The Faces of ECE series is designed to raise awareness of the many early care and education professionals who are supporting one of the most important fields in America today. From the people on the front lines working with children to those working behind the scenes to prop the system up from within, everybody has a role to play and a story to tell. Child Care Matters is committed to sharing those stories.

The field of early care and education gets a bad rap for being behind the times when it comes to technology adoption. But there is an ongoing push for modernization, from the child care provider's back office to the complex web of administrative systems at the state level. Where is that push coming from? How have those efforts evolved over time? What challenges remain for us to overcome?

For this installment of Faces of ECE, I had the pleasure of speaking with Louise Stoney, independent consultant and co-founder of both Opportunities Exchange (OppEx) and the Alliance for Early Childhood Finance. Louise is a legend in this field—pick any ECE systems in the country and you'd be hard pressed to dig too deep without finding a reference to her ideas, her influence, or her work. We talked about how OppEx’s focus has evolved over time, why the organization is currently working to drive child care management software (CCMS) adoption, and the critical importance of accurate, reliable data at every level of the ECE ecosystem. Enjoy!

Background

John Jennings: Hello and welcome back to another episode of Faces of ECE from Child Care Matters. Louise, for those who don't know you, can you tell us who you are, what you do, and give us a little background on your experience in early care and education?

Louise Stoney: I've been working in early care and education for, oh my gosh, probably 35 years at least. You can see all the gray hair. And most of that time I've been on the policy and finance side. I spent many years believing the problem was money. I thought if I just could open up spigots of money, we could solve this problem. I realized 20 years ago that money alone wasn't the problem. Because most of the businesses just weren't sustainable even with regular, ongoing money coming in. I felt like we were sort of pouring money into a sieve. We were pouring money into a field that just wasn't able to get the results that we wanted.

So I started to really look deeper, looked under the hood, and tried to figure out what was going on. I also had been working on cost modeling with my colleague, Anne Mitchell, and—long story short—we realized that most child care programs are too small to be sustainable, not at prices that are affordable for families. And yes, we need government subsidy, but we also need to figure out how to run these businesses in a way that makes sense. That was the reason that I founded Opportunities Exchange. It was to solve that problem. How do we make this field strong and sustainable and still provide high quality by really going deep into the business model and trying to figure out what we could do to strengthen it?

John: We’re going to dig deeper into child care management software in a bit. But first, I want to go back to the topic of finance and sustainability. One of the things I see cited most often with regards to Opportunities Exchange is this concept of the “Iron Triangle” of ECE finance. Can you explain what that means and what it looks like in practice?

Louise: So that's also an interesting story. I started the process of coining the phrase, “the iron triangle,” way back when my daughter was in preschool.She was in a cooperative nursery school that was basically run by the teachers. It was a lovely program in the basement of a college dorm. And shortly after I enrolled her in this program, we got this emergency call, like “we’re in trouble!” Long story short, within a matter of weeks, I was the registrar for the program and started looking at the finances. In the two years that my daughter was there, we went from being strapped financially, always worried, to giving those teachers 20% raises. How did that happen? It happened because I focused on the iron triangle. Back then, I didn’t know it was the iron triangle, but I learned it.

What I learned was I had to keep every seat full. Every day, every seat. And I had to do whatever I needed to do to keep those seats full. So that meant sometimes working with the teachers about whether we could do mixed age groups, thinking about marketing, a lot of different pieces. But keeping that program full was number one. Number two, making sure we collected all fees in full and on time. No bad debt. I knew some families needed time, but we really had to make sure we collected all the fees. Thirdly, making sure we understood our costs and we right-sized our tuition, because that little program was 100% tuition-funded. Doing those things is what gave us the revenue to raise wages. We didn’t raise the tuition the whole time I was there, we just kept the revenue coming in the door.

So, fast forward 20 years later, I'm sitting in front of the computer, I'm working with Anne Mitchell at the Alliance for Early Childhood Finance, I'm trying to figure out how we make these budgets work, and bingo! I'm like, wait a minute, remember that thing I did with that little child care program? We started applying the formula to all these budgets, and we started realizing, wow, management really does matter. Yes, it's about revenue, but it's also about staying on top of those key metrics.

The Role of Technology

John: What would you say to somebody who understands, conceptually, the idea of business automation but is maybe feeling overwhelmed by the thought of evaluating, implementing, and learning how to use one more thing?

Louise: We do a lot of this work at OppEx. So we are completely vendor neutral. We don't endorse any one technology vendor over another. Our goal is to help both providers and intermediaries like CCR&Rs and state agencies make better decisions around technology. So we have tools on our website that are designed to help you evaluate software.

So the first thing you need to do is to get really clear on what needs you have. What do you want the software to do? We have a nice little spreadsheet that'll pop up that lists all the different things that technology can do for you. And it’s categorized by “essential,” “nice to have,” “not necessary.” Go through that checklist, read through it as a starting point. Then, bring that checklist to the different vendors and say, okay, show me what you can do with these different tools.

Our clients are usually intermediaries like child care resource and referral agencies or Community Development Financial Institutions (CDFIs), sometimes states. So we provide these tools to them and they then work directly with the providers. We're trying to get this information out to whoever talks to providers so they can lead providers to this when they need to make decisions.

Child Care Management Software Practice and Policy

John: At BridgeCare, we do a lot of work that next layer up from the CCMS, managing data at the regional and state levels. You’ve talked about the direct benefits of CCMS adoption for providers. Can you paint the big picture for us about the impact that adoption has on the overall ECE system? What value do state agencies and policymakers get from a more plugged-in provider community?

