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)? The data used for the 2024 Market Rate Study represents rates entered into provider self-service accounts between 1/1/2023 and 9/30/2023. The lead agency collected the bulk of the data through a stabilization reporting period from 5/1/2023 to 7/31/2023 but also included rates entered by providers as early as 1/1/2023 and as late as 9/30/2023. Evaluation of those rates deemed current, added by providers from 1/1/2023 through 9/30/2023, began in October of 2023 and is the referenced by the 2024 Market Rate Study. 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 Georgia Children’s Cabinet, the State Advisory Council, typically meets three times each year but in 2023, there were only two meetings, one in March 2023 and a second in July 2023. The Commissioner of the Lead Agency is the co-chair of the Cabinet and provides the Cabinet with updates regarding CCDF activities at each meeting in addition to other agency activities. The State Advisory Council did not provide any specific feedback to inform the Market Rate Study. iv. Local child care program administrators: The Lead Agency meets quarterly with stakeholders that represent licensed child care learning center operators and licensed family child care learning home operators. These regular meetings include updates regarding CCDF activities in addition to other agency activities. No specific feedback was given to inform the Market Rate Study; however, some feedback was received asking the Lead Agency should reconsider the counties assigned to each market rate zone. This feedback did not inform the development and execution of the Market Rate Study because the Study was already established to conduct that analysis. Ultimately, the Study did not result in any changes to which county was assigned to each zone in the proposed plan. v. Local child care resource and referral agencies: Georgia does not have a resource and referral network as defined by CCDF and these organizations, while integral to improving the quality of child care in Georgia, are not closely aligned with administration of the child care subsidy program. For its current Market Rate Study, the Lead Agency did not consult on the development and execution of the Market Rate Study with local resource and referral agencies. The Lead Agency works closely with Georgia's local resource and referral agencies to provide coaching and technical assistance to providers participating in the state’s Quality Rating and Improvement System. vi. Organizations representing child care caregivers, teachers, and directors from all settings and serving all ages: No such organization exists in Georgia to represent only the interests of these roles. That being said, the Lead Agency does meet regularly with stakeholders that represent licensed child care learning center operators and licensed family child care learning home operators that employ those in these roles. vii. Other. Describe: The Lead Agency meets quarterly with child care advocates such as the Georgia Early Education Alliance for Ready Students, Voices for Georgia's Children, Black Child Development Institute of Atlanta individually on a quarterly basis. These regular meetings include updates regarding CCDF activities in addition to other agency activities. No specific feedback was given to inform the Market Rate Study. 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? 5/29/2024 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)? Georgia's Market Rate Study was completed May 29, 2024. The survey process to collect data used for the 2024 Market Rate Study concluded 9/30/2023 and represents rates entered into provider self-service accounts between 1/1/2023 and 9/30/2023. The lead agency collected the bulk of the data through a stabilization reporting period from 5/1/2023 to 7/31/2023 but also included rates entered by providers as early as 1/1/2023 and as late as 9/30/2023. Evaluation of those rates deemed current, added by providers from 1/1/2023 through 9/30/2023, began in October of 2023 and is the referenced by the 2024 Market Rate Study. iii. Describe how it represented the child care market, including what types of providers were included in the survey: Primarily, the Lead Agency used regular reporting required by the child care stabilization program to collect current provider prices for child care through a stabilization reporting period from 5/1/2023 to 7/31/2023. The providers included in the data collection process were licensed child care learning centers and licensed family child care learning homes and represented 89% of all licensed child care providers operating in Georgia. Valid responses were collected from 3,435 licensed child care providers. This total represented 78 percent of all licensed child care providers. In addition to this focused collection, the data collected also included rates entered by providers as early as 1/1/2023 and as late as 9/30/2023 and allowed for providers that did not receive stabilization funds to be included. In Georgia, licensed child care represents the CCDF-eligible, priced market for child care. iv. What databases are used in the survey? Are they from multiple sources, including licensing, resource and referral, and the subsidy program? The providers included in the data collection process were licensed child care learning centers and licensed family child care learning homes. The data was collected in a database used specifically for managing the child care licensing process and also allows licensed child care programs to publicize their child care prices to the public if they choose. No other database is necessary or would be appropriate. v. How does the survey use good data collection procedures, regardless of the method for collection (mail, telephone, or web-based survey)? The data collection process consisted of licensed child care providers using a web-based application by logging into their child care license self-service account. After logging in, providers were asked to provide their current child care prices using an established process developed more than eight years ago to collect and advertise provider prices. Rate data was then extracted from the database and was evaluated for quality and inclusion in the evaluation process. The cleaning process by the lead agency involved excluding providers with rates deemed not current, which meant that the rates had been entered prior to 1/1/2023. In addition, providers were excluded if all or a majority of their rates were not reported. vi. What is the percent of licensed or regulated child care centers responding to the survey? 