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DHS Extorts Higher Fees for a Rotten Licensing Racket

DHS Extorts Higher Fees for a Rotten Licensing Racket

Arizonans for Prosperity

One of our taxpayer activists, Dorothy, wrote me an email (which I have pasted below), complaining about the huge increases in preschool fees that have been mandated this month by the Arizona Department of Health Services.

Here was my response:

Dear Dorothy—

Your daughter is dealing with a rotten government scam, from start to finish.

A lot of economists will tell you that the entire licensing scheme is a racket, and that nearly all of the useful and efficient regulation of child care centers is achieved through reputation, parental/consumer choice, and the tort system.

It is wrong for DHS to raise fees to astronomical heights to prop up a mostly useless licensing scheme.

Unfortunately, as you can see in this news article, the people who ostensibly defend the rights of children in Arizona have been barking up the wrong tree:


The child rights activists are demanding that the government spend more money to prop up the licensing scheme, when they should be working toward pulling the plug on the whole thing.

Thank you for writing to me. You have reminded me that I need to bring this matter up before members of the Legislature’s HHS committees.

For Liberty,


Here was Dorothy’s email to me:

Sent: Sunday, October 25, 2009 8:50 AM

Hi Tom,

I’m not sure if you can help shed any light on the below email my daughter received from the preschool (Bethany Learning Center) that her son goes to. Is this a done deal? Is there anything we can do besides writing letters, etc. the director suggests. This seemed to come out of nowhere – we hadn’t heard anything about it.

Any help or suggestions would be appreciated.


Dear Parents,

As most of you have either heard or read this past week, The Department of Health Services is planning a licensing increase for licensed preschools. The increase will be raised by 8,800 percent. For (Name of preschool withheld) our fee will multiply from $150.00 to $13,442.00 based on the sliding scale fee schedule. The proposal for the increase was made due to deep budget cuts. Unfortunately the escalation of this proportion is outrageous.

This increase in fees comes at a difficult time for preschool and child-care providers. We have all been hit hard with the recession. The implementation of these new fees with no time to plan or budget is too much too fast. We agree the rates are due to go up, however this is something that needs to be done gradually not overnight.

(Name of preschool withheld), as most facilities, is scrambling to figure out how this increase can be paid for. Ultimately these costs are likely to be passed on to families who attend each facility. The Department of Health Services is organizing a public meeting in Phoenix on Tuesday, October 27, from 5:00-6:00pm, for those of us affected by this increase to offer some alternatives to the proposed fee structure. If you are as concerned as I am about the increase in licensing fees, plan on attending the meeting so your voice can be heard.

As the Director of (name withheld) I would like to encourage you write a letter to Governor Jan Brewer letting her know that this is outrageous. It is a back door tax being imposed and it has the potential of putting facilities such as ours out of business. The governor signed this bill; she needs to be aware of the impact. In addition your concerned e-mails to the legislators letting them know that this fee structure will be devastating to child-care facilities will employ them to get involved. I have included the links to the e-mails of Will Humble – Interim Director of Department of Health Services; Bob Burns – President of the Senate; Kirk Adams – Speaker of the House; Nancy Barto – Chairperson of the Health and Human Services Committee; the Senate Appropriations Committee members; the House of Representatives Appropriations Committee; and Governor Brewer’s office.

Let me know if you have any additional questions.


(Name withheld)


  1. This letter from DHS is part of the fake doomsday scenario invented by Brewer and her advisors. It is part of an organized scheme to pressure the legislature to pass her budget and raise taxes.

  2. Please post Dorothy’s response. Does she want to send her child to a preschool that has no government licensing process?

  3. Todd, you seem to imply that a government licensing process is inherently more useful and effective than some combination of reputation and private certification/licensing. What evidence do you have that supports that implication?

  4. Every time Tom opens his mouth, it solidifies my true thoughts on AFP. Cut cut cut…right up until it is inconvenient for us.
    I get the whole no regulation thing. No offense though, I would never in a million years send my kids to a center that has no regulation or checks and balances to make sure my kids are safe. Relying on the “tort system” is just ridiculous.

