1. 1 Labor Management Training 8767 E. Via de Ventura Blvd. Scottsdale, AZ 85258 Wednesday October 29, 2008 1 October 2008

2. 2 Why have training on labor management? Labor is by far the biggest cost bucket Labor needs are always changing (weekly…daily …hourly!) - we have to stay all over labor We have seen many opportunities to improve our labor management practices across the Mini-Skool Family $11,500 $16,000 G&A ExpenseLabor ExpenseOperating Expense $47,000 Rent Expense Typical Weekly Center Expenses

3. 3 What drives labor needs in the Center? Classroom 1 (Infants)Classroom 2 (Toddler) Classroom 3 (2’s)Classroom 4 (Toddler) Classroom 5 (3’s)Classroom 6 (4’s) There are several factors that determine weekly labor needs in each Center:  Number of classrooms  Students per classroom  Students per teacher ratios  Hours of Operations Labor management can be a complicated equation

4. 4 Introduction to the Mini-Skool Labor Management Tool Mini-Skool management has spent the last 8 weeks developing a Center- level labor management tool  Gathered Center-level data from ProCare  Spoke with other child care and other multi-unit companies to understand how other companies predict and manage labor needs  Visited Mini-Skool centers to test the concept The labor management tool was developed to calculate “target” weekly labor hours for every Center Each Center’s target hours are calculated each week based on the factors that drive labor needs:  Number of classrooms  Students per classrooms  State-mandated student:teacher ratios  Hours of operations  Hours needed for bus drivers and cooks

5. 5 Example center-level report – Target Weekly Hours The tool uses data from every center to calculate target weekly hours

6. 6 Total physical capacity at each school

7. 7 Example center-level report – Target Weekly Hours The tool uses data from every center to calculate target weekly hours Number of students enrolled is the primary driver of labor hours needed

8. 8 Example center-level report – Target Weekly Hours The tool uses data from every center to calculate target weekly hours Each Center has state-mandated student:teacher ratios

9. 9 Example center-level report – Target Weekly Hours The tool uses data from every center to calculate target weekly hours Each classroom needs enough teachers to maintain ratios: we think it is only fair to round up to allow for the entire teacher

10. 10 Example center-level report – Target Weekly Hours The tool uses data from every center to calculate target weekly hours Total target teacher hours for the week

11. 11 Example center-level report – Target Weekly Hours The tool uses data from every center to calculate target weekly hours Each Center needs drivers and cooks

12. 12 Example center-level report – Target Weekly Hours The tool uses data from every center to calculate target weekly hours Adjustments made for centers with salaried teachers

13. 13 Example center-level report – Target Weekly Hours The tool uses data from every center to calculate target weekly hours Every teacher given break/lunch hours

14. 14 Example center-level report – Target Weekly Hours The tool uses data from every center to calculate target weekly hours Total weekly target hours for each Center

15. 15 Labor Management Tool: Example Calculation The Tool “knows” how to allocate students by classroom Capacity = 10 Scenario: Allocate 12 toddlers into two toddler classrooms, each with capacity for 10 students, ratio = 6 Option 1: Filling up all of classroom 1 before filling classroom 2  incorrect 3 teachers Option 2 (Labor management tool method): allocate 6 students each into both classrooms  correct 2 teachers

16. 16 How will this work? Target labor hours will be distributed by Regional Managers to every Center on Thursday each week Center Directors will still build their Center’s weekly labor schedule the same way as before The objective is to schedule weekly hours and manage actual hours within the target hours On a daily basis, Centers will receive a daily labor hours tracker, which shows actual labor hours vs. target labor hours. This will help Center Directors see the trends in their center’s labor over time

17. 17 Now let’s take an “under the hood” tour of the tool! School #, name, and location A lot of work went into to tool to make sure we consider all the relevant factors

18. 18 Weekly enrollment from centers is collected from ProCare This center didn’t submit any enrollment data into ProCare, and will then receive a target hour of ZERO to manage to

19. 19 Labor tool “knows” the capacity and program of every classroom in all centers

20. 20 Ratios are individually recorded by school and by program according to state laws

21. 21 Daily hours by program assigned by management

22. 22 Target hours are calculated every week

23. 23 School numbers Actual labor hours are collected daily from ProCare…

24. 24 …and compared to target hours daily (at school, geography, and RM levels) School #, name, and location Management can set thresholds to “flag” centers that miss target hours by X%

25. 25 Labor Management Tool Accuracy There are a few things that Center and Regional Directors must do to help ensure the Labor Management Tool is accurate for their Centers 1. Backup your ProCare System daily. This allows Corporate to pull accurate enrollment and labor data on a daily basis. The best time to backup ProCare is first thing in the morning, so that it reflects the full prior day’s labor hours 2. Make sure all students’ schedule and programs are accurate in ProCare (see next page) 3. Help make sure teachers clock in and out appropriately 1 2 3

26. 26 Next Steps Please keep your ProCare information updated! Update Program and Schedule data for all enrolled students Submit Progress Report weekly Continue to submit the Progress Report on Friday nights as usual Let’s manage labor! Centers should have received targets for the past two weeks Centers will receive the daily labor hours tracker Regionals will help work with Centers to improve labor management wherever possible ProCare Labor Management Tool

27. 27 Q&A For questions after this session please contact Brian Wright, COO Brian.Wright@mini-skool.com