4.3 Adequate Payment Rates

The Lead Agency must set CCDF subsidy payment rates in accordance with the results of the current MRS or ACF pre-approved alternative methodology and at a level to ensure equal access for eligible families to child care services comparable with those provided to families not receiving CCDF assistance. Lead Agencies are also required to provide a summary of data and facts to demonstrate how payment rates ensure equal access, which means the Lead Agency must also consider the costs of base level care and higher quality care as part of its rate setting. Finally, the Lead Agency must re-evaluate its payment rates at least every 3 years. The ages and types of care listed in the base payment rate tables are meant to provide a snapshot of the categories of rates and are not intended to be comprehensive of all categories that might exist or to reflect the terms used by the Lead Agency for particular ages. If rates are not statewide, please provide all variations of payment rates when reporting base payment rates below. Base rates are the lowest, foundational rates before any differentials are added (e.g., for higher quality or other purposes) and must be sufficient to ensure that minimum health, safety, quality, and staffing requirements are covered. These are the rates that will be used to determine compliance with equal access requirements. 4.3.1 Payment rates a. Are the payment rates that the Lead Agency is reporting in 4.3.2 set statewide by the Lead Agency? [x] Yes. i. If yes, check if the Lead Agency: [ ] Sets the same payment rates for the entire State or Territory. [x] Sets different payment rates for different regions in the State or Territory. [ ] No. ii. If no, identify how many jurisdictions set their own payment rates: b. Provide the date the current payment rates became effective (i.e., date of last payment rate update based on most recent MRS or ACF pre-approved alternative methodology as reported in 4.2.1). 7/1/2024 c. If the Lead Agency does not publish weekly rates, then how were the rates reported in 4.3.2 or 4.3.3 calculated (e.g., were daily rates multiplied by 5 or monthly rates divided by 4.3)? daily rates were multiplied by 5 4.3.2 Base payment rates a. Provide the base payment rates in the tables below. If the Lead Agency completed a market rate survey (MRS), provide the percentiles based on the most recent MRS for the identified categories. If the Lead Agency sets different payment rates for different regions in the State or Territory (and checked 4.3.1aii), provide the rates for the most populous region as well as the region with payment rates set at the lowest percentile. Percentiles are not required if the Lead Agency also conducted an ACF pre-approved alternative methodology but must be reported if the Lead Agency conducted an MRS only. The preamble to the 2016 final rule states that a benchmark for adequate payment rates is the 75th percentile of the most recent MRS. The 75th percentile benchmark applies to the base rates. The 75th percentile is the number separating the lowest 75 percent of rates from the highest 25 percent. Setting rates at the 75th percentile, while not a requirement, would ensure that eligible families can afford three out of four child care providers. In addition to reporting the 75th percentile in the tables below, the Lead Agency must also report the 50th percentile and 60th percentile for each identified category. If the Lead Agency conducted an ACF pre-approved alternative methodology, provide the estimated cost of care for the identified categories, as well as the percentage of the cost of care covered by the established payment rate. If the Lead Agency indicated it sets different payment rates for different regions in the State or Territory in 4.3.1.a, provide the estimated cost of care and the percentage of the cost of care covered by the established payment rate for the most populous region as well as the region with rates established at the lowest percent of the cost of care. For each identified category below, provide the percentage of providers who are receiving the base rate without any add-ons or differential payments. Provide the full-time weekly base payment rates in the table below. If weekly payment rates are not published, then the Lead Agency will need to calculate its equivalent. i. Table 1: Complete if rates are set statewide. If rates are not set statewide, provide rates for most populous region. Percentiles are not required if the Lead Agency also conducted an ACF pre-approved alternative methodology but must be reported if the Lead Agency conducted an MRS only. Care Type Base payment rate (specify unit, e.g., per day, per week, per month) % of providers receiving Base rate Full-Time Weekly Base Payment Rate What is the percentile of the rate? (MRS) What is the 50th percentile of the rate? (MRS) What is the 60th percentile of the rate? (MRS) What is the 75th percentile of the rate? (MRS) What is the estimated cost of care? (Alternative Methodology) What percent of the estimated cost of care is the rate? Center Care for Infants (6 months) 102.07 Per Day 100.00 510.35 72.50 463.05 485.00 520.00 126.01 Per Day 81.00 Family Child Care for Infants (6 months) 58.54 Per Day 100.00 292.25 76.30 250.00 250.00 290.00 65.00 Per Day 90.00 Care Type Base payment rate (specify unit, e.g., per day, per week, per month) % of providers receiving Base rate Full-Time Weekly Base Payment Rate What is the percentile of the rate? (MRS) What is the 50th percentile of the rate? (MRS) What is