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)? The data for the Market Rate Survey was captured during the timeframe of January 2023 through December of 2023. 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 Lead Agency met with the Governor’s Early Childhood Advisory Council (ECAC) on Thursday, April 4, 2024, to collaborate on the 2025 ￿ 2027 CCDF State Plan including the development and completion of the required Market Rate Survey (MRS). iv. Local child care program administrators: Local child care program administrators work closely with Child Care Resource and Referral (CCR&R) agencies in providing critical data necessary to understand the true cost of child care services up to and including current child care rates. Additionally, the Lead Agency has collaborated with the Tribal and County child care agencies on the completion of the MRS. Local agencies serve an important role in encouraging providers to respond to the CCR&R surveys sent to them. v. Local child care resource and referral agencies: The Lead Agency works closely with Supporting Families Together Association (SFTA) and all nine of the regional CCR&R’s to improve survey templates, increase survey response rates, and explore new and innovative ways to capture critical data elements. The CCR&R’s and SFTA are collaborative partners in ongoing MRS workgroup meetings led by the Lead Agency. vi. Organizations representing child care caregivers, teachers, and directors from all settings and serving all ages: The Lead Agency will be consulting with the Wisconsin Department of Public Instruction (DPI) and key Early Care and Education (ECE) stakeholders across the state to ensure full involvement of all providers, teachers, and caregivers in the completion of the MRS survey tool. These interactions may occur through collaboration with the ECAC or through specific collaboration with individual stakeholders. vii. Other. Describe: The Lead Agency has met with Tribal agencies throughout the state to discuss all aspects of the CCDF state plan, including ways to improve the MRS process to fully capturing true cost of care data from tribal 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? 6/15/2024 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)? The data for the Market Rate Survey was collected during the timeframe of January 2023 through December 2023. iii. Describe how it represented the child care market, including what types of providers were included in the survey: The MRS contains data received from all licensed family and group providers across the state to ensure updated rate information in all rural and urban regions. iv. What databases are used in the survey? Are they from multiple sources, including licensing, resource and referral, and the subsidy program? The primary source of data for the MRS is the survey of licensing child care providers by the regional CCR&R through the completion of the Business Information Form (BIF) that was co-developed by SFTA and the CCR&R’s. Additionally, the Lead Agency does access provider rate information that is self-entered by providers into the Child Care Provider Portal (CCPP) to supplement survey data received. v. How does the survey use good data collection procedures, regardless of the method for collection (mail, telephone, or web-based survey)? Child Care Resource and Referral Agencies (CCR&R) collect survey data through mail, telephone, and web-based survey responses. All data are entered into a Salesforce database, however the child care provider responds. Child care providers can update their details directly in the web-based survey. Trained CCR&R staff enter details given through mail or phone. Updated dates are tracked for each survey response. An automated interface transfers data from each CCR&R to a central Salesforce database at the Supporting Families Together Association (SFTA) which then transfers to WI DCF. CCR&Rs coordinate each year to reach out to child care providers in order to collect the bulk of survey data during the same period of time. Providers can also access the web portal year- round to update CCR&Rs whenever there are changes. vi. What is the percent of licensed or regulated child care centers responding to the survey? 61.00 vii. What is the percent of licensed or regulated family child care homes responding to the survey? 61.00 viii. Describe if the survey conducted in any languages other than English: The Lead Agency has the capability to provide the BIF form in Spanish or Hmong if requested. ix. Describe if data were analyzed in a manner to determine price of care per child: The MRS results are used to determine the overall percent of available slots that are open to families participating in the Wisconsin Shares Subsidy program. This information is used to developed data-informed decisions regarding the allocation of funding towards the improvement of child care rates. x. Describe if data were analyzed from a sample of providers and if so, how the sample was weighted: Surveys were sent to all licensed child care providers. Price information is weighted by day-time child care capacity, so that Wisconsin can measure slot availability for families as closely as possible. 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. All licensed child care providers are invited to participate in the survey. Results are analyzed in various groupings, primarily by county, age group, and provider type (family or group setting). Tribal territories had too few respondents to evaluate separately, so they were included in their neighboring county. Some counties had no respondents. When setting rates for WI Shares, Wisconsin uses neighboring county rates to set the prices for these. Missing geographies are from rural areas that have few or no licensed child care providers. 