Louise: Let’s talk about that, because again that is very nascent at this point, it’s a big idea and we’re slowly getting there. But I want to go back a bit to the roads and bridges and the concept of driving a car, because I think it’s an interesting analogy. Right now, we have a child care field that—technology is still relatively new to them, so in many ways they’re trying to drive cars on dirt roads. We're trying to pave those roads. We're trying to create the technology highway that will allow change to happen. We're doing that in partnership with intermediaries and with government.

If you think about where we’ve gotten with GPS technology, I can go on the internet, I can go on my phone, and I know exactly where there's gonna be a traffic jam, even 100 miles down the road, right? Because my phone has that data. It knows where the cars are moving, it can tell me. We can do the same thing with the childcare field. We can understand what's happening in this field when we have that data in real time. So, right now—people are gonna throw rotten tomatoes at me for saying this, but I'm gonna say it out loud—our childcare supply data is terrible. We're running around talking about childcare deserts this, child care deserts that. I'm going to tell you the truth: most early childhood programs are under-enrolled. How could that be? How can we have programs that are under-enrolled and also childcare deserts? Because our data is too old, because our data is too siloed, because our data doesn't really tell us what we need to know. That's a problem we can fix. And we can fix that problem with modern technology.

BridgeCare is one of the partners that's helping us to do that. There are other tech vendors in the space that are working with us as well. And the reality is once all childcare providers start using Child Care Management Software (CCMS), many things will become possible. There'll be an electronic file for every child. There'll be an electronic file for every family. People will enroll and check in electronically online. That will give us the data that we need to better understand the field. Now people freak out thinking, oh my gosh, I don't want to share my child's data. We're not talking about individuals or any kind of personally identifiable information. You know, back to the GPS analogy, when I look at my Google Maps, I don't know who's driving those cars or what kind of cars they are, I just know there's a traffic jam. That's what we need. Aggregate data to help us understand the field, to help us understand where do we have vacancies? Where do we have pockets of challenges? What system-wide issues are causing challenges? But we can't get that aggregate data with accuracy if we don't build the infrastructure underneath it to drive the data. So that's really the big picture that we're working on.

What's Next?

John: You’ve been on the front lines of the evolution of this space for decades now. I’m wondering—you mentioned a few examples of states and counties that are moving in the right direction. How close are we to seeing data-driven decision making as the norm for ECE?

Louise: That's such an interesting question. I want to actually offer an example because I think we have the potential to be really close. So for those of you who have been in the field as long as me, you will remember the years before we used the ERS, the environmental rating scale as the demarcation of quality, or then later used CLASS. Now, everybody thinks that way, right? All of our coaching is geared to making sure you do better on the ERS. All of our coaching is geared to thinking about CLASS. Everybody takes it for granted. That's data-driven decision-making. We have fundamentally changed the way that we think about quality improvement in the context of understanding data because of these measures. Now, we're also learning where those measures aren't accurate, where we need to change them, and we'll work on changing them. But, the point is, there was a huge shift in the field in understanding and in using data, and it rippled up at every level, the providers, the intermediaries, the states. I believe we could do the same thing on the business side. And I saw that transition happen on the quality side pretty quickly.

I don't know what will happen on the business side. There are so many factors going on. And our economy is so crazy right now that it's hard to make predictions. But I do believe that this is a train that's on the tracks. It's a train that's moving. And I believe that it is the pathway of the future. And the real question is, what will it take for us to get to scale?

I want to go back one more time to leadership. Where there is leadership, you can get to scale pretty quickly, and I'm going to take you to a tiny little state, Kentucky. So Kentucky is a state that I think only about a year and a half ago purchased 1,200 licenses to a child care management software, and they only have 2,000 providers. They made those licenses available for free to their providers. They are now at almost 80 % of their providers using some form of CCMS. That's huge. That's a major transformation in a very short period of time because of focused leadership. So, I think that this is entirely possible.

It's very easy to get lost. Child care is very complex. There's many players in the space. It's really easy to get distracted. But for folks that have been really focused on results, focused on harnessing technology with strong leadership, I really believe we can get to scale and we can do it pretty quickly.

John: We really appreciate all the work you’re doing to make child care more sustainable. How does one go about enlisting the help of Opportunities Exchange for their next big initiative?

Louise: The first thing you should do is go check out our website. I know this is going to sound strange to some people, but we actually want to deliver as little technical assistance as possible. We want you to do this yourselves if you can. We’re always thrilled when people call us up and say “I’ve been to your website and we’ve done this, this, and this, and here’s where I’m stuck,” and we’re like “That’s great!” So please use those tools, that's why they are there (and they are free by the way), and then if you get stuck, if you have questions, if you need help, shoot us off an email.

We’re very transparent, we’re very responsive, and our goal is to empower providers, intermediaries, and states to to understand the system, what reform is needed, and to lead the change themselves.

Additional Resources

• Opportunities Exchange Website
• Collecting Data on Child Care Supply in Real Time: A New Approach to Data Collection (Louise Stoney, Adam Lucas, and Mia Pritts, Opportunities Exchange - January, 2025)
• Connecting Automation to Action: Leveraging CCMS with Targeted Business Coaching (Johanna Borden and Amy Friedlander, Opportunities Exchange - December, 2024)