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). 8/1/2023 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)? ECECD does not publish weekly rates and reported monthly rates. To calculate weekly rates ECECD divides the monthly rate by 4.3. 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) 1075.0 0 Per Month 21.53 248.26 1231.00 Per Month 87.00 Family Child Care for Infants (6 months) 1100.0 0 Per Month 6.85 254.04 1274.00 Per Month 86.00 Center Care for Toddlers (18 months) 775.00 Per Month 21.53 178.98 914.00 Per Month 85.00 Family Child Care for Toddlers (18 months) 1075.0 0 Per Month 6.85 248.26 1205.00 Per Month 89.00 Center Care for Preschool ers (4 years) 700.00 Per Month 21.53 161.66 835.00 Per Month 84.00 Family Child Care for Preschool ers (4 years) 875.00 Per Month 6.85 200.92 1077.00 Per Month 81.00 Center Care for School- Age (6 years) 500.00 Per Month 21.53 115.47 528.00 Per Month 95.00 Family Child Care for School- Age (6 years) 530.00 Per Month 6.85 122.40 644.00 Per Month 82.00 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? [ ] 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: [x] 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: ECECD pays a differential rate to child care providers who provide care during non-traditional hours as follows: 5 percent for 1-10 hours per week; 10 percent for 11-20 hours per week; and 15 percent for 21 or more hours per week. ii. [ ] Differential rate for children with special needs, as defined by the Lead Agency. Describe: 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: ECECD pays a differential rate to child care providers who achieve a FOCUS rating of 2 Plus-, 3-, 4-, and 5-stars. 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. N/A 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 existing pre-approved alternative methodology approach involved several steps feeding into rate setting: a rigorous data collection method as well as interviews, an online survey, stakeholder engagement, and a number of public meetings were conducted. The survey and the interview participants included centers and family child care homes participating in all FOCUS quality levels, and serving children of all ages throughout the state. A cost estimation model was developed that included a variety of cost variables including number of employees, age of children served, and quality level. Utilizing the cost model, ECECD set rates based on the cost of quality. ECECD has continued to monitor increased costs as a result of inflation to increase its rates annually. ECECD will utilize a similar process once the updated alternative methodology is complete in order to set rates based on cost. b. How did the Lead Agency determine that the rates are adequate to meet health, safety, quality, and staffing requirements under CCDF? ECECD utilized the ACF pre-approved alternative methodology completed in 2021 to set adequate base payment rates to ensure equal access and to enable providers to meet health, safety, quality and staffing requirements under CCDF. The ACF pre-approved alternative methodology included: (1) estimates of the cost of providing care at varying levels of quality and the resources needed for a provider to remain financially solvent; (2) an examination of the impact of program size, ages of children served, geographic region, enrollment, and bad debt, (3) review of the impact of funding from multiple sources; and (4) identification of the gap between the costs and the revenue sources. As part of the ACF pre-approved alternative methodology, the Lead Agency assessed the cost of delivering high-quality services and utilized the assessment to propose a rate increase to ensure equal access. 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 existing pre-approved alternative methodology approach involved several steps feeding into rate setting: a rigorous data collection method as well as interviews, an online survey, stakeholder engagement, and a number of public meetings were conducted. The survey and the interview participants included centers and family child care homes participating in all FOCUS quality levels, and serving children of all ages throughout the state. A cost estimation model was developed that included a variety of cost variables including number of employees, age of children served, and quality level. Utilizing the cost model, ECECD set rates based on the cost of quality and in order to promote the stabilization of child care providers. ECECD has continued to monitor increased costs as a result of inflation to increase its rates annually. ECECD will utilize a similar process once the updated alternative methodology is complete in order to set rates based on cost. d. How did the Lead Agency account for the cost of higher quality while setting payment rates? ECECD accounted for the cost of quality in the development of proposed rates beginning with rigorous data collection and interviews. The current alternative methodology included the following elements of quality: ratios, staff qualifications, and professional development, and planning time. Additional elements of quality included teacher compensation. Proposed payment rates at each quality level were based on the research and analysis conducted as part of the ACF pre-approved alternative methodology. A similar methodology will be used in the updated ACF pre-approved alternative methodology to ensure the cost of higher quality is taken into account while setting payment rates. 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. N/A