Running head: Financial Contingency Planning

Financial Contingency Planning for the FBI’s CJIS Division’s Lasting Impressions Child Development Center

In partial fulfillment of
The Requirements for the degree of

Master’s of Science in Administration Justice and Security

Julia Ann Minnocci
March 4, 2013
Dr. Hector Garcia

Financial Contingency Planning

Introduction

This paper will provide details how the upcoming sequestration will affect the Department of Justice’s (DOJ’s) Federal Bureau of Investigation’s (FBI) Criminal Justice Information Services (CJIS) Division’s Lasting Impressions Child Development Center (LICDC). In addition to possible sources of revenue, temporary assistance, and funding assets as part of financial contingency planning, the paper will discuss the following: public-private partners; nonprofits; bond issuance; grants; multi-level government financing, and the effects of taxation. Also the paper will evaluate the role that financial efficiency will play in obtaining funding at the state and local levels as well as how to identify sources of fundsfor the project.
Financial Contingency Planning The FBI CJIS Division decided to build a daycare center for the use by the FBI Employees. The FBI built the LICDC facility on the CJIS Division’s campus in June 1993; however, it did not open until June 1995. FBI Employees are given first priority to enroll their child/children at the facility. Once the FBI Employees enrolled their child/children, the following individuals are permitted to enroll their child/children at LICDC in the following order: contractors working at CJIS, other federal agencies, and the community. This was the process followed until the center reached its capacity of 153 children. In order for LICDC to obtain funding not only from tuition and other sources, LICDC had to become National Association for the Education of Young Children (NAEYC) accredited. LICDC has been a NAEYC accredited facility for the past 18 years. The LICDC has had a financial contingency plan in place. According to wiseGEEK (2002-2013), a financial contingency plan is known as a worst-case scenario plan, backup plan, or a disaster recovery plan, the contingency plan is simply a secondary or alternative course of action that can be implemented in the event that the primary approach fails to function as it should. Plans of this type allow businesses and other entities to adapt quickly to changing circumstances and remain in operation, sometimes with very little inconvenience or loss of revenue. It is not unusual for organizations of different types to have both a master plan relevant to the entire organization as well as plans geared toward rapid response in specific areas of the operation. A contingency plan is often developed by identifying possible breakdowns in the usual flow of operations, and developing strategies that make it possible to overcome those breakdowns and continue the function of the organization. However, until this year, the LICDC has not had to activate it.

