1. The Massachusetts Early Education and Care and Out-of- School Time Quality Cost Model Anne MitchellAndrew Brodsky Presentation to the Massachusetts Department of Early Education and Care January 8, 2013

2. Project Goals Identify child care cost drivers of levels from licensing through QRIS levels Create interactive model to estimate costs of child care quality in MA Estimate cost implications of changing reimbursement rates Identify current and potential financing strategies for child care quality

3. Cost Methodology Baseline cost estimates based on cost of licensing Cost to achieve given distribution of quality based on analysis of cost- related components of QRIS system If data are available, costs determined separately by region

4. Excel Model Features Allows user to change distribution of quality (beginning at licensing) Allows user to adjust supports for high quality child care (such as grants) and view resulting costs Allows user to adjust reimbursement rate structure

5. Excel Model Output Current and projected enrollment by age and setting Additional costs based on changes to enrollment and quality distribution, by setting Additional costs based on changes to reimbursement rates Cost of quality grants to providers

6. Factors Affecting Quality Higher quality ECE costs more than most families can afford Market-based ECE encourages price competition – low tuition fees – and discourages investments in quality

7. Considerations for Estimating Costs Expense drivers: Ratios Group size Staff compensation (salary and benefits) Revenue drivers: Parent tuition fees/other revenue Revenue collection Enrollment efficiency

8. Provider perspective: Iron Triangle

9. Supporting Financial Stability State can… Set family income eligibility high for entry and higher for exit Use contracts more than vouchers Set rate ceilings as high as feasible Providers can… Fill vacancies immediately to keep enrollment as close to 100% as possible Collect all revenue on time Diversify revenue: Participate in CACFP, PreK & other revenue sources

10. Considerations for Estimating Cost: QRIS Requirements in licensing rules QRIS expectations increase by levels Primarily better qualified staff as quality increases (higher compensation) More staff time for assessment, family activities and conferences, curriculum planning, staff meetings One-time costs for equipment

11. Massachusetts Cost of Quality Survey (2012) Used in the model Data confirms BLS wages, cost of training and continuing professional development Data informed non-personnel costs Materials and equipment Child screening and assessment

12. The Massachusetts Early Education and Care and Out-of-School Time Quality Cost Model – Screen Shots

15. Scenario 1: BLUE line on graph

16. Scenario 2: RED line on graph

17. Scenario 3: GREEN line on graph