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)? January 2024 through April 2024 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 State Advisory Council was included in planning meetings held by the vendor who conducted the Market Rate Survey and the vendor who conducted the Cost of Care Study. Members were asked for feedback regarding how the processes were implemented, refining of questions on the surveys and refining of the cost estimation tool. iv. Local child care program administrators: Local childcare program administrators participated in the Market Rate Survey process meetings with the vendor by participating in an initial meeting where the process was discussed. They were invited to provide feedback at this time. They also participated in ongoing meetings during the process to provide feedback on the actual process as it was being conducted. Based on some of their feedback there were some revisions made to the process and the lead agency also extended the timeline in order to ensure everyone had a chance to participate. Program administrators were equally involved in the cost of care study and were a part of the technical assistance group which was the group that worked with the vendor to refine the study process as well as the provider input group which was the group that participated in focus groups to share information regarding the actual expenses they incur while running a child care business. v. Local child care resource and referral agencies: The State Advisory Council was included in planning meetings held by the vendor who conducted the Market Rate Survey and the vendor who conducted the Cost of Care Study. Members were asked for feedback regarding how the processes were implemented, refining of questions on the surveys and refining of the cost estimation tool. Members of the state’s resource and referral agency are also members of the State Advisory Council. vi. Organizations representing child care caregivers, teachers, and directors from all settings and serving all ages: Delaware has implemented a statewide Family Child Care Network. Vendors of both the MRS and the Cost of Care Study were apprised of this new initiative and did ensure that we reached out to the University of Delaware who manages this program to determine who the FCC Network leads were. FCC Networks were contacted by both vendors to ensure their participation in the respective studies. Other organizations representing teachers and directors from all settings and serving all ages are a part of the state advisory council. 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? 5/15/2024 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)? All prices in the survey were collected within a 3-and-a-half-month period-Mid January through April 2024. iii. Describe how it represented the child care market, including what types of providers were included in the survey: The state used a census method to collect data rather than a sampling method to collect data. The vendor attempted contact with all licensed centers, home-based providers, faith-based providers and state funded pre-k providers, therefore ensuring complete representation of the childcare market. iv. What databases are used in the survey? Are they from multiple sources, including licensing, resource and referral, and the subsidy program? The state used databases provided by the state’s resource and referral vendor as well as data from the Office of Childcare Licensing. v. How does the survey use good data collection procedures, regardless of the method for collection (mail, telephone, or web-based survey)? The survey consisted of 10 attempts by telephone per provider. Follow-up calls were made by the lead agency to providers who did not respond after the 10th attempt. This cycle was completed multiple times. The lead agency also sent reminders mid-way through the MRS and at the start of the Cost of Care Study to remind providers that both were taking place, that they were separate studies and the importance of their participation in each. vi. What is the percent of licensed or regulated child care centers responding to the survey? 50.00 vii. What is the percent of licensed or regulated family child care homes responding to the survey? 50.00 viii. Describe if the survey conducted in any languages other than English: The survey was conducted in English. ix. Describe if data were analyzed in a manner to determine price of care per child: The goal of the 2024 Delaware Local Child Care Market Rate Survey was to develop statistically credible information of the present unsubsidized market prices charged by providers in Delaware and to provide confidence intervals that indicate the accuracy of the estimated percentiles. ￿Unsubsidized market prices￿ (or ￿market prices￿) are prices providers charge parents for the care of private-paying children. They are prices charged by the providers to unrelated and unaffiliated parents that have not been reduced for special circumstances (e.g., low-income, employees children, etc.). x. Describe if data were analyzed from a sample of providers and if so, how the sample was weighted: The goal of the 2024 Delaware Local Child Care Market Rate Survey was to develop statistically credible information of the present unsubsidized market prices charged by providers in Delaware and to provide confidence intervals that indicate the accuracy of the estimated percentiles. ￿Unsubsidized market prices￿ (or ￿market prices￿) are prices providers charge parents for the care of private-paying children. They are prices charged by the providers to unrelated and unaffiliated parents that have not been reduced for special circumstances (e.g., low-income, employees children, etc.). 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 goal of the 2024 Delaware Local Child Care Market Rate Survey was to develop statistically credible information of the present unsubsidized market prices charged by providers in Delaware and to provide confidence intervals that indicate the accuracy of the estimated percentiles. ￿Unsubsidized market prices￿ (or ￿market prices￿) are prices providers charge parents for the care of private-paying children. They are prices charged by the providers to unrelated and unaffiliated parents that have not been reduced for special circumstances (e.g., low-income, employees' children, etc.). The study describes the findings of the survey including estimates of the 75th percentiles of prices by age group and county; full-time and part day prices; family childcare and center prices; provider and purchase prices; odd-hour care and care for children with special needs 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). The goal of the 2024 Delaware Local Child Care Market Rate Survey was to develop statistically credible information of the present unsubsidized market prices charged by providers in Delaware and to provide confidence intervals that indicate the accuracy of the estimated percentiles. ￿Unsubsidized market prices￿ (or ￿market prices￿) are prices providers charge parents for the care of private-paying children. They are prices charged by the providers to unrelated and unaffiliated parents that have not been reduced for special circumstances (e.g., low-income, employees' children, etc.). The study describes the findings of the survey including estimates of the 75th percentiles of prices by age group and county; full-time and part day prices; family childcare and center prices; provider and purchase