University of Wisconsin Center for Cooperatives
Rural Cooperatives, January/February 1996, Vol. 63, No. 1
Rural Cooperatives is published by the Rural Business-Cooperative Service, U.S. Department of Agriculture

Iowa Cares:
How Rural Iowa Benefits from Child Care Centers

David Poe and John Madding

USDA/Rural Housing Service National Office

TThe establishment of quality child care centers in America's rural communities is much more than a convenience issue for families without a stay-at-home parent or other in-home child care provider. As residents of Harlan, Iowa, can attest to, child care is an issue that cuts to the core of the rural quality of life for millions of people.

The existence of quality child care has had a broad social impact in towns such as Harlan, a community of about 5,000 people in southwestern Iowa. Local businesses there have been better able to secure dependable workers, which in turn has helped to keep some mothers off of welfare roles, because of the availability of child care centers. The increasing number of single parent families and the large number of families requiring two incomes due to stagnant or declining "real" wages for some types of work have made child care a necessity for millions.

USDA's Rural Housing Service (RHS) can help provide seed money and technical advice for rural communities seeking to establish child care centers. The program most often used for this purpose is the Community Facilities Loans program. Loans may be made to public bodies and nonprofit organizations for a variety of essential community facilities. Loans are available in rural areas and towns with populations up to 20,000. RHS can guarantee loans made by a local lender or make direct loans for needed facilities.

Many rural communities are also meeting the need for child care by creating child care cooperatives businesses that are owned and operated by the local residents who actually use the centers. The Cooperative Services program of USDA can provide a wealth of educational material to relate a basic understanding on how cooperatives are created and function.

Risky Business

The problem for the USDA Rural Economic and Community Development mission area (RECD) in promoting rural child care centers has been that these facilities typically have not been good investments in terms of "life expectancy," and thus have a poor track record for repayment of long term loans.

A number of factors combine to make rural child care centers relatively risky ventures for lenders. When a new child care center opens, it typically starts with a great deal of support and enthusiasm from a core group of parents who use the facility. But four or five years later, the children of these core supporters may have reached an age where their need for child care has diminished. Thus, this core of strong supporters tends to lose interest in the center before new supporters can be recruited to keep the institution moving forward. Another related problem is that administrators of child care centers are often trained in how to deal with children but often lack financial management skills. For these and other reasons, cashflow as well as other financial concerns are frequent problems. In a small community, it is critical that broadbased community support be in place from the outset.

Space suitable for small children is also difficult to find in many rural communities. Abandoned or unused buildings are frequently offered as locations, but abandoned buildings without major modifications seldom meet the needs of children. toilet facilities, heat and ventilation, windows, kitchens and storage areas are usually designed for adults, not children.

Overcoming Barriers

The Iowa RECD office has been among the most successful of USDA's rural program offices nationally in overcoming barriers and establishing child care centers which appear likely to be longterm resources for their communities. The Time for Tots child care facility in Harlan, Iowa, is an example of one successful center supported by RECD. In 1988, a group of Harlan citizens began struggled to provide community child care, but many of the traditional problems plagued the effort. Fortunately for Harlan, Pam Klinkefus was determined to make Time for Tots a reality.

In 1991, Klinkefus contacted the FmHA (now Rural Economic and Community Development) office in Atlantic, Iowa. Shirley Winston and Forrest Vermillion, district loan specialists, agreed that the Time for Tots project was a good idea and would provide a much needed service to the community. But a number of preparatory steps needed to be completed before a loan could be considered.

In the beginning, Time for Tots used some abandoned trailers on small lots, but they proved to be inadequate. The trailers lacked many needed facilities and were too cold in the winter and too hot in the summer. The administrators of the child care facility also did not have any cash reserves.

Klinkefus put together a fund raising committee which (through a variety of projects) raised about $80,000 from local sources. This money was to be used for construction of a new building and the purchase of playground and classroom equipment. The center's board of directors was also broadened to include many of the community leaders. Klinkefus and the board were able to convince even the state legislators that they had a stake in child care facilities. As a result of their efforts, the state of Iowa made a $50,000 grant to Time For Tots.

