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: [x] Sets the same payment rates for the entire State or Territory. [ ] 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). 9/22/2024 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)? MiLEAP publishes rates on a bi-weekly basis on its website. The weekly rates included below were calculated by dividing the published full-time bi-weekly rates by 2. 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) 321.75 Per Week 26.00 353.00 75.00 285.00 305.00 353.00 Family Child Care for Infants (6 months) 256.50 Per Week 31.00 225.00 75.00 191.25 200.00 225.00 Center Care for Toddlers (18 months) 321.75 Per Week 26.00 353.00 75.00 285.00 305.00 353.00 Family Child Care for Toddlers (18 months) 256.50 Per Week 31.00 225.00 75.00 191.25 200.00 225.00 Center Care for Preschool ers (4 years) 227.25 Per Week 26.00 281.25 75.00 225.00 250.00 281.25 Family Child Care for Preschool ers (4 years) 220.50 Per Week 31.00 225.00 75.00 180.00 200.00 225.00 Center Care for School- Age (6 years) 220.50 Per Week 26.00 212.50 75.00 126.00 150.00 212.50 Family Child Care for School- Age (6 years) 216.00 Per Week 31.00 210.00 75.00 175.00 187.50 210.00 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) Family Child Care for Infants (6 months) Center Care for Toddlers (18 months) Family Child Care for Toddlers (18 months) Center Care for Preschool ers (4 years) Family Child Care for Preschool ers (4 years) Center Care for School- Age (6 years) Family Child Care for School- Age (6 years) 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? [ ] 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: [x] No. b. Has the Lead Agency chosen to implement tiered reimbursement or differential rates? [x] Yes. [ ] 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. [x] Differential rate for higher quality, as defined by the Lead Agency. Describe: Michigan pays a higher reimbursement rate to licensed providers with a quality level of Reflecting on Quality or higher, in the continuous improvement process through Great Start to Quality. Michigan pays a higher reimbursement rate to license exempt related and unrelated providers who complete 10 hours of approved training per year. This is training in addition to the initial training, called License Exempt provider Preservice Training (LEPPT) 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? Michigan’s rates are set by the state legislature following recommendations by the department that incorporate data from the narrow cost analysis, provider feedback, and MRS. b. How did the Lead Agency determine that the rates are adequate to meet health, safety, quality, and staffing requirements under CCDF? Rates adequately allow providers to meet the health, safety, quality, and staffing requirements under the CCDF as demonstrated by the increase in providers accepting scholarship rates and covering the spectrum of quality levels under Michigan’s Great Start to Quality system. Information and data providing evidence that the State’s established payment rates are adequate to meet all health, safety, quality and staffing requirements, were discussed in the states most recent Market Rate Survey. The contracted agency, Public Policy Associates (PPA), utilized web based, pre-programmed model: the Provider Cost of Quality Calculator (PCQC) to calculate the estimated cost of the inputs used by providers to deliver services at various levels of quality. The PCQC model considers hypothetical expenditures and revenues for child care centers and home settings separately. To ensure that data meets the states specific needs, secondary data was compiled through detailed provider estimates of average monthly health, safety, and staffing expenses, provided through the COVID-19 stabilization grant application process. Data from more than 4,700 providers representing all facility types, regions, and quality levels was used to ensure that the State of Michigan’s provider rates were adequate to meet the health, safety, and staffing needs of the children. 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? The narrow cost analysis undertaken is synthesized into recommendations made to the state legislature which is responsible for setting rates. All recommendations related to rates promote the stabilization of child care providers to ensure access to high quality early learning setting. The gap between the cost of care and rates, to the extent known, is a core factor to the recommendations made regarding increases. d. How did the Lead Agency account for the cost of higher quality while setting payment rates? The department provides differential rates for higher quality care using Michigan’s quality recognition and improvement system, Great Start to Quality, in the case of center and home-based care. The department also pays a higher rate to license exempt providers that complete 10 hours of additional training per year. The Great Start to Quality’s quality rating and improvement system aims to help parents understand the quality of care available as they select a provider and to assist providers in continually improving the care they are able to offer through professional development and other resources, thereby supporting quality care across the child care system in the state. Beginning February 2023, the star rating system transitioned to a continuous improvement process, using quality levels that correspond with the previous star ratings, as follows: Blank Star/1 Star: Maintaining Health & Safety. 2 Star: Reflecting on Quality. 3 Star: Enhancing Quality. 4 Star: Enhancing Quality ￿ Validated. 5 Star: Demonstrating Quality. The QRIS calculates ratings, or ￿stars,￿￿quality levels￿ for participating licensed child care providers based on a detailed point system to signal level of quality being provided. Points are earned based on provider characteristics and practices associated with high quality. These include staff credentials and professional development, family and community engagement, administrative capacity, health and physical safety, curriculum and assessment, and certain child-to-teacher ratios. Providing higher quality care, as reflected by higher QRIS quality levels, is associated with higher operating costs for child care providers, and in particular higher personnel costs. The chief reason is that one of ways for providers to increase quality is to employ personnel who have more early child care-specific training and education. Even at lower- rated providers (including home-based providers), staff are expected to have at least a Child Development Associate (CDA) credential, which requires a fee and professional education. With more credentials, staff expect greater compensation, thus increasing staffing costs. Improving quality by ensuring lower teacher-to-child ratios also necessarily increases personnel costs by increasing the number of staff required. Holding all other factors, such as enrollment and poverty level, fixed, child care centers with higher star ratings had higher total personnel costs than those with lower ratings. Two-star/Reflecting on Quality centers had total personnel costs that were nearly 40% lower than 5-star/Demonstrating Quality centers in the analysis. Differences in non-personnel costs were negligible. Interviews with providers found that there was little appetite for making the quality improvements necessary to move to a higher star rating/quality level, largely due to the increased costs a provider would incur. This reluctance was largely due to the difficulties of finding adequately trained staff and the wages necessary to pay them. There was also frustration at delays in the certification of staff in the Michigan Registry (www.miregistry.org) system. 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. N/A