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)? May 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: In January 2024, the Idaho Child Care Program (ICCP) Advisory Panel members were notified that the Local Market Rate study was to begin that month. Panel members were encouraged to ask questions and review the state and federal requirements related to the MRS. Additionally, panel members were asked to provide input on any considerations to be made in the development and conduct of the study, as well as any guidance in rate setting. In April 2024, the ICCP Advisory Panel members were provided presentations on the process, status, and initial and results of the Market Rate Survey. Members were given the opportunity to review their previous recommendations, ask questions, and provide comments and feedback. iv. Local child care program administrators: In late Fall 2023, IDHW child care staff toured the state meeting on location with child care providers and hosting evening meetings for all child care providers and stakeholders in the following cities: Boise, Meridian, Caldwell, Coeur d’Alene, Idaho Falls, Pocatello, Twin Falls, Moscow, and Lewiston. At each meeting the Local Market Rate Survey was reviewed, data collection was discussed, and all attendees were encouraged to participate with the survey, ensure their information was accurate in RISE, and review the results of the survey. At each meeting time was dedicated to soliciting feedback on the market rates and ICCP payment practices. Additionally, child care administrators from the following locations are members of the ICCP Advisory Panel and received additional information and opportunities for feedback as described above: Boise, Rexburg, Nampa, Twin Falls, Pocatello, Coeur d'Alene, and Moscow. v. Local child care resource and referral agencies: Idaho's child care resource and referral offices are contractually required to gather, track, and report data specific to the Local Market Rate study. The statewide staff are actively involved in developing outreach and communication plans to collect current data from each provider. They contribute to the quality assurance procedures each year for collecting accurate and timely data for providers and conduct outreach when fixes are needed in data. vi. Organizations representing child care caregivers, teachers, and directors from all settings and serving all ages: In January 2024, the Idaho Child Care Program (ICCP) Advisory Panel members were notified that the Local Market Rate study was to begin that month. Panel members were encouraged to ask questions and review the state and federal requirements related to the MRS. Additionally, panel members were asked to provide input on any considerations to be made in the development and conduct of the study, as well as any guidance in rate setting. In April 2024, the ICCP Advisory Panel members were provided presentations on the process, status, and initial and results of the Market Rate Survey. Members were given the opportunity to review their previous recommendations, ask questions, and provide comments and feedback. Members of this group include leadership from the Idaho Association for the Education of Young Children, Idaho Voices for Children, Community Council of Idaho, the State Department of Education, the Idaho Infant Toddler Program, the Idaho Out-of-School Network, and the Idaho Head Start Association. vii. Other. Describe: NA 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? 6/28/2024 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 known providers are asked to maintain rate data in the RISE database, facilities receive automated reminders to update their data quarterly, upon their login. Data used for the survey was downloaded May 2024. iii. Describe how it represented the child care market, including what types of providers were included in the survey: The providers included in the analysis were required to be active and located in the state of Idaho, and the type of care provided was limited to child care centers, group care, and family care. Both providers participating with ICCP and non-ICCP providers in all jurisdictions (licensed by cities) were included in the data system. iv. What databases are used in the survey? Are they from multiple sources, including licensing, resource and referral, and the subsidy program? The Market Rate data were provided by IdahoSTARS, the agency responsible for the state's Child Care Resource and Referral System. Statewide provider data for all state licensed and child care providers participating in the Idaho Child Care Program (ICCP) are maintained by IdahoSTARS using data from the RISE database. v. How does the survey use good data collection procedures, regardless of the method for collection (mail, telephone, or web-based survey)? The provider data required for the market rate analysis were retrieved from the RISE database and included basic provider information and full-time rates. Data provided in the study is collected every six months from all known providers to ensure accuracy and current rates for each providers in RISE. vi. What is the percent of licensed or regulated child care centers responding to the survey? 100.00 vii. What is the percent of licensed or regulated family child care homes responding to the survey? 