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 2023 Market Rate Survey was distributed to all active child care providers (Type I centers, Type II centers, Type III centers, School-based Child Care, Family Child Care Providers, and In-home Child Care) by email on October 13, 2023. The survey closed on November 20, 2023. 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: Information about the Market Rate Survey was shared in the Lead Agency’s monthly Early Childhood newsletter, which is disseminated to a wide range of stakeholders and was also shared in meetings with some Advisory Council members. iv. Local child care program administrators: The Lead Agency and Lead Agency contractor incorporated input from provider-focused surveys, small-group discussions, and one-on-one conversations with diverse providers operating different types of businesses in various environments and contexts statewide. v. Local child care resource and referral agencies: Information about the Market Rate Survey was shared in the Lead Agency’s monthly Early Childhood newsletter, which is disseminated to a wide range of stakeholders and to which child care resource and referral agencies subscribe. vi. Organizations representing child care caregivers, teachers, and directors from all settings and serving all ages: Direct conversations with child care providers, including teachers and directors, from across the state and who operate different types of businesses. vii. Other. Describe: (not applicable) 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? 11/20/2023 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)? The Market Rate Survey was distributed on October 13, 2023, and closed on November 20, 2023. iii. Describe how it represented the child care market, including what types of providers were included in the survey: The 2023 Market Rate Survey was distributed to all active child care providers (Type I centers, Type II centers, Type III centers, School-based Child Care, Family Child Care Providers, and In-home Child Care). In total, responses were received from at least 50% of registered providers in each provider type, with the exception of Early Head Start-Child Care Partnership sites, which do not generally charge rates comparable with the child care market. In total, the survey was completed by 62.7% of active child care providers in the state. A breakdown of the respondents and response rate by provider type is as follows: 121 of 204 Type I center (non-CCDF) providers responded to the survey (a 59.3% response rate). 85 of 166 Type II center (non-CCDF) providers responded to the survey (a 51.2% response rate). 685 of 1,016 Type III center (CCDF) providers responded to the survey (a 67.4% response rate). 23 of 149 Type III Early Head Start-Child Care Partnership center providers responded to the survey (a 15.4% response rate). 210 of 258 Family Child Care providers responded to the survey (a 81.4% response rate). 2 of 3 In-Home Child Care providers responded to the survey (a 66.7% response rate). iv. What databases are used in the survey? Are they from multiple sources, including licensing, resource and referral, and the subsidy program? Louisiana uses a single database to collect data for its child care, which includes licensing, background checks, and quality ratings for all providers, as well as resource utilization. Invitations to participate in the Market Rate Survey were distributed to all active providers, including Type I centers, Type II centers, Type III centers, School-based Child Care, Family Child Care Providers, and In-home Child Care providers, who were registered in the state system as active providers as of October 13, 2023. v. How does the survey use good data collection procedures, regardless of the method for collection (mail, telephone, or web-based survey)? The survey team implemented a comprehensive data collection process throughout the survey period, which involved distributing the survey via email, sending additional reminder emails, mailing postcards with direct access to the online survey, and conducting a call-out campaign to emphasize the survey's importance to providers. Additionally, brief blurbs containing survey information were included in recurring newsletters and webinars. vi. What is the percent of licensed or regulated child care centers responding to the survey? 59.50 vii. What is the percent of licensed or regulated family child care homes responding to the survey? 81.40 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: Yes. Respondents provided charged rates per child, by child age. x. Describe if data were analyzed from a sample of providers and if so, how the sample was weighted: No, surveys were distributed to all registered providers and used a convenience sampling method. No weighting was used. 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. Respondents provided their addresses, including city and zip code. These data were matched back to identify variation in regional rates based on regional organization used by the Lead Agency across programs. All regions across the state are represented in the survey. Prices were also examined for differences in providers operating in rural vs. urban settings, using the federal Rural Education Achievement Program designations, which are used by the Lead Agency to determine a parish’s classification as rural or suburban/urban. 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). Respondents were required to provide their provider type. Survey responses and pricing were reported out by provider type, highlighting variation in pricing by provider type. iii. Describe how the market rate survey or pre-approved alternative methodology reflected age of child (e.g., infant, toddler, preschool, school-age): Respondents were required to provide their charged cost by age of the child. Survey responses and pricing were reported out by child age, highlighting variation in pricing by child’s age. iv. Describe any other key variations examined by the market rate survey or ACF pre- approved alternative methodology, such as quality level: The analysis following the market rate survey examined additional factors such as quality level. 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)? This analysis used a blended approach: a cost model, which was informed by a limited cost survey, which was administered as part of the Market Rate Survey. b. In the Lead Agency’s analysis, were there any relevant variations by geographic location, category of provider, or age of child? Yes, variations were identified by geographic location, category of provider, and age of the child. 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.)? Where possible, actual data from providers were used as inputs for the Provider Cost of Quality Calculator (PCQC). In all other instances, the state-specific PCQC default values were used. For home-based providers, average hourly salary was utilized, assuming a 10- hour day, five days a week. This was the same assumption used for weekly tuition values. PCQC default values for Louisiana were used to populate the mandatory benefits. 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). Louisiana implements a statewide early childhood quality rating and improvement system, categorizing providers into performance ratings ranging from ￿Approaching Proficient￿ to ￿Excellent.￿ These ratings are based on multiple factors that contribute to effective teacher:child interactions. Upon completion of the survey, responses were aligned with site-level performance ratings to pinpoint variations. 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 difference between the 75th percentile of charged rate and cost of care are as follows for each age group in Type III center-based care: Infants: 75th percentile charged rate = $46.00; Cost of Care = $48.75; Difference = $2.75 Toddlers: 75th percentile charged rate = $42.00; Cost of Care = $31.33; Difference = ($10.67) 3 Year Old Preschool: 75th percentile charged rate = $37.00; Cost of Care = $29.46; Difference = ($7.54) 4 Year Old Preschool: 75th percentile charged rate = $36.00; Cost of Care = $30.55; Difference = ($5.45) School-aged: 75th percentile charged rate = $35.00; Cost of Care = $24.23; Difference = ($10.77) The Lead Agency has not made any rate increases since the completion of the 2023 Market Rate Survey; the Lead Agency last made rate increases in February 2022, based off of information shared by providers in their ARPA Stabilization Grant applications. 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: 6/26/2024 ii. Provide the date the report containing results was made widely available (no later than 30 days after the completion of the report): 7/26/2024 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://louisianabelieves.com/resources/library/early-childhood-policy-guidance 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 2023 Market Rate Survey tool was developed from a series of conversations that took place in recurring check-in meetings with partners such as providers, state advocates, and national consulting experts, before and after the truer cost of care analysis the Lead Agency conducted with data received from ARPA Stabilization Grant provider applications. These discussions and feedback influenced which questions were included in the Market Rate Survey. The Lead Agency will consider comments in the detailed report when evaluating future rate increases and other policy and procedure changes to better support the needs of EC providers.