the 60th percentile of the rate? (MRS) What is the 75th percentile of the rate? (MRS) What is the estimated cost of care? (Alternative Methodology) What percent of the estimated cost of care is the rate? Center Care for Toddlers (18 months) 84.70 Per Day 100.00 423.50 52.00 409.00 434.40 485.00 97.74 Per Day 87.00 Family Child Care for Toddlers (18 months) 58.54 Per Day 100.00 292.25 76.30 250.00 250.00 290.00 65.00 Per Day 90.00 Center Care for Preschool ers (4 years) 57.99 Per Day 100.00 289.95 45.80 302.00 325.00 369.50 50.71 Per Day 114.00 Family Child Care for Preschool ers (4 years) 46.50 Per Day 100.00 232.50 59.30 200.00 240.00 275.00 65.00 Per Day 72.00 Center Care for School- Age (6 years) 50.62 Per Day 100.00 253.10 80.40 215.00 223.95 245.00 38.26 Per Day 132.00 Family Child Care for School- Age (6 years) 46.50 Per Day 100.00 232.50 59.30 200.00 240.00 275.00 65.00 Per Day 72.00 ii. Table 2: Do not complete if rates are set statewide. If rates are not set statewide, provide rates for region with payment rates set at the lowest percentile. Percentiles are not required if the Lead Agency also conducted an ACF pre-approved alternative methodology but must be reported if the Lead Agency conducted an MRS only. Care Type Base payment rate (specify unit, e.g., per day, per week, per month) % of providers receiving Base rate Full-Time Weekly Base Payment Rate What is the percentile of the rate? (MRS) What is the 50th percentile of the rate? (MRS) What is the 60th percentile of the rate? (MRS) What is the 75th percentile of the rate? (MRS) What is the estimated cost of care? (Alternative Methodology) What percent of the estimated cost of care is the rate? Center Care for Infants (6 months) 119.52 Per Day 100.00 597.60 54.50 590.00 623.35 732.10 136.56 Per Day 88.00 Care Type Base payment rate (specify unit, e.g., per day, per week, per month) % of providers receiving Base rate Full-Time Weekly Base Payment Rate What is the percentile of the rate? (MRS) What is the 50th percentile of the rate? (MRS) What is the 60th percentile of the rate? (MRS) What is the 75th percentile of the rate? (MRS) What is the estimated cost of care? (Alternative Methodology) What percent of the estimated cost of care is the rate? Family Child Care for Infants (6 months) 58.54 Per Day 100.00 292.25 58.50 275.00 300.00 300.00 61.02 Per Day 96.00 Center Care for Toddlers (18 months) 84.70 Per Day 100.00 423.50 52.00 409.00 434.40 485.00 97.74 Per Day 87.00 Family Child Care for Toddlers (18 months) 58.54 Per Day 100.00 292.25 58.50 275.00 300.00 300.00 61.02 Per Day 96.00 Center Care for Preschool ers (4 years) 80.13 Per Day 100.00 400.65 45.50 420.00 449.00 496.60 53.80 Per Day 149.00 Family Child Care for Preschool ers (4 years) 54.33 Per Day 100.00 271.65 32.80 320.00 350.00 380.00 70.30 Per Day 77.00 Center Care for School- Age (6 years) 48.96 Per Day 100.00 244.80 59.50 220.00 250.00 267.00 37.50 Per Day 131.00 Family Child Care for School- Age (6 years) 54.33 Per Day 100.00 271.65 32.80 320.00 350.00 380.00 70.30 Per Day 77.00 b. Does the Lead Agency certify that the percentiles reported in the table above are calculated based on their most recent MRS or ACF pre-approved Alternative Methodology? [x] Yes. [ ] No. If no, what is the year of the MRS or ACF pre-approved alternative methodology that the Lead Agency used? What was the reason for not using the most recent MRS or ACF pre-approved alternative methodology? Describe: 4.3.3 Tiered rates, differential rates, and add-ons Lead Agencies may establish tiered rates, differential rates, or add-ons on top of their base rates as a way to increase payment rates for targeted needs (e.g., a higher rate for serving children with special needs). a. Does the Lead Agency provide any rate add-ons above the base rate? [x] Yes. If yes, describe the add-ons, including what they are, who is eligible to receive the add-ons, and how often are they paid: EEC provides a $24 add-on to the per-child base rate for contracted child care seats that serve children involved with the Department of Children and Families (DCF), children with parents under 24, and children experiencing homelessness. We also offer a transportation add-on rate of $12 one-way and $18 two- ways. [ ] No. b. Has the Lead Agency chosen to implement tiered reimbursement or differential rates? [ ] Yes. [x] No. Tiered or differential rates are not implemented. If yes, identify below any tiered or differential rates, and, at a minimum, indicate the process and basis used for determining the tiered rates, including if the rates were based on the MRS or an ACF pre-approved alternative methodology. Check and describe all that apply: i. [ ] Differential rate for non-traditional hours. Describe: ii. [ ] Differential rate for children with special needs, as defined by the Lead Agency. Describe: iii. [ ] Differential rate for infants and toddlers. Note: Do not check if the Lead Agency has a different base rate for infants/toddlers with no separate bonus or add-on. Describe: iv. [ ] Differential rate for school-age programs. Note: Do not check if the Lead Agency has a different base rate for school-age children with no separate bonus or add-on. Describe: v. [ ] Differential rate for higher quality, as defined by the Lead Agency. Describe: vi. [ ] Other differential rates or tiered rates. For example, differential rates for geographic area or for type of provider. Describe: vii. If applicable, describe any additional add-on rates that you have besides those identified above. Does the Lead Agency