2020 child care market rate survey report · 2020. 12. 22. · private pay rates to the elrcs...

Pennsylvania’s

2019

CHILD CARE MARKET RATE SURVEY REPORT

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Table of Contents

Section I: Introduction .................................................................................................................................. 2

Section II: Methodology and Process ............................................................................................................ 2

Section III: Market Rate Survey Results ........................................................................................................ 3

Section IV: Narrow Cost Analysis .................................................................................................................. 6

Section V: Summary ...................................................................................................................................... 8

Section VI: Next Steps ................................................................................................................................... 9

Appendix A: 2019 MRS – Full-Time Care MCCA Percentiles ....................................................................... 11

Appendix B: 2019 MRS – Part-time Care MCCA Percentiles ....................................................................... 16

Appendix C: Keystone STARS Quality Add-on Rates for CCW Enrollments ................................................ 21

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Section I: Introduction The Pennsylvania Department of Human Services, Office of Child Development and Early Learning (OCDEL) is the lead agency for the implementation of the Child Care Development Fund (CCDF). CCDF provides States, Indian tribes, and territories with funding to help low-income families access child care for their children through certificates, grants, or contracts. Pennsylvania supports low-income working family’s access to child care through certificates in a subsidized child care program known as Child Care Works (CCW).

Activities implemented through CCDF are authorized under the Child Care Development and Block Grant of 2014 (CCDBG). Section 658E(c)(4) of the CCDBG, and accompanying CCDF regulations at 45 CFR Part 98, require OCDEL to certify that CCW payment rates are sufficient to ensure equal access as compared to families paying private tuition. The payment rates, also known as the Maximum Child Care Allowances (MCCAs) or base subsidy rates, are established by OCDEL in regulation and disaggregated by county as well as care-level, provider type, and type of care (i.e. part-time vs. full-time). CCDF regulations require OCDEL to either 1) conduct a market rate survey (MRS) of child care providers every three years or 2) utilize a pre-approved alternative methodology. To meet this requirement, OCDEL conducted an MRS between Oct. 7, 2019, and Dec. 31, 2019.

An MRS is the collection and analysis of prices charged by child care providers in an open market, where the parent/guardian and provider do not have a relationship that could affect the price charged. A well- planned and conducted market rate survey provides quantitative insight into provider business practices and prices by location, setting, children’s ages, and the time children are in care. The purpose is to guide state agencies, such as OCDEL, in setting payment rates within the context of market conditions so the rates are sufficient to provide equal access. The 75th percentile payment rate was established as a benchmark for CCDF by the preamble to the 1998 Final Rule (63 FR 39959); therefore, states and territories are familiar with this rate as a proxy for equal access. The federal Office of Child Care (OCC) considers payment rates set at the 75th percentile or higher as providing equal access.

After the MRS is conducted, OCDEL is required by CCDBG to issue a publicly available final report detailing the results. The following report is provided to meet this requirement. Additional information and guidance on market rate surveys, rate setting requirements of CCDBG, and other related topics can be found on the OCC webpage.

Section II: Methodology and Process In August 2019, OCDEL staff developed a plan for the upcoming MRS. A series of meetings were held to determine the best course of action for administering the survey, and communicating with the field of child care providers. Like the 2016 MRS, staff agreed that utilizing PELICAN Provider Self-Service (PSS) was the best course of action for administering the survey. PSS is a self-service online application that allows regulated child care providers to manage their working relationships with OCDEL. Among the functional capabilities of PSS, providers can update their program profiles, including a section dedicated to private pay tuition rates.

OCDEL staff worked with the Early Learning Resource Centers (ELRCs) to update instructions on how a provider could update private pay tuition rates utilizing PSS. In addition, all providers were notified that if they did not wish to utilize PSS or did not have an active PSS profile, they could choose to report private pay rates to the ELRCs directly through a phone call or email. To adhere to the CCDF requirement that the MRS be completed over a three-month span, OCDEL set the survey timeframe for providers to update their private pay tuition rates from Oct. 7, 2019, to Dec. 31, 2019.

