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)? June-August 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 2024 Market Rate Survey is a result of the collaboration of the Lead Agency and the University of Oklahoma’s Center for Early Childhood Professional Development (CECPD). iv. Local child care program administrators: Unlike previous years, we did not provide prior notice to facilities about being contacted by interviewers this year. This adjustment was made with the goal to enhance the accuracy and integrity of our findings. v. Local child care resource and referral agencies: Notification on the Market Rate Survey was sent to Oklahoma Child Care Resource and Referral Association to distribute to the regional organizations. vi. Organizations representing child care caregivers, teachers, and directors from all settings and serving all ages: Unlike previous years, we did not provide prior notice to facilities about being contacted by interviewers this year. This adjustment was made with the goal to enhance the accuracy and integrity of our findings. vii. Other. Describe: DHS regularly consults with cross-agency bodies through the Child Care Advisory committee, State Advisory Council, Tribal Child Care Association and Partners meetings. Public hearings are held prior to rate increases in child care subsidy. 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? 8/31/2024 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)? June-August 2024 iii. Describe how it represented the child care market, including what types of providers were included in the survey: The target population contained 2,452 facilities. After removing facilities that were no longer in business and that had no telephone, the final sample size was 2,431 facilities. After removing those facilities that surveyors were unable to contact and those that refused to participate or terminated the call, the total number of survey participants was 1,527 for a response rate of 62.8%. iv. What databases are used in the survey? Are they from multiple sources, including licensing, resource and referral, and the subsidy program? The Child Care Licensing database was used that included all current licensed programs representative of all licensed program types. v. How does the survey use good data collection procedures, regardless of the method for collection (mail, telephone, or web-based survey)? All interviewers adhered to a standardized script to ensure uniformity in data collection. Interviews were conducted Monday through Friday, generally between the hours of 8:00 AM and 5:00 PM. Upon request, a limited number of interviews were conducted after standard business hours. Each provider was contacted twice to ensure we reached as many participants as possible. vi. What is the percent of licensed or regulated child care centers responding to the survey? 63.30 vii. What is the percent of licensed or regulated family child care homes responding to the survey? 60.50 viii. Describe if the survey conducted in any languages other than English: No other languages were used. ix. Describe if data were analyzed in a manner to determine price of care per child: Provider responses have been collected, compiled and pending analysis. x. Describe if data were analyzed from a sample of providers and if so, how the sample was weighted: A sample was not used. All providers were contacted except for Head Start, part-day, day camp, drop-in, and out of school time as these were deemed not representative of the private pay market. 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. Since the last Market Rate Survey (MRS), the Lead Agency has adopted a single statewide rate for subsidies. This new approach no longer differentiates rates based on geographic location. By standardizing rates, we hope to incentivize the expansion of child care services in rural areas, thereby increasing the overall availability and accessibility of care. 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). All child care MRS data was collected by age of child, facility type (licensed homes and centers) and the Star rating. iii. Describe how the market rate survey or pre-approved alternative methodology reflected age of child (e.g., infant, toddler, preschool, school-age): All child care MRS data was collected by age of child, facility type (licensed homes and centers) and the Star rating. iv. Describe any other key variations examined by the market rate survey or ACF pre- approved alternative methodology, such as quality level: The MRS data is collected and analyzed by Star level. The current system is built on a 5 star rating system. Differential rates are offered for ratings of 1 Star, 2 Star, 3 Star, 4 Star and 5 Star. 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 used a Cost of Quality study conducted by the Rand Corporation in consultation with the State Advisory Council (Oklahoma Partnership for School Readiness). b. In the Lead Agency’s analysis, were there any relevant variations by geographic location, category of provider, or age of child? Yes, the sample captured variations in provider type, geographic location, quality rating, and age of child. 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.)? Minimum Licensing requirements were used to determine the cost at the base level of quality. Examples of minimum requirements include teacher-child rations and group sizes, requirements regarding square footage. 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 determines high quality care based on participation in the state Quality Rating and Improvement System. Higher quality of care is defined as care provided in a program rated as two-star level or above, as additional quality criteria, such as enhanced education and professional development, begin to increase at this level. The Market Rate Survey (MRS) obtains information from all levels of providers (one star to five star), from all geographical regions throughout the state. 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? Results of the Rand study indicate there is wide variation in program operations across the sampled providers, resulting in considerable differences in recovery of costs per child based on the state’s payment rates. The state has not implemented a rate increase based on the last Market Rate Survey and Narrow Cost Analysis due to the payment of enhanced rates made possible by Covid-relief funds. The Lead Agency will continue to pay the enhanced rates to maintain compliance with equal access provisions. The Lead Agency will be completing a Market Rate Survey and Narrow Cost Analysis in 2024. 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: 8/31/2024 ii. Provide the date the report containing results was made widely available (no later than 30 days after the completion of the report): 9/30/2024 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: Oklahoma Human Services shared the MRS results through website posts, partner agencies and organizations involved in early childhood education. OKDHS shared results of the Market Rate Survey with the Oklahoma Tribal Child Care Association so they may utilize the results to formulate tribal CCDF. https://oklahoma.gov/content/dam/ok/en/okdhs/documents/okdhs-pdf- library/child-care- services/Oklahoma%20Child%20Care%20Market%20Rate%20Survey%20Final%20 Report%20083124.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 MRS was discussed at Child Care Services Partners meeting, the Oklahoma Tribal Child Care Association, and the State Advisory Council. All stakeholder feedback and suggestions were considered in developing the final survey.