4.2 Assess Market Rates and Analyze the Cost of Child Care

To establish subsidy payment rates that ensure equal access, Lead Agencies must collect and analyze statistically valid and reliable data and have the option to conduct either a (1) market rate survey (MRS) reflecting variations in the price to parents of child care services by geographic area, type of provider, and age of child, or (2) an ACF pre-approved alternative methodology, such as a cost estimation model, which estimates the cost of care by incorporating both data and assumptions to estimate what expected costs would be incurred by child care providers and parents under different scenarios. All Lead Agencies must analyze the cost of providing child care through a narrow cost analysis or pre-approved alternative methodology. Prior to conducting the MRS or pre-approved alternative, Lead Agencies must consult with the State Advisory Council on Early Childhood Education and Care (designated or established pursuant to the Head Start Act (42 U.S.C. 9837b(b)(1)(A)(i)) or similar coordinating body, local child care program administrators, local child care resource and referral agencies, and other appropriate entities; and organizations representing child care caregivers, teachers, and directors. Prior to conducting the MRS or pre-approved alternative methodology, Lead Agencies must consult with the State Advisory Council on Early Childhood Education and Care (designated or established pursuant to the Head Start Act (42 U.S.C. 9837b(b)(1)(A)(i)) or similar coordinating body, local child care program administrators, local child care resource and referral agencies, and other appropriate entities; and organizations representing child care caregivers, teachers, and directors. Note: Any Lead Agency considering using an alternative methodology instead of a market rate survey to set payment rates, is required to submit a description of its proposed approach to OCC for pre-approval in advance of developing and conducting the alternative methodology. Advance approval is not required if the Lead Agency plans to implement both an MRS and an alternative methodology to set rates at a percentile of the market rate, but a Lead Agency conducting a limited market rate survey and using it to inform their cost model would need pre-approval for this approach. In its request for ACF pre-approval, a Lead Agency must provide details on the following elements of their proposed alternative methodology: • Overall approach and rationale for using proposed methodology • Description of stakeholder engagement • Data collection timeframe (if applicable) • Description of the data and assumptions included in the methodology, including how these elements will yield valid and reliable results from the model • Description of how the methodology will capture the universe of providers, and reflect variations by provider type, age of children, geographic location, and quality 4.2.1 Completion of the market rate survey or ACF pre-approved alternative methodology Did the Lead Agency conduct a statistically valid and reliable MRS or ACF pre-approved alternative methodology to meet the CCDF requirements to assess child care prices and/or costs and determine payment rates? Check only one based on which methodology was used to determine your payment rates. a. [x] Market rate survey. i. When were the data gathered (provide a date range; for instance, September – December 2023)? October 2023 ￿ January 2024 b. [ ] ACF pre-approved alternative methodology. i. [ ] The alternative methodology was completed. ii. [ ] The alternative methodology is in process. If the alternative methodology was completed: When were the data gathered and when was the study completed? Describe any major differences between the pre-approved methodology and the final methodology used to inform payment rates. Include any major changes to stakeholder engagement, data, assumptions or proposed scenarios. If the alternative methodology is in progress: Provide a status on the alternative methodology and timeline (i.e., dates when the alternative methodology activities will be conducted, any completed steps to date, anticipated date of completion, and expected date new rates will be in effect using the alternative methodology). c. Consultation on data collection methodology. Describe when and how the Lead Agency engaged the following partners and how the consultation informed the development and execution of the MRS or alternative methodology, as appropriate. iii. State Advisory Council or similar coordinating body: The Market Rate Survey (MRS) was brought before the Early Childhood Council (ECC) in May 2023. The ECC was informed of the Lead Agency’s intent to contract the survey out, the intent of the survey, and asked for feedback or suggestions on what the ECC would like to see on the MRS. iv. Local child care program administrators: The Lead Agency met with local child care program administrators in June 2023 to discuss the intent to contract the survey out, the intent of the survey, and asked for feedback or suggestions on what they would like to see on the MRS. v. Local child care resource and referral agencies: The Lead Agency’s contracted child care resource and referral agency was involved and participated in meetings developing the MRS and weekly meetings during the collection period of the MRS. The Lead Agency’s contracted child care resource and referral agency helped to collect MRS data by reaching out to child care providers as needed. vi. Organizations representing child care caregivers, teachers, and directors from all settings and serving all ages: The Lead Agency met with the Early Childhood Advisory board in June 2023 and discussed the MRS. The Early Childhood Advisory board was informed of the Lead Agency’s intent to contract the survey out, the intent of the survey, and asked for feedback or suggestions on what the board would like to see on the MRS. vii. Other. Describe: NA d. An MRS must be statistically valid and reliable. An MRS can use administrative data, such as child care resource and referral data, if it is representative of the market. Please provide the following information about the market rate survey: i. When was the market rate survey completed? 