Sources of Revenue Because the LICDC is a nonprofit organization, it normally receives no more than one-third of its support from gross investment income and unrelated business income, and at the same time more than one-third of its support from contributions, fees, and receipts related to exempt purposes (LICDC FAQs, 2013). Also the LICDC receives funding from the Department of Justice’s FBI’s CJIS Division in the form of donations. For example, LICDC is a half-million dollar facility and there is at no cost to the daycare. In addition to donations, LICDC receives funding from the following: students’ tuition, which ranges in cost and depends on the number of days they attend, their age, and whether they are a part-time or a full-time student; a yearly corporation fee of $5 from each corporate member, which is composed of the parent(s) or legal guardian; a $25 wait-list fee for parents wanting to get their children into the daycare, and a yearly enrollment fee of $20. Also each year, the daycare holds a summer camp, which is open to school-age children. The cost of the summer camp is $130 per child, and there are 32 spots available. Other forms of revenue the LICDC receives are as follows: percentages from fundraisers such as Sarris Candy sales, spring and fall Lifetouch Pictures, and book fairs. On the other hand, LICDC receives various grants such as applying to have a Public Pre-K program, which they began offering the fall of 2011; scholarships from NAEYC, as a result of an accredited program. According to NAEYC (n.d.), the Accreditation Scholarships have been supported by three sources during the seven-year history. A special fund set up by the NAEYC Governing Board, the F. B. Heron Foundation, W.K.I. Kellogg Fund, and the Kresge Foundation. The Harrison County Board of Education, which offers the Public Pre-K program, permits 20 students per class. The next school year (2013-2014) the program will permit 30 students. Therefore, the director will have to open two rooms to accommodate all 30 children. Each child attending public preschool at the daycare will bring in an additional $2,000. Finally, the LICDC director can apply for different educational grants which will bring more money. A couple of years ago, the director applied for a grant, which LICDC won in the amount of $2,500. Because LICDC is a nonprofit organization, it can receive other donations, which are strictly not monetary gifts, such as food. Federal and state governments provide nutritional food assistance to daycare centers through a program called the Child and Adult Care Food Program (CACFP). This is a program that supplies reimbursement for snacks and meals to states through the United States Department of Agriculture and serves over 3.2 million children each day. Daycares are reimbursed upon the numbers of their children who receive free or reduced-priced lunch. Daycares receive a cash reimbursement based on a percentage or count of meal types (snack or breakfast, lunch, or dinner) and status of the child (free, reduced price lunch, or neither). Prices for reimbursements are set annually on July 1 and based on changes linked to the Food Away From Home series of the Consumer Price Index. Participating organizations must track each meal or snack served to each child or adult each day. On a monthly basis, each organization will submit its records to the statewide administering agencies for reimbursement. Reimbursement will be provided only for students enrolled in the program and for meals and snacks given within the authorized amount. Payment is made to participating organizations from respective states from money set aside by the USDA for this program (D, Matt., 1999-2013). However, there are sources of revenue and funding assets, which LICDC does not receive. They are as follows: public-private partners, bond issuance, multi-level government financing, and taxation. According to The National Council for Public-Private Partnerships (n.d.), a public-private partnership is a contractual agreement between a public agency (federal, state or local) and a private sector entity. Through this agreement, the skills and assets of each sector (public and private) share delivering a service or facility for the use of the public. In addition to the sharing of resources, each party shares in the risks and rewards potential in the delivery of the service and facility. The FBI serves as the public agency and LICDC is a private sector entity because it is not owned by the FBI. Employees at LICDC are contractual employees. The LICDC does not receive bond issuance because it is not a state-funded educational facility. Finally, because LICDC is a nonprofit organization, which makes it tax exempt, it does not encounter taxation, nor does it receive multi-level government funding.
Effects of the sequestration to LICDC If the sequestration happens, the LICDC may have minimal affects for the duration of the sequestration. First, as part of the contingency plan, LICDC sent letters to all FBI Employees, who have children at the center advising them that should a sequestration happen, LICDC will operate business as usual, which means the attendance policy and weekly tuition payments will still be due. Also they have advised the FBI parent(s) to let them know whether or not their child will be attending the daycare on the sequestration days, so that they can plan for possible “drop-ins.” They have even offered a part-time plan if parents will be off separate days. This will save the parents $10 a week; however, it will not affect the revenue or funding of the daycare. On the other hand, LICDC may lose money on fundraisers such as the book fairs because parents will not be spending money on that. Also summer camp may take a hit at $130 per week per child, as FBI parents may decide not to send their children. The only way it would not be affected is if LICDC could fill the spots outside the FBI. Finally, LICDC offers a variety of programs such as Kindermusik, tumbling, and karate, which are a separate fee paid to the service. If the sequestration happens, these programs will minimize for that time. Conclusion In conclusion, the LICDC developed a financial contingency plan in case the Department of Justice’s FBI’s CJIS Division became part of the 2013 sequestration beginning in April and ending on September 30, 2013. Part of their contingency plan was to notify all FBI should a sequestration happen, the daycare would continue to operate business as usual; they would continue to adhere to the attendance policy, and tuition payments would still need made on a weekly basis. However, they did ask if any child would be out during the sequestration days; let them know so they could fill the spot with “drop-ins.” LICDC will continue to receive funding through tuition, public preschool grants, various other grants, and scholarships via NAEYC accreditation. Also the LICDC will be saving money in rent and food because the FBI donated the facility, and they will receive reimbursement through food assistance. Therefore, the LICDC will face minimal impact as a result of the FBI sequestration in April.

References

FAQs.org (2013). Lasting Impressions Child Development Center, West Virginia Center in Clarksburg, West Virginia (WV). Retrieved from http://www.faqs.org/tax-exempt/WV/ Lasting-Impressions-Child-Development-Center-West-VirginiaCenter.html

WiseGeek (2003-2013). What is a contingency-plan? Retrieved from http://www.wisegeek.org/what-is-a-contingency-plan.htm

D., Matt (1999-2013). Food assistance in daycares. Retrieved from http://www.ehow.com/about_6812334_food-assistance-daycares.html

NAEYC.org (n.d.). Scholarships. Retrieved from http://www.naeyc.org/academy/primary/helpscholarships

NCPPP (n.d.) How PPPs work. Retrieved from http://ncppp.org/howpart/index.shtml

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