The Staffing Math: Why Your State’s Licensing Ratios Are the Biggest Variable in Your Goddard P&L

You are building a pro forma for a Goddard School. You have the FDD financial data open. You have modeled tuition revenue based on your market’s rates. You have roughed out rent based on the real estate path — build-to-suit lease, retrofit, or land purchase.

Then you get to labor. And labor is where the pro forma either works or does not.

Childcare is a labor business. Not labor-intensive in the way restaurants are labor-intensive. Labor-dominated. Teacher payroll, benefits, substitutes, and payroll taxes typically consume 45–55% of gross revenue at a well-run center, per the National Association for the Education of Young Children. That is not a line item you optimize around. It is the line item.

And the single largest driver of that number is not wage rates, not benefits costs, not turnover — it is how many teachers your state requires you to have in a room at a given time. The staff-to-child ratio mandated by your state licensing authority.

This is the variable that makes the same franchise cost dramatically different amounts to operate in different states. And it is the variable most prospective franchisees do not model until after they have signed.

A Goddard School is not a business where you can run lean on staff during slow periods and scale up when demand rises. Licensing ratios are binding constraints — legal minimums enforced by state inspectors, not staffing suggestions. If your infant room has five babies and your state ratio is 1:4, you need two teachers in that room. Not one and a floating aide. Two qualified, background-checked, CPR-certified lead or assistant teachers.

Three structural forces lock the labor share in place:

• Ratios are floors, not targets. You cannot go below them. You can exceed them (and parents notice when you do), but you cannot dip below, even for 15 minutes during a lunch break, without risking a licensing citation.
• Coverage is continuous. A K–12 school staffs one shift. A Goddard School operates 10–12 hours per day. Teachers take breaks, call in sick, attend training, and quit. Every one of those moments requires a qualified substitute already on payroll or on call.
• The ratio resets by age group. You do not get to average your infant ratio against your preschool ratio. Each classroom is a separate compliance unit. An infant room at 1:4 and a pre-K room at 1:10 cannot share staff to hit a blended 1:7.

This is why labor sits at roughly half of revenue across the industry. According to the Bureau of Labor Statistics, the median hourly wage for childcare workers nationally was $14.60 in 2023. But that national median obscures massive state-level variation — and when you multiply wage differences by ratio differences, the compounding is severe.

State licensing ratios for childcare centers are set by each state’s regulatory authority — typically the Department of Human Services, Department of Early Childhood, or equivalent agency. They are public, but they are not easy to compare because states define age bands differently, use different group-size caps, and update their regulations on different cycles.

Here is a comparison across six states where Goddard operates, using the three age bands that drive the most cost variance:

Infants (birth to ~18 months)

Toddlers (~18 months to 3 years)

Preschool (3 to 5 years)

Sources: Colorado Department of Early Childhood, Pennsylvania DHS, Texas HHS, Florida DCF, California DSS, Kentucky CHFS. Ratio rules change — verify against current regulations before modeling.

What Jumps Out

The infant room is where the gap is widest in dollar terms. Colorado at 1:3 for young infants requires 67% more staff per child than Kentucky at 1:5. But infant care also commands the highest tuition — $2,000–$2,800/month in many Goddard markets — so some of that cost is offset by revenue.

The preschool room is where the gap is widest in ratio terms. Texas at 1:15 and Florida at 1:20 allow a single teacher to cover three to five times as many children as Colorado’s 1:8 for three-year-olds. Preschool tuition is lower, but the classroom is far more profitable per square foot in lenient-ratio states.

The ratio alone does not set your cost. The ratio multiplied by three other factors does.

Factor 1: Local Wage Rates

The BLS Occupational Employment and Wage Statistics show childcare worker wages varying from $11–$12/hour in parts of the rural South to $18–$22/hour in coastal metros and high-cost-of-living states.

A strict-ratio state that also has high wages compounds the cost twice. Colorado requires more teachers and pays them more than the national median. Texas requires fewer teachers and pays them less.