100.00 viii. Describe if the survey conducted in any languages other than English: The Market Rate data were provided by IdahoSTARS, the agency responsible for the state's Child Care Resource and Referral System. Statewide provider data for all state licensed and child care providers participating in the Idaho Child Care Program (ICCP) are maintained by IdahoSTARS using data from the RISE database. The RISE database is available in Spanish. Additionally, non-English speaking providers are contacted by an interpreter to verify data. ix. Describe if data were analyzed in a manner to determine price of care per child: The RISE database allows for child care pricing to be entered in several modes, depending upon how the child care provider sets its prices. The modes are hourly, daily, weekly, monthly, and annually. Providers are encouraged to enter data for all of the modes they use. For example, one provider may have both a daily rate and a monthly rate that their customers can pay. Because there are multiple modes, and the providers are encouraged to use the modes that best suit them, child care rates are not standard among all providers. To provide an estimate of the market rate across the entire industry, one must either perform separate rate analyses by pricing mode or convert the pricing data to one consistent mode. In the interest of assessing the market rates for the entire population of providers at one time, the latter option was chosen. Based on information from the database, the two most common modes for rates are daily and monthly. To provide a single analysis for the entire industry, and to be consistent with Department of Health and Welfare’s (DHW) current policy to pay providers on a monthly basis, the monthly rate was chosen to be the basis for the market rate analysis. For converting the rates, the preference was to use monthly rates, followed in order by weekly rates, daily rates, and hourly rates. The multiplicative factors used to convert non -monthly rates to monthly rates were: • 4.28 weeks per month; • 21.4 days per month (5 days per week × 4.28 weeks per month); • 171.2 hours per month (40 hours per week × 4.28 weeks per month). x. Describe if data were analyzed from a sample of providers and if so, how the sample was weighted: No, all known licensed and subsidy participating child care providers are required to enter their information in to the provider data management system, RISE and their data was used in the rate calculations. 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. To evaluate the market structure, three geographic levels were examined (zip code, county, and region) as the basic unit for the analysis, and county was selected as the unit that best allowed differentiation between units without a large number of units with missing information. Some areas have higher overall rate structures than other areas due to differences in population density and differences in economic conditions. Following methodology used by several other states in their market rate analyses, principal components and cluster analyses were performed to divide counties into groups so that the counties within a group had similar rate structures while counties in different groups had differing rate structures. These analyses resulted in identifying three groups of counties. (2024 Idaho Child Care Market Rate Analysis). Using a single state-wide rate would not allow the Idaho Department of Health and Welfare to account for differences in rates due to geographic location, while using separate rates for each provider would be overly complex and would not account for similarities in rates within geographic regions. The process of determining a set of geographic regions for the market rate analysis required four steps: 1. Select the initial geographic units to use in the market rate structure analysis 2. Reduce the provider-level data to unit-level data 3. Determine the best measurements to use to compare and combine the units 4. Determine the best number of groups and to assign the geographic regions to the appropriate group. 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 Market Rate Analysis was restricted to three types of care: 1. Child care centers 2. Group care 3. Family (including relative) care. This is inclusive of all licensed child care providers and nearly all subsidy participating providers. Rates for in-home child care providers were excluded as the sample size was too small for reasonable rate setting. The decision was made to combine family and group care together for the market rate analysis with child care centers in a separate Market Rate Analysis. iii. Describe how the market rate survey or pre-approved alternative methodology reflected age of child (e.g., infant, toddler, preschool, school-age): With respect to age, children are divided into four categories in the IdahoSTARS database, these groups align with state licensing child to adult ratio requirements: 1. 0 - 23 months 2. 24 through 35 months 3. 36 through 59 months 4. 