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)? DEL used the latest provider private pay rates between July 1, 2022, and June 30, 2023, when determining the average market rate. DEL used the latest month during that period (June 30, 2023). If June was not available, DEL used the last month the providers had available. The information is used to determine an adequate payment rate, enabling families using the subsidy to enter the child care market in a competitive position with the ability to find and afford high-quality care across the full range of child care provider types and services. 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: Prior to the development of the MRS, DEL gathers private pay rate data from contracted and non-contracted legally operating providers. DEL coordinates a statewide campaign, January-May, that includes a flyer and email blasts to the ELCs encouraging them to invite providers and local child care organizations to invite their members to participate in the MRS. Once MRS data is compiled, the DEL consults with the Association of Early Learning Coalitions, Florida Family Child Care Home Association, Florida Association for Education of Young Children, Florida Head Start Association, Florida Association for Child Care Management, and Florida Alliance of Children’s Councils Trusts to share the results of the MRS. Provider association groups and other aforementioned stakeholders attended the December 19, 2023 MRS webinars, conducted to collect feedback. These entities are the same entities that are required to consult and coordinate with development of the plan. There were 380 participants during the course of the webinars that yielded suggestions on data collection used to capture the care levels and provider types. As a result of the feedback received from the webinars, DEL will raise the minimum and maximum acceptable rates for inclusion in the 2024 MRS. iv. Local child care program administrators: The DEL consults with ELCs to obtain legally operating provider’s private pay data by May 31. This data is used to conduct the MRS. Providers and ELCs attended the December 19, 2023 MRS webinars, conducted to collect feedback. There were 380 participants during the course of the webinars that yielded suggestions on data collection used to capture the care levels and provider types. v. Local child care resource and referral agencies: The DEL consults with the ELCs and the local CCR&R agencies to conduct the MRS. Within the 30 ELCs are 30 CCR&R units that are responsible for coordinating efforts with child care providers to annually submit their private provider rates by the last business day in May. The DEL works with ELC CCR&R units as needed to coordinate this submission. There were 380 participants during the course of the webinars that yielded suggestions on data collection used to capture the care levels and provider types. vi. Organizations representing child care caregivers, teachers, and directors from all settings and serving all ages: The DEL consults with Florida Family Child Care Home Association, Florida Association for Education of Young Children, Florida Head Start Association and Florida Association for Child Care Management to share the results of the MRS and to collect feedback on how the MRS was conducted. vii. Other. Describe: 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? 12/12/2023 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)? The report is updated annually and covers the state fiscal year (July ￿ June), with an emphasis on reporting the most recent rates during the period. The current report, published December 12, 2023, covers the 2022-2023 state fiscal year. The next reporting period will be issued in late 2024. iii. Describe how it represented the child care market, including what types of providers were included in the survey: The market rate survey includes the following provider types: private center, family child care home, large child care home, public school, non-public school, after school program, and faith-based exempt providers offering services within Florida’s 67 counties. iv. What databases are used in the survey? Are they from multiple sources, including licensing, resource and referral, and the subsidy program? The division uses its Single Statewide Information System (SSIS) to complete the MRS. v. How does the survey use good data collection procedures, regardless of the method for collection (mail, telephone, or web-based survey)? Annually, the DEL requires providers that participate in SR, Voluntary Prekindergarten (VPK) and CCR&R to update their profiles and provide their private pay rates in the SSIS. DEL gathers private pay rate data through the updated provider profiles in the SSIS to calculate the MRS. vi. What is the percent of licensed or regulated child care centers responding to the survey? 84.00 vii. What is the percent of licensed or regulated family child care homes responding to the survey? 95.00 viii. Describe if the survey conducted in any languages other than English: The survey is completed in English. ix. Describe if data were analyzed in a manner to determine price of care per child: Providers enter their private pay rates in the Provider Portal each year by May 31st. These rates are defined by age level and unit of care (full time or part time). The MRS consolidates this data by Full Time and Part Time, County, Provider Type, and Care Level. Based on these groupings, the following statistics are generated to analyze the price per child: Number of Providers with a rate in that category, Weighted Average Rate, Maximum Rate, Minimum Rate, Weighted Median Rate, Most Frequent Rate, and Weighted 75th Percentile. All weighting is done using the Licensed Capacity of each provider. x. Describe if data were analyzed from a sample of providers and if so, how the sample was weighted: No, the MRS uses private pay rates from all providers in the SSIS. The private pay rates are weighted based on the total capacity of the provider. 