79.00 vii. What is the percent of licensed or regulated family child care homes responding to the survey? 73.00 viii. Describe if the survey conducted in any languages other than English: The web- based application used to collect the data is in English by default but can be translated to multiple languages using Google Translate. ix. Describe if data were analyzed in a manner to determine price of care per child: The data was analyzed in a manner that allowed the Lead Agency to determine the market price, on a per provider basis: statewide and in each market zone for each provider type, type of care, and age group. x. Describe if data were analyzed from a sample of providers and if so, how the sample was weighted: The data analyzed was a collected sample that represented 3,435 out of 4,425, or 78 percent of the statewide licensed child care market eligible to receive CCDF. This includes 79 percent of licensed centers and 73 of licensed family homes. The sample collected, 78 percent, is far higher than the 50 percent response rate that is generally considered an excellent response rate and therefore 78 percent is highly representative the provider population. No weighting was necessary or applied to this sample. 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. Results of the market rate survey were analyzed at the state and county levels. Based on county-level data and reported rates, counties were assigned to one of three market rate zones. Zone One encompasses the highest tier of rates and generally coincides with the counties in the Atlanta metro area; Zone Two encompasses the middle tier of rates and generally coincides with the state’s counties encompassing mid-sized metro areas; Zone Three encompasses the lowest tier of rates and consists of the remainder of the state’s 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). Results of the market rate survey were analyzed and reported by child care learning centers and family child care learning homes, the two types of providers that make up the priced market for CCDF. While licensed-exempt and informal caregivers are allowed to participate in the subsidy program under certain conditions, their inclusion as an option to families should not mean that they should be considered an influential part of the priced market to be considered in the Market Rate Study. These programs typically care for less than 1.5% of all children in care in the subsidy program. For licensed-exempt providers to participate, they must be either government owned and operated or a seasonal camp for school aged children. An informal caregiver can also participate but is not typically a provider that would market themselves for services or otherwise collect a fee for services. 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. iii. Describe how the market rate survey or pre-approved alternative methodology reflected age of child (e.g., infant, toddler, preschool, school-age): Results of the market rate survey were analyzed and reported by the following age groups: under 1 year, 1 year olds, 2 year olds, 3 year olds, 4 year olds, 5 year olds, and school-age. In addition, results were reported by age groups that align with subsidy payment rates: infant (birth - 12 months), toddler (1 - 2 years), preschool (3 - 5 years), school-age (5 years and older). iv. Describe any other key variations examined by the market rate survey or ACF pre- approved alternative methodology, such as quality level: Results were broken out by different Quality Rated (QRIS) levels and by providers' participation in CCDF subsidy 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)? Instead of a narrow cost analysis, the Lead Agency conducted a ￿total cost study￿ in three parts: development of a cost model, review of internally available provider-level data, and extensive survey efforts administered externally to a large number of child care providers. The second and third parts informed assumptions in the model in a statistically valid and representative manner. The goal of the total cost study was to understand what expenses providers actually paid considering the constraints under which they operate rather than develop estimates based on aspirational case studies. Cost model development was initiated by the Lead Agency in 2019 and involved significant modifications to the Cost of Provider Quality & Revenue (CPQ&R) tool from the National Institute of Early Education Research (NIEER). The developer of the CPQ&R assisted the Lead Agency in these modifications after being introduced to the Lead Agency by NIEER representatives. That CPQ&R is a system-level model for estimating preschool costs at the provider, district, and state level, and allows a population of children to be modeled based on a mix of part-day, full-day, and extended-day slots (e.g., 3-, 6-, and 11-hour care). It was modified for the Lead Agency to accommodate any age-group participating in subsidized child care as well as programs of varying duration that may operate simultaneously within a single child care facility. To that end, several new concepts were introduced in the model calculations: the ability to vary operating assumptions by time of day; the impact of shared or unused classrooms on calculated costs per child; and the acceleration or deceleration of depreciation expense based on asset utilization rates. Cost calculations at the district and state level in the CPQ&R were removed so that the Lead Agency’s model focused solely on costs at the provider level, and a user interface was created allowing the Lead Agency to navigate between model parameters and assumptions more easily. The two provider types included in subsidy reimbursement rate tables in Georgia are licensed child care learning centers (CCLCs) and licensed family child care learning homes (FCCLHs). Additional dimensions in the rate tables include three geographic