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Table of Contents EXECUTIVE SUMMARY ...................................................................................................................................... 1 INTRODUCTION .................................................................................................................................................. 3 VERMONT’S CURRENT APPROACH TO CCFAP RATE SETTING ........................................................................ 3 COMPARING APPROACHES TO CHILD CARE SUBSIDY RATE SETTING ............................................................ 5 MARKET RATE STUDY .................................................................................................................................... 5 COST OF CARE .............................................................................................................................................. 7 APPROACHES TO INTEGRATE RATE AND COST DATA ............................................................................................. 9 INDEXING RATES TO REFLECT CHANGES .......................................................................................................... 10 IMPACT OF DIFFERENT METHODOLOGIES ..................................................................................................... 10 PROGRAMMATIC AND FINANCIAL IMPLICATIONS ....................................................................................... 12 FAMILY CONTRIBUTIONS .............................................................................................................................. 13 EXAMPLES OF COST-BASED APPROACH TO RATE SETTING .......................................................................... 14 DISTRICT OF COLUMBIA ............................................................................................................................... 15 NEW MEXICO ............................................................................................................................................ 15 VIRGINIA ................................................................................................................................................... 16 APPENDIX ......................................................................................................................................................... 17 A. UNDERSTANDING HOW A COST ESTIMATION MODEL CAN BE USED FOR ALTERNATIVE METHODOLOGY ................. 17 B. ADDITIONAL BACKGROUND RESOURCES ................................................................................................. 19 CITATIONS ......................................................................................................................................................... 21