Repeated networking with civic clubs and other groups eventually convinced local citizens that children in the day care center were not being neglected, but were offered the very best possible care. The new, attractive, clean building with a dedicated, caring staff convinced even the more affluent parents that Time for Tots was good enough for all children.

Klinkefus worked with the community leaders to meet the requirements to qualify y for about $303,000 in loans to construct a building for Time for Tots. The center opened for business in November 1993 with a license to care for 113 children.

Making a Major Difference

Harlan resident Mary Marco says Time for Tots has had a major impact on her quality of life. Marco, a single mother of four daughters, has always struggled to work and raise her children. However, she was not willing to work if it meant sacrificing her children's education or general wellbeing.

The entire family suffered as Mary was forced to jump from sitter to sitter and relative to relative in order to secure the needed child care for her children.

Marco realized that her high absenteeism at work, constant worry about her children's development and the strain on the children from constantly moving were pushing her toward welfare.

Mary had a job with Communications Data Services Inc. in Harlan and wanted to continue to work there to provide for her family. Thus, Marco was desperate to find a child care facility that would watch her three youngest children while she was working. She was faced with the prospect of having to quit her job, go on state welfare and apply for aid for dependent children. This was an alternative Marco desperately wanted to avoid.

Fortunately, she heard about Time for Tots and enrolled her three youngest daughters. "My entire life has blossomed as a result of Time for Tots," says Marco. Her income from working, along with a USDA loan, has enabled her to move from a rented, two-bedroom apartment into a three-bedroom home that she is purchasing.

Nancy Gessmann, general manager at Communications Data Services and Marco's supervisor, says that over 40 percent of her company's employees use Time for Tots. "The entire community benefits from the center because parents shoulder the responsibility for raising their own children, which helps them become more productive citizens," says Gessmann. "Our business benefits because our workers are more dependable and absenteeism is reduced by as much as 50 percent. And the lifestyle of parents improves."

The RECD office in Iowa has been perhaps the most successful USDA state office in promoting child care centers which appear likely to be ongoing resources for their communities. RECD employees in Iowa have worked on the problems facing rural child care for several years and have successfully funded nine facilities through out the state, all of which appear to be performing quite well. In each case, children are receiving quality care, the communities are pleased and RHCDS Community Facility loans are being repaid.

The lowa Approach

The Iowa approach to child care center development is worthy of duplicating across the United States. The efforts of the Iowa RECD employees working on child care epitomize the strategic action and quality service which is at the heart of efforts to reorganize and improve USDA operations. The collective best ideas of several RECD employees were brought together and a vision was produced of an economically viable organization (assisted by USDA) that was designed by local community leaders to provide quality care for many children.

RECD employees were able to pull together the different talents and ideas of community leaders and RECD staff to develop a model capable of repeat successes across Iowa. The goal in Iowa has been to organize, motivate and assist community leaders to provide permanent, economically sound, self-sustaining child care services for families with one or more parents who desire to work. This will encourage self-supporting families with healthy, emotionally stable, well-adjusted children.

The "bundle of good ideas" being used for child care centers in Iowa was not produced overnight. Perhaps most important was that there was an environment that enabled good ideas to flourish. This environment came from the leadership. RECD State Director Ellen Huntoon managed financial programs to encourage innovation and emphasized responsiveness to local clients. "We all need to realize that we are building the foundations upon which rural America must stand," Huntoon says. "To do this, we must plan carefully, place our trust in local leaders and be willing to take chances."

Dorman Otte, Director of Rural Utilities and Community Facilities, has a vision about how government should conduct business based on a set of principles that espouse the concept of sustainable rural communities. "We are not just making loans in Iowa," says Otte. "We are building communities and local economies. We want RECD projects to make our communities more successful. We must recognize that decisions are almost always better when they are made by a broad group of leaders at the local level. Our projects need to accommodate existing programs and RECD needs to be flexible enough to support and fit in with local programs."