regions (Market Rate Zones 1, 2, and 3), three quality rating levels (Quality Rated One Star, Two Star, and Three Star), and two types of care (Full-Day and Before-/-After-School). In addition, the Lead Agency wanted a cost model that could dynamically vary assumptions by facility size (for CCLCs), by providers’ level of participation in child care subsidy (a socioeconomic indicator), and by season. The Lead Agency observed that the distribution of children by age group that it serves varies between the summer and the school year. Initially, the Lead Agency used its state licensing standards and indicators from its Quality Rated program, data from the Bureau of Labor Statistics (BLS), and other publicly available secondary data sources to inform its first round of cost model estimates in 2020. However, it had concerns with using this information to establish new subsidy rates. Among its concerns: Licensing standards identify only the minimum requirements for metrics of potential interest to cost modeling. Quality Rated indicators are not mandates, and providers do not have to meet the scoring thresholds on any structural quality indicator (e.g., group size) to achieve a higher rating. Furthermore, a previous Quality Rated Validation Study conducted by the Lead Agency found that the scores earned by providers on structural quality indicators￿those most strongly associated with child care costs￿ were not strongly correlated with their final quality rating. A previous Economic Impact Study conducted on behalf of the Lead Agency included data (collected by survey) that questioned the validity in applying published BLS statistics to Georgia’s private child care providers and their workers. BLS data is neither collected or reported in a manner that would inform wages exclusive to private child care centers and account for variations by region (below the state level); nor is it available in any form for family home providers and their workers. These concerns led the Lead Agency to engage in a strategic planning process for its cost modeling efforts in early 2022. The strategic plan identified two internal data sources that could be used to improve the quality of cost model assumptions. The first was the Lead Agency’s most recent (at the time) market rate survey in 2021, for which it received responses from more than 2,800 providers including information pertaining to their operating structure (hours of operation, number of classrooms by age group, single or multiple sites under management). The second, and more compelling internal data source was the Lead Agency’s Quality Rated information system, which recorded structural quality indicator measurements for each rating issued, including but not limited to, observed group size and child-adult ratios, staff education credentials, and annual training hours. All providers participating in child care subsidy program are required to participate in Quality Rated, and a total of 2,712 providers (representing 11,863 classrooms) were included in the data set analyzed by the Lead Agency. With guidance from its strategic plan, in late 2022 (and through the summer of 2023), the Lead Agency engaged in a series of surveys with providers to address key assumptions in the cost model not addressed by the market rate survey or Quality Rated data. The Lead Agency was able to leverage its American Rescue Plan Act (ARPA) stabilization subgrant program, STABLE 4ward, in this regard by requiring participating providers to submit quarterly reports, including responses to survey questions about their unit costs and primary cost drivers. Furthermore, because the reports were collected quarterly, the Lead Agency was able to vary the information it requested from providers in each period. 3,677 providers participated in STABLE 4ward, representing more than 34,000 active child care workers in Georgia. The Lead Agency was able to collect hourly wage and education credentials for these workers; identify staffing levels for non-teaching staff as a function of facility size; gather information on employee benefits, occupancy costs, and the cost to provide child meals; and obtain information specifically from FCCLH providers to establish their effective hourly wage in a manner commensurate with the wage treatment of hourly staff employed at CCLCs. This information addresses unit costs for most of the expenses incurred by providers. While licensed-exempt and informal caregivers are allowed to participate in the subsidy program under certain conditions, their availability as an option to families should not mean that they should be considered an influential part of the total cost study. These programs typically care for less than 1.5% of all children in care in the subsidy program. For licensed-exempt providers to participate, they must be either government owned and operated or a seasonal camp for school aged children. An informal caregiver can also participate but is not typically a provider that would market themselves for services or otherwise collect a fee for services. 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. b. In the Lead Agency’s analysis, were there any relevant variations by geographic location, category of provider, or age of child? In the subsequent analysis of the internal and external data collected, provider measurements were grouped according to child age (classroom), geography (Market Rate Zone), provider type (CCLC versus FCCLH), and quality rating￿as well as by facility size, type of care, and whether the provider served children on subsidies. The distribution of measurement values for each group was examined, and selected statistics were compared between relevant groups. If the difference in observed mean values between groups was found to be statistically significant, then this increased the Lead Agency’s confidence in assuming variations in the cost model. Provider type, geography, and child age were all relevant in the variations observed in the data by the Lead Agency. The Lead Agency observed several interesting variations in its analysis: higher wages among CCLC staff possessing higher education credentials but not among FCCLH providers possessing higher education credentials; higher wages among FCCLH providers rated at higher