Financing Child Care in the United States - Ewing Marion Kauffman ...

PUBLIC–PRIVATE PARTNERSHIPS CAPITAL INVESTMENT PARTNERSHIPS
STRATEGIC CONSIDERATIONS
• Unlike general obligation bonds, which are owned by
the governmental body issuing them, this strategy
relies on bonds that are owned by a “conduit,” in this
case, the Illinois Facilities Fund.
• A strong, experienced intermediary is crucial to the
success of this strategy. The conduit selected to sell
the bonds and build the facilities—the Illinois Facilities
Fund—had extensive expertise and a record of
accomplishment in other financing efforts.
• Strong commitment from the private sector also was
important to the success of this strategy. The IFF was
created by the Chicago Community Trust, which
provided a $2 million grant to serve as equity. A $1
million loan from the Illinois Development Finance
Authority was secured as a reserve fund. Foundation
funding also covered the cost of early planning and
implementation.
• The Illinois Facilities Fund is a community development
financial institution that makes loans to Illinois human
services agencies that rely on government contracts
and are unable to obtain other financing. Additionally,
IFF provides management–skills programs, construction
oversight and other technical assistance to its
borrowers and child care partners.
• Each year, the state of Illinois appropriates funds—in
addition to the funds allocated for child care
subsidies—to repay principal and interest on the IFF
debt. It is unlikely that an intermediary organization
would assume this level of risk without the
commitment of state funds.
• Economies of scale are important. The decision to
design and build seven centers at once resulted in an
estimated savings of $700,000.
• Child care programs that carry significant debt must
have effective fiscal management procedures in place
to ensure that cash flow is available to repay the loan.
Many child care programs do not have this level of
fiscal expertise. IFF has played a crucial role in
strengthening the fiscal management capacity of the
programs it finances.
• The multimillion–dollar buildings — which are located in
neighborhoods plagued by severe poverty, drug abuse
and violence — provide more than child care and Head
Start. Some are family centers; one houses a health
clinic; many have served as an important “anchor” and
spurred additional development in their communities.
OTHER SITES WITH SIMILAR STRATEGIES
Initiatives in Fairfax, Virginia (see page 106) and Maine
(see page 161) used funds from school bonds to help
finance childcare facilities. Connecticut also relied on
funds from revenue bonds to support its child care
facilities program (see page 72).
CONTACT
Trinita Logue, President
Illinois Facilities Fund
300 West Adams Street, Suite 431
Chicago, IL 60606
Phone (312) 629 0060
Fax (312) 629 0065
E–mail hn2467@handsnet.org
163