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How money, influence killed S.C. child-care reform

South Carolina's largest child-care operator has been paid more than $28 million since 2002 by the state Department of Social Services to provide services to low-income or special-needs children.

Critics say those payments came at the same time that Dennis Drew was working inside the state's political system to quash tighter child-care regulations that would cost his business money.

Drew is founder and operator of The Sunshine House, the nation's seventh-largest chain. He serves on a state board overseeing the regulation of his business, is on a state panel charged with overseeing education reform in South Carolina and has close ties to Gov. Mark Sanford as an adviser, former staffer and donor.

Drew says he supports improved child care. But, he adds, those improvements cannot come solely on the financial backs of private companies.

Others say Drew uses his power - influence derived fromhis closeness to state leaders and market share - to oppose efforts to improve child care.

They say Drew:

* Opposed the creation of a state-run rating system for child-care centers and other proposed changes in how child care is overseen in South Carolina.

* Has a conflict of interest, collecting millions of dollars from the state to provide child care while helping to oversee how his child-care business is regulated.

High-quality child care is important; studies show children in good child-care programs arrive in school more ready to learn.

Statewide, the child-care industry has an annual $787 million economic impact, according to a University of South Carolina study. More than 118,000 children are enrolled in more than 2,800 S.C. child-care facilities.

THE TOP PROVIDER

Drew and his wife, Roseann, created The Sunshine House chain in 1975, according to the company's Web site.

A former educator and Marine, Drew operates 129 centers in South Carolina, North Carolina, Georgia, Florida, Kentucky, Texas, Colorado and Utah. There are 14 centers in the Midlands and 50 in South Carolina.

"Sunshine House and Dennis Drew, because of their very size, influences this industry like nobody else," said Tim Ervolina, president of the United Way Association of South Carolina, which has made strengthening early child care one of its top policy missions.

The Sunshine House, Ervolina said, is "the 800-pound gorilla."

Ervolina also is on the board of First Steps, the state agency focused on getting children ready for school. The United Way is represented on the State Advisory Committee on the Regulation of Childcare Facilities.

Drew also is on that committee. He first was appointed by then-Gov. Jim Hodges, who lost a re-election bid to Sanford in 2002. The committee is made up of private child-care providers, operators of church-based child-care facilities, parents, academics and government officials. Drew fills a slot designated for a private provider.

Drew uses his political connections and the vocal S.C. Child Care Association - of which he is a past president and current board member - to exert influence over the regulatory process, Ervolina and others said.

"The industry has never really been welcoming of regulations which are anything at all beyond the bare minimums," Ervolina said. "The industry has argued at every turn (that) this was going to put them out of business, and 'You don't understand,' and 'We can't survive.'

"And obviously, being the leader in that industry in South Carolina, Mr. Drew never really supported changing regulations."

Drew calls that claim "insulting."

"Why would you say that?" he said. "I don't fight regulations. I discuss regulations. We explain our points of view. Isn't that allowed in a democracy?

"What we're interested in," Drew said, "is in the best interest of the parent. That's a cross between what the parents can afford to pay or what the state can afford to pay and the quality that the child receives. Nobody opposes anything."

Drew said criticisms of his actions and other child-care providers come from people "who read a lot of books and talk a lot on the phone, but don't really have to do this day to day."

They also come from some members of the S.C. Task Force on the Cost of Quality Early Care and Education.

A RATING SYSTEM

The task force was created in 2002 to study child care in South Carolina and ways to make it better. Representatives from more than 30 groups spent 18 months studying the issue.

The S.C. Child Care Association was one of the groups that worked on the task force, according to the task force's final report and strategic plan, written by Janet Marsh, a Clemson University researcher.

The strategic plan, released in 2004, had as its ultimate proposal a voluntary, five-star rating system for child-care centers. At the time, Drew told The State newspaper the strategic plan provides a chance to "focus our limited resources and dollars where we have the greatest priorities."

Advocates said the system would give parents an easy-to-understand tool to find the best care and, through the power of the marketplace, prod lower-rated child-care centers to raise their standards.

But as the plan, known as Palmetto Stars, moved through the legislative process, Marsh said, Drew and the S.C. Child Care Association moved to kill it.

