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)? February 16, 2022 - May 9, 2022 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 Early Childhood Interagency Coordinating Council (ECICC) was consulted, via presentation and conversation, during council meetings. iv. Local child care program administrators: Licensed child care providers from across the state were engaged as part of the steering committee that helped to review the Market Rate Survey (MRS). v. Local child care resource and referral agencies: Child care program administrators, child care resource and referral agencies, and caregivers/teachers/directors were included in the MRS steering committee. Partners provided input during steering committee meetings, which informed the questions to use and ways to conduct outreach to child care providers. vi. Organizations representing child care caregivers, teachers, and directors from all settings and serving all ages: Child care program administrators, child care resource and referral agencies, and caregivers/teachers/directors were included in the MRS steering committee. Partners provided input during steering committee meetings, which informed the questions to use and ways to conduct outreach to child care providers. vii. Other. Describe: Consultation for the development of the survey and survey collection approaches occurred with a variety of diverse early childhood stakeholders in Nebraska, which included members of the Nebraska Preschool Development Grant Leadership Team, Buffett Early Childhood Institute, Department of Education, University of Nebraska, Nebraska Early Childhood Collaborative, and an independent consultant. Partners provided input during steering committee meetings, which informed the questions to use and ways to conduct outreach to child care providers. 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? 6/15/2023 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)? Data collection lasted for a 90-day period beginning on February 16, 2022. iii. Describe how it represented the child care market, including what types of providers were included in the survey: The Market Rate Survey was sent to all licensed providers across the state of Nebraska to obtain private pay child care rates for children with or without medical and behavior needs. Categories of focus included: geographic location (rural or urban); type of care (Family Child Care Home I, Family Child Care Home II, Child Care Center, Preschool, School Age License); age group of children; status of medical and behavioral needs; accreditation; participation in the Child Care Subsidy Program; barriers and limitations to providers accepting the Child Care Subsidy Program; the provider’s participation in the state’s Quality Rating and Improvement System or other systems of quality indicators; cost of implementation for health and safety training; and traditional and non-traditional care. iv. What databases are used in the survey? Are they from multiple sources, including licensing, resource and referral, and the subsidy program? DHHS provided the Buffett Institute with an electronic version of the most current child care licensing roster that included provider email addresses to contact child care providers. The Institute also partnered with Early Learning Coordinators across the state and the Child Care Resource and Referral Network (CCRN) to promote the survey to providers. v. How does the survey use good data collection procedures, regardless of the method for collection (mail, telephone, or web-based survey)? There were three phases in the survey distribution and sampling process. Phase I sent a postcard to each licensed provider (2,940) with a URL to access the online survey. The postcard contained a unique ID so each provider could access the survey along with detailed instructions on how to complete the survey. Phase II sent all licensed child care providers a postcard reminding them to complete the survey. Phase III focused on providers who did not respond during Phase I and II. Phone calls were made to each of the survey non-respondents. As part of Phase III, two email reminders were sent to all the known provider emails, which totaled 1,664. vi. What is the percent of licensed or regulated child care centers responding to the survey? 32.90 vii. What is the percent of licensed or regulated family child care homes responding to the survey? 62.40 viii. Describe if the survey conducted in any languages other than English: Spanish ix. Describe if data were analyzed in a manner to determine price of care per child: Yes, data was analyzed to determine the care rate per age category. x. Describe if data were analyzed from a sample of providers and if so, how the sample was weighted: After a data cleansing process, which excluded invalid responses and unlicensed providers, 871 (29.59%) valid responses were obtained for use in data analyses. 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. The 2023 Market Rate Survey included two geographic categories: urban and rural. The urban category included four counties: Dakota, Douglas, Lancaster, and Sarpy. All remaining counties were included in the rural geographic group. More than half of the respondents were from rural areas. The Report provides a map of the state by respondent’s location. 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). The MRS was sent to the following licensed child care provider types, who are eligible for child care subsidy: Family Child Care Home I and Family Child Care Home II, Child Care Center, and School-Age Only Center. License-exempt child care providers, also known as family, friends, and/or neighbor providers, were not included in the survey as they are not guiding the market value. iii. Describe how the market rate survey or pre-approved alternative methodology reflected age of child (e.g., infant, toddler, preschool, school-age): Ages of the children were categorized into the following for analysis: infant, toddler, preschool, and school-age. iv. Describe any other key variations examined by the market rate survey or ACF pre- approved alternative methodology, such as quality level: The MRS also asked about accreditation, quality rating, subsidy involvement and barriers, enrollment and capacity, cost of health and safety training, provider participation in various partnering programs (Sixpence, Child and Adult Care Food Program, T.E.A.C.H. Early Childhood Nebraska, etc.), and diversity of the population attending the programs. 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 Lead Agency was notified on December 13, 2021, that a one-year wavier was approved for the completion of the Narrow Cost Analysis. The Lead Agency contracted with a vendor to complete the Narrow Cost Analysis. This is expected to be completed by July 1, 2025. Currently, the Lead Agency uses the Market Rate Survey data to set rates. b. In the Lead Agency’s analysis, were there any relevant variations by geographic location, category of provider, or age of child? The Lead Agency was notified on December 13, 2021, that a one-year wavier was approved for the completion of the Narrow Cost Analysis. The Lead Agency contracted with a vendor to complete the Narrow Cost Analysis. This is expected to be completed by July 1, 2025. Currently, the Lead Agency uses the Market Rate Survey data to set rates. 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 Lead Agency was notified on December 13, 2021, that a one-year wavier was approved for the completion of the Narrow Cost Analysis. The Lead Agency contracted with a vendor to complete the Narrow Cost Analysis. This is expected to be completed by July 1, 2025. Currently, the Lead Agency uses the Market Rate Survey data to set rates. 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 Lead Agency was notified on December 13, 2021, that a one-year wavier was approved for the completion of the Narrow Cost Analysis. The Lead Agency contracted with a vendor to complete the Narrow Cost Analysis. This is expected to be completed by July 1, 2025. Currently, the Lead Agency uses the Market Rate Survey data to set rates. 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? The Lead Agency was notified on December 13, 2021, that a one-year wavier was approved for the completion of the Narrow Cost Analysis. The Lead Agency contracted with a vendor to complete the Narrow Cost Analysis. This is expected to be completed by July 1, 2025. Currently, the Lead Agency uses the Market Rate Survey data to set rates. 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: 6/15/2023 ii. Provide the date the report containing results was made widely available (no later than 30 days after the completion of the report): 7/6/2023 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: The Market Rate Survey Report is available on the Lead Agency’s website. https://dhhs.ne.gov/Pages/Market-Rate-Survey.aspx 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: Throughout development of the MRS report and analysis of data, stakeholders including ECICC members, licensed child care providers, teachers/directors, and administrative staff from various agencies were able to provide input and feedback. Feedback included provider-reported barriers to the CCDF/Subsidy program. The Lead Agency used the feedback from stakeholders to determine how best to reach the most amount of providers across the state and what questions should be asked in the survey.