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62 | P a g e FFY 2025–2027 CCDF State Plan

Including these unlicensed providers would ultimately skew analysis in a way that would negatively impact license providers and their markets. Also, licensed-exempt providers that participate are reimbursed at the same level as child care centers and informal caregivers are reimbursed at the same level as family child care learning homes. 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? For the Lead Agency, 30 distinct rates exist for the child care subsidy program. When evaluating each rate individually and at an individual provider level, the gap between the price at the 60th percentile and the estimated cost varies greatly and identifies how price and cost do not align consistently. Eight subsidy rates meet or exceed the estimated cost of care. Typically, 69 percent of children are served at these rates during the school year, and 62 percent are served at these rates during school breaks. The average value of the amount over the cost per child, per week is $20.29 during school and $24.42 during school breaks. These rates include: center-based, before and after school care in market zones 1, 2, and 3; center-based, full-time care in market zone 1 for toddlers (1-2), and preschool (35), and school-age children; family home-based, full-time care in market zone 1 for infants; and center-based, full-time care in market zone 2 for school-age children. Seven subsidy rates have a low price-to-cost gap of less than 10 percent. The average value of the gap per child, per week is $7.65 during school and $7.85 during school breaks. Typically, 7.9 percent of all children are served at these rates during the school year, and 10.5 percent are served at these rates during school breaks. These rates include: family home-based, before and after school care in market zones 1 and 2; family home-based, full-time care in market zone 1 for toddlers (1-2) and preschool (3-5); family home-based, full-time care in market zone 2 for infants and toddlers (1-2); and center-based, full-time care in market zone 2 for preschool (3-5). Thirteen subsidy rates have a moderate price- to-cost gap of 11 percent to 33 percent. The range of the gap per child, per week is from $7 to $64, depending on the rate, and the average value of the gap per child, per week is $46.70 during school and $42.34 during school breaks. Typically, 18.8 percent of all children are served at these rates during the school year, and 23 percent are served at these rates during school breaks. These rates include: family home-based, before and after school care in market zone 3; center-based, full-time care in market zone 1 for infants; family home-based, full-time care in market zone 1 for school-age children; center-based, full-time care in market zone 2 for toddlers (1-2); family home-based, full- time care in market zone 2 for preschool (3-5) and school-age children; center-based, full- time care in market zone 3 for toddlers (1-2), preschool (3-5), and school-age children; and family home-based, full-time care in market zone 3 for infants, toddlers (1-2), preschool (3-5), and school-age children. Two subsidy rates have a high price-to-cost gap of 40 percent to 48 percent. The average value of the gap per child, per week is $112 during school and school breaks. Typically, 4 percent of all children are served at these rates each week. These rates include: center-based, full-time care in market zone 2 for infants and center-based, full-time care in market zone 3 for infants. Provider level analysis was completed and based on the total of typical weekly payments for care when paying at the 60th percentile of the market rate zone compared to the baseline level of total cost for a 1-star provider in that same market rate zone. Child care centers in market zone 1 benefit the greatest, and child care centers and family child care learning homes in market zone 3 benefit the least from the proposed rates. For child care centers in market zone 1, which is