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)? Survey data collection occurred from March 22 to April 5, 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: A representative of the Lead Agency met with staff from Center for Public Partnership and Research, the backbone support for the Kansas Children’s Cabinet, and staff with The Kansas Children’s Cabinet. The Kansas Children’s Cabinet serves as the state advisory council in Kansas. Members of the Lead Agency then presented to the Early Childhood Recommendations Panel, which is part of the Kansas Early Childhood Governance Structure and informs the Early childhood Children’s Cabinet work, on October 20th, 2023. This presentation informed members of the Childcare Market Rate Analysis project and requested volunteers to serve on the advisory committee. Kansas Department of Health and Environment Field Services Supervisor joined the advisory committee. The advisory committee provided feedback on the survey instrument. They identified questions that were confusing, incomplete, or irrelevant. The committee’s feedback was used to make sure that the questions were not confusing and were worded correctly. The first draft of the survey had questions that were interpreted differently by different members of the advisory committee. With ongoing review, the committee was able to reduce or eliminate the variability in the interpretation of key questions. The survey was developed electronically using Qualtrics, incorporating advanced logic to guide respondents through the survey based on their answers. Members of the advisory team tested the survey and revisions were made based on the feedback received. iv. Local child care program administrators: Four child care program administrators joined the advisory committee. During the project, one transitioned from their role as a child care provider to a position at Kansas Action for Children. Kansas Action for Children is a nonprofit, nonpartisan advocacy that focuses on early education, health care access, and family supports for children in Kansas. The advisory committee provided feedback on the survey instrument. They identified questions that were confusing, incomplete, or irrelevant. The committee’s feedback was used to make sure that the questions were not confusing and were worded correctly. The first draft of the survey had questions that were interpreted differently by different members of the advisory committee. With ongoing review, the committee was able to reduce or eliminate the variability in the interpretation of key questions. The survey was developed electronically using Qualtrics, incorporating advanced logic to guide respondents through the survey based on their answers. Members of the advisory team tested the survey and revisions were made based on the feedback received. v. Local child care resource and referral agencies: The Director of Innovation, Programs, and Strategy at Child Care Aware of Kansas, served on the advisory committee. Child Care Aware of Kansas is a child care resource and referral agency that collects child care rate data and provided that data for this project. The advisory committee provided feedback on the survey instrument. They identified questions that were confusing, incomplete, or irrelevant. The committee’s feedback was used to make sure that the questions were not confusing and were worded correctly. The first draft of the survey had questions that were interpreted differently by different members of the advisory committee. With ongoing review, the committee was able to reduce or eliminate the variability in the interpretation of key questions. The survey was developed electronically using Qualtrics, incorporating advanced logic to guide respondents through the survey based on their answers. Members of the advisory team tested the survey and revisions were made based on the feedback received. vi. Organizations representing child care caregivers, teachers, and directors from all settings and serving all ages: Staff from the Kansas Association for Infant and Early Childhood Mental Health and the president of the Child Care Provider Coalition of Kansas, joined after the committee requested more representation from in-home childcare entities. The Kansas Association for Infant and Early Childhood Mental Health is an association of professionals in Kansas who spread awareness of the emotional development of infants. The Child Care Provider Coalition of Kansas is a nonprofit organization founded for and by professional family child care providers in Kansas. vi. The advisory committee provided feedback on the survey instrument. They identified questions that were confusing, incomplete, or irrelevant. The committee’s feedback was used to make sure that the questions were not confusing and were worded correctly. The first draft of the survey had questions that were interpreted differently by different members of the advisory committee. With ongoing review, the committee was able to reduce or eliminate the variability in the interpretation of key questions. The survey was developed electronically using Qualtrics, incorporating advanced logic to guide respondents through the survey based on their answers. Members of the advisory team tested the survey and revisions were made based on the feedback received. vii. Other. Describe: The Community Development Specialist for the Department of Commerce, served on the advisory committee, offering a unique perspective with their expertise in project management and community resource liaison. The advisory committee provided feedback on the survey instrument. They identified questions that were confusing, incomplete, or irrelevant. The committee’s feedback was used to make sure that the questions were not confusing and were worded correctly. The first draft of the survey had questions that were interpreted differently by different members of the advisory committee. With ongoing review, the committee was able to reduce or eliminate the variability in the interpretation of key questions. The survey was developed electronically using Qualtrics, incorporating advanced logic to guide respondents through the survey based on their answers. Members of the advisory team tested the survey and revisions were made based on the feedback received. 