Factor 2: Group Size Caps

Group size caps determine how many children you can put in a single classroom, regardless of how many teachers you have. Pennsylvania caps infant groups at 8. Texas allows 12.

This matters for two reasons:

• Revenue per classroom. A room capped at 8 infants at $2,200/month generates $17,600/month. A room with 12 infants at the same rate generates $26,400/month. Same square footage.
• Staffing efficiency. At a 1:4 ratio, an 8-child room needs 2 teachers. A 12-child room needs 3 teachers. Revenue per teacher is identical ($8,800). But fixed costs — the room itself, the furnishings, the licensing fees — are spread across 50% more revenue in the larger room.

Factor 3: Coverage Hours and the Substitute Problem

A 10.5-hour operating day, five days per week, requires more than one shift of teachers. A teacher working 8 hours needs someone covering the remaining 2.5 hours of that classroom’s operation. Multiply that by every classroom, and substitute/float staff typically add 15–25% to your base ratio-driven headcount.

In states with severe staffing shortages, those substitute hours are harder to fill and command premium wages — temporary agency rates, overtime for existing staff, or signing bonuses that raise effective hourly costs.

The Math in Practice

Consider a single infant classroom in two states:

Colorado (1:3 ratio, 10-child cap, $17/hour average wage):

• 10 infants require 4 teachers (3.33, rounded up)
• Base annual payroll per room: 4 teachers × $17/hour × 2,080 hours = $141,440
• Add 20% for benefits, payroll taxes, and subs: $169,728/year

Kentucky (1:5 ratio, 10-child cap, $13/hour average wage):

• 10 infants require 2 teachers
• Base annual payroll per room: 2 teachers × $13/hour × 2,080 hours = $54,080
• Add 20% for benefits, payroll taxes, and subs: $64,896/year

Same number of children. Same revenue. The Colorado room costs $104,832 more per year to staff — 2.6 times the Kentucky room. That is one classroom. A Goddard School typically operates 6–10 classrooms across age groups. The staffing differential across the full center can reach $200,000–$400,000 annually.

This is not a rounding error. It is the difference between a center that generates $300,000 in owner earnings and one that generates $100,000 — on the same gross revenue.

The ratio problem exists in every market cycle. The staffing crisis makes it acute.

Pennsylvania — Goddard’s home state and its densest territory — published a workforce survey through Start Strong PA in 2026 that quantified what operators had been describing anecdotally:

• 78% of programs reported current teacher shortages.
• 87% of programs reported difficulty recruiting qualified staff.
• 65% of programs reported difficulty retaining staff beyond the first year.
• The median turnover rate for assistant teachers exceeded 30% annually.

These are not Goddard-specific numbers — they cover all licensed childcare programs in Pennsylvania. But Goddard operates in the same labor pool and competes for the same candidates.

What the Shortage Does to Your Pro Forma

The staffing crisis hits your financial model in four places simultaneously:

1. Wage inflation. When 87% of programs are struggling to recruit, wages rise faster than tuition. The BLS reports childcare worker wages grew 5–8% year-over-year in 2024 and 2025, well above general inflation. Goddard franchisees cannot raise tuition at the same pace without losing enrollment to competitors or pricing out families.
2. Signing bonuses and premium pay. Programs competing for a shallow labor pool offer $500–$2,000 signing bonuses, referral bonuses, and above-market starting rates. These do not show up in the BLS median — they are above-the-line costs that raise your effective hourly rate.
3. Unfilled classrooms. A room you are licensed for but cannot staff is revenue you cannot collect. If your infant room is licensed for 8 and you can only staff for 6 (because you cannot find a third teacher at your 1:4 ratio), you lose two tuition slots — $4,000–$5,600/month in many markets. This is the most damaging effect because it hits the top line, not just the cost line.
4. Regulatory risk. Operating below ratio, even briefly, triggers citations. Repeated violations can result in fines, mandatory corrective action plans, or in extreme cases, enrollment caps imposed by the licensing authority. The financial cost of a staffing violation is not the fine — it is the enrollment restriction that follows.