  5. Hunter – I am merely asking whether the parent thinks government licensing is a scam. Sean pretty much sums up what is probably the thinking of most parents.

  6. Basil St. John says

    I think the reputation/tort system idea is great! If my child is killed at a daycare center, I can sue and make a lot of money and put it in the bank. And then I can have another kid, so what’s the big deal? If it happens enough, the market will sort it all out and a few damaged children is a small price to pay, when you look the big picture.

  7. Just how does raising fees 8,000 per cent with zero change in regulations make anyone safer?

    This is a huge tax. Seems the AZ government wants places to be shut down. How does this help the working poor and lower middle class who depend on affordable child care? WHo’s gonna watch the kids? Poeple have to give up work? OKay, then what? Get welfare and food stamps to cover the loss of income .. oh, but where is the tax money coming from to pay for the increased gov’t hand-outs now that more people are forced to quit what work they have to watch their kids? OH! Put them in government day care? Bigger groups, warehousing is better? Is that the goal? Put in weapons detectors and sheriffs to roam about, introducing prison terms like “lock-down” to toddlers?

    Dang for those prices, I’ll hire a private tutor to come to the house! Like what people used to do in the old days! But then, the gov’t would want to “unionize” the tutors to get union fees out of them, like ACORN was doing door to door in a few states the last few months against home care providers. Trying to pressure mothers taking care of their handicapped and house-bound children to pay into a union. Union gets richer, but everyone else just gets poorer.

  8. Veritas Vincit says

    Education, DES, DPS, DoC and all state agencies that aren’t getting their way from the Legislature are making the public suffer knowing full well that John Q Public will take out their pain on those elected – leaving the true cause of the spending excesses and the current pain to scurry Scott Free into their bureaucratic hovels.

    Maybe the public should start really looking at the local and agency budgets and asking “What’s that for Mr/Ms Director?” and saying “Your Fired!”

    Why don’t they subsidize this pre-school licensing with money from the First Things First program? Look up that rat-hole of complete waste. Sounds nice though, because with a nice sounding name, folks like Todd will actually believe its a necessary government program.

  9. I will be the first to say there is a LOT of waste in Government. Seriously though, are we all THAT crazy that we are surprised when 20%+ cuts come down the pipe and there are some big changes?

    I hope our party people aren’t naive and think that we could mandate cuts and everything would just be peachy and fine.

  10. VV and wanuba – what do you guys think cutting government means ? It is like you champion cuts and then get exercised that it actually results in the government having to charge the industry being regulated enough to be able to continue doing the job they are mandated to do by law. Is this really a surprise?

  11. The sad thing is they don’t really check preschools very often. This is just a way to get money for doing nothing.

  12. Antifederalist says

    You just don’t get it. The idea is not only to cut the funding to government, but to also lessen government’s impact on our personal lives and on industry. The idea is for government NOT to charge industry more, it’s for government to do LESS. Government should have to cut back their operations, NOT charge more to maintain their current operations. So, yeah, it’s consistent for conservatives to favor cutting government funding AND to oppose increases in fees, surcharges, etc.

  13. Festus B. Rottweiler says

    Best solution? Put the little SoB’s to work in the cotton fields. Cheap labor, no illegals, and they’ll be too tired to scream and yell all day long.

