Verifying Enrollment and Tuition

Key Takeaways

Ask for a de-identified roster with one row per child and one column per fact you intend to calculate with.
Headcount and full-time equivalent enrollment differ by ten to twenty percent in a typical center with mixed schedules, and the gap lands directly in revenue.
Build a bridge from the rate card to collected cash, then explain any residual difference against the profit-and-loss statement.
Verify subsidy and contract revenue against remittances rather than deposits, because timing and rates are set by each state's program.
Prepaid tuition and deposits are obligations you inherit; settle their treatment in writing before closing.

Ask for a roster you can actually reconcile

Request a roster export with one row per child, covering the full period you are analyzing, with these fields and no names.

A unique identifier that stays consistent across months
Classroom and age band, plus the date of any room transition
Contracted days per week and contracted hours, separately
Payer type: private, subsidy, public pre-K, employer, or mixed
Gross tuition rate before any adjustment
Each discount applied, itemized by type rather than netted
Enrollment start date, notice date, and withdrawal date
Deposit held and registration fee status
Current balance and the aging of that balance

The two fields buyers forget are the discount itemization and the withdrawal date. Netted discounts hide the leakage entirely, and a missing withdrawal date is how a center reports a child as enrolled for four months after the family left.

Ask for the same export for at least twenty-four months, produced in one run rather than assembled by hand. A hand-built summary is the seller's analysis; an export is evidence.

Define full-time equivalent before you calculate anything

Enrollment is not a single number, and the disagreements in a child care negotiation almost always trace to two people using the word differently.

Take an illustrative center licensed for 96 children with 88 children on the roster. The contracted schedules break down as 58 children at five days, 19 at three days, and 11 at two days. Prorating by contracted days gives 58 plus 11.4 plus 4.4, or 73.8 full-time equivalents.

That center is 91.7 percent full by headcount and 76.9 percent full by full-time equivalent. Both figures are accurate, and only one of them predicts revenue. If a seller quotes the first and you model the second, you are roughly fifteen points apart before either of you has said anything wrong.

One nuance is worth carrying: part-time children can share a licensed seat on different days, so seat-day utilization sits somewhere between the two measures. That matters when you are estimating how much unsold capacity actually exists. A center at 76.9 percent on a full-time-equivalent basis may have far less physical room available on Tuesdays than on Fridays, and the rooms that are full on the busiest day are the constraint on growth. Whether those seats can be staffed at all is a separate test, covered in analyzing staffing grids and ratios.

Write your definition down and use it in the model, the lender package, the letter of intent, and the purchase agreement. Consistency is worth more than precision here.

Build the bridge from rate card to collected cash

This is the core exercise. Start with what the rate card says the enrolled children should generate, then subtract your way down to what the bank actually received. Continuing the same illustrative center, with an average full-time rate of $248 per week over a fifty-one-week billing year:

Step	Amount	What it tells the buyer
Rate-card tuition on 73.8 FTE	$933,400	Theoretical maximum from the current roster
Sibling and staff discounts	−$27,100	Policy cost, 2.9 percent of tuition
Subsidy rate differential	−$33,600	Gap between private rates and program rates
Net billed tuition	$872,700	What the system actually invoiced
Credits and adjustments	−$14,200	Closure days, goodwill credits, billing corrections
Balances written off	−$11,600	Collection policy strength
Collected tuition	$846,900	Ties to deposits and merchant statements
Registration and supply fees	+$38,200	Seasonal, usually concentrated in two months
Food program reimbursement	+$52,400	Requires its own agreement to continue
Late fees, events, field trips	+$7,300	Small, and often discontinued after a sale
Total collected revenue	$944,800	The buyer's verified figure
Revenue reported on the statements	$968,000	The seller's figure
Unexplained difference	$23,200	2.4 percent that needs an answer

A residual of two or three percent is common and usually resolves into timing, a payer the roster did not capture, or accrual treatment. A residual of eight percent is a different conversation. Either way, the value of the bridge is that it converts a vague sense that the numbers feel high into a specific number with a specific owner.

Test collections rather than billings

Pull bank statements and merchant processing statements for the same months as the roster export and compare totals line by line. Expect small timing differences at month ends; expect no pattern.

Look at where the money arrives. A center that collects through automatic drafts has predictable cash and low aging. A center that collects by check and cash at the front desk has collection risk, reconciliation risk, and a front-desk process you will need to replace.

Then age the balances by payer type. Private-pay balances past sixty days tell you the notice and suspension policy is not enforced, which is a fixable operating problem with a cost attached. Aged subsidy balances usually indicate something procedural rather than something about the families, and the fix may involve the administering agency rather than the center.