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 is based on the rates provided by providers per county. The market rate is based on age level and units of care (full time and part time rates) for providers from all 67 counties. 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). Rates are calculated based on the following provider types: private center, family day care home, large day child care home, public school, non-public school, after school program, and faith-based exempt center. iii. Describe how the market rate survey or pre-approved alternative methodology reflected age of child (e.g., infant, toddler, preschool, school-age): Rates are displayed for the following care levels: infant, toddler, 2-year-old, preschool 3￿5- year-olds, school age, and special needs. iv. Describe any other key variations examined by the market rate survey or ACF pre- approved alternative methodology, such as quality level: Rates are calculated based on full-time and part-time weekly rates and if the provider is Gold Seal or a non-gold provider. 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)? DEL collected full-time equivalents and corresponding base DEL-approved payment rates by county, care level, unit of care, and provider type for FY 2022-2023 from SSIS and private pay rates based on care level and unit of care from the FY 2022-23 MRS. These rates were adjusted by county using the corresponding Comparative Wage Factor (CWF). - DEL consolidated provider cost of care data from the FY 2022-2023 survey in Florida’s SSIS. For the fiscal year, there were over 6,000 responses for annual expenditures in the following cost categories: - Materials and curriculum, - Food/food preparation, - Maintenance, - Regulatory costs, - Operational costs, such as payroll/benefits, rent/mortgage and facility expenses, and - Average number of children enrolled. - Average enrollment numbers for centers and family child care homes were used as input to create a profile for a typical center and family child care home. - The Provider Cost of Quality Calculator (PCQC) was used to estimate costs for a ￿typical’ center and family child care home at this link: https://pcqc.acf.hhs.gov. - Input from SR program staff and data from the FY 2022-2023 survey in Florida’s SSIS was used to create a base scenario for a center and a family child care home. - The PCQC used the classroom and teacher/student ratios entered to create a model of the staff needed to support the business. - The PCQC included a range of salaries for staff members based on wages in Florida for each position at a typical provider. Three scenarios were created using the ranges of salaries provided: - Base ￿ basic licensure, lowest salary amount. - Tier 1 Quality ￿ midpoint salaries. -Tier 2 Quality ￿ highest salaries. - DEL multiplied the full-time equivalents by the corresponding rates (base DEL-approved payment rates, statewide 75th percentile private pay rates, Base, Tier 1 Quality, and Tier 2 Quality). These rates were annualized by multiplying by 260 days of care. The CWF was applied to the estimates to account for cost differences between counties. - The annualized differences between the current base DEL-approved payment rates and the statewide 75th percentile private pay rates, Base, Tier 1 Quality, and Tier 2 Quality rates were then compared to estimate the additional cost to the state of the various possible rates. b. In the Lead Agency’s analysis, were there any relevant variations by geographic location, category of provider, or age of child? There were variations based on the age of the child (Infant, Toddler and 2-Year-Old, Preschool (Age 3,4,5), and School-Age. The analysis found that the cost of care was highest for the infant care level and steadily decreased through the school age care level. The analysis was done for the following provider categories: Centers and Family Child Care Homes. The analysis used statewide averages and did not include variations by geographic region. DEL collected full-time equivalents and corresponding base DEL-approved payment rates by county, care level, unit of care, and provider type for FY 2022-2023 from Florida’s Single Statewide Information System (SSIS) and private pay rates based on care level and unit of care from the FY 2022-23 MRS. These rates were adjusted by county using the corresponding Comparative Wage Factor. 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.)? When determining whether the PCQC was a reasonably appropriate estimate of the cost of care, DEL considered the following: - Recommendations from Region IV CCDF staff to use the PCQC tool. - Specific guidance from Quality Assurance consultants from federal contractor ICF when establishing center and family child care home models in the PCQC. -The PCQC’s detailed cost modeling, using Florida industry averages for costs including: - Personnel Costs - Director Salary - Education Coordinator Salary - Teacher Assistant Salary - Substitute Hourly Wage - Workers Compensation - Unemployment Rate - Unemployment (maximum basis for annual wages) - Health Insurance - Annual Paid Time Off (hours per staff) - Additional Benefits - Annual Teaching Staff Training - Training Fees and Background Checks - Percent Additional Teaching Staff Time - Additional Per-Staff Cost - Non-Personnel Costs - Food & Food Prep - Kitchen Supplies - Classroom Supplies - Education Supplies - Office Supplies & Equipment - Medical Supplies - Insurance - Square Feet (average per classroom) - Rent, Lease, or Mortgage - Utilities - Building Insurance - Maintenance, Repair, and Cleaning - Additional Per Classroom Cost - Transportation - Telephone & Internet - Audits & Legal Fees - Licensing Fees and Permits - Professional Services and Fees ￿ Accreditation Fees - Professional Membership and Subscriptions - Additional Per Site Cost - Whether the cost drivers are pertinent to Florida, and to what extent each of the potential cost drivers are appropriate given different levels of care ranging from Base (basic licensing), Tier 1 Quality (SR contract eligible) and Tier 2 Quality (high quality care). - The resulting decision was to use the cost of care estimator with the following cost drivers: - Emphasize modeling an average center and family child care home using the average monthly children served and overall costs from the FY 2022-2023 survey in Florida’s SSIS. - Classify Base, Tier 1 and Tier 2 providers based on the lower, mid and higher salary ranges for all staff members for centers and family child care homes. - Use the PCQC tool’s incorporated Florida-specific salary ranges. 