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Editorial: Phantom savings in private child care

After months of trying to get firm numbers from Menlo Park city officials, the Almanac finally found out last week that the true cost to operate the city's child care programs is $1.14 million, just $4,500 more than income received from tuition.

This is a shocking disclosure, given that the City Council majority of Nicholas Jellins, Mickie Winkler and Lee Duboc have repeatedly claimed that the programs cost the city $444,000 more than they take in. As a result, the trio has pressed ahead with a request for proposals from private firms to operate the programs based on the premise that they are operating at a loss of nearly half a million dollars a year.

This discrepancy comes from an accounting sleight of hand, where the city assigns a portion of its permanent overhead costs, such as the salaries of the city manager, the assistant city manager and other administrative employees, to the programs. But obviously, those salaries cannot be applied to a private child care operation and will not go away if a private operator takes over.

Other reasons for reduced operation costs include the unfilled position of a staff supervisor and the fact that the city no longer has to pay rent on two portable classrooms. As a result, the city is virtually breaking even on child care, just as many parents contended at heated public hearings in April and May.

Tuition was raised 10 percent in May to help bring down costs to the city as the programs moved into the newly remodeled Menlo Children's Center.

Certainly a private operator could do the job for lower tuition, but at what cost? To keep expenses low and make a profit, the proposals on the table would likely substitute less qualified teachers for the present staff, who are familiar with the children and programs.

The public was told from the beginning that the object of privatization was to break even at the child care center. Now that a true account of the actual costs of the programs shows a gap of only $4,500, it seems to us that the expensive staff time devoted to writing the request for proposals, forming a task force and performing all the other tasks involved in a bid process has made this a losing proposition from the start.

This child care fiasco is just another example of the city's rush to privatization without determining the true costs of the services it wants to replace. For example, the City Council, on a 3-2 vote, earlier this year quickly turned the city's new swimming pool complex over to a private operator before analyzing whether the city would be able to cover its costs running the aquatics program itself. Under the hurriedly drafted agreement, the city receives no rent for the pool complex it privatized.

What is to be gained by privatization if it doesn't really reduce costs and simply gives away assets paid for by the city's taxpayers?

Parents are due an explanation — and soon — about why the council moved so quickly to study privatizing these programs even though the center was within a few thousand dollars of breaking even.

In our view, the city should scrap its privatization plans, at least until the end of the school year next spring, which would avoid an unsettling change for the children in the middle of a school year. After that, the decision would be up to a new council.