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? 4/5/2024 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)? Most of the questions reflect point-in-time information. For example, when providers were asked about the maximum number of children allowed in their facility (per their license), they could report the currently available maximum number of children based on their enrollment as of that day. Other questions asked about certain metrics over a specific length of time. For example, providers were asked how much their program spent on employee training in the past twelve months. The market rate data was obtained from the current information entered by providers in the system maintained by Child Care Aware of Kansas, the state child care contractor for child care resource and referral services, which is regularly updated. iii. Describe how it represented the child care market, including what types of providers were included in the survey: The Lead Agency took a full census approach to ensure the full universe of providers in the Kansas child care market had an equal opportunity to participate in the market rate survey. This included licensed child care centers, licensed day care homes, group day care homes, encompassing the diversity of providers within the state. The rate data provided by the Child Care Aware of Kansas database included a total of 773 centers and 2,932 licensed homes. iv. What databases are used in the survey? Are they from multiple sources, including licensing, resource and referral, and the subsidy program? In addition to the market rate survey, the Lead Agency obtained and analyzed child care provider data from the Child Care Aware of Kansas database. v. How does the survey use good data collection procedures, regardless of the method for collection (mail, telephone, or web-based survey)? The Lead Agency developed an electronic survey using Qualtrics. The survey contained advanced logic to send respondents to a future point in the survey based on how they answered certain questions. Using Qualtrics ensures data security and facilitates comprehensive data analysis, while the advanced logic personalizes the survey experience, increasing respondent engagement and accuracy. vi. What is the percent of licensed or regulated child care centers responding to the survey? 30.21 vii. What is the percent of licensed or regulated family child care homes responding to the survey? 69.80 viii. Describe if the survey conducted in any languages other than English: The survey was conducted in English. ix. Describe if data were analyzed in a manner to determine price of care per child: The survey included several questions about the maximum hourly, daily, weekly, and monthly rates per child charged by providers. The questions asked for these rates by age (e.g., infants, toddlers, preschool, and school age) and available hours (e.g., full-time vs part-time). x. Describe if data were analyzed from a sample of providers and if so, how the sample was weighted: The Lead Agency took a full census approach to ensure the full universe of providers in the Kansas child care market had an equal opportunity to participate in the market rate survey. Given this full census approach, no sampling or weighting was necessary for data analysis. 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 survey included a question about the county in which care was provided (respondents were asked to complete a survey for each license allowing for providers that operate in multiple counties). The responses included at least one provider in 95 of the 105 counties in Kansas. In addition to the market rate survey, the Lead Agency obtained and analyzed child care provider data from the Child Care Aware of Kansas database, which contained information on providers from all 105 counties. Some analyses, such as the cost area analysis, excluded counties with fewer than three providers to mitigate the impact of fluctuations due to small numbers. 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 survey included a question about license type. The available options were Licensed Child Care Home, Group Child Care Home, Child Care Facility, Preschool, Head Start, School Age Program, and School Age Drop-In Program. iii. Describe how the market rate survey or pre-approved alternative methodology reflected age of child (e.g., infant, toddler, preschool, school-age): The survey asked providers about the rates charged for each age group (e.g., infant, toddler, preschool, school-age). The survey also asked providers to indicate what ages qualify for the different age group rates. For example, the age ranges for the infant group were 0-12 months, 0-18 months, or ￿Other.￿ iv. Describe any other key variations examined by the market rate survey or ACF pre- approved alternative methodology, such as quality level: The survey asked providers whether they provided alternate hour care, what type (e.g., evening, overnight, weekend), and how much they charged for the alternative hours. Providers were asked to provide the hourly, daily, weekly, and monthly rates for alternative hour care. Similar to the standard rates, the providers were asked to provide these rates by age group (e.g., infants, toddlers, preschool, and school age). 