Leadership Building Pays Dividends

At the grassroots level, Gene Crosby, RECD state loan specialist, has played an important role in getting child care facilities funded in Iowa. Crosby is especially effective because he is an expert at "shadow leadership" (the practice of coaching local leaders from the sidelines).

It is local "champions" who are the keys to most community development projects, including child care centers. Shadow leaders, such as Crosby, help provide ideas about the organizational framework needed to turn the vision of community leaders into reality.

Crosby provides technical leadership to loan specialists in the field and district offices who carry out financial projects. These RECD employees frequently attend local community meetings to help answer technical questions about how RECD programs work.

Keys to Success

Iowa RECD staff have identified these essential elements in developing successful child care centers: (1) Require communities to invest a significant amount of local money in projects. There needs to be sufficient resources to ensure that the child care centers have reserves in case the unexpected occurs -- such as cashflow shortages or other financial problems. It is thus desirable to get local businesses or industries to guarantee that, if necessary, their organization will provide support for a certain number of the available child care slots.

(2) Involve the whole community in fundraising. There are many ways to raise funds for community projects, including community dances, theater performances, and direct solicitation from local business leaders.

(3) Enlist broadbased community support even from those groups which cannot contribute financial resources. These may include school board members, county and town government officials, parents and business representatives, economic development groups, a local hospital etc. These leaders can be the strongest advocates or biggest critics of a project, depending upon how they are treated.

(4) Convince state legislators that they also have a stake in making sure that child care facilities are available to communities. The benefits to the state more than offset the cost of the grants.

(5) Acquire a copy of the state child care regulations and follow all of the requirements.

(6) Integrate other programs, such as Headstart, into child care center activities. Child care centers should provide the wraparound services needed to enable other programs to function properly.

(7) Be flexible and try to accommodate the diverse interests of the community. Infant care, afterhour care and care for sick children are some potential needs to consider.

(8) Establish permanent networks to provide community education and support. A child care center board member or other knowledgeable person needs to meet with civic clubs, parent organizations and other groups to explain how a child care center will benefit the community and how they can provide support.

(9) Build a solid base of experience, knowledge and support, then pursue funding. Usually about one year is needed to gain the necessary experience and give the community time to develop needed leadership.

(10) Promote child care as a resource to be used by all members of the community, including affluent families, handicapped children, gifted children and others. Avoid the stigma that arises when child care centers are associated with the label of being exclusively for the poor.

(11) Cooperate with homebased child care facilities and be careful not to discourage their use. Child care centers and homebased facilities need to work together.

(12) Select a building site that is located adjacent or very near an elementary school, hospital or other complementary institution. The location of the center is critical for parents who have more than one child. Frequently the facilities or services of both institutions can be shared.

OldFashioned Lending Style

Success did not come to Iowa simply by following a neat set of rules and policies. District loan specialists in Iowa make loans the old fashioned way: through repeated night meetings and long hours spent in gentle persuasion and encouragement of local leaders. They work behind the scenes with local leaders to overcome barriers such as negative attitudes against working mothers, scarce financial resources and resistance to new ideas.

Through many years of experience they have come to understand that:

  • In the early stages of a project, community leaders and parents do not always realize what they need. They know there is a problem but they often do not know what the best solution may be. Surveys under taken to define and address the problem are good tools but may not be entirely accurate.

  • Local leaders must lead the charge, but they usually need support to help them get started.

  • Enthusiasm and hard work are not enough. Money is the moving force and some of the local leaders must have administrative and financial management skills to make everything work smoothly.

Maureen Kennedy, Rural Housing Service administrator, hopes that others outside Iowa who have an interest in promoting child care will work with the Iowa staff and learn from them. "Their experience, enthusiasm, confidence and great ideas about child care are contagious," says Kennedy. "We need to spread it."

Editor's note: For more information on the IOWA RECD's approach to promoting child care centers, contact Dorman A. Otte, (515) 284-4152, FAX: (515) 284-4859.

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