60 through 156 months. Within each of the age categories, rates are collected by IdahoSTARS for two "usage" categories: full-time and part-time. The Market Rate Structure Analysis incorporated these four categories and the market rate analysis provided percentiles for each of these four categories. iv. Describe any other key variations examined by the market rate survey or ACF pre- approved alternative methodology, such as quality level: NA 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)? DHW utilized the data available in the RISE Database in order to obtain the provider wage data. By using the data from RISE, DHW was able to complete an analysis that represented all types of providers in all geographic regions of Idaho. The dataset was parsed by the type of care provided ( i.e. Center, Group, or Family) and by higher quality care by Idaho’s quality rating system. b. In the Lead Agency’s analysis, were there any relevant variations by geographic location, category of provider, or age of child? DHW utilized the data available in the RISE Database in order to obtain the provider wage data. By using the data from RISE, DHW was able to complete an analysis that represented all types of providers in all geographic regions of Idaho. The dataset was parsed by the type of care provided ( i.e. Center, Group, or Family) and by higher quality care by Idaho’s quality rating system. 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.)? DHW utilized the data available in the RISE Database in order to obtain the provider wage data. By using the data from RISE, DHW was able to complete an analysis that represented all types of providers in all geographic regions of Idaho. The dataset was parsed by the type of care provided ( i.e. Center, Group, or Family) and by higher quality care by Idaho’s quality rating system. 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). Idaho defines ￿higher quality￿ as any program participating with our Steps to Quality program in addition to any Head Start or nationally accredited facility. Steps to Quality participating providers meet a base level of quality focusing full implementation of enhanced health and safety practices in addition to enhanced professional development requirements for staff. Providers that deliver higher levels of quality verified at steps 3 through 6 implement additional quality practices related to lower adult to child ratios, ongoing professional development, staff qualifications, learning environment, curriculum and assessment use, and relationships amongst teachers and children. 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 estimated average cost to run a Center based facility was $343,598. The state of Idaho had an average reimbursement rate during that time of $72,480, which accounts for about 21% of their total costs. The estimated average costs to run a Group of Family based facility was $54,308. The state of Idaho had an average reimbursement rate of $26,640, which accounts for about 49% of their total costs. Idaho will continue to review data available in RISE to improve our understanding of the cost of providing child care in Idaho. Data collected will be used to inform all future rate updates as funding is available to insure that rates paid are sufficient to address the cost of providing care. 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: 8/6/2024 ii. Provide the date the report containing results was made widely available (no later than 30 days after the completion of the report): 8/20/2024 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://healthandwelfare.idaho.gov/providers/child-care-providers/child-care- resources 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: In late Fall 2023, IDHW child care staff toured the state meeting on location with child care providers and hosting evening meetings for all child care providers and stakeholders in the following cities: Boise, Meridian, Caldwell, Coeur d’Alene, Idaho Falls, Pocatello, Twin Falls, Moscow, and Lewiston. At each meeting the Local Market Rate Survey was reviewed, data collection was discussed, and all attendees were encouraged to participate with the survey, ensure their information was accurate in RISE, and review the results of the survey. At each meeting time was dedicated to soliciting feedback on the market rates and ICCP payment practices. Attendees at the local meetings included local child care program administrators, owners, and operators, child care staff, regional staff from the child care resource and referral agency, and organizations representing child care staff. In January 2024, the Idaho Child Care Program (ICCP) Advisory Panel members were notified that the Local Market Rate study was to begin that month. Panel members were encouraged to ask questions and review the state and federal requirements related to the MRS. Additionally, panel members were asked to provide input on any considerations to be made in the development and conduct of the study, as well as any guidance in rate setting. In April 2024, the ICCP Advisory Panel members were provided presentations on the process, status, and initial and results of the Market Rate Survey. Members were given the opportunity to review their previous recommendations, ask questions, and provide comments and feedback. Members discouraged the implementation of tiered reimbursements based on QRIS participation, and echoed the regional meeting attendees’ recommendation to set rates has high as the budget would allow to continue to improve subsidy participating children’s access to the full diversity of child care options. IDHW acknowledges and has met both of these recommendations.