4.2 Assess Market Rates and Analyze the Cost of Child Care

To establish subsidy payment rates that ensure equal access, Lead Agencies must collect and analyze statistically valid and reliable data and have the option to conduct either a (1) market rate survey (MRS) reflecting variations in the price to parents of child care services by geographic area, type of provider, and age of child, or (2) an ACF pre-approved alternative methodology, such as a cost estimation model, which estimates the cost of care by incorporating both data and assumptions to estimate what expected costs would be incurred by child care providers and parents under different scenarios. All Lead Agencies must analyze the cost of providing child care through a narrow cost analysis or pre-approved alternative methodology. Prior to conducting the MRS or pre-approved alternative, Lead Agencies must consult with the State Advisory Council on Early Childhood Education and Care (designated or established pursuant to the Head Start Act (42 U.S.C. 9837b(b)(1)(A)(i)) or similar coordinating body, local child care program administrators, local child care resource and referral agencies, and other appropriate entities; and organizations representing child care caregivers, teachers, and directors. Prior to conducting the MRS or pre-approved alternative methodology, Lead Agencies must consult with the State Advisory Council on Early Childhood Education and Care (designated or established pursuant to the Head Start Act (42 U.S.C. 9837b(b)(1)(A)(i)) or similar coordinating body, local child care program administrators, local child care resource and referral agencies, and other appropriate entities; and organizations representing child care caregivers, teachers, and directors. Note: Any Lead Agency considering using an alternative methodology instead of a market rate survey to set payment rates, is required to submit a description of its proposed approach to OCC for pre-approval in advance of developing and conducting the alternative methodology. Advance approval is not required if the Lead Agency plans to implement both an MRS and an alternative methodology to set rates at a percentile of the market rate, but a Lead Agency conducting a limited market rate survey and using it to inform their cost model would need pre-approval for this approach. In its request for ACF pre-approval, a Lead Agency must provide details on the following elements of their proposed alternative methodology: • Overall approach and rationale for using proposed methodology • Description of stakeholder engagement • Data collection timeframe (if applicable) • Description of the data and assumptions included in the methodology, including how these elements will yield valid and reliable results from the model • Description of how the methodology will capture the universe of providers, and reflect variations by provider type, age of children, geographic location, and quality 4.2.1 Completion of the market rate survey or ACF pre-approved alternative methodology Did the Lead Agency conduct a statistically valid and reliable MRS or ACF pre-approved alternative methodology to meet the CCDF requirements to assess child care prices and/or costs and determine payment rates? Check only one based on which methodology was used to determine your payment rates. a. [x] Market rate survey. i. When were the data gathered (provide a date range; for instance, September – December 2023)? October 2023 through December 2023 b. [ ] ACF pre-approved alternative methodology. i. [ ] The alternative methodology was completed. ii. [ ] The alternative methodology is in process. If the alternative methodology was completed: When were the data gathered and when was the study completed? Describe any major differences between the pre-approved methodology and the final methodology used to inform payment rates. Include any major changes to stakeholder engagement, data, assumptions or proposed scenarios. If the alternative methodology is in progress: Provide a status on the alternative methodology and timeline (i.e., dates when the alternative methodology activities will be conducted, any completed steps to date, anticipated date of completion, and expected date new rates will be in effect using the alternative methodology). c. Consultation on data collection methodology. Describe when and how the Lead Agency engaged the following partners and how the consultation informed the development and execution of the MRS or alternative methodology, as appropriate. iii. State Advisory Council or similar coordinating body: The MRS was shared with the CT Early Childhood Cabinet (State Advisory Council) on May 21, 2024. The report was shared and the methodology of the MRS was discussed. The OEC State Administrator took questions from the council for review and edited to the survey if necessary. iv. Local child care program administrators: United Way of Connecticut, the statewide 2-1-1 Child Care agency conducted the 2023-2024 Market Rate Survey and provided the survey data details and results. The University of Connecticut School of Social Work prepared the ￿2024 Connecticut Child Care Market Rate Report￿ based on the survey data and results provided by the United Way of Connecticut. v. Local child care resource and referral agencies: United Way of Connecticut, the statewide 2-1-1 Child Care agency conducted the Market Rate Survey and provided the survey data details and results. vi. Organizations representing child care caregivers, teachers, and directors from all settings and serving all ages: The OEC works with an External Steering Committee composed of directors, teachers, and key early childhood stakeholders to receive regular feedback and suggestions on key policies and changes that effect the early childhood community in Connecticut. The MRS was shared and discussed with the External Steering committee on May 21, 2024. The OEC State Administrator took questions from the council for review and edited to the survey if necessary. vii. Other. Describe: N/A d. An MRS must be statistically valid and reliable. An MRS can use administrative data, such as child care resource and referral data, if it is representative of the market. Please provide the following information about the market rate survey: i. When was the market rate survey completed? 