prices; odd-hour care and care for children with special needs. iii. Describe how the market rate survey or pre-approved alternative methodology reflected age of child (e.g., infant, toddler, preschool, school-age): The goal of the 2024 Delaware Local Child Care Market Rate Survey was to develop statistically credible information of the present unsubsidized market prices charged by providers in Delaware and to provide confidence intervals that indicate the accuracy of the estimated percentiles. ￿Unsubsidized market prices￿ (or ￿market prices￿) are prices providers charge parents for the care of private-paying children. They are prices charged by the providers to unrelated and unaffiliated parents that have not been reduced for special circumstances (e.g., low-income, employees' children, etc.). The study describes the findings of the survey including estimates of the 75th percentiles of prices by age group and county; full-time and part day prices; family childcare and center prices; provider and purchase prices; odd-hour care and care for children with special needs. iv. Describe any other key variations examined by the market rate survey or ACF pre- approved alternative methodology, such as quality level: The goal of the 2024 Delaware Local Child Care Market Rate Survey was to develop statistically credible information of the present unsubsidized market prices charged by providers in Delaware and to provide confidence intervals that indicate the accuracy of the estimated percentiles. ￿Unsubsidized market prices￿ (or ￿market prices￿) are prices providers charge parents for the care of private-paying children. They are prices charged by the providers to unrelated and unaffiliated parents that have not been reduced for special circumstances (e.g., low-income, employees' children, etc.). The final 75th percentile price estimates are included in 14 tables. The final tables present: (1) the 75th percentiles of prices, including comparisons of the distribution of prices charged by providers (￿provider prices￿), (2), the distribution of prices paid by Delaware families (￿weighted￿ or purchase prices), (3) a study of the costs and prices associated with the care of children with special needs, (4) the effects of the COVID-19 pandemic on prices charges and enrollments, and (5) various percentiles between the 10th and 90th percentiles. 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)? The lead agency contracted with P-5 Strategies a consultant group that assisted with the development of a cost study and enhancements to the state specific cost estimation tool. P-5 believes in a comprehensive approach that combines fiscal, governance, and equity analysis, paired with deep intentional stakeholder engagement, to drive real progress towards an equitable prenatal to five system that meets the needs of children, families, and providers. P-5 proceeded with the study by establishing a technical assistance workgroup which consisted of professionals in ECE. This group assisted with the development of the actual process, provided relevant scenarios and assumptions, etc. They also enlisted a Provider In-put group which consisted of center and family childcare providers who participated in statewide focus groups to share information about the actual costs incurred in the course of managing a childcare business. b. In the Lead Agency’s analysis, were there any relevant variations by geographic location, category of provider, or age of child? There were significant gaps between the what the state is paying and the actual cost of care. In DE there are 3 counties and historically the state has reimbursed Kent and Sussex Counties at lower rates than those providers in New Castle County. This process is informed by the Market Rate Study. There is also a variation by age group. Younger children are more expensive to care for in all counties and Family childcare is a less expensive option than 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.)? Some assumptions used include: Full day, full year care, for children from birth to 12 Use the most common program size, serving children birth to five and birth to 12 for analysis Foundation of the Delaware Model • Licensing standards present in all scenarios of the model • State-funded ECE program requirements Child Care Center Assumptions • 5 classrooms (infant, toddler, preschool, school age) • Capacity of 94 at licensing; 84 for state-funded ECE program • Includes employer contribution to health insurance • 20 days PTO (10 sick, 10 leave) • Includes 18 hours professional development annually • 5% contribution to operating reserve Family Child Care • Capacity of 6 children • Includes employer contribution to health insurance • 20 days PTO (10 sick, 10 leave) • Includes 12 hours professional development annually • 5% contribution to operating reserve 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). Delaware had been using a Quality Rating and Improvement System (QRIS) since 2007 and provided tiered reimbursement to providers rated at 3, 4, and 5 stars. Delaware has reimagined its QRIS program to a Quality Improvement System or QIS in 2023. The new QIS system is composed of three quality indicators: Creating conditions for quality, Positive climate and high-quality interactions, and Family engagement and community services. Each quality indicator contains a set of more concrete, observable key practices. Providers may apply for Quality Improvement Awards as they work to complete Quality Improvement Plans. Some assumptions that the lead agency used to determine the cost of higher levels of quality include: • Lower ratio/group size • Planning/Release Time • Curriculum Implementation Supports • Educational Materials 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 lead agency conducted both a market rate analysis and a cost analysis. An analysis of the combined data revealed a significant gap between cost and price. The lead agency did use this data to inform the most reimbursement rates which are based on the 2024 MRS and becomes effective July 1, 2024. 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: 5/15/2024 ii. Provide the date the report containing results was made widely available (no later than 30 days after the completion of the report): 5/30/2024 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: Once the report was final it was announced at the State Advisory Council meeting, and on a monthly providers call. The lead agency also sent the information out to our sister agencies and on the childcare subsidy listserv. The final report is posted on the lead agency website and can be viewed on the link below. https://www.dhss.delaware.gov/dhss/dss/files/2024DelawareChildCareMarketRa teSurvey.pdf 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: The early care and education community was engaged from the beginning of the MRS process. The vendor held three meetings to share the process and address questions and concerns. The vendor met with ece stakeholders throughout the process and did receive feedback on the process of data collection as providers advised they when they reached out to the researchers, they were not able to get them on the phone. The Reseach company provided additional numbers that could be used. The vendor also received feedback regarding a group of state funded pre-k programs that are historically left out of the study. It was decided that based on this feedback these providers would be included and the data analyzed.