  14. About cutting costs. One starts with using money wisely in the first place.
    Example: How come Phoenix got a brand new light rail system that is pretty much useless, when all that money – and it must have cost a billion-plus – COULD have been used for better schools in rural areas?
    A billion for schools, vouchers, scholarships, charter schools for poor, outlying areas all over the state so kids in remote areas could get a real shot at college and advanced degrees?
    Well paved, lighted, full of roads and a perfectly functional BUS system and Phoenix gets an expensive luxury no one actually needs.
    Now what? A big paperweight in Phoenix should have been a NO from the get-go, and is certainly one big, inconvenient reason Arizona’s having budget problems. And even though all the business schools in Arizona, and in the nation, teach that SUNK costs are no valid reason to keep funding bad ideas, the politicians feel pressed to keep the pretty thing plugged in. So, the pre-schools now have to pony up to cover that sort of frivolous spending? Another case of an irresponsible generation selfishly taking from the children?
    Day care and preschools all over the state – run by small-business people and used by families who may NEVER have any occasion to USE the light rail in Phoenix, to add insult to injury.
    Let’s see the fiscal seriousness of the legislators: Cut the light rail, before punishing daycare providers. Families actually USE and NEED daycare to go to work, not the light rail.

  15. “Best solution? Put the little SoB’s to work in the cotton fields. Cheap labor, no illegals, and they’ll be too tired to scream and yell all day long.”
    Could work. How about YOU try that for a year and come back and tell us all how you liked it?

  16. Antifederalist,
    Did the legislature change the law regarding preschool licensing – no, so I don’t think you get it. The same activity is legally required just with less funding. What is so hard to understand about that?

  17. wanuba – I think again you are not aware of reality. The light rail system was approved by voters and the funds aren’t coming from money that would be spent on rural schools.

  18. todd Says:
    October 30th, 2009 at 8:27 pm
    wanuba – I think again you are not aware of reality. The light rail system was approved by voters and the funds aren’t coming from money that would be spent on rural schools.
    A light rail wasn’t necessary. Any funds allocated to that means massive funds were not allocated to OTHER more deserving projects, including rural schools, improvements in school choices, opportunities, curriculum, teaching.
    It was a CHOICE which was pushed and presented by special interests and most certainly painted in glowing and unrealistic potential ridership hypothetical projections. No one else in the entire state benefits from a Phoenix light rail, just gets the bill for it.
    How can anyone be serious about fiscal responsibility when that light rail will demand subsidies to keep operating? Another demand on a state budget that represents money that could have been used for better purposes, or shouldn’t have been demanded for in the first place. And they’re too chicken to tear it up and sell it on EBay. The additional costs trying to keep it going will be worse than the initial costs.
    Evicerating private pre-schools and daycare to pay for the likes of such boondoggles is grotesque.
    CUTS aren’t necessary if proper fiscal decisions are made in the first place.

  19. Light rail was passed by Phoenix and Maricopa county voters is two separate votes, after two separate multi-million dollar propaganda campaigns. These campaigns were funded by the light-rail industry: the folks ending up with the billions you and I are paying them. So, yeah, you have democracy in action right there.

  20. Snickers do you apply the same “special interest” label when immigration and other propositions pass handily? How do you explain the payday loan loss? They spent millions and lost 70-30.

  21. Sean, I explain it the same way I explain Hitler winning popular elections. Or the vote to release Barabbas.

  22. I wonder what the fine is for operating an unlicensed facility? I suspect it is a whole lot less than the cost of that license. I suspect a lot of business are going to go ‘unlicensed’ and just pay the fine which they will write off as ‘the cost of doing business.’

  23. At the prices the state government says it costs to adequately monitor child care facilities, I would expect many private companies would be willing to undertake the inspections and certifications. With their reputations for accuracy the only thing keeping them in business, private companies would be more reliable than government and probably at a significantly lower cost.

    The state law could be changed in response to the budget crisis to say that all day care facilities must prominently post whether they have independent certification and who is providing it. That would privatize the regulation, save everyone money, and provide more reliable protection for most children in daycare. Free enterprise certification is more flexible and can act more decisively because there are no considerations of government due process protecting bad facilities.

    Plus, the certification companies can, unlike the government, be sued which give them stronger incentives to be more vigilant to keep costs down by keeping their liability insurance companies’ satisfied they are doing a good job. The greatest gains from tort system regulation are that insurance companies pressure their policyholders to act responsibly which does prevent problems as well as provide financial settlements in response to problems.

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