Page 11

I. STUDY BACKGROUND Child Care Market Rate Survey 2023 Page | 1

A. PURPOSE OF SURVEY The 2023 Child Care Market Rate Survey was conducted for the Division of Child Development and Early Education (DCDEE), North Carolina Department of Health and Human Services (NCDHHS) by the Center for Urban Affairs and Community Services (CUACS) at North Carolina State University. The purpose of the survey is to establish recommendations for market rates for subsidized child care through the North Carolina Subsidized Child Care Assistance Program. The study is based on a survey of child care providers across the state and represents the seventh such survey. This report describes the procedures used in the survey (Section I), provides background on current operation of child care facilities (Sections II through V), and presents the findings of an analysis designed to recommend changes to the current market rate (Section VI). B. REQUIREMENTS FOR SUBSIDIZED CHILD CARE Many of the child care facilities across North Carolina use public funds to assist in paying for the care for some or all of the children that are enrolled in their programs. The NC General Assembly appropriates funding for the North Carolina Subsidized Child Care Assistance Program and has designated the NCDHHS to supervise this voucher-based program. As federal funds are also used to operate the NC Subsidized Child Care Assistance Program, certain federal requirements must be met by program administrators and participants. Included among these is the regular completion of a survey to determine the fees charged for child care services in the various markets throughout the state. This information is used to determine how subsidized child care reimbursement rates compare to private pay rates and helps establish the subsidized reimbursement rate. A “market rate” or “subsidy rate,” as referenced in North Carolina legislation, represents the maximum amount that a child care center or family child care home may be paid with subsidy funding for child care services. Child care providers are currently reimbursed at the market rate. Market rates are established for each county; age categories (infants/toddlers, two-year-olds, three- to-five-year-olds, and school-age children); types of child care providers (centers versus homes); and rated license levels (one- through five-star licenses). For purposes of establishing market rates, the age categories for centers are as described above; however, for homes, infants and one-year- olds are considered separately for reimbursement. Market rates are not average child care rates. Market rates are established using the 75th percentile by child, which means that if surveys find that there were 100 children whose parents paid for child care in a certain county, the market rate would use the 75th percentile rate, counting from lowest to highest paid for an individual child in that county. Market rates have been set using the 75th percentile so that eligible children can have access to a majority of child care options. Further