1/1/2024 ii. What was the time period for collecting the information (e.g., all of the prices in the survey are collected within a three-month time period)? October 2023 through December 2023 iii. Describe how it represented the child care market, including what types of providers were included in the survey: Connecticut had 401 Licensed Center providers respond to the FY2024 Market Rate Survey, out of a universe of 1,473. This is a sample size of 27%. The response included providers from all 5 Child Care regions in the state. There were 441 or 24% of Licensed Family Child Care providers that responded to the survey out of a universe of 1,843 in Connecticut. iv. What databases are used in the survey? Are they from multiple sources, including licensing, resource and referral, and the subsidy program? Database used was merging of 211 Child Care database, and ImpaCT Child Care Eligibility and Payment System. v. How does the survey use good data collection procedures, regardless of the method for collection (mail, telephone, or web-based survey)? The survey reached out to both Center-based and Family Home Child Care providers in the Fall of 2023. The survey form was made available in hard copies mailed out, and word docs of the questions copied from the electronic form, it was made available electronically, and allowed a connection to their 211 child care profile to update their information. WordPress forms were used to create electronic version of the survey. Forms could be sent in via email, USPS mail, in person or conducted via telephone. The survey extended to ensure a statistically valid response rate of 24% for Licensed Family Providers, and a 27% Center-based response rate. In effort to collect survey responses 211 Child Care communication plan consisted of: Campaign Initial email campaign to 100% of programs (~3100) in the 211 Child Care data system. All email campaigns were formatted to resend to non-openers one week after initial sent date. Scheduled postings to ECE listserv Campaign to Staffed Family Child Care Network Campaign to non-responders. On weekly schedule, identify non responders, conduct subsequent email campaigns. 211 Child Care staff conducted outbound calls to complete 2 cycles of calls to all non- responders. It was conducted in a year where Connecticut Providers were experiencing survey fatigue, due to many exciting working sessions including the work of Connecticut’s Blue Ribbon Panel on Child Care that created a Report between July and December of 2023, with significant feedback and participation from child care providers and programs. vi. What is the percent of licensed or regulated child care centers responding to the survey? 27.00 vii. What is the percent of licensed or regulated family child care homes responding to the survey? 24.00 viii. Describe if the survey conducted in any languages other than English: The survey was conducted in both English and Spanish. ix. Describe if data were analyzed in a manner to determine price of care per child: Yes, each survey included questions for cost of care by child age group, Infant, Toddler, Preschool, and School Age, and hours of care full-time and hourly, with details requested for how many hours the provider considered full-time. Enrollment, Vacancy, and Licensed capacity were all used as consideration for the approach of the survey determination of percentiles. The enrollment numbers by child age group and cost of full-time care were used for determining percentiles of Market Rate. x. Describe if data were analyzed from a sample of providers and if so, how the sample was weighted: Yes, for each age group, statewide and regional, the sample and survey results were determined by all providers that responded to the survey, and then limited to those that had results/answers to each particular age group (infant, toddler, preschool, and school-age) for full-time rate, and by enrollment numbers. School-age results also looked at part-time rates for before and after school care. By age group - in the Licensed Center survey, there were response rates of providers with enrollments >0, as a percent of the sum of Enrollment plus Vacancy, of the providers that responded to the survey, by age group as follows: Infant Enrollments: 51%, Toddler: 47%, Preschool (including part-day): 47%, and School Age: 26%. The percent by enrollment for all ages = 44% for the center- based survey respondents. By age group - in the Licensed Family Child Care survey, there were response rates of providers with enrollments >0, as a percent of the sum of Enrollment plus Vacancy, of the providers that responded to the survey, by age group as follows: Infant Enrollments: 32%, Toddler/Preschool: 32%, and