OCDEL developed an aggressive communications strategy to notify providers of the importance of MRS

https://www.acf.hhs.gov/office-of-child-care

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participation and the impact on MCCA rate setting. The strategy included a multi-faceted approach utilizing both external and internal resources:

Pre-Survey Communications (Sept. – Oct. 6, 2019) • OCDEL’s Deputy Secretary and External Relations Director announced the upcoming MRS to

members of Pennsylvania’s Early Learning Council (ELC) and State Interagency Coordinating Council at a joint meeting. The ELC fulfills the requirements of the State Advisory Council and consists of various child care providers, as well as membership-based advocacy organizations that represent the industry. ELC members were encouraged to communicate with their constituencies about the MRS until the end of the survey timeframe in December 2019.

• OCDEL’s External Relations Director presented at the Pennsylvania Child Care Association’s (PACCA’s) Education and Policy Committee as well as the South Eastern Pennsylvania Early Childhood Coalition (SEPECC).

• All regulated providers were sent a letter from their respective ELRC explaining the need to update their rates. The letter included detailed instructions for PSS, a help desk telephone number for technical assistance, and the alternatives for reporting updated rates.

Survey Timeframe Communications (Oct. 7 – Dec. 31, 2019) • OCDEL’s External Relations Director presented at the Child Care Providers Network policy

meeting. • At the October 2019 Early Childhood Education Summit:

o OCDEL’s Deputy Secretary included details about the MRS in her opening remarks and presentation.

o A power point was on display in the main hall of the summit for three days providing information about the MRS.

o The OCDEL Leadership break-out session included information about the MRS and how providers could update private pay rates in PSS.

o OCDEL established a computer lab for providers to log onto PSS and update their program rates. Support staff were available for technical assistance. The computer lab was marketed throughout the summit’s three-day schedule.

• OCDEL participated in a PACCA webinar on educating providers about the MRS and how to update private pay rates in PSS.

• Five separate email notifications were sent to subscribers of the Pennsylvania Key’s Early Ed News, reminding child care providers of the upcoming deadline to update rates in PSS. The notifications were also posted on two Pennsylvania Key social media sites.

• OCDEL’s Bureau of Certification Services included an MRS announcement via the licensed child care provider listserv.

• The Pennsylvania Key website included MRS notifications on the What’s New? homepage on two separate occasions during the survey timeframe.

Following the expiration of the MRS on Dec. 31, 2019, OCDEL requested a PELICAN query that captured all open and regulated child care providers with at least one reported private pay rate in PSS. ELRCs were also directed to report any private pay rates reported via telephone or email. The data was then cleaned and checked to insure daily private pay rates were accurately captured for each provider. The final data set was uploaded into a Microsoft Excel-based model developed by a third-party IT vendor. The model analyzed the private pay rates in the data set and computed the percentile for each MCCA. The results of the model are detailed in Section III and Appendices A and B.

Section III: Market Rate Survey Results The final MRS data included 6,702 operating child care providers with at least one reported private pay

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rate. The MRS data reflected both providers with and without a Child Care Works (CCW) agreement and represents 95 percent of the approximately 7,000 regulated programs operating at the end of the 2019 calendar year. Figure 1 disaggregates the providers included in the MRS by type and designation in Pennsylvania’s quality rating and improvement system, Keystone STARS. Figure 1

For providers included in the MRS, 94.2 percent, or 6,313, had active CCW agreements with their regional ELRC.1 This reported percentage of providers with active CCW agreements is artificially high because providers participating in CCW are more likely to utilize PSS regularly; therefore, they are more likely to have updated their rates via PSS. The actual percentage of regulated providers with an active CCW agreement compared to the total regulated provider population is approximately 87-90 percent based on data elements collected by OCDEL outside of the MRS.

Although the rate at which licensed providers are participating in CCW is relatively high (87-90 percent), some barriers to CCW participation may exist. As detailed in Section IV, there is a significant gap between the cost of providing child care services in the commonwealth and the amount providers are paid through the MCCAs. Generally, the MCCA rates only meet between 40 – 66 percent of the costs assumed by providers serving CCW enrolled children. Some providers are unable to participate in CCW as they may simply operate in more affluent localities where the CCW eligible population is small or non- existent. In such cases, there may be no added benefit to a provider entering into a CCW agreement.