The proposal came out of the task force with momentum. But, she said, "that was before the bureaucracy and political will, I would say initiated by Dennis Drew, stopped everything."

An e-mail sent from Brantlee Fulmer, operator of the Merryland child-care centers and vice president of the S.C. Child Care Association, to other members of that association said the group's board recently had met and agreed to move forward on "Legislative action stopping Palmetto Stars."

The State obtained a copy of the e-mail, inadvertently sent to a state Department of Social Services employee.

The United Way's Ervolina agrees with Marsh's assessment.

"There was tremendous political pressure from the industry, going to lawmakers and going to key decision makers in the state regulatory system," he said. "There was push back when it came down to making this thing happen."

In an e-mail to Sanford on Jan. 18, 2005, Drew wrote of Palmetto Stars: "It would be important that we be deliberative in our process of studying the costs and benefits of implementing such a complicated and cumbersome system."

The State newspaper obtained the e-mail through a Freedom of Information Act request to the governor's office.

"I have personally heard from many very concerned early education providers, as well as many parents of young children," Drew wrote. "As you examine this issue, I would like to offer any assistance you feel valuable. Palmetto Stars as currently designed is a major extension of government into the private sector."

That same day, Marie Darstein, director of education at The Sunshine House, also wrote Sanford, urging him to oppose the program. "This undermines parental choice, creates an unlevel playing field, AND does not coordinate funding," she wrote.

Soon after, Sanford told the Department of Social Services to pull back on Palmetto Stars. Joel Sawyer, Sanford's press secretary, said that was "because we ran into some very stiff resistance in the General Assembly."

Rep. Ralph Davenport, R-Spartanburg, moved to prevent Social Services from enacting any rating system.

"We didn't want that to pass because it would have had the effect of killing any work to move forward on getting a rating system in place," Sawyer said.

The "push back" from private child-care providers surprised Kim Aydlette, director of Social Services, who reports directly to Sanford.

"I mistakenly assumed there was some consensus, and obviously there wasn't," she said.

It seemed, Marsh said, as if the child-care providers - including Drew and the S.C. Child Care Association - had supported Palmetto Stars at first, only to oppose it later.

Drew said he does not oppose the idea of a rating system. One already exists, he said. Social Services has a three-tiered system of licensing. That system encourages centers to improve, he said.

But advocates of the five-star system say the current system does not encourage enough improvement, adding there is no easy way now to learn a center's rating.

Any true rating system should be done "by an independent agency and not the state," Drew said. "The state has one responsibility, and that is to set the state standards, which they do."

The S.C. Child Care Association has moved to create such a rating system, Drew said.

But an industry-run rating system is a bad idea, the United Way's Ervolina said.

"In my experience, and in most people's experience, self-regulated industries don't work really well," he said. "They usually are all 'diploma mills.'"

Social Services head Aydlette said she has no problem with "any association developing standards for its members."

But "the problem with (the S.C. Child Care Association) is that they don't represent the majority of day-care owners in South Carolina," she said. "Whatever they develop is certainly good information, but unless other associations or independent operators abide by them, it doesn't solve the problem of giving parents consistent information."

The Child Care Association includes 150 to 160 centers, said Shannon Erickson, president of the group. More than 1,000 child-care centers are licensed in South Carolina, according to Social Services.

N.C. STANDARDS

The Sunshine House participates in rating systems in other states.

It has 31 centers in North Carolina, according to the N.C. Division of Child Development. Centers there are rated by the state from 1 to 5, with 1 meaning the program "meets North Carolina's minimum licensing standards for child care."

Of Drew's 31 centers there, none receive the highest rating, and three received a rating of 1. The average score of North Carolina Sunshine Houses was 2.96. North Carolina does not release a state average.

The collapse of the proposed South Carolina rating system was not all bad, said Erickson, president of the S.C. Child Care Association.

Erickson, who operates three child-care centers in Beaufort County, said a key problem with a rating system is the cost to parents. It would cost a great deal, although she is not sure how much, for centers to reach the higher ratings. That higher cost mostly would be passed on to parents in the form of higher fees, she said.

"Palmetto Stars had a huge quality level but no funding to get us there," she said. "Everybody would want to be a five-star."

