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NORTH CAROLINA CHILD CARE MARKET RATE STUDY FINAL REPORT Child Care Market Rate Survey 2023 Page | i

TABLE OF CONTENTS

I. STUDY BACKGROUND .......................................................................................................... 1 A. PURPOSE OF SURVEY……………………………………………………………………………… 1 B. REQUIREMENTS FOR SUBSIDIZED CHILD CARE……………………………………………… ……1 1. Federal Requirements .................................................................................................... 2 2. State Requirements ........................................................................................................ 2 C. TERMINOLOGY AND DEFINITIONS……………………………………………………………… … 3 II. STUDY METHODOLOGY ...................................................................................................... 5 A. SURVEY POPULATION …………………………………………………………………………… 5 B. SURVEY DESIGN…………………………………………………………………………………. 5 C. DATA COLLECTION AND DATA QUALITY CONTROL PROCEDURES……………………………… 5 D. FINAL SAMPLE………………………………………………………………………………….. 6 1. Sample Disposition and Response Rate ......................................................................... 6 2. Sample Characteristics ................................................................................................... 7 III. CURRENT PRIVATE PAY VERSUS SUBSIDY RATES IN NORTH CAROLINA ........................ 10 IV. CHILD CARE PROGRAM OPERATION ................................................................................. 16 A. BASIS FOR SETTING PRIVATE-PAY RATES………………………………………………………… 16 B. CONTRIBUTIONS TO ASSIST WITH PROGRAM OPERATION ……………………………………….. 18 C. IMPACT OF ECONOMIC CONDITIONS ON PROVISION OF QUALITY CHILD CARE………………….. 20 1. Impact on Facilities………………………………………………………………......... 20 2. Impact on Children……………………………………………………………….......... 23 D. FACILITIES RECEIVING SUBSIDIES THAT CHARGE THE DIFFERENCE BETWEEN SUBSIDY REIMBURSEMENT RATES AND PRIVATE RATES…………………………………………………. 25 E. DIFFERENCE BETWEEN PRIVATE-PAY RATE AND THE NC SUBSIDY REIMBURSEMENT RATE PAID BY PARENTS FOR FACILITIES CHARGING FAMILIES THE DIFFERENCE……………………………

26 F. REASONS FOR NOT PARTICIPATING IN THE NC SUBSIDIZED CHILD CARE ASSISTANCE PROGRAM…………........................................................................................................................

27 V. DETERMINING CHILD CARE MARKET RATES…………………………………………… 30 A. MARKET RATES AND THE FEDERALLY MANDATED SURVEY …………………………………... 30 B. DETERMINING RAW MARKET RATES……………………………………………………………. 30