1 A CCW agreement permits a licensed provider to serve children/families enrolled in the CCW subsidy child care program.

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2019 MRS: Average and Median Daily Child Care Rates Full-Time Part-Time ProviderType/CareLevel N Average Median N Average Median Family Child Care Homes Infant 1,334 $ 34.46 $ 40.00 1,252 $ 27.95 $ 33.00 Young Toddler 1,359 $ 32.69 $ 38.38 1,275 $ 26.54 $ 31.80 Old Toddler 1,369 $ 31.56 $ 36.54 1,290 $ 25.59 $ 30.00 Preschool 1,374 $ 30.36 $ 35.00 1,302 $ 24.75 $ 27.00 School Age 1,294 $ 28.51 $ 30.00 1,278 $ 22.75 $ 23.75 Group Child Care Homes Infant 588 $ 36.80 $40.00 558 $ 30.12 $ 32.40 Young Toddler 610 $ 34.65 $ 38.00 576 $ 28.39 $ 31.00 Old Toddler 625 $ 33.22 $ 36.00 596 $ 27.18 $ 30.00 Preschool 639 $ 31.76 $ 34.00 611 $ 25.92 $ 27.00 School Age 618 $ 29.65 $ 30.00 614 $ 23.60 $ 23.57 Child Care Centers Infant 3,285 $ 46.74 $ 40.38 2,928 $ 38.56 $ 34.00 Young Toddler 3,497 $ 44.45 $ 39.00 3,217 $ 36.41 $ 32.00 Old Toddler 3,628 $ 42.31 $ 36.86 3,388 $ 34.40 $ 30.40 Preschool 4,198 $ 39.04 $ 35.00 3,992 $ 30.78 $ 27.60 School Age 4,188 $ 35.94 $ 31.00 4,184 $ 25.66 $ 24.00

Following the release of the MRS report and detailed further in Section VI, OCDEL will hold a comment period for providers, advocates and other constituencies to provide additional feedback on barriers to participating in CCW.

Figure 2 below provides survey results of the statewide average private pay rate by Keystone STAR designation, care level (infant, toddler, preschool, school-age) and length of care (i.e., part-time vs full- time). Please note, a higher STAR designation is associated with a more enriching provider environment, more highly qualified staff, and a generally higher quality level of care. The MRS data confirms that providers offering higher quality care, regardless of care level, charge private pay families more per day compared to providers at the lower end of the Keystone STARS spectrum. The historically linear relationship between care level and price per day was also present in the data. In all cases, infant and toddler care was associated with higher prices as compared to preschool and school age care.

Figure 2

Keystone STARS Designation

Provider Count

Average Infant FT

Market Rate

Average Young

Toddler FT Market Rate

Average

Older Toddler FT Market Rate

Average

Preschool FT Market

Rate

Average

School Age FT Market

Rate

Average Infant PT

Market Rate

Average Young

Toddler PT Market Rate

Average

Older Toddler PT Market Rate

Average

Preschool PT Market

Rate

Average

School Age PT Private

Rate No STARLevel / STAR 1 3,834 $ 40.21 $ 38.17 $ 36.50 $ 34.66 $ 32.27 $ 32.57 $ 31.00 $ 29.47 $ 27.63 $ 24.26 STAR 2 1,165 $ 40.53 $ 38.70 $ 37.02 $ 35.03 $ 32.70 $ 33.49 $ 31.92 $ 30.57 $ 28.18 $ 23.85 STAR 3 558 $ 45.61 $ 43.29 $ 41.23 $ 38.31 $ 35.23 $ 38.48 $ 36.08 $ 34.22 $ 30.63 $ 25.47 STAR 4 1,145 $ 51.32 $ 48.92 $ 46.91 $ 42.56 $ 39.29 $ 42.30 $ 39.90 $ 37.95 $ 33.40 $ 27.66

*FT is an abbreviation for “Full-Time”. PT is an abbreviation for “Part-Time”.