1/22/2024 ii. What was the time period for collecting the information (e.g., all of the prices in the survey are collected within a three-month time period)? October 23, 2023 ￿ January 22, 2024 iii. Describe how it represented the child care market, including what types of providers were included in the survey: Surveys were sent to all Center and Family/Group child care providers licensed in North Dakota. Provider types included were child care centers, preschool education facilities, school age child care, multiple license facilities, family child care and group care in homes and in facilities. iv. What databases are used in the survey? Are they from multiple sources, including licensing, resource and referral, and the subsidy program? An initial listing of providers eligible to complete the MRS was obtained from the child care licensing system. Information that was incomplete on a child care provider record was obtained from the Child Care Assistance Program system or the Lead Agency’s contracted resource and referral agency. v. How does the survey use good data collection procedures, regardless of the method for collection (mail, telephone, or web-based survey)? The survey was multi-modal, beginning with an online survey launch, making use of telephone calling to encourage response (and in some cases, completing by telephone), and finally utilizing paper surveys via physical mail to ensure that all providers had been reached. The online survey was initially distributed via personalized link to ensure that recipients were not contacted after they had completed the survey. However, the survey was also distributed using an anonymous link (via social media, and by telephone contact to encourage immediate completion), and by QR code on postcard reminders and the mail survey letter. Additionally, the survey included multiple reminders in all three formats, so that providers were encouraged to complete the survey regardless of modality. We also made use of passive online (social media) reminders, which included an anonymous link to the survey, and at launch, conducted webinars and office hours to allow for providers’ questions and concerns. The webinar recordings were also posted online for those who did not attend vi. What is the percent of licensed or regulated child care centers responding to the survey? 42.10 vii. What is the percent of licensed or regulated family child care homes responding to the survey? 57.70 viii. Describe if the survey conducted in any languages other than English: NA ix. Describe if data were analyzed in a manner to determine price of care per child: Yes. Data from the market rate portion of the survey were combined with the narrow cost analysis portion of the survey to produce a uniform price of care per child estimate. This will be detailed further in the report. x. Describe if data were analyzed from a sample of providers and if so, how the sample was weighted: The data collected was analyzed in its completion; no sampling was used in the fielding of the survey, and as the response rates were determined to be representative both geographically and by license type, no weighting was employed. e. Price variations reflected. The market rate survey data or ACF pre-approved alternative methodology data must reflect variations in child care prices or cost of child care services in specific categories. i. Describe how the market rate survey or pre-approved alternative methodology reflected variation in geographic area (e.g., county, region, urban, rural). Include information on whether parts of the State or Territory were not represented by respondents and include information on how prices or costs could be linked to local geographic areas. As North Dakota is a geographically large but not populous state, it was central to our methodology that all areas be represented evenly. Throughout fielding, we took care to keep track of response rates by Planning Region, which presented an aggregate picture of providers throughout the state (not every county contains a child care provider). ii. Describe how the market rate survey or pre-approved alternative methodology reflected variation in type of provider (e.g., licensed providers, license-exempt providers, center-based providers, family child care home providers, home based providers). Provider types included in the market rate survey were child care centers, preschool education facilities, school age child care, multiple license facilities family child care and group care in homes and in facilities. The licensing system was used to identify licensed child care providers in the state that were eligible to complete the MRS. iii. Describe how the market rate survey or pre-approved alternative methodology reflected age of child (e.g., infant, toddler, preschool, school-age): The survey uses a few questions to assess the age of children for which care is provided by the respondent. First, there are two questions (￿What is the age range of children you currently accept in your program? Youngest age￿ and ￿Oldest age￿) which attempt to assess the range of care provided for in a specific manner. There are also the age group breakdowns; the survey question, ￿Which of the following age groups does your facility serve when capacity allows? Select all that apply.