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). Three types of licensed providers were surveyed: licensed group centers, licensed camp, and licensed family providers. Licensed group centers and licensed camp were evaluated as one type of provider; licensed family providers were evaluated separately. iii. Describe how the market rate survey or pre-approved alternative methodology reflected age of child (e.g., infant, toddler, preschool, school-age): The Lead Agency uses four age groups to evaluate the market rates: under 2 years, 2-3 year-olds, 4-5 year-olds, and 6 and older. When surveying, providers are asked their price for each year of the child (i.e., under 1, 1-year-old price, 2-year-old price, etc.). iv. Describe any other key variations examined by the market rate survey or ACF pre- approved alternative methodology, such as quality level: The Lead Agency also looks at groupings of counties by percent of the population in urban areas: rural areas (<25%), semi-rural (25-49%), semi-urban (50-74%), and urban (75-100%). The Lead Agency also looks at price by YoungStar level as combined with urban groupings. 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)? A narrow cost analysis was completed in May 2024 to capture the cost of operating operate a high-quality child care program, including non-personnel costs that are included in the Lead Agency’s Quality Rating Improvement System at higher levels and compensation that is commensurate with education completed. The narrow cost analysis data collection included the collection of publicly available data, and the use of the ACF-OCC Provider Cost of Quality Calculator (PCQC). Data collected through these processes included: cost of implementing high-quality care, staff costs, facility expenses, professional development, and ensuring sufficient child-to-staff ratios. b. In the Lead Agency’s analysis, were there any relevant variations by geographic location, category of provider, or age of child? The narrow cost analysis reflects four urban groups: 0-24% urban, 25-49% urban, 50-74% urban, and 75- 100% urban. Child care programs are identified by Wisconsin’s quality rating system (YoungStar) participation status and quality level rating through the Narrow Cost Analysis by each YoungStar level (e.g., 2 Star, 3 Star, 4 Star, and 5 Star). The Lead Agency also breaks it down by provider regulation type (family, group) and the child’s age rage(infant and toddler, 2 year olds, 3 year olds, 4 year olds, school age). 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.)? Child care programs are identified by the Lead Agency’s quality rating system (YoungStar) participation status and quality level rating through the Narrow Cost Analysis. The YoungStar quality rating is reflected in the overall costs associated with running a high- quality child care program. The narrow cost analysis provides annual per child costs by each YoungStar level (e.g., 2 Star, 3 Star, 4 Star, and 5 Star). The base level quality is seen in the costs associated with programs rated as a 2 Star program. 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). Child care programs are identified by the Lead Agency’s quality rating system (YoungStar) participation status and quality level rating through the Narrow Cost Analysis. The YoungStar quality rating is reflected in the overall costs associated with running a high-quality child care program. The narrow cost analysis provides annual per child costs by each YoungStar level (e.g., 2 Star, 3 Star, 4 Star, and 5 Star). High quality child care programs are inclusive of programs rated 3, 4, and 5 Star. Staff current and recommended salaries at these quality levels reflect the quality rating criteria requirement of higher staff education, additional staffing structure, and non- personnel costs also reflect adjustments to costs at higher quality levels consistent with the rating criteria requirements. 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? Historically, the Lead Agency has funded rate increases to all child care providers. Effective 10/1/2018, the Lead Agency provided funding to increase the rate for infant care to a minimum of $5.00 per hour based on Market Rate Survey (MRS) data and stakeholder feedback. On 01/01/2019, all rates were increased by 5% and on 10/1/2019 all rates were again increased to bring all rates to the 35th percentile. Additionally, effective 1/1/22, the Lead Agency allocated approximately $50 million in funding to raise state-wide payment rates to the 75th percentile. This large allocation was used to increase the rates for all child age ranges and provider types of bring the entire state up to the 75th percentile. The 2024 Child Care Market Survey analysis provided additional information on how investments listed above have impacted the gap between cost and price: - Child Care provider prices have increased between 2022 and 2023. - Because of these price increases, the buying power of Wisconsin Shares has decreased. In 2022, the maximum Wisconsin Shares rate was at or above the price of 74% of slots. In 2023, it was at or above the price of 50% of slots. - Provider prices do not always reflect the true cost of providing quality care. The true costs of providing quality care would include pay parity with kindergarten educators in K- 12 settings. Moving forward the Lead Agency will continue to review MRS and Cost of Care data to identify other specific areas where payment rates have fallen below the agency's goal of all rates being at the 75th percentile and consider new approaches, such as alternative cost of care methodologies, that will help inform these critical efforts. 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: 5/30/2024 ii. Provide the date the report containing results was made widely available (no later than 30 days after the completion of the report): 6/24/2024 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: The Lead Agency posts all Market Rate Survey and Narrow Cost Analysis documents at https://dcf.wisconsin.gov/childcare/ccdbg. Additionally, the Lead Agency notifies the public that the MRS / Narrow Cost Analysis documents have been completed and posted through weekly Listserv messages, X, and Facebook. Each messaging platform includes the appropriate link to access the final report and summary document. 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 Lead Agency works closely with the local CCR&Rs in the throughout the development and completion of the MRS final report. The CCR&Rs engaged with the Lead Agency on the wording of the Business Information Form (BIF) which is the one of the primary data instruments used to gather statewide provider data.