Figure 3 provides survey results of the statewide average and median daily market prices reported in the MRS by provider type, care level, and length of care. The columns labeled “N” list the number of private pay rates that were captured for each category. When comparing the average prices per day, Child Care Centers (CCCs) charge the highest dollar amount, regardless of care level, followed by Group Child Care Homes (GCCHs) and Family Child Care Homes (FCCHs). However, when the median prices per day are compared, no significant variance by provider type is present. As an example, the typical full-time daily rate for infant care for CCCs, GCCHs, and FCCHs is approximately $40 statewide.

Figure 3

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The MRS data also highlights that the MCCAs are inadequate in meeting provider costs in some cases. Of the 2,010 MCCAs for regulated providers, 1,857 could be measured against private pay rates with a percentile calculation. Of that number, approximately 25 percent, or one out of every four, fail to reach the 1st percentile and nearly 70 percent fail to exceed the 30th. Figure 4 provides additional detail of the MCCA percentiles.

Figure 4

OCDEL understands many of the current MCCAs are below the 75th percentile recommended by ACF to reflect equal access; however, the basis for measuring the MCCAs in Pennsylvania is has some statistical weaknesses. The 75th percentile payment rate was established as a benchmark for CCDF by the preamble to the 1998 Final Rule (63 FR 39959); therefore, states and territories are familiar with this rate as a proxy for equal access. Scientific and mathematic communities agree that for any percentile- based measurement, precision increases as the number of observations/values increases, and the more highly skewed a data distribution is, the larger the number of observations/values are needed to obtain a reasonable level of confidence. Put more simply, percentile measurements require at least three values, preferably ten, and more if possible. Ideally, each of the commonwealth’s 201 base rate categories2 would have at least ten providers in the three provider types (FCCH, GCCH, CCC). Approximately 25 percent of the base rate categories do not have at least three regulated providers, which skews the percentile measurement. Furthermore, six out of every ten base rate categories do not have at least 10 providers within a provider type.

Additional county-level details on the MCCA percentiles can be found in Appendices A and B.

Section IV: Narrow Cost Analysis CCDF compliance with 45 CFR 98.45(f) requires a Narrow Cost Analysis to be completed as part of the MRS survey. OCDEL engaged Dr. Phillip M. Sirinides of the Pennsylvania State University -Harrisburg to complete a study aimed at understanding the cost of providing child care services in Pennsylvania. In October 2020, The Cost of Child Care in Pennsylvania study was issued. OCDEL is utilizing this study to meet the Narrow Cost Analysis requirement.

2 67 counties x 3 provider types = 201 base rate categories.

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The study was conducted in the Fall of 2019 and utilized the ingredients method to calculate the economic cost of providing child care in Pennsylvania. This included collecting detailed data on the necessary resources to operate child care program and applying a market price to those resources. Examples of resources include personnel, facilities, equipment, consumable supplies and other services. Data was collected from a statewide survey and on-site visits and staff interviews with a representative sample of 30 providers. Providers varied in type, geographic location, size and quality rating.

Figure 5 below reports the minimum, median and maximum cost of care per child per week by provider type, quality level and locale as reported in the study.

Figure 5

The table above shows:

• the state-wide median cost of care is $290 per child per week; • group and small center providers generally had a higher cost of care than family or larger center

providers; • cost of care generally increases as STAR level increases; • cost of care varies greatly in rural versus metropolitan areas

It is important to note that when determining MCCAs meet between 40-66 percent of provider costs, the study did not factor in additional payments or incentives such as Keystone STARS quality add-ons, education retention awards, merit awards, etc. Understanding the cost of care in Pennsylvania is important in the evaluation of the established MCCA rates paid for the CCW child care subsidy.

The cost to provide child care is high and will continue to increase through efforts to increase staff compensation and advance qualifications. Furthermore, the COVID-19 pandemic has had a devastating impact on the commonwealth’s child care industry by further increasing costs and reducing child enrollments. Although the MRS does not account for increased costs related to COVID-19, OCDEL did enlist the Pennsylvania State University Institute of State and Regional Affairs to conduct a study on the unexpected new costs assumed by the industry since March 2020. The study can be used independently or in conjunction with the MRS and the narrow cost analysis to better understand the financial landscape of child care in the commonwealth.