￿ quantifies in a more easily translatable manner which age groups are served by the provider. Throughout the survey, the ￿age groups￿ breakdowns are used to refer to common care differentiations (e.g. rates charged to parents). However, some providers have noted that they have further breakdowns within these categories. This is worth noting for future iterations of the survey. iv. Describe any other key variations examined by the market rate survey or ACF pre- approved alternative methodology, such as quality level: NA 4.2.2 Cost analysis If a Lead Agency does not complete a cost-based pre-approved alternative methodology, they must analyze the cost of providing child care services through a narrow cost analysis. A narrow cost analysis is a study of what it costs providers to deliver child care at two or more levels of quality: (1) a base level of quality that meets health, safety, staffing, and quality requirements, and (2) one or more higher levels of quality as defined by the Lead Agency. The narrow cost analysis must estimate costs by levels of quality; include relevant variation by provider type, child’s age, or location; and analyze the gaps between estimated costs and payment rates to inform payment rate setting. Lead agencies are not required to complete a separate narrow cost analysis if their pre-approved alternative methodology addresses all of the components required in the narrow cost analysis. Describe how the Lead Agency analyzed the cost of child care through a narrow cost analysis or pre-approved alternative methodology for the FFY 2025–2027 CCDF Plan, including: a. How did the Lead Agency conduct a narrow cost analysis (e.g., a cost model, a cost study, existing data or data from the Provider Cost of Quality Calculator)? The narrow cost analysis was conducted using a cost survey as part of the broader Market Rate Survey. b. In the Lead Agency’s analysis, were there any relevant variations by geographic location, category of provider, or age of child? Initial analyses suggest that annual expenditures were higher on average at rural childcare centers compared to urban childcare centers. Expenditures were also higher at non-home facilities than they were at home-based facilities. Annual revenues from enrollment were somewhat higher in urban facilities than they were in rural facilities and were much higher at non-home facilities than they were at home-based facilities. c. What assumptions and data did the Lead Agency use to determine the cost of care at the base level of quality (e.g., ratios, group size, staff compensations, staff training, etc.)? The study analyzed costs based on the provider’s participation in the statewide quality rating and improvement system (QRIS). All providers included in the study are required, at minimum, to meet a base level of quality (i.e. child care licensing or Step 1 Quality Rating). d. How does the Lead Agency define higher quality and what assumptions and data did the Lead Agency use to determine cost at higher levels of quality (e.g., ratio, group size, staffing levels, staff compensation, professional development requirements)? A Lead Agency can use a quality improvement system or other system of quality indicators (e.g., accreditation, pre-Kindergarten standards, Head Start Program Performance Standards, or State-defined quality measures). The study analyzed costs based on the provider’s participation in the statewide quality rating and improvement system (QRIS). All providers included in the study are required, at minimum, to meet a base level of quality (i.e. child care licensing or Step 1 Quality Rating). Providers that deliver higher levels of quality (i.e. Step 2, Step 3, or Step 4 Quality Rating) are required to implement additional quality practices related to professional development, staff qualifications, learning environment, curriculum and assessment use, and relationships amongst teachers and children. e. What is the gap between cost and price, and how did the Lead Agency consider this while setting payment rates? Did the Lead Agency target any rate increases where gaps were the largest or develop any long-term plans to increase rates based on this information? After conducting a narrow cost analysis, the Lead Agency found that there was a difference between the enrollment expenses and revenue among different types of childcare providers. While center-licensed providers were able to make a profit from their enrollment revenue and cost per child, family and group license types faced a deficit. This inequality between different license types led the state to increase CCAP rates for family and group license types to support the childcare business. The state agency plans to continue to monitor the availability of child care, and to use coding to track types of providers and whether any increases in provider payment from the ND Child Care Initiative have an effect on child care business sustainability and capacity in order to understand which payment practices best support ND child care. 4.2.3 Publicly available report on the cost and price of child care The Lead Agency must prepare a detailed report containing the results of the MRS or ACF pre- approved alternative methodology and include the Narrow Cost Analysis if an ACF pre-approved alternative methodology was not conducted. The Lead Agency must make this report widely available no later than 30 days after completion of the report, including posting the results on the Lead Agency website. The Lead Agency must describe in the detailed report how the Lead Agency took into consideration the views and comments of the public or stakeholders prior to conducting the MRS or ACF pre-approved alternative methodology. a. Describe how the Lead Agency made the results of the market rate survey or ACF pre-approved alternative methodology report widely available to the public by responding to the questions below. i. Provide the date the report was completed: 6/28/2024 ii. Provide the date the report containing results was made widely available (no later than 30 days after the completion of the report): 7/19/2024 iii. Provide a link to the website where the report is posted and describe any other strategies the Lead Agency uses to make the detailed report widely available: www.hhs.nd.gov/sites/www/files/documents/EA/CCAP/2024_MRS.pdf iv. Describe how the Lead Agency considered partner views and comments in the detailed report. Responses should include which partners were engaged and how partner input influenced the market rate survey or alternative methodology: The report was reviewed by the Economic Assistance Section, the Early Childhood Section, and Child Care Aware of ND to ensure all details that were needed were captured in the final report.