School Age: 33%. The percent by enrollment for all ages = 32% enrollment of total spaces available by licensed family home providers that responded to the survey. e. Price variations reflected. The market rate survey data or ACF pre-approved alternative methodology data must reflect variations in child care prices or cost of child care services in specific categories. i. Describe how the market rate survey or pre-approved alternative methodology reflected variation in geographic area (e.g., county, region, urban, rural). Include information on whether parts of the State or Territory were not represented by respondents and include information on how prices or costs could be linked to local geographic areas. The Market Rate Survey included providers in each of the five geographical regions in the state including: East, North Central, Northwest, South Central and Southwest. These regions are the current child care subsidy payment regions. The North Central region has the highest number of children served in the subsidy program and is used for reporting rates in the CCDF Plan. ii. Describe how the market rate survey or pre-approved alternative methodology reflected variation in type of provider (e.g., licensed providers, license-exempt providers, center-based providers, family child care home providers, home based providers). Licensed center-based, licensed group child care home, and licensed family day care home provider types were included in the 2024 Child Care Market Rate Survey. The survey also included programs that meet licensing requirements, national accreditation standards, and serve children with special needs. Additional information about the child care settings including: location and region, license type, accreditation status, participation in State-funded programs, if they accept Care 4 Kids subsidies, and enrollment numbers and vacancies by age group. The Care 4 Kids program also makes Child Care Certificate payments to Unlicensed Relative Care providers, with rates per child equal to a base set at one-third of minimum wage in Connecticut. Family Child Care subsidy rates are negotiated through a Union Contract between the CSEA-SEIU Union and the State of Connecticut. Foe SFYs 2024, 2025, and 2026 Licensed Family provider rates increased by 11% and Unlicensed Relative providers by 6% in each of the three years. iii. Describe how the market rate survey or pre-approved alternative methodology reflected age of child (e.g., infant, toddler, preschool, school-age): Provider rates were measured separately for infants, toddlers, preschool, and school-age children. Only facilities that provide care to children in the appropriate age category were included in the analysis. Care 4 Kids Child Care subsidy Center Based and Licensed Family rates are paid by Infant/Toddler, Preschool, and School Age categories. The Market Rate Survey identified rates separately for Infants, Toddlers, Preschool and School Age to align with age differences in licensing regulations for Toddler age ￿ with Infants in center based and with Preschool in Family based. iv. Describe any other key variations examined by the market rate survey or ACF pre- approved alternative methodology, such as quality level: The survey also included programs that meet licensing requirements, national accreditation standards, and serve children with special needs. Additional information about the child care settings including: location and region, license type, accreditation status, participation in State-funded programs, if they accept Care 4 Kids subsidies, other state-funding, Head Start or Early Head Start, scholarships, military or staff discounts, and sibling reductions. Weekly Full-time rate and number of hours considered full-time were collected. Hourly rates by age group were collected. Questions as to if the provider accepts children in each of the age group were asked. License type, region. Enrollment numbers, vacancy numbers and licensed capacity were collected for each provider by age group were available and in total. If a provider is defined as a Nursery School was also identified. License number, type and Care 4 Kids Vendor ID, Provider Name, Address, Accreditation status, total capacity, type of care, town, region, and email were collected. 4.2.2 Cost analysis If a Lead Agency does not complete a cost-based pre-approved alternative methodology, they must analyze the cost of providing child care services through a narrow cost analysis. A narrow cost analysis is a study of what it costs providers to deliver child care at two or more levels of quality: (1) a base level of quality that meets health, safety, staffing, and quality requirements, and (2) one or more higher levels of quality as defined by the Lead Agency. The narrow cost analysis must estimate costs by levels of quality; include relevant variation by provider type, child’s age, or location; and analyze the gaps between estimated costs and payment rates to inform payment rate setting. Lead agencies are not required to complete a separate narrow cost analysis if their pre-approved alternative methodology addresses all of the components required in the narrow cost analysis. Describe how the Lead Agency analyzed the cost of child care through a narrow cost analysis or pre-approved alternative methodology for the FFY 2025–2027 CCDF Plan, including: a. How did the Lead Agency conduct a narrow cost analysis (e.g., a cost model, a cost study, existing data or data from the Provider Cost of Quality Calculator)? As