The Impact of COVID-19 on Pennsylvania Child Care study in its entirety can be found at: www.dhs.pa.gov/coronavirus/Documents/PA_COVID_IMPACT_FINAL.pdf

http://www.dhs.pa.gov/coronavirus/Documents/PA_COVID_IMPACT_FINAL.pdf

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From both a can

market

and a cost

spective, it

s clear

ylvania’s

ablished

CA

Based on the results of The Cost of Child Care in Pennsylvania study, it is recommended that OCDEL reassess the MCCA rate structure to lessen the gap between the true cost of the care and the MCCA rates.

The Cost of Child Care in Pennsylvania study in its entirety can be found at: scholarsphere.psu.edu/downloads/12j62s548j.

Section V: Summary The 2019 MRS and The Cost of Child Care in Pennsylvania study have helped evaluate the established MCCA base rates in 1) ensuring equal access for CCW families, and 2) compensating providers to meet the basic health and safety requirements in the operation of a child care program. The commonwealth offers significant daily add-on rates for high-quality providers participating in Keystone STARS; however, those add-ons were not considered in either the MRS or narrow cost analysis. Current quality add-on rates can be found in Appendix C. Comparatively, it should be noted that as of January 2020, approximately 34 percent of the CCW population was enrolled in a STAR 3-4 program, while 66 percent received care with a provider that has yet to meet that designation, or a relative-provider.

When considering the results of the MRS and the study, approximately 95 percent do not meet the 75th percentile benchmark recommended by OCC, and 8 out of every 10 do not exceed the 40th percentile. In addition, the results of the study show that the current established MCCA rates cover only approximately 50 percent of the true cost of care. Figure 6 shows the full-time care MCCA percentiles (based on the 2019 MRS) for the six counties with the highest number of CCW children served. The six counties represent 61 percent of total January 2020 CCW enrollments. No MCCA in those six counties reaches the 40th percentile, with the 18th percentile being the median across all provider types.

Figure 6

Full-Time Care

County % of Total CCW

Population Provider Type INFANT YOUNG

TODDLER OLD TODDLER PRE-SCHOOL SCHOOL-AGE

Philadelphia

33.5%

CENTER 22.22% 28.94% 21.93% 21.54% 21.35% GROUP 20.79% 20.56% 22.10% 23.50% 26.67% FDCH 23.28% 20.42% 26.11% 24.71% 30.90%

Allegheny

9.1%


Delaware

6.5%


Dauphin

3.3%


Lehigh

4.9%


Montgomery

3.8%


MRS and The Cost of Child Care in Pennsylvania study will be utilized to inform both the MCCA base rate

https://scholarsphere.psu.edu/downloads/12j62s548j

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and the Keystone STARs quality add-on rate adjustments moving forward. Making improvements in this policy area continues to be a high priority for OCDEL.

Section VI: Next Steps Upon publication of this report, OCDEL will establish a timeframe for providers, advocates, families and the general public to provide comment on the data and findings detailed in Sections I-V. OCDEL will also ask for input on barriers currently preventing more regulated providers from participating in the CCW subsidy program. Upon completion of public comment period, OCDEL will review the submissions and issue an amended report detailing the comments provided to OCDEL.

Early childhood education providers can provide feedback regarding the report or any barriers to participating in Child Care Works using the Market Rate Survey Feedback Form (https://www.surveymonkey.com/r/3CGJKDP), which will be available between until Dec. 22, 2020 and Jan. 22, 2021.

https://www.surveymonkey.com/r/3CGJKDP

https://www.surveymonkey.com/r/3CGJKDP

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Appendix A: 2019 MRS – Full-Time Care MCCA Percentiles

*FDCH refers to Family Child Care Homes (FCCH) Full-Time Care

County Provider Type INFANT YOUNG


Adams


Allegheny


Armstrong


Beaver


Bedford


Berks


Blair


Bradford


Bucks


Butler


Cambria


Cameron

CENTER 0.00% 0.00% 0.00% 0.00% 0.00% GROUP No MRS Rate No MRS Rate No MRS Rate No MRS Rate No MRS Rate FDCH 0.00% 0.00% 0.00% 0.00% 0.00%