AT THE TABLE

The failure of Palmetto Stars is not the only child-care setback that critics blame on Drew and his industry allies.

Last year, Social Services proposed a series of changes in child-care regulations to lawmakers, who must sign off on the changes.

One regulation would have lowered the maximum students-to-teacher ratio in all age groups over a period of years and capped the maximum number of children in any age group that could be in one room.

For example, current rules say there must be one teacher for every 13 children, ages 3 to 4. The proposed rules would have required a teacher for every 11 children and required there be no more than 33 children in one room.

Private child-care centers, led by The Sunshine House and the S.C. Child Care Association, succeeded in killing the cap on group sizes, according to news reports of the debate in the Legislature.

Later that year, the State Advisory Committee on the Regulation of Childcare Facilities worked with the Department of Social Services on a plan to allow the state agency for the first time to levy fines against centers for violations.

The advisory board, which includes Drew, his Sunshine House vice president Darstein and Erickson, approved a plan in September 2005. All three signed a letter saying they approved of the proposal.

In November, however, an administrative law judge examined the proposal at the request of the S.C. Child Care Association and the owners of several other child-care centers. State law requires a public hearing on proposed regulations if one is requested by more than 25 individuals or a group representing more than 25 people.

Cindy Walton-McCawley, a founder and owner of the Adlerian Child Care Centers, co-authored an 11-page letter to the judge, Ray Stevens, saying the proposed regulations were "unreasonable and unnecessary." Her letter asked that Stevens rule the regulations "are without any merit" or send them back to the agency to be "revised entirely."

Walton-McCawley is on the board of the S.C. Child Care Association.

On Dec. 22, Stevens ruled there was a need for the regulations. But, he added, the regulations were not "reasonable" because Social Services did not have a "detailed plan of implementation." The agency was instructed to come up with a better plan.

Rep. Rex Rice, R-Pickens, introduced legislation in the S.C. House to allow Social Services to levy fines for violations. The bill died last year.

Rice said the S.C. Child Care Association was active in opposing his plan.

"Every time I thought we had something worked out - it just amazed me," he said. "I thought we'd sit down at the table and work something out, and it never happened. It was one thing after another."

Drew said last week he has supported fines for centers that don't comply with the rules, but said "there was not enough time" to make it work in the time Social Services wanted.

"It's more of a procedural thing than saying we don't want fines," Drew said.

Drew has supported tighter regulations in the past - for other segments of the child-care industry.

For example, he supported stronger regulations for child-care offered in a person's home and pushed for 4K programs in public schools to have to be licensed by the state.

In the past, Drew - and other private child-care center owners - have complained that public schools that offer 4K programs do not have to be licensed. The schools, which compete with private child-care centers for students, are licensed by the Department of Education.

'VALID CONCERNS'

Drew is not without his fans.

Sandra Hackley, head of the Early Care and Education department at Midlands Technical College, said she has known Drew for "many, many years, and I have a great deal of respect for the man."

Hackley, who has been chairwoman of the Richland County Early Education Council, said Drew "really knows his business."

Drew's success in the child-care industry leads him to have "valid concerns" about government regulations, Hackley said.

But, she added, "He truly wants quality child care."

Many of Drew's caregivers have taken part in Midlands Tech's early childhood program.

"He's a very strong proponent of training and the need for educating the work force," Hackley said. "I really applaud his efforts in encouraging quality through educating staff. He does an awesome job."

S.C. Child Care Association president Erickson said Drew "provides a lot of jobs in this state, and a huge amount of families love his services."

PAID TO SERVE

Drew's network of centers was paid more than $28 million by the Department of Social Services from 2002 through July 31, according to agency records obtained by The State.

From Jan. 1, 2005, through the end of July, Drew's centers were paid nearly $10 million. The next largest pay-out was just more than $3 million to La Petite Academy.

Over that period, a total of more than $76 million was paid to 1,300 centers in S.C.

The money comes from the $4.8 billion federal Child Care and Development Fund. It is designed to help low-income families, families on temporary public assistance and those transitioning from public assistance.

More than 1,300 individual child-care centers in South Carolina received voucher money from the Advocates for Better Care program - known as ABC - in 2005 or 2006, according to state figures.

Marsh, the Clemson researcher, sees a conflict in Drew's receiving millions from the state Social Services agency because he is involved in its regulatory process.

