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). 3/1/2024 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)? The full-time day is multiplied by 5 days to calculate a weekly rate. 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) 58.00 Per Day 100.00 290.00 75.00 50.00 54.60 58.00 0.00 Per Day 0.00 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) 45.00 Per Day 100.00 225.00 75.00 37.00 40.00 45.00 0.00 Per Day 0.00 Center Care for Toddlers (18 months) 58.00 Per Day 100.00 290.00 75.00 50.00 54.60 58.00 0.00 Per Day 0.00 Family Child Care for Toddlers (18 months) 45.00 Per Day 100.00 225.00 75.00 37.00 40.00 45.00 0.00 Per Day 0.00 Center Care for Preschool ers (4 years) 55.00 Per Day 100.00 275.00 75.00 45.00 47.25 55.00 0.00 Per Day 0.00 Family Child Care for Preschool ers (4 years) 40.00 Per Day 100.00 200.00 75.00 40.00 40.00 45.00 0.00 Per Day 0.00 Center Care for School- Age (6 years) 50.00 Per Day 100.00 250.00 75.00 40.00 40.00 45.00 0.00 Per Day 0.00 Family Child Care for School- Age (6 years) 40.00 Per Day 100.00 200.00 75.00 40.00 40.00 45.00 0.00 Per Day 0.00 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? [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: The Market Rate Survey report showed a difference in child care reimbursement rates based off high growth county estimates. The high- growth counties in Montana (Flathead, Gallatin, Lewis and Clark, Missoula, Ravalli, and Yellowstone according to the U.S. Census Bureau) experienced an increase in population of at least 2,000 people between 2020 and 2022. An additional 15% is added to the base rate in these identified high-growth counties. All child care providers in the high-growth counties can receive the additional add-on. [ ] 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. [x] Differential rate for non-traditional hours. Describe: The Lead Agency pays a 10% add-on for at least one hour of care provided outside of 6 am to 6 pm Monday-Friday. ii. [x] Differential rate for children with special needs, as defined by the Lead Agency. Describe: A special needs add-on is at the discretion of the Lead Agency when a family and child care provider submit paperwork for the special needs subsidy. This additional subsidy is made available for a child care provider and provides an additional reimbursement over the base scholarship payment. A child with special needs is paid an additional 10% over the base scholarship payment, and a child with disabilities is paid an additional 15% over the base scholarship payment. 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: The Lead Agency has a high-quality add-on paid to child care providers that participate in the Lead Agency’s QRS program at a defined quality level 2, 3, 4, or 5 and that maintain their level for children participating in BBS. The following percentage add-ons are paid based on the Level: Level 2, 5%; Level 3, 10%, Level 4, 15%, and Level 5, 20%. There is no ad-on for quality Level 1. 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? The Lead Agency set rates at the 75th percentile from the 2023 Market Rate Report and followed recommendations for statewide rates. b. How did the Lead Agency determine that the rates are adequate to meet health, safety, quality, and staffing requirements under CCDF? The Lead Agency set rates based on the 2023 Market Rate Study at the 75th percentile. The rates are set up by child care provider type and age of child. A higher rate is set for a child care center, which is supported by the Narrow Cost Analysis. A larger child care facility has a higher cost of care. Additionally, the rate is higher for an infant/toddler, which supports the lower child to staff ratio licensing requirement. To aid in quality requirements, a high quality add-on is paid for care provided to children receiving the scholarship at QRS Level 2, 3, 4, or 5. 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 defined the cost of care annually with owner labor included as a family provider at $11,822 per child, a group provider at $12,141 a child, and a center at $13,910 a child. If the annual cost is divided by 52 weeks a year, the weekly cost of care would be the following: family providers ($227.35/child), group providers ($233.48/child), and centers ($267.50/child). The cost of care from the Narrow Cost Analysis does not consider a child’s age. Based on a preschool-aged child the weekly pay rate for family providers was $200.00 per child and $275.00 per child at centers. Since the weekly cost of care is comparable to the middle age category (preschool age), the Lead Agency believes the established payment rates at the 75th percentile promote the stabilization of child care providers. d. How did the Lead Agency account for the cost of higher quality while setting payment rates? The Lead Agency pays a high-quality add-on for care provided to children receiving the scholarship at QRS Level 2, 3, 4, or 5 providers. 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. The Lead Agency established different payment rates for the following child care provider types: Family, Friend, and Neighbor (FFN) and Relative Care Exempt (RCE) provider. The Lead Agency established payment rates for these provider types based on data from the 2023 Market Rate Survey Report. FFNs and RCEs were surveyed in the October 2023 postcard rate survey; however, there was not enough data to establish rates. The Lead Agency set FFN payment rates at 85% of the family child care facility based on a reduced licensing burden relative to family child care facilities. The Lead Agency set RCE payment rates at 85% of the FFN payment rates, based on a reduced licensing burden relative to FFN providers.