Preschool struggles due to state budget stalemate

September 8, 2010 6:41:05 PM PDT
While state lawmakers drag their feet on a budget deal, a lot of young children and their parents are facing a very harsh reality. Preschools and learning centers supported by the state will have to close until funding comes in. At one center teachers simply are not getting paid.

The last time teachers at Creative Montessori Learning Center in East Palo Alto were paid was on July 31.

"Banks are not understanding when you go and tell them that you can't pay the mortgage because of not getting paid. It would be a great help if the budget is passed," says preschool teacher Dileepa Gunatileka.

It's all because legislators have not passed this year's budget. Eighty percent of the center's money comes from the state; the rest comes from tuition fees.

These centers run on very thin margins and dozens in the Bay Area and California are having this problem and many run the risk of closing.

Michelle Blakely is with First 5 which helps underserved kids from birth to 5 years old.

"These centers are maxed out on their credit, staff have been working without pay and they really represent some of the neediest families and hard working families that we have in our community," says Blakely.

Finding the resources to continue to operate doesn't come easy. They have little or no collateral and the banks are not willing to offer them loans.

Gloria Marshall, Ph.D., runs the preschool.

"We lease this building, we don't own anything so we have no collateral and I have found that the banks don't consider a letter from the state saying that they owe us, to be worth anything in terms of getting a loan," says Marshall.

The center is reaching out to micro financing organizations like "Opportunity Fund of San Francisco." The average loan is $8,000 at an 8 percent interest rate. That's enough for the center to pay its lease for two months.

"Banks really don't make loans this small and a lot of these providers probably wouldn't qualify for a bank loan because of credit history, because of time in business. We are able to look beyond cookie cutter things and look at people's stories," says Eric Weaver from Opportunity Fund.

First 5 relies on tobacco tax revenue and is willing to also provide a bridge loan until a budget is reached.

In the meantime teachers hope it won't be too long before they see a paycheck.


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