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)? Prenatal to Five Fiscal Strategies developed a customized Excel-based cost model to conduct this narrow cost analysis. This model uses the same methodology as the Provider Cost of Quality Calculator , the web-based cost modeling tool provided by the federal Office of Child Care that has been approved for use in subsidy rate setting. By developing an Excel-based model, Prenatal to Five Fiscal Strategies created a customized tool for Kansas that can account for the unique context of the state. The model developed by Prenatal to Five Fiscal Strategies is fully customized to reflect Kansas licensing regulations and quality standards. b. In the Lead Agency’s analysis, were there any relevant variations by geographic location, category of provider, or age of child? The Kansas Child Care Cost Model used for the narrow cost analysis identifies variations in the cost of care based on provider type and age of child. As detailed in the narrow cost analysis report, the estimated cost of care is higher for younger children, with the cost for infants approximately 41% higher than for four-year-olds in a child center. The cost of care in child care centers is also estimated to be higher than in family child care homes. When using current salaries, the average cost per child in centers is almost double the cost in family child care homes. When accounting for comparable income for family child care home provider/owners, the gap is less, but the cost of care in centers is still 24% higher than in family child care homes. The cost model did not identify variations in the cost of care by geographic location due to the model using statewide salaries, which are the largest cost driver in the model. Using statewide salaries ensured the model did not perpetuate the geographic inequities that exist in current workforce compensation. The narrow cost analysis did include analysis of geographic variations in the gaps between the estimated cost of care and the market prices reported in the three cost areas identified by the Market Rate Survey. As detailed in the narrow cost analysis report, when estimating the cost of meeting licensing standards, providers in cost area 3 see gaps between the estimated cost of care and the 75th percentile of the market rate in all settings and for all age groups. Providers in cost area 2 see gaps only for infants and toddlers in this scenario, while providers in cost area 1 can cover the estimated cost of care with the 75th percentile of the market rate in that cost area. 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 Kansas child care cost model reflects the standards that licensed child care providers are required to meet. The primary cost drivers related to these standards are child-to-staff ratios, group size limits, and caregiver qualifications. In a Child Care Center, the classroom staffing pattern includes one lead teacher and one assistant teacher per classroom and additional floater time to maintain ratios at open/close and during breaks. For non- classroom staff, the model includes a program director, an assistant director and an administrative assistant, with full-time employee calculated based on the licensed capacity of the program. For Family Child Care Homes, staffing includes the provider and 8 hours per week of assistant hours for coverage. The base level of care also includes the cost for educators to participate in annual training and professional development, at 16 hours per year. All non-personnel expenses necessary to operate a program are also captured in the model, including occupancy costs based on the square footage requirements detailed in licensing. Discretionary benefits included paid time off in the amounts of eight days of paid sick leave and eight days of paid vacation and the contribution of $5238 per employee towards health insurance for both Child Care Centers and Family Child Care Homes. Training and professional development included 16 hours per provider/employee annually for both settings. Licensing regulations were used to determine ratios, group sizes and the health and safety standards in the model. Mandatory employer taxes and coverage for breaks were used. 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). Higher quality was defined using the four foundational links that are associated with the Quality Improvement System, Links to Quality. In a Child Care Center, classroom staffing pattern of one lead teacher and one assistant teacher per classroom based on licensing rules and one additional floater to help with coverage. Non- Classroom staffing pattern of one full-time program director, one .5 FTE assistant director if less than 50 children, 1 FTE assistant director if up to 100 children, 1.5 FTE assistant directors if up to 150 children, and 2 FTE assistant directors if over 150 children. One administrative assistant if less than 50 children, 1 FTE administrative assistants if up to 100 children, 1.5 FTE administrative assistants if up to 150 children, and 2 FTE administrative assistants if over 150 children. For Family Child Care Homes, classroom staffing only included one full time provider, 8 hours per week of assistant hours for coverage and 20 hours per week additional for a part-time assistant. Discretionary benefits included paid time off in the amounts of eight days of paid sick leave and eight days of paid vacation and the contribution of $5238 per employee towards health insurance for both Child Care Centers and Family Child Care Homes. Training and professional development included 16 hours per provider/employee annually for both settings. Licensing regulations were used to determine ratios, group sizes and the health and safety standards in the model. Mandatory employer taxes and coverage for breaks were used. For Child Care Centers, one hour per day per lead teacher was allowed for planning time and for Family Child Care Homes an extra 5 hours per week was allowed for assistant teacher salary to allow for planning time. For both, conferences were allowed 2 times per year, per child with 2 hours of floater/substitute coverage per conference. 