Granite Guide to Early Childhood Primer - Operating on Thin Margins: The Cost of Providing New Hampshire Child Care - 6

Oct 15, 2026

Uploaded by Jake

This primer examines the operating-cost pressures facing New Hampshire child care programs, highlighting thin profit margins and financial instability despite high family prices and an undercompensated workforce. Using a national cost model and budget examples from three programs, it contrasts the market affordability of tuition with the higher true cost of delivering care, especially under scenarios paying living wages with benefits. It also reviews limited non-tuition funding sources and how personnel and facilities drive major expenses, shaping tradeoffs among affordability, quality, and sustainability.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages2

Reading Time5 min

AccessFree to download

Operating costs and financial strain

Revenue and expense structure

Non-tuition funding limits

Program budget insights

System-wide sustainability considerations

NH EARLY CARE AND EDUCATION RESEARCH CONSORTIUM Granite Guide to Early Childhood Primer \#6 Winter 2026 Operating on Thin Margins: The Cost of Providing New Hampshire Child Care Tyrus Parker and Jess Carson he Carsey School of Public Policy’s Granite Guide TtoHaEarmpl~~y~~shChiresldheoodarlycsearrieeasnhighlightsd educatioisns(uNesH inENCEe) w sector by synthesizing evidence on a set of interconnected topics. This primer focuses on operating costs for New Hampshire child care programs. For more detail about the series, visit the NH ECE Research Consortium webpage. Child Care Providers Are Economically Strained and Financially Complex Despite the high price of child care for families and an undercompensated workforce, child care programs face slim profit margins and financial instability. Challenges like high operating costs and low compensation are common risks for program closures nationwide and likely play a role in the 11 percent net loss in New Hampshire licensed child care programs between 2017 and ~~2025.~~1 Comprehensive revenue and expense data for child care programs are rare, both nationally and for New Hampshire. However, one important recent exception is a new cost model that estimates the true cost of care for different program types in each state. In New Hampshire, for instance, operating a program with a separate classroom for infants, toddlers, three-year-olds, and four-year-olds would cost between $1.1 million per year (if paying educators at current levels and offering no benefits) and $1.8 million (if paying educators a living wage with benefits) .2 These costs would result in infant tuition between $21,000 and $33,000 per year, yet center-based tuition for infants averaged $16,000 in 2024. The disparity between prices that the market can bear and the costs of operating a program—particularly a high-quality program with appropriate staff compensation—helps explain why programs are financially unstable. Providers Face Limited Non-Tuition Revenue Streams Amid limited public funding, national data show family-paid tuition dominates program revenue. Non-tuition revenue opportunities are piecemeal: the Child Care and Development Fund (CCDF), the main federal investment mechanism, is limited in amount and allowable uses, as are federal funds for Head Start and the Child and Adult Care Food Program (CACFP) . COVID-era relief funds provided temporary support, but expired by fall 2024, and thus far, NH state funds to support the workforce were available only for 2025. Beyond these fluctuating funds, programs may turn to grants, fundraising, and other smaller revenue streams to fill gaps. Program Budgets Give Insight to Financial Models To contextualize cost-model estimates, we analyze operating budgets from three NH ECE programs, shared by partners for this primer. While these examples demonstrate how programs can sustain operations amid funding constraints, each operates with limited flexibility and significant tradeoffs. Figure 1 summarizes program revenue, highlighting the dominance of tuition, and the relevance of CCDF for Program 2, in a lower-income community.3 Huddleston Hall • 73 Main Street • Durham, NH 03824 • (603) 862-2821 TTY Users: Dial 7-1-1 or 1-800-735-2964 (Relay N. H.) • [carsey.unh.edu](carsey.unh.edu) Access Online 2 CA R S EY SCHOOL OF PUBLIC POLICY Figure 1. Revenue Sources Among Three Active NH ECE Programs Source: Carsey School analysis of 2024/2025 budgets Personnel Expenses Lead Expenditures For all three programs, staff wages and benefits are the largest expense category, accounting for more than 70 percent of expenditures (Figure 2) .4 Despite similarly high staff expenses, program expenses do vary. For instance, under facilities, Program 1 had rental costs, while Program 3 owned its site, but required costly maintenance. Meanwhile, under “other,” food costs were the most common expense and varied from 0 to 5 percent of expenditures across

FAQs

Why are New Hampshire child care programs financially unstable?

Programs face slim profit margins and financial instability due to high operating costs and a workforce that is undercompensated. The primer connects these pressures to net loss in licensed programs over time.

How does the primer estimate the true cost of child care?

It relies on a nationally developed cost model that estimates the true cost of care by program type and staffing assumptions. It then compares these costs to tuition levels faced by families.

What non-tuition revenue sources are discussed, and what constraints do they have?

The primer highlights the CCDF, Head Start, and CACFP, noting that their amounts and allowable uses are limited. It also describes temporary COVID-era relief and the need for grants, fundraising, and other smaller streams when funding fluctuates.

Oct 15, 2026

Uploaded by Jake