workers have only driven up the cost and limited the availability of child care in the state: Tuition can eat up as much as a third of a family's income, according to the report.

"As it stands now, I don't think it is sustainable," Stephenson said of Red Caboose. "It's going to be a very tight year coming up."

If something doesn't change, Stephenson said Red Caboose might consider doing away with the sliding fee model that allows families to pay tuition based on their income — an offering that's essential to its mission and sets Red Caboose apart from other child care providers in Madison.

Depending on age, full tuition ranges from around $360 to $400 a week, with discounts available based on income. Eighty percent of families receive tuition support, and more than one-third of Red Caboose students are children of color, according to the center's website.

"We really, really don't want to go there because that would squeeze out the families that we're most trying to reach, the low-income families who couldn't otherwise afford quality child care," Stephenson said.

The impending funding cliff also could mean Red Caboose will need to rely more heavily on federal or state support. Right now, 90% of the center's $2.3 million budget comes from tuition.

The remaining portion comes from a combination of federal, state and city-level funding, and short-term pandemic relief grants from the Wisconsin Department of Families and Children, and Department of Administration, Stephenson said. Red Caboose has also started to receive grants from nongovernmental sources, including the May Family Foundation and Roots & Wings.

'Positively giddy'

Despite the bleak outlook for child care and families in the state, the air in Madison was filled with a sense of optimism Saturday as Red Caboose celebrated the opening of its new facility on Winnebago Street. Addressing the crowd of families, teachers and alumni, Stephenson said he felt "positively giddy" about the new 21,000-square-foot center. Red Caboose was previously located on Williamson Street.

Although boxes of furniture and equipment still sat waiting to be unpacked inside classrooms, children didn't hesitate to try out the new green monkey bars and slides outside, running through the fresh layer of wood chips on the ground and marking the sidewalk with chalk drawings. Inside, wide hallways led to numerous classrooms, some empty and others already in use.

Mimi Porat's young son and daughter were just two of the children exploring the center and testing out the new playground equipment Saturday. Porat, and her husband, Steve, started sending their oldest child to Red Caboose in 2021 after spending about six months on the waitlist.

While they don't qualify for tuition assistance at Red Caboose, they do pay less than some, as their children only attend part-time. Even so, child care is the family's largest expense at the moment, Porat said.

"More so than our house or anything, day care is the biggest thing we pay for now," Porat said. "We're not saving any money now with two kids in child care."

At the same time, Porat acknowledged the value of child care, especially while she's in the middle of starting her own business. The socialization opportunities are also more than she could provide at home, she said.

"I couldn't provide this enriching environment if I was a stay-at-home parent," Porat said. "I would try, but I do feel like my kids are so lucky."

Eyes on goal

Red Caboose campaigned for donations to support the facility expansion and is now about $1.5 million away from its $7 million goal. Stephenson said the hope is to raise enough money to pay off the loan for the new center.

"If we can't do that, then we have to pay it off through our income, so we really also need to increase our enrollment," Stephenson said.

With the additional space in the new building, Red Caboose could increase its enrollment threefold to 150.

But for the time being, many of the new rooms will sit empty while Red Caboose searches for more staff. Without more employees, the center can't admit more children from its lengthy waitlist because of staff-to-child ratios set by Wisconsin regulations.

"It's become increasingly difficult to find new staff because you can earn as much or more money doing less stressful jobs," Stephenson said.

The center employs about 30 people in a mix of teaching and administrative positions but will need to hire six more teachers before it can start increasing enrollment, Stephenson said.

Wisconsin Republicans have advanced child care bills that would lower the minimum age for child care workers and increase the number of children workers could supervise. Democrats have argued these bills don't offer serious solutions.

Red Caboose teachers can make up to $17.50 an hour, according to the child care center's administrators. The national median is $13.71 an hour, according to 2022 data from the U.S. Bureau of Labor Statistics.

Staff compensation accounts for almost 80% of Red Caboose's expenditures each year. Operational costs will stay about the same despite relocating to a bigger building, Stephenson said.

Red Caboose's new home is in a four-story building that also houses 38 low-cost apartment units. Nonprofit Movin' Out and Red Caboose partnered on the $12.7 million housing project with the aim of providing affordable housing and child care under one roof.

Movin' Out has received financial support from the city of Madison to fund the construction. Red Caboose owns the ground floor of the building.

Cindy Lehnhoff, director of the National Child Care Association, said this project highlights an especially innovative solution to the child care crisis.

She said more hyperlocal, community-funded providers may start popping up as people are forced to get creative in order to stay afloat. Other fixes could come from employers offering child care support as a benefit to staff, something the workforce will likely start to demand in the future, she said.

"While it's going to help a small portion of people, it's going to help people that really need it," Lehnhoff said about Red Caboose.

"I think if we don't see more investment from businesses, people in the communities, it's going to continue to erode because there's no one answer to fixing child care. This is not going to be the answer overall, but it is one of the answers."

[EDITOR'S NOTE: This article has been updated to reflect a correction. The original article incorrectly stated the hourly wage for Red Caboose employees.]

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