part of Connecticut’s Blue Ribbon Panel work during 2022-2023, Social Venture Partners updated the 2021 Narrow Cost Analysis conducted by UConn. For this 2025-2027 CCDF Plan, OEC has contracted with Prenatal to Five Fiscal Strategies to further update our Narrow Cost Analysis by first updating the Cost Model Frame, then updating the Cost Model, Run updated NCA scenarios with provision of input from OEC and other stakeholders, such as Social Venture Partners, followed by a Narrow Cost Analysis conducted by Prenatal5 Fiscal Strategies (P5FS). P5FS developed a customized Excel-based cost model for the state to conduct this narrow cost analysis. This model uses a similar methodological approach used by P5FS in several states and communities across the country, as well as the Provider Cost of Quality Calculator (PCQC), the web-based cost modeling tool provided by the federal Office of Child Care that has been approved for use in subsidy rate setting. By creating an Excel-based model, P5FS developed a customized tool for Connecticut that can account for the unique context of the state. This model also benefited from assumptions and analysis conducted for the 2022 Connecticut Narrow Cost Analysis and by modeling completed to support the 2023 Connecticut Blue Ribbon Panel on Child Care. b. In the Lead Agency’s analysis, were there any relevant variations by geographic location, category of provider, or age of child? To meet the geographic analysis requirements the statewide cost per child outputs are compared to regional subsidy rates to demonstrate how geographic variation in rates impacts the gaps between cost and price. Results of the statewide cost of care analysis were compared to the statewide average rate as well as to the payments rates in each of the five subsidy regions: East Region, North Central Region, Northwest Region, South Central Region, and Southwest Region. Substantial variations were found across regions, most especially between East and Southwest regions as can be seen in the NCA report. Upon analysis, the statewide average of weekly variation in gaps between cost of care and current salary levels (as listed in CT’s Registry) ranged from $-56.12 below cost for Infant Toddler , versus $-34.53 below cost for school age and $-3.91 below cost for preschool age for licensed child care centers. Breaking this down further by region, the most significant gaps between cost of care and current salary levels (as listed in CT’s Registry) were found in the East Region. These ranged from $-151.12 below cost for infant toddler, $-54.21 for school age and $38.71 for preschool. This is compared to the slimmest gaps found in the Southwest Region, where the Care 4 Kids full time payment was $69.88 above the cost of care for infant toddlers, $49.29 above the cost of care for preschoolers, and only $-17.01 below the cost of care for school age. Comparatively, the statewide average of weekly variation in gaps between cost of care and current income levels (as listed in CT’s Registry) ranged from $30.14 above cost for Infant Toddler, versus $-99.06 below cost for preschool age and $-68.95 below cost for school age for licensed family child care providers. When we examine the statewide average of weekly variation in gaps between cost of care and higher salary levels (as calculated from CT’s Compensation Schedule) ranged from the largest gap of $-233.88 below the cost of care for infant toddlers to $-95.42 below cost of care for preschool and $-86.15 below cost of care for school age for licensed centers. Breaking this down further by region, the most significant gaps were seen once again in the East Region, ranging from $-328.88 below cost of care for infant toddlers to $-130.22 below cost of care for preschoolers, and $-86.15 below cost of care for school age. This is compared to the slimmest gaps, again seen in the Southwest Region. These ranged from $-107.88 below cost of care for infant toddlers, to $-42.22 below cost of care for preschoolers and $-68.63 for school age for licensed centers. When we examine the statewide average of weekly variation in gaps between cost of care and higher salary levels (as calculated from CT’s Compensation Schedule) ranged from the largest gap of $-134.53 below the cost of care for infant toddlers to $-263.73 below cost of care for preschool and $-151.28 below cost of care for school age for licensed family child care providers Breaking this down further by region, the most significant gaps were seen once again in the East Region, ranging from $-229.53 below cost of care for infant toddlers to $-298.53. below cost of care for preschoolers, and $-170.96 below cost of care for school age. This is compared to the slimmest gaps, again seen in the Southwest Region. These ranged from $-8.53 below cost of care for infant toddlers, to $-210.53 below cost of care for preschoolers and $-133.76 for school age for licensed centers. c. What assumptions and data did the Lead Agency use to determine the cost of care at the base level of quality (e.g., ratios, group size, staff compensations, staff training, etc.)