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63 | P a g e FFY 2025–2027 CCDF State Plan
43 percent of all subsidy providers, the Lead Agency estimates that 98 percent of providers during school and 97 percent during school breaks would receive total funding more than total cost. The programs in the 2 percent and 3 percent of programs that do not receive total funding are not overly reliant on child care subsidies for total revenue. These programs typically serve an average between 16 percent and 21 percent of their capacity on children in the subsidy program, and the total price to cost gap averages between $54 and $71 per week or less than 5 percent below cost. For family child care home providers in market zone 1, the Lead Agency estimates that during school weeks, total payments will meet or exceed cost for 53 percent of providers. For the remaining 47 percent, total payments would average less than 5 percent below cost. During summer weeks, the results shift, and for 83 percent, total payments would average 7 percent below cost. For child care centers in market zone 2, the Lead Agency estimates that 85 percent of providers during school and 92 percent during school breaks would receive on average total funding of 13 percent less than total cost. For family child care home providers in market zone 2, the Lead Agency estimates that during school weeks, total payments will meet or exceed cost for 33 percent of providers. For the remaining 67 percent, total payments would average less than 8 percent below cost. During summer weeks, the results shift, and for 92 percent, total payments would average 10 percent below cost. For child care centers in market zone 3, the Lead Agency estimates that 97 percent of providers during school and 99 percent during school breaks would receive on average total funding of 24 percent less than total cost. For family child care home providers in market zone 3, the Lead Agency estimates that during school weeks, total payments will meet or exceed cost for 19 percent of providers. For the remaining 81 percent, total payments would average less than 20 percent below cost. During summer weeks, the results shift, and for 98 percent, total payments would average 23 percent below cost. In general, when considering the relationship between price and cost, two key trends exist. One, for both price and cost, geography factors in significantly. However, when going from market zone 1 to 3, the cost does not decline to the degree that price does. This leads to greater price to cost gaps in market zones 2 and 3 as mentioned in the analysis above. Second, in addition to the first key, family child care tends to underprice their services relative to cost when compared to child care centers, specifically for children in preschool and school-age children in full-time care. For full-time care in family child care homes, the cost per child does not vary much from age group to age group, but family child care home providers tend to lower their prices as children age, similarly to child care centers. These key trends underscore how using only price evaluation when setting child care subsidy rates can lead to disproportionate impact in relation to the estimated cost of care. These disproportionate impacts create price to cost gaps that cannot be overcome by selecting a higher percentile of the market for child care subsidy rates. When updating child care subsidy rates, the Lead Agency did not ultimately focus on price to cost gaps. However, the Lead Agency gave significant consideration to the existing gaps and intends to increase stakeholder engagement to communicate more broadly the findings of the total cost study and the Lead Agency’s cost model. 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.