reduce provider payments if the price the provider charges to private-pay families not participating in CCDF is below the Lead Agency’s established payment rate? [ ] Yes. If yes, describe: [x] No. 4.3.4 Establishing payment rates Describe how the Lead Agency established payment rates: a. What was the Lead Agency’s methodology or process for setting the rates or how did the Lead Agency use their data to set rates? Moving forward, EEC intends to implement the pre-approved alternative methodology and analysis of gaps between costs and revenue to help determine which rates need to be adjusted to reflect gaps between expected revenues and the cost of delivering quality services. EEC may prioritize increasing rates for different age groups, regions, and/or provider types based on the findings from the alternative methodology and anticipates that this cost-informed approach will contribute to a more consistent, equitable, and simpler child care financial assistance rate structure. EEC is committed to increasing child care financial assistance rates by identifying the percentage of cost necessary to provide sufficient funding to programs to support them in increasing investments in quality care over time, contingent on available funding, and will monitor progress toward covering an increasing percentage of the cost of care over time. EEC intends to measure progress toward covering the cost of care by taking into account both child care financial assistance rates as well as other public revenue streams and will also continue to monitor and use information about the market and tuition costs for families to understand access to care. In 2023, EEC used both market rate data and findings from a comprehensive cost study, focusing on the cost of care to meet health, safety, and quality requirements under current licensing regulations, to inform a strategy for rate setting and transformational adjustments to the rate structure that was approved by the EEC Board for implementation this fiscal year (retroactive to July 1, 2023). The new rates and rate structure make significant progress on addressing long-standing inequities in rates by geographic region and age group. b. How did the Lead Agency determine that the rates are adequate to meet health, safety, quality, and staffing requirements under CCDF? EEC used both market rate data and a comprehensive cost study, focusing on the cost of care to meet health, safety, and quality requirements under current licensing regulations, to inform a strategy for rate setting in fiscal year 2024 (FY24) . EEC’s current cost estimation models include a focus on the cost of care to meet health, safety, quality, and staffing requirements under current licensing regulations by age group, program type, and region. The cost study used data collected from Massachusetts-based providers to understand cost drivers such as staffing patterns, personnel costs, and non-personnel costs (by region and provider type) which are indicative of health, safety, quality, and staffing requirements. The cost study rates were then used to determine rate increases that would be within budget for EEC in FY24. On April 20, 2023, EEC received a letter of non-compliance in the area of equal access provision 45 CFR 98.45(a) related to payment rates. Despite the progress made during the transition to an alternative methodology, four rates remain below the 50th percentile of market rates in Massachusetts (a state with some of the highest market rates in the nation). c. How did the Lead Agency use the cost of care, either from the narrow cost analysis or the ACF pre-approved alternative methodology to inform rate setting, including how using the cost of care promotes the stabilization of child care providers? Moving forward, EEC will use findings from the alternative methodology to inform rate setting. As noted above, EEC will monitor progress toward covering an increasing percentage of the cost of care over time. EEC used both market rate data and findings from a comprehensive cost study to inform rate setting this fiscal year (retroactive to July 1, 2023). The prior fiscal year used information from a narrow cost analysis, along with the market rate survey, to inform rates. d. How did the Lead Agency account for the cost of higher quality while setting payment rates? Moving forward, EEC will use findings from the alternative methodology to inform rate setting; the cost estimation models will measure both the cost of care to meet health, safety, quality, and staffing requirements under current licensing regulations by age group, program type, and region, as well as the cost of higher quality care. For setting the payment rates in fiscal year 2024 (FY24), EEC examined both the cost of care to meet current licensing regulations and the cost of higher quality care which included both increased compensation and higher staffing levels. EEC also incorporated a quality add-on that was connected to participation in the former Quality Rating and Improvement System (QRIS) into the base rates this FY24 (retroactive to July 1, 2023). e. Identify and describe any additional facts (not covered in responses to 4.3.1 – 4.3.3) that the Lead Agency considered in determining its payment rates to ensure equal access. As noted above, EEC made significant progress in addressing long-standing geographic and age group inequities (particularly for infant and toddler care) in determining its payment rates in FY24. EEC also increased all rates to acknowledge increases in operational costs across the board.