quality levels but not among CCLC staff (controlling for education credentials); higher wages among CCLC and FCCLH staff at providers who did not care for children on subsidies and for providers in more urban areas; increasing class size for older age groups at CCLCs (consistent with licensing) but smaller class sizes than state licensing guidelines would suggest (i.e., well below the maximum group sizes allowable); higher annual training hours for staff at providers with higher quality ratings and higher at all quality levels than Quality Rated guidelines suggest; higher mortgage/lease costs per square foot in more urban areas but not higher utilities, insurance, and maintenance/repair costs per square foot. The Lead Agency also observed many interesting lack of variations in its analysis: Calculated effective hourly wages for FCCLH providers were not universally lower than hourly wages paid to CCLC lead teachers. Non-teaching staff counts at CCLCs did not, in general, change as a function of facility size or quality rating. Class sizes at FCCLHs were, in general, close to the state licensing guidelines (i.e., their maximum allowable group size). Class size reductions by quality level were smaller than expected for both CCLCs and FCCLHs. Staff education credentials by quality rating varied less than expected. Very few providers were observed to provide additional benefits to their employees, regardless of their quality rating or participation in child care subsidies. Mortgage/lease, utilities, building insurance, and maintenance/repair costs per square foot, in general, did not change as a function of facility size. Usable classroom square footage per child decreased with increasing child age less than expected and did not change as function of quality rating. Facility shared space factors (allowances for hallways, bathrooms, offices, etc.) did not change as a function of facility size. Providers did not spend more on child meals than current CACFP rates, regardless of their quality rating, participation in child care subsidies, and geographic location. While licensed-exempt and informal caregivers are allowed to participate in the subsidy program under certain conditions, their availability as an option to families should not mean that they should be considered an influential part of the total cost study. These programs typically care for less than 1.5% of all children in care in the subsidy program. For licensed-exempt providers to participate, they must be either government owned and operated or a seasonal camp for school aged children. An informal caregiver can also participate but is not typically a provider that would market themselves for services or otherwise collect a fee for services. 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. 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 Lead Agency defines the base level of quality as 1 star under its Quality Rated program. Provider level data was filtered only for providers rated 1 star; this data was further filtered by provider type, geography (as defined by Market Rate Zone), and child age (for classroom-level data). The Lead Agency included 725 providers rated one star in the analysis described in Section 4.2.5.a. The distribution of measurement values for each filtered data set was examined, and statistics supporting variations between data sets were identified by the Lead Agency to inform cost model assumptions. Major assumptions in the cost model include the following: group size, hours of care, number of children per classroom adult, maximum number of lead teachers per class, maximum number of assistant teachers per class, number of target age classrooms per facility, number of total classrooms per facility, percent of lead teachers by education credential (at the facility), percentage of assistant teachers by education credential (at the facility), center director or family home provider education credential, number of annual professional development training hours for center directors (or family home providers), number of annual professional development training hours for lead teachers, number of annual professional development training hours for assistant teachers, hourly wage by credential level for center directors, hourly wage by credential level for lead teachers, hourly wage by credential level for assistant teachers, effective hourly wage for family home providers, non-teaching staff hourly wages, non-teaching staffing levels, mandatory benefits rate, additional benefits rate, cost per child meal or snack, number of meals and snacks offered per day, percentage of children served meals and snacks, transportation cost per child- trip, number of child-trips offered per day, percentage of children served by transportation, education supplies cost per child, office supplies and miscellaneous operations expense per child, lease/mortgage cost per square foot, utilities cost per square foot, insurance cost per square foot, and maintenance cost per square foot, square footage allocated per child, site-level cost per child for telephone/internet, site-level cost per child for professional services, instructional assessment cost per child, percentage of children assessed, annualized replacement cost per child for durable education equipment, and annualized replacement cost per child for other durable equipment. Among One-Star providers, virtually all the assumptions listed above were varied by provider type (CCLCs versus FCCLHs). Assumptions for hourly wages, facilities, and site- level costs were also varied by geography (MRZ). Assumptions for group size, number of children per classroom adult, percentage of children served by transportation, square footage allocated per child, percentage of children assessed, and annual replacement cost for durable education equipment were varied by child age. While licensed-exempt and informal caregivers are allowed to participate in the subsidy program under certain conditions, their availability as an option to families should not mean that they should be considered an influential part of the total cost study. These programs cannot participate in the state's quality rating and improvement system and typically care for less than 1.5% of all children in care in the subsidy program. For licensed- exempt providers to participate, they must be either government owned and operated or a seasonal camp for school aged children. An informal caregiver can also participate but is not typically a provider that would market themselves for services or otherwise collect a fee for services. 