? The Connecticut Child Care Cost Model reflects the standards that licensed child care providers are required to meet. P5FS reviewed these standards to determine the cost drivers to include in the model. The cost drivers were reviewed with OEC and compared to assumptions used in both the 2022 NCA and the financial model developed to support the 2023 Blue Ribbon Panel on Child Care. The primary cost drivers are child-to-staff ratios, group size limits, and caregiver qualifications. To meet licensing requirements and health and safety standards, caregivers must complete annual training and professional development. This is included as a cost driver in the model in the form of hours for a substitute or floater to cover the caregiver’s responsibilities while they attend training. All nonpersonnel expenses necessary to operate a program are also captured in the model, including occupancy costs based on the square footage requirements detailed in licensing regulations. d. How does the Lead Agency define higher quality and what assumptions and data did the Lead Agency use to determine cost at higher levels of quality (e.g., ratio, group size, staffing levels, staff compensation, professional development requirements)? A Lead Agency can use a quality improvement system or other system of quality indicators (e.g., accreditation, pre-Kindergarten standards, Head Start Program Performance Standards, or State-defined quality measures). The OEC defines quality through accreditation. Our agency has partnered with NAEYC to develop and implement our ELEVATE initiative gives child care providers the tools and guidance needed to improve their programs. https://www.ctoec.org/elevate/. Cost of quality will be examined through our NCA and will incorporate ratio, group size, staffing levels, staff compensation, professional development requirements, etc. as the first NCA did completed in 2022. In the 2024 NCA, assessing the current cost to meet minimum state standards, the Workforce Registry data is used, whereas, scenarios assessing the cost of higher-quality, the mid-career level salary data is used. e. What is the gap between cost and price, and how did the Lead Agency consider this while setting payment rates? Did the Lead Agency target any rate increases where gaps were the largest or develop any long-term plans to increase rates based on this information? The 2024 NCA shows a gap between cost of care and current Care 4 Kids’ subsidy rates. For child care centers, the weekly statewide average infant/toddler subsidy rate is approximately $233.88 below the estimated cost, ranging from $107.88 in the Southwest region to $328.88 below the estimated cost in the East region. The weekly statewide average preschool subsidy rate is approximately $95.42 below the estimated cost, ranging from $42.22 in the Southwest region to $130.22 below the estimated cost in the East region. The weekly statewide average school age subsidy rate is approximately $86.15 below the estimated cost, ranging from $68.63 in the Southwest region to $105.83 below the estimated cost in the East region. For licensed family child care, the weekly statewide average infant/toddler subsidy rate is approximately $160.50 below the estimated cost, ranging from $110.50 in the Southwest region to $211.50 below the estimated cost in the East region. The weekly statewide average preschool subsidy rate is approximately $238.10 below the estimated cost, ranging from $199.50 in the Southwest region to $277.50 below the estimated cost in the East region. The weekly statewide average school age subsidy rate is approximately $103.99 below the estimated cost, ranging from $83.35 in the Southwest region to $125.35 below the estimated cost in the East region. 4.2.3 Publicly available report on the cost and price of child care The Lead Agency must prepare a detailed report containing the results of the MRS or ACF pre- approved alternative methodology and include the Narrow Cost Analysis if an ACF pre-approved alternative methodology was not conducted. The Lead Agency must make this report widely available no later than 30 days after completion of the report, including posting the results on the Lead Agency website. The Lead Agency must describe in the detailed report how the Lead Agency took into consideration the views and comments of the public or stakeholders prior to conducting the MRS or ACF pre-approved alternative methodology. a. Describe how the Lead Agency made the results of the market rate survey or ACF pre-approved alternative methodology report widely available to the public by responding to the questions below. i. Provide the date the report was completed: 6/24/2024 ii. Provide the date the report containing results was made widely available (no later than 30 days after the completion of the report): 6/27/2024 iii. Provide a link to the website where the report is posted and describe any other strategies the Lead Agency uses to make the detailed report widely available: https://www.ctoec.org/ccdf/ iv. Describe how the Lead Agency considered partner views and comments in the detailed report. Responses should include which partners were engaged and how partner input influenced the market rate survey or alternative methodology: In the Summer and Fall of 2023, public forums including the Blue Ribbon Panel work were held and included the opportunity to reshape the survey questions and methodologies. Relatively slight changes were made to the SFY2024 Survey from the prior Market Rate Survey. Results were presented as a part of the CCDF Plan public hearing / forum in May, 2024, with an open question and answer session and additional opportunity to write questions and comments and submit online. This allowed the State to hear and learn from families, providers, advocates, state and local government staff and leaders about current and relevant issues connecting child care costs and rates charged by providers.