"I see a problem, (and) I would hope that others would see a problem," she said. "Over a period of years, we see that with presidents and other famous people - when they have had the experience of power through relationships and power through accumulation of money - and he has both."

Erickson of the Child Care Association sees no conflict of interest in Drew's serving on the state board that deals with child-care regulations while being paid millions by Social Services.

"It's only fitting," she said. "He's in no way more influential than anybody else, but we're trying to make sure the service we provide is quality and affordable. And that's not an easy thing to make happen."

Joel Sawyer, Gov. Sanford's press secretary, said Sanford's position is clear.

"The governor is absolutely clear with anyone who works for him or represents him on a board or commission, that they are not there to feather their own nest," Sawyer said.

IN THE OFFICE

Drew's relationship with the governor predates Sanford's November 2002 election.

On Aug. 26, 2002, Drew, his wife Roseann, and Darstein, the Sunshine House vice president, contributed to Sanford's campaign. Drew gave $1,500; his wife gave $3,500; Darstein gave $500.

Gov.-elect Sanford named Drew to a task force charged with recommending changes to the state's education system.

In July 2003, Sanford named Drew to the Education Oversight Committee, the watchdog panel for the state's public K-12 schools. A month later, Sanford brought Drew into his administration, naming him education adviser.

That appointment lasted just a few months. By January 2004, Drew had left the governor's executive staff. Drew said he realized his business was growing and needed his attention. Drew said he promised Sanford six months to a year in the job, for which he was paid an annual salary of $1.

But Sawyer said Drew "was not a good fit." The decision for Drew to leave Sanford's employ was a mutual one, Sawyer said.

Drew, his wife and his business have continued to support Sanford politically, contributing $5,500 to Sanford this year, according to the State Ethics Commission. Drew also has contributed $5,000 to Republican education superintendent candidate Karen Floyd.

Between his support for Floyd, his connections to Sanford, and his work on the Education Oversight Committee and the child-care advisory board, Drew is involved in every aspect of education in the state - with the exception of post-secondary.

Aydlette, the Social Services director, said she cannot say specifically what, if any, impact Drew has had on child-care regulations. But, she said, "if I had that kind of stake, I imagine I'd be pretty involved."

Drew said he and his child-care colleagues "are interested in the best things for children. How to get there, it may be the difference.

"I'm just a guy. I'm not a bad guy. I've never been a bad guy. It's about the children."

Reach Gould Sheinin at (803) 771-8658.

DENNIS DREW

The head of The Sunshine House child-care chain

* Education: Bachelor's degree in education, Eastern Illinois University; master's degree in media and instructional development, East Carolina University

* Service: Retired from the Marine Corps Reserves; member, Charleston Southern University Board of Visitors

* Business: Child care, since 1975, operating The Sunshine House, with 129 centers in South Carolina, North Carolina, Georgia, Florida, Kentucky, Texas, Colorado and Utah. There are 14 Sunshine House centers in the Midlands and 50 in South Carolina

SOURCE: www.sunshinehouse.com

DENNIS DREW AND S.C. CHILD CARE

* 1975: Dennis Drew and his wife, Roseann, start The Sunshine House child-care chain. Today, it is the nation's seventh-largest child-care company.

* Feb. 5, 2002: Gov. Jim Hodges names Dennis Drew to his State Advisory Committee on the Regulation of Childcare Facilities.

* Feb. 28, 2002: The S.C. Task Force on the Cost of Quality Early Care and Education begins meeting. The task force spends 18 months working on a project known as Palmetto Stars. The task force includes the S.C. Child Care Association, of which Drew is a director and former president.

* Aug. 26, 2002: Dennis and Roseann Drew give $5,000 to Mark Sanford's gubernatorial campaign. Marie Darstein, another Sunshine House executive, gives $500.

* December 2002: Sanford names Dennis Drew to his pre-inaugural task force on education.

* July 2003: Sanford names Drew to the state Education Oversight Committee, which oversees S.C. school reform efforts.

* August 2003: Sanford hires Drew to be education adviser on his staff at a salary of $1 a year.

* January 2004: Drew leaves Sanford's staff.

* March 2004: Palmetto Stars officially proposed.