Carbon

CENTER 10.53% 31.58% 31.58% 10.53% 5.00% GROUP 0.00% 0.00% 0.00% 50.00% 0.00% FDCH No MRS Rate No MRS Rate No MRS Rate No MRS Rate No MRS Rate

Centre


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Chester


Clarion


Clearfield


Clinton


Columbia


Crawford

CENTER 0.00% 15.00% 27.27% 32.26% 0.00% GROUP No MRS Rate No MRS Rate 0.00% 0.00% 0.00% FDCH 85.71% 28.57% 28.57% 28.57% 14.29%

Cumberland


Dauphin


Delaware


Elk


Erie


Fayette


Forest

CENTER No MRS Rate No MRS Rate No MRS Rate No MRS Rate No MRS Rate GROUP No MRS Rate No MRS Rate No MRS Rate No MRS Rate No MRS Rate FDCH No MRS Rate No MRS Rate No MRS Rate No MRS Rate No MRS Rate

Franklin


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Fulton

CENTER 0.00% 0.00% 0.00% 0.00% 0.00% GROUP No MRS Rate No MRS Rate No MRS Rate No MRS Rate No MRS Rate FDCH No MRS Rate No MRS Rate No MRS Rate No MRS Rate No MRS Rate

Greene


Huntingdon


Indiana


Jefferson


Juniata


Lackawanna


Lancaster


Lawrence


Lebanon


Lehigh


Luzerne


Lycoming


McKean


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Mercer


Mifflin


Monroe


Montgomery


Montour


Northampton


Northumberland


Perry


Philadelphia


Pike


Potter


Schuylkill


Snyder


Somerset


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*FDCH refers to Family Child Care Homes (FCCH)

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Appendix B: 2019 MRS – Part-time Care MCCA Percentiles *FDCH refers to Family Child Care Homes (FCCH) Part-Time Care



Adams


Allegheny


Armstrong


Beaver


Bedford


Berks


Blair


Bradford


Bucks


Butler


Cambria


Cameron


Carbon


Centre


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*FDCH refers to Family Child Care Homes (FCCH) Part-Time Care



Chester


Clarion


Clearfield


Clinton


Columbia


Crawford


Cumberland


Dauphin


Delaware


Elk


Erie


Fayette


Forest

CENTER No MRS Rate No MRS Rate No MRS Rate No MRS Rate No MRS Rate GROUP No MRS Rate No MRS Rate No MRS Rate No MRS Rate No MRS Rate FDCH No MRS Rate No MRS Rate No MRS Rate No MRS Rate No MRS Rate

Franklin


Fulton

CENTER 0.00% 0.00% 0.00% 0.00% 50.00% GROUP No MRS Rate No MRS Rate No MRS Rate No MRS Rate No MRS Rate FDCH No MRS Rate No MRS Rate No MRS Rate No MRS Rate No MRS Rate

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Greene


Huntingdon


Indiana


Jefferson


Juniata


Lackawanna


Lancaster


Lawrence


Lebanon


Lehigh


Luzerne


Lycoming


McKean


Mercer


Mifflin


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Monroe


Montgomery


Montour


Northampton


Northumberland


Perry


Philadelphia


Pike


Potter


Schuylkill


Snyder


Somerset


Sullivan


Susquehanna


Tioga


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Union


Venango


Warren


Washington


Wayne


Westmoreland


Wyoming


York


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Appendix C: Keystone STARS Quality Add-on Rates for CCW Enrollments

Keystone STARS Daily Add-on Rates Care Level PT STAR 2 FT STAR 2 PT STAR 3 FT STAR 3 PT STAR 4 FT STAR 4 Infant $0.95 $1.55 $3.25 $6.80 $4.10 $10.30 Young Toddler $0.85 $1.45 $3.10 $6.60 $3.90 $10.10 Older Toddler $0.85 $1.45 $3.10 $6.60 $3.90 $10.10 Preschool $0.45 $0.95 $2.50 $5.90 $3.20 $9.20 School-Age $0.45 $0.95 $2.50 $5.90 $3.20 $9.20