If you are modeling a Goddard investment, labor should be the first section of your pro forma, not the last. Here is how to build it:

Step 1: Get Your State’s Current Ratios

Do not use the FDD’s national averages or a franchise broker’s summary. Pull the actual regulations from your state licensing authority. Check:

• Ratios by age band (not just “infant” — some states split infant into two sub-bands)
• Maximum group sizes
• Qualification requirements for lead versus assistant teachers (affects wage rates)
• Any pending regulatory changes — several states tightened ratios in 2024–2025

Step 2: Build a Room-by-Room Staffing Model

For each classroom in your planned layout:

• Number of children at licensed capacity
• Number of teachers required at ratio
• Lead teacher wage rate (local market, not national median)
• Assistant teacher wage rate
• Float/substitute coverage (add 15–25% to base headcount)
• Benefits load (health insurance, PTO, payroll taxes — typically 18–25% of wages)

Step 3: Stress-Test Against Partial Enrollment

Your center will not open at full capacity. Ramp-up to full enrollment typically takes 12–24 months. But ratios do not flex with enrollment — if you have 3 infants in a 1:4-ratio state, you still need 1 teacher in that room. Your labor cost per child is highest during ramp-up, precisely when your revenue is lowest.

Step 4: Model Wage Growth Separately from Tuition Growth

Do not assume you can raise tuition in lockstep with wage increases. Test a scenario where wages grow 5–7% annually and tuition grows 3–4%. That gap compounds. Over a five-year loan term, it can erode projected cash flow by 15–20%.

Step 5: Get Market-Specific Compensation Data

Capital advisory firms like Lendesca, franchise-focused CPAs, and the franchisor’s development team can provide wage benchmarking for your specific market. National averages are directionally useful and precisely wrong. You need local data — what the KinderCare and Primrose down the street are paying their lead infant teachers today. The market competition landscape in your territory determines your wage floor.

These are the staffing questions to put to Goddard’s development team during territory evaluation. They are not adversarial — they are the questions a serious buyer asks.

1. What are the current state licensing ratios for each age band in this territory, and are any regulatory changes pending? If the state is considering tightening infant ratios from 1:4 to 1:3, your labor cost projection just moved 25% in the wrong direction.
2. What is the average lead teacher wage and assistant teacher wage at existing Goddard schools within 50 miles of this territory? Not the national average. Not the state average. The market average. Ask for actuals from the most recent operating year.
3. What is the current teacher turnover rate at the nearest three Goddard locations? Turnover is a direct cost — recruiting, onboarding, and training a replacement teacher costs $3,000–$5,000 per hire, per multiple childcare industry analyses. A 30% annual turnover rate on a 15-person teaching staff means replacing 4–5 teachers per year.
4. What is the average time-to-fill for an open teaching position in this market? If the answer is 60–90 days, your pro forma needs a permanent float position — someone on payroll whose job is covering gaps. If the answer is 30 days or less, you have more flexibility.
5. How does the financing structure account for the ramp-up period staffing cost? You will carry ratio-mandated staff before you have ratio-filling enrollment. How much working capital does the franchisor recommend for the gap, and how does that compare to what existing franchisees actually needed?

The Goddard franchise fee is the same in every state. The royalty percentage is the same. The curriculum is the same. The brand is the same. But the operating cost is not — and the largest single driver of the difference is a number set by a state licensing board, not by the franchisor.

A buyer who models labor at a national average percentage will get a nationally average answer. It will be wrong for their specific state, their specific market, and their specific classroom configuration. The difference between getting this right and getting this approximately right is often six figures of annual cash flow.

Model the rooms. Count the teachers. Price the market. Then decide if the territory works.