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. 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 Lead Agency defines higher levels of quality according to Quality Rated 2-star and 3-star ratings it issues to providers. A key question the Lead Agency sought to answer in its total cost study was the degree to which child care costs differed between higher Quality Rated and lower Quality Rated providers. As mentioned, Quality Rated does not include mandates that require higher costs to achieve a higher quality rating. By analyzing the data as described in Section 4.2.5.a. from 1,380 2- star providers and 491 3-star providers, the Lead Agency was able to observe variations compared to 1-star providers than could inform cost model assumptions regarding the true cost of quality. The Lead Agency observed variations by quality level in the following provider measurements: group size, percentage of lead teachers by education credential (at the facility), percentage of assistant teachers by education credential (at the facility), number of annual professional development training hours for center directors (or family home providers), number of annual professional development training hours for lead teachers, number of annual professional development training hours for assistant teachers, square footage allocated per child (CCLCs only), site level facility costs per child, annualized replacement cost per child for durable education equipment, and annualized replacement cost per child for other durable equipment (CCLCs only). Coupled with variations reported in Section 4.2.5.b., the Lead Agency was able to develop a robust set of assumptions to inform its cost model for its total cost study. While licensed-exempt and informal caregivers are allowed to participate in the subsidy program under certain conditions, they cannot participate in the state's QRIS, Quality Rated, and their availability as an option to families should not mean that they should be considered an influential part of the total cost study. These programs typically care for less than 1.5% of all children in care in the subsidy program. For licensed-exempt providers to participate, they must be either government owned and operated or a seasonal camp for school aged children. An informal caregiver can also participate but is not typically a provider that would market themselves for services or otherwise collect a fee for services. 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 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. 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: 5/29/2024 ii. Provide the date the report containing results was made widely available (no later than 30 days after the completion of the report): 6/3/2024 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: Market Rate Study for child care pricing: https://www.decal.ga.gov/documents/attachments/GeorgiaChildCareMarketRate sSummarywithAppendices.pdf Evaluation of the cost of child care: https://www.decal.ga.gov/BftS/CostofCare.aspx In addition to posting these resources on the Lead Agency's website, the Lead Agency held 3 webinars during July and August of 2024 regarding the changes to rates and other policies. During each webinar, these resources were mentioned along with directions on how to locate these resources on the Lead Agency's website. 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 Lead Agency is solely responsible for all CCDF activities in the State of Georgia and for its current Market Rate Study and Total Cost Study. The lead agency did not consider the views and comments of other state agencies since they have no direct role in CCDF administration. The Lead Agency considered the views of early childhood and education advocates in that that the data collected represented the largest number of providers possible. In terms of those representing child care providers, some feedback was received asking the Lead Agency should reconsider the counties assigned to each market rate zone. This feedback did not inform the development and execution of the Market Rate Study because the Study was already established to conduct that analysis. Ultimately, no immediate action was made to re-assign counties to new market rate zones, but the analysis pointed to the possible need to revisit the original criteria for the zone and conduct further evaluation. The lead agency has initiated that work in advance of the next Market Rate Study. For both early childhood and education advocates and child care provider advocates, in addition to showing rates for each market rate zone for licensed centers and licensed family homes, the final report responded to the desire to see how market prices varied by factors such as Child Care and Parent Services (CAPS) participation and Quality Rated (QR) participation and rating, statewide values, and expanded values for each market rate zone from the 5th percentile to the 95th percentile. In addition, each rate view, shows rates by individual age level and by CAPS age group. Full-time CAPS rates are based on the following age categories: infant (birth - 12 months), toddler (1 - 2 years), preschool (3 - 5 years), and school-age (5 years & older). The Lead Agency considered the views of those representing providers in the Total Cost Study which were not specific but generally supportive. The idea of a cost- based approach to setting rates is not well understood by all providers but their advocates are interested in knowing more. The Total Cost Study was able to collect data from a large majority of licensed providers and the provider community is receptive to stakeholder engagement on the topic and how it can be used to set rates in the future. Overall, the final reports were not significantly influenced in any specific way by any partner, but the reports and their content are aligned with stakeholders and will allow the Lead Agency to continue to actively engage with partners moving forward.