* February 2005: The State Department of Social Services shelves Palmetto Stars after lawmakers - at the urging of private child-care centers, including the S.C. Child Care Association - move to prevent the agency from starting the system.

* March 2005: Social Services shelves plans to cap the number of children that child-care centers can have in one room. Officials said intense lobbying of lawmakers by child-care providers, including The Sunshine House and the S.C. Child Care Association, doomed the proposal.

* May 16, 2005: New regulations limiting the number of children per teacher in child-care centers are approved.

* Oct. 28, 2005: Social Services proposes regulations allowing it to levy fines against child-care centers for violating licensing rules.

* November 2005: The S.C. Child Care Association asks a judge to review the proposed fines.

* Dec. 22, 2005: Judge Ray Stevens rules the fines are "needed," but the Social Services proposal is not "reasonable." The proposed regulations are pulled.

SOURCES: Department of Social Services, The State newspaper reports, First Steps, Department of Education, The Sunshine House

CHILD-CARE RULES

There are several different classifications of child-care operations. Each has its own requirements for licensing and operation set by the Department of Social Services. A look at those classifications:

* Family child-care home: Up to six children cared for in a private home

* Group child-care home: Seven to 12 children cared for in a private home

* Child-care center: Thirteen or more children in a non-residential building. Operations include The Sunshine House. Many are for-profit businesses; some are run by nonprofits, such as the United Way.

* Religious entity: Church-based child-care.

Licensing child-care centers

There are three levels of licensing for child-care centers, facilities with 13 or more children:

* Level I: Basic licensing, referred to by the state Department of Social Services as "participating." Centers meet minimum requirements. There are 232 licensed Level I centers in South Carolina.

* Level II: "ABC enhanced" centers have lower staff-to-child ratios, and meet environmental requirements and other standards. There are 843 Level II centers in South Carolina.

* Level III: Until recently, this designation was reserved for centers accredited by the National Association for the Education of Young Children, which has stringent requirements. Sixty-eight centers in South Carolina reach this mark.

To learn more

Go to www.thestate.com to search for information on child-care centers, including complaints and violations, from the Department of Social Services.

SOURCE: Department of Social Services

THE FUTURE OF S.C. CHILD CARE

A look at some issues on the horizon for S.C. child care

Rating system concept still alive

The idea of a state rating system for child-care centers still is alive but is far from a sure thing.

This year, lawmakers told the state office of First Steps to study ways to improve the quality of child care in South Carolina. First Steps is expected to name a task force this week that will report to the Legislature in January.

Dan Wuori, First Steps' school readiness officer, said a rating system could be one of the recommendations to lawmakers. If proposed, it would take legislative action to become reality.

Incentives and tax credits?

The economic impact of the child-care industry in South Carolina is huge.

Each year, the industry has an estimated $787 million impact on the state's economy, according to a study released in July by USC economist Don Schunk.

The study recommends the state treat the child-care industry like other businesses. That means extending economic development incentives and tax credits for parents who enroll their children in higher-quality centers.

However, identifying higher-quality programs is difficult now. The study recommends creating a "reliable and valid quality rating system" for child-care programs.

New 4K program in the wings

In partnership with the Department of Education, First Steps is creating a pre-kindergarten program for 4-year-olds in several poor, rural S.C. counties.

This program could be a boon to private child-care centers.

Four-year-olds are the most profitable age group to serve in the child-care industry. In part that's because state law allows a higher student-teacher ratio for that age group. For example, the law limits centers to six infants for every teacher. But a center can have up to 18 4-year-old children for each teacher.

The S.C. Child Care Association is encouraging its members to apply for $3,000 per child in state money available to child-care providers in the affected counties.

The program is being developed as the kind of public-private partnership that many private child-care providers say is essential to boosting quality. Without government subsidies, providers say, increased quality costs too much for most parents to afford.

The Education Oversight Committee, the panel that oversees S.C. education reform efforts, is charged with evaluating the program by 2008. The committee is to include recommendations for a statewide 4K program for at-risk children.

Dennis Drew, founder and operator of The Sunshine House child-care chain, is a member of the Oversight Committee. Two of his centers already have been approved to take part in the First Steps 4K program.

-Aaron Gould Sheinin

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