Meet the Smiths

Meet the Smith Family:

Meet the Smith Family Small Town, California Kathy Watts, Program Director, West Hills College Child Development Centers

Meet John & Mary Smith:

Meet John & Mary Smith John makes $13 an hour working in a factory Mary makes $8.05 an hour working in a store John brings home $1, 803 a month Mary brings home $1,168 a month Combined take home pay = $2,919 a month Combined gross income $3,649 Less taxes

Johnny & Katy Smith:

Johnny & Katy Smith Katy is 3 years old and Johnny is 6 months old While their parents work, Katy and Johnny attend ABC Childcare Center The center offers state subsidized childcare. John and Mary pay a $289 parent fee each month for Katy and Johnny’s care

The Smith’s Living Expenses:

The Smith’s Living Expenses The Smith’s monthly living expenses include: Rent - $800 Utilities - $300 Laundry - $45 (laundry mat) Auto Insurance - $150 Car Payment - $163 Gasoline - $125 Food - $750 (including diapers & formula) Preschool - $289 At the end of each month, after fixed expenses, the Smith family has $297 of disposable income. Each month the Smith family spends approximately $100 on clothing, $50 for meals out, and $147 for incidentals.

July 1, 2011:

July 1, 2011 On July 1, 2011, due to budget cuts, the Smith family and eight other families (12 children) at the center no longer qualify for subsidized childcare. The new rate for the Smith family is $1,750 per month (Katy = $650 and Johnny = $1,100). Unable to pay $1,750 a month for childcare, Mary is forced to quit her job ( result: no income tax for the state ) . The Smith family moves to a cheaper apartment. Mary sells her car, eliminating the car payment, gasoline, registration, and insurance on one car ( result: state loses gasoline tax money, insurance company loses a customer ). The Smith’s now have $38 left for incidentals at the end of each month (the Smith’s have no disposable income so, are not purchasing anything but food and necessities, and as food is not taxed (result: reduced state and local sales tax revenue and stores/ restaurants lose customers – reducing the state’s income tax revenue) .

Meet Sarah:

Meet Sarah Sarah, a single mom and preschool owner, where the Smith children attended. Sarah has owned the preschool for nearly 10 years. The high quality preschool had 48 children enrolled through June 30, 2011. When subsidize childcare was cut, the preschool lost 12 children. On July 1, 2011, Sarah was forced to lay off 4 of her staff members because of low enrollment. (Result: all 4 staff members filed for unemployment benefits, and there is a loss in income tax revenue) Sarah is now struggling to keep her preschool open. There is no longer any additional funds to purchase new materials and supplies ( result: loss of state and local sales tax) . If she is unable to enroll children to fill her open slots, she will have to close her preschool. She worries about the families of the other 36 children who would then need to find care for their children.

Center For Sale:

Center For Sale Preschool For Sale On September 1, 2011, Sarah makes the difficult decision to close the preschool after losing three more families (6 children) due to parents being laid off from their jobs. Parents could not find new employment that paid enough to cover childcare. She will close her doors on September 30, 2011 (result: state loses tax revenue). Nine employees are laid off. The families of the remaining 30 children must now find new care . Six families are successful in finding new centers for their children (8 children). Eight families have found a relative willing to watch their children (17 children). The remaining five families (9 children) are unable to find care. In four families, one parent must now quit his or her job (result: loss of income tax) In the fifth, a single parent pulls her 11 year old out of school (she is now homeschooled) to watch her two-year old sister ( result: district loses ADA )

Where are We so Far?:

Where are We so Far? The Smiths and four other families no longer pay income tax for one parent Sarah and her nine employees no longer pay income tax Six of the 15 families file for public assistance (welfare benefits, food stamps, unemployment benefits, etc.) The Smiths, the other four families, Sarah and her employees no longer have disposable income so . . . Additional businesses must reduce employee hours or lay off employees Further reducing sales tax and income tax revenue Leading more businesses to reduce their workforce Making additional reductions in sales tax and income tax revenue This cycle is repeated over and over and over!

Effects of the lack of subsidized childcare:

Effects of the lack of subsidized childcare Parents unable to work The Cycle Begins The Cycle Goes on Forever No childcare Families have no disposable income No work

Please Explain::

Please Explain: Exactly how does cutting subsidized childcare save California money?