Page 20

www.prenatal5fiscal.org 18 served, and funding streams accessed, to ensure that engagement is reaching the full child care populaDon.

In addiDon to primary data collecDon with child care providers, the alternaDve methodology process also uDlizes extant data. This can include data on the workforce, from workforce registries or workforce surveys, data related to program type and capacity from licensing databases, and data related to costs such as average rent/lease/mortgage and uDlity costs, or the costs of other nonpersonnel items. AddiDonal extant sources on salary, such as Bureau of Labor StaDsDcs or data from living wage or sufficiency calculators may also be integrated into cost models, to address necessary compensaDon levels.

Model Building and Scenario Development Developing a cost esDmaDon model requires two primary inputs. First, expense and revenue data from providers, as discussed above. Second, a quality frame, idenDfies the key cost drivers within the standards programs are required to meet. Developing this quality frame requires a close reading of state licensing standards and any quality requirements such as are required under a Quality RaDng and Improvement System. The requirements that come with a cost must be idenDfied, and then a value assigned, which may vary based on the level of the quality requirement. This work should be done before program interviews or focus groups so that the team can ask probing quesDons about programs to understand the costs associated with their requirements. For example, if a program is required to conduct two family engagement acDviDes each year, it is important to understand the costs, such as providing child care or food during the acDvity, paying teachers overDme, or hiring subsDtutes.

This quality frame, along with state licensing standards, forms the baseline of the cost esDmaDon model. Program data can be used to inform the default assumpDons for the primary cost drivers such as salaries and benefits, occupancy costs, and other non-personnel expenses. States can use the federal Provider Cost of Quality Calculator (PCQC) to fill gaps in data on salary and non-personnel expenses.lviii The PCQC uses Bureau of Labor StaDsDcs data for salary data and naDonal default assumpDons on average costs for non-personnel expenses. Usually, states will develop a single baseline model for centers and one for family child care homes, and then this model can be modified to integrate different assumpDons, such as the cost of meeting different quality standards in a QRIS, meeDng aspiraDonal quality standards, paying higher staff compensaDon, and variaDons based on region. Timeline and Cost To develop a cost esDmaDon model that meets the requirements for subsidy rate senng usually takes between 6 to 12 months, depending on the number of providers in the state and the level of educaDon needed with the community before the data collecDon begins. The graphic below details the key steps across this Dmeline.

Months 1–3 •Engage interested parties •Assess readiness •Plan project Months 4–6 •Collect data from providers via surveys, interviews, and focus groups Months 7–9 •Develop cost estimation models •Develop, verify, and revise assumptions Months 10–12 •Run scenarios and share results •Inform rate setting