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). DEL’s quality indicators are reflected in Rule 6M-4.740, F.A.C., which requires SR providers to have a program assessment that meets the Contract Minimum Threshold of 4.00 prior to executing a SR contract. Program assessment refers to the measurement of the quality of teacher-child interactions, including responsive caregiving, behavioral support, engaged support for learning, classroom organization, and instructional support for children using the assessment adopted by the DEL. Quality Performance Incentive: SR providers are eligible to receive Quality Performance Incentive (QPI) differentials for each care level and unit of care based upon their program assessment composite scores. Providers with program assessment composite scores of: 4.50 to 4.99 receive a 4% differential. 5.00 to 5.99 receive a 7% differential. 6.00 to 7.00 receive a 10% differential. The SR reimbursement rates were weighted based on the number of days paid in the last month the provider received payments in Fiscal Year 2022-23. For most providers, this was June 2023. To avoid excluding SR rate information, the MRS process checked previous months and reported the days paid for each rate in the latest month. The days paid by provider, care level and unit of care were used to weight the SR rates. Gold Seal: The Gold Seal Quality Care program acknowledges child care facilities and family day care homes that are accredited by nationally recognized agencies based on the applicable accrediting standards of the National Association for the Education of Young Children, the National Association of Family Child Care, and the National Early Childhood Program Accreditation Commission. Head Start, Early Head Start and Migrant and Seasonal Head Start programs that receive subsidy rates and are accredited are also eligible for the Gold Seal program. In addition, s. 1002.945(6), F.S., provides that a child care facility which participates in the SR program and has achieved Gold Seal Quality status shall receive a minimum 20 percent rate differential for each enrolled SR child by care level and unit of care. 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 current DEL-approved payment rates were used as the starting point of the narrow cost analysis. The baseline annual cost was estimated using the current DEL-approved payment rates multiplied by the corresponding full-time equivalents and then multiplied by 260 days of care. This dollar amount was used as the starting point for comparing how much additional funds would be required for any identified gap. - Next, the same process was done using the Tier 1 Quality level rates. The Tier 1 Quality level annual cost was estimated using the Tier 1 Quality rates multiplied by the corresponding full-time equivalents and then multiplied by 260 days of care. - The same process was done using the Tier 2 Quality level rates. The Tier 2 Quality level annual cost was estimated using the Tier 2 Quality rates multiplied by the corresponding full-time equivalents and then multiplied by 260 days of care. - Finally, the same process was done using the county-level 75th percentile private pay rate from the 2022-2023 MRS. The annual cost of the statewide 75th percentile private pay rate was estimated using the county-level 75th percentile level rates multiplied by the corresponding full-time equivalents and then multiplied by 260 days of care. - DEL then compared the analysis’ annualized cost of the different sets of rates compared to the current DEL-approved payment rates. The analysis showed the following: - Increasing rates to the Base level would increase the state’s annual costs by 24%. - Increasing rates to the Tier 1 Quality level would increase the state’s annual costs by 52%. - Increasing rates to the Tier 2 Quality level would increase the state’s annual costs by 81%. - Increasing rates to the county-level 75th percentile level would increase the state’s annual costs by 40%. During the 2024 Legislative Session, the legislature increased reimbursement rates to meet, at a minimum, 85% of the of 75th percentile of the current market rate survey. The new reimbursement rates will become effective July 1, 2024. DEL found that when making these comparisons that the base reimbursement rates are lower than the cost of care base level. DEL strives to bring all reimbursement rates up. 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: 2/23/2024 ii. Provide the date the report containing results was made widely available (no later than 30 days after the completion of the report): 2/29/2024 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.fldoe.org/schools/early-learning/rep-pol-guide/market-rate.stml 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 department provided a subset of ELCs, RCMA, providers, provider association groups and other interested stakeholders the draft 2022-23 MRS for their review and feedback. A webinar was held on December 19, 2023, to present the initial results of the MRS. The webinar participants were informed of the CCDF’s requirement to analyze the cost of providing child care services by conducting a narrow cost analysis. The webinar participants’ suggestion to make changes to the upper and lower limit of acceptable rates, meaning that the MRS excludes pay daily rates that are either too high or too low to be reasonable, was incorporated. The final MRS was completed, posted to the DEL website and shared with ELCs, RCMA, providers, provider organization groups and other stakeholders on February 29, 2024 at the following link: https://www.fldoe.org/schools/early- learning/rep-pol-guide/market-rate.stml.