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? If the Narrow Cost Analysis found a gap between the Kansas child care cost model, reflecting the standards that licensed child care providers are required to meet, and the market rate survey rates at the 75th percentile, the Lead Agency used the higher rate. The Narrow Cost Analysis compared the estimated cost of care with the 75th percentile of the current market prices as defined in the Market Rate Survey. The statewide cost of care was compared to the prices in each of the three cost areas identified in the market rate survey as well as to a generated statewide average market price. This analysis found that for child care center providers in cost area 3, the gap between the estimated cost of care and the market rate is $136 per week for an infant, $105 per week for a toddler, $66 per week for two- and three-year-olds, $36 per week for a four-year-old and $19 per week for a school age child. In cost area 2, the gap is $35 per week for an infant and $33 per week for a toddler. Market prices exceed the estimated cost of by $6 per week for two- and three- year-olds, $23 per week for a four-year-old and $7 per week for a school age child. In cost area 1, the market rate exceeds the estimated statewide cost of care by between $42 and$92 per week depending on the age of the child. For family child care providers, 75th percentile of the market rate exceeds the estimated cost of care for a program meeting licensing standards exceeds in all cost areas, although by a larger amount in cost area 1 than in cost area 2 and 3. In cost area 3, the market rate exceeds the estimated cost of care by $17 per week for an infant, $8 per week for a toddler, two- year-old and three- year-old, $3 per week for a four-year-old and $10 per week for a school age child. In cost area 2, the market rate exceeds the estimated cost of care by $60 per week for an infant, $41 per week for a toddler, two- year-old and three-year-old, and $30 per week for a school age child. In cost area 1, the market rate exceeds the estimated cost of care by $99 per week for an infant, $89 per week for a toddler, two- and three-year-old, $84 per week for a four-year-old, and $50 per week for a school age child. When comparing the cost of care for a program meeting the higher quality standards based on Links to Quality and inclusive of increased compensation, the gaps increase. In child care centers, the estimated cost of care exceeds the market rate for all age groups in cost area 2 and cost area 3. In cost area 2 the gaps range from $33 per week for a school age child to $158 per week for an infant. In cost area 3 the gaps range from $60 per week for a school age child to $259 week for an infant. In cost area 1, there is a gap of $71 per week for an infant and $45 per week for a toddler. The cost of care exceeds the market price by $10 per week for a two and three-year-old, $29 per week for a four-year-old and $1 per week for a school age child. In family child care homes for a program meeting Links to Quality standards there are now gaps between the estimated cost of care and the market rate for all age groups in all three cost areas. The gaps range from $140 to $63 per week in cost area 3, $43 to $102 per week in cost area 2, and $23 to $54 per week in cost area 1. Full details of the gap analysis are provided in the narrow cost analysis report. 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: 6/28/2024 ii. Provide the date the report containing results was made widely available (no later than 30 days after the completion of the report): 6/28/2024 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.dcf.ks.gov/services/ees/Pages/Child_Care/Child-care-and-early- education.aspx The Lead Agency sent an email to 132 partners in early childhood system work directly on 6/28/24. The Lead Agency shared the opportunity for feedback with the local resource and referral agencies, provided to local licensing specialists, child care professional organizations, other state agencies, through the All in For Kansas Kids newsletter. The Kansas Department of Health and Environment sent information on the opportunity to provide feedback to the listserv that it maintains to child care providers and partners. Child Care Aware of Kansas sent the information to community partners. The Lead Agency shared through the lead agency social media platforms. The Lead Agency shared on social media on 7/2/24 and a reminder on 7/11/24. 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 addition to the consultation in the development and conducting of the MRS, we did receive feedback on the detailed report. The feedback was from providers that were concerned that the rates were being set based on what providers were able to charge, instead of what is needed to operate. Because of this confusion about how the narrow cost analysis may be used in the rate setting, additional clarification was added to the report about how the information would potentially be used by the Lead Agency. The cost model allows users to estimate the cost of care for programs of different sizes, serving different age children and in a child care center or family child care home that meets health, safety, and licensing requirements. Additionally, the model allows user to understand the impact on the cost of care of variations in salaries and benefits (health insurance, paid sick days and paid leave). We did not make any changes to take into consideration other variations related to additional cost of living. There was a suggestion that cost of living for areas should be taken into consideration. No changes were made based on this suggestion, as the cost of living can impact the items that were taken into consideration in the cost model, such as salaries.