Childcare Landscape Study - Flipbook - Page 69
Davidson County Child Care Landscape Study Results
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Although 16 percent of centers across greater Davidson County report operating at a loss in
the last year, this number varies by neighborhood. Centers located in lower-income
neighborhoods (average income below $76,000) report operating at a loss more frequently
than centers located in middle- or higher-income areas, with 1 in 3 programs (30%) in
lower-income areas reporting losses, compared to approximately 1 in 10 programs (9%13%) in middle- and higher-income neighborhoods.
Whether a program is profitable (i.e., directors reported themselves as 8Highly Profitable9 or
8Profitable9) does not vary meaningfully across program characteristics. No key program
characteristics, including tuition rate, certificate participation status, and the share of
enrolled children receiving certificates, are correlated with profitability.
Even though 44 percent of surveyed programs describe themselves as profitable, self-reported
profitability does not necessarily indicate substantial operating margins in the child care sector.
Outside of the child care system, a net profit margin of 10 percent is considered average for a
business, and margins below 5 percent are considered poor.33 National analyses indicate that
child care businesses often operate on a profit margin below 1 percent.34
Importantly, true-cost modeling conducted for greater Davidson County assumes a
minimum 5 percent operating reserve to support the financial stability of a child care
program, well above what most child care programs achieve under current operating
conditions (see Brief 4 for more details on the estimated cost of center-based high-quality
care in greater Davidson County).
Reflecting these financial constraints, most surveyed child care directors report they will
need to make adjustments soon in response to current financial and operating conditions.
Most prominently, over the next 6 to 12 months, 68 percent of programs report they are
likely to raise tuition rates (see Figure 8).
Figure 8: Child Care Centers’ Planned Operational Changes in the Next 6 to 12 Months
Raise Tuition Rates
68%
Increase the Number of Certficate Enrollments
Cut Back on "Extra" Services
19%
12%
Adjust the Quality of Program or Services Offered
9%
Close the Program
2%
None of These Apply to My Program
19%
Source: Davidson County Child Care Provider Experience Survey. The Prenatal-to-3 Policy Impact Center, 2025. Notes:
Sample limited to center-based survey respondents (n=116), including Head Start programs (n=4). Only select response
options are shown; additional options were available in the survey.
Prenatal-to-3 Policy Impact Center 2026
www.pn3policy.org