Find the discount leakage

Discounts are the quietest source of revenue difference in a child care business because they are set individually, granted informally, and rarely reviewed.

Sort the roster by effective rate within each age band and read the bottom decile. You will typically find staff children at deep discounts, multi-child families with stacked sibling credits, legacy families on rates from several years ago, and one or two arrangements nobody can explain. Each has a policy answer and a dollar value.

Then ask when rates last rose, by how much, and what happened to enrollment in the following ninety days. A center that has not raised rates in three years is carrying a deferred decision, and a buyer who raises rates in month two owns the consequences of a decision the seller avoided.

Deposits, prepayments, and the closing settlement

Money collected before closing for care delivered after closing is an obligation you will perform. So are security deposits and registration fees for children who have not started.

Ask for a schedule of deposits held and prepaid tuition as of the most recent month end, and ask for it again immediately before closing. The usual commercial treatment is a credit to the buyer at closing, but the mechanism, the proration convention, and the survival of any dispute belong in the purchase agreement and to your attorney. The seller-side view of tuition deposits and prepayments at closing is worth reading before you negotiate it.

Summer is the common trap. A center that collects a summer camp fee in April for a program running in July is holding cash that belongs to services you will deliver. That cash may already be inside the trailing revenue figure you were shown.

Subsidy, pre-K, and contract revenue

Private tuition is verified against deposits. Program revenue is verified against remittance advices, authorization records, attendance submissions, and the administering agency's payment history, because rates, attendance rules, and payment timing are set by each state's program rather than nationally.

Ask three specific questions, then work through analyzing subsidy revenue in detail. What percentage of enrolled children are authorized, and for what period? What is the difference between the program rate and the private rate in each age band? And how long, on average, does payment take from service delivery?

Food program reimbursement deserves the same treatment. The federal child and adult care food program is administered through state agencies, and an agreement does not travel automatically to a new owner (Source: USDA Food and Nutrition Service, retrieved 2026). If reimbursement is a meaningful share of revenue, treat reinstatement as a scheduled task with an owner and a date.

Attendance is not enrollment

Enrollment is a contract; attendance is a fact. For private-pay families the distinction is mostly academic, since tuition is generally charged regardless of attendance. For subsidy and contract revenue it can be decisive, because payment may depend on documented attendance under rules that vary by state.

Ask for attendance records alongside the roster for at least three months and compare them. Persistent absence among subsidy-authorized children is worth understanding before you assume that revenue continues.

Keep the whole exercise de-identified

Every calculation in this guide runs on coded identifiers. There is no analytical reason for a buyer to hold children's names, family financial information, or individual medical records during diligence, and holding them creates obligations you did not need.

Ask the seller to export with names suppressed and identifiers preserved. If a specific question genuinely requires an identifiable document, route it through counsel with written terms covering use, storage, and deletion, and keep it out of any shared data room.

Frequently asked questions

How many months of enrollment data should I ask for?

Thirty-six months if the seller has them, twenty-four at a minimum, always as a monthly series rather than annual totals. Three years lets you compare each September with the two before it, which is the only reliable way to separate ordinary summer seasonality from a genuine decline.

How should a buyer define a full-time equivalent?

Pick one definition, write it down, and apply it everywhere. The common approach treats a five-day contracted schedule as 1.0 and prorates shorter schedules by contracted days. What matters is that your model, your lender package, and the purchase agreement all use the same definition, because mixed definitions are where valuation arguments start.

Can I rely on reports from the center's management software?

Use them as a starting point, not as proof. Those reports show what someone entered and intended to bill. Independent evidence is bank deposits, merchant statements, subsidy remittances, and the tax return. When the two disagree, the difference is usually discounts, credits, or uncollected balances that never appeared in a summary.

How is prepaid tuition handled at closing?

It is negotiated, and it should be settled in writing well before closing. Money collected before closing for care delivered afterward is a real obligation you will have to perform. The usual treatment is a credit to the buyer at closing, but the mechanism belongs to your attorney and the purchase agreement.

Does subsidy revenue need different verification?

Yes. Private tuition is verified against deposits; subsidy revenue is verified against remittance advices, authorization records, and the payment history from the administering agency. Rates, attendance rules, and payment timing are set by each state's program, so confirm the terms for that jurisdiction rather than assuming.

Do I need children's names to verify enrollment?

No, and you should not ask for them. A unique identifier per child, with room, age band, contracted days, payer, gross rate, discount, start date, and status, supports every calculation in this guide. Identifiable records belong with counsel under written handling terms, not in a buyer's spreadsheet.