Infant Toddler Rate Analysis Based on the analysis of rates for educators in infant and toddler programs, and in alignment with the implementation of multiple Department initiatives focused on this age group, EEC proposes a 3% increase to rates paid to educators serving infants and toddlers in Massachusetts. Upcoming initiatives with increased expectations of educators include: The Development of Infant and Toddler Learning Guidelines These Guidelines are intended for all types of early education and care settings that care for children from birth through thirty-six months of age. They describe how programs and educators can best support the healthy development of infants and toddlers. They are structured to facilitate their use for professional development, are aligned with EECs existing Preschool Guidelines for Three and Four Year Olds and with the EEC Core Competencies. They address brain development, emphasize relationships as a key factor across all development domains, and reflect values inherent in a strength based approach. Birth to School Age Task Force Report Recommendations Multiple recommendations speak to the need to for increased compensation for providers and for quality services for infants and toddlers. Quality Rating and Improvement System (QRIS) Includes standards for increased qualifications for staff in high quality programs. 2
Historical Discussion Of Rate Increase for Infants and Toddlers 2009 Massachusetts 2008 Child Care Market Rate Survey (June 2009) This study collected/analyzed market prices by zip code and by the six EEC regions for all program types to understand the distribution of daily published prices of early education and care statewide and by region and by type of care and age group and found the rate EEC paid was below 50% of the median. The study revealed that the rates paid to EEC supported programs was below 50% of the median and the price of care was highest for infants (in center based care). At this time, although interested, the Board was unable to respond to this gap in funding due to the fiscal environment. The Planning and Evaluation Committee discussed the desire to link future rate increases to quality, but it was difficult to respond without a defined system of quality (the QRIS system was not yet developed). 3
Historical Discussion Of Rate Increase for Infants and Toddlers 2010 Prioritization of ARRA Funding to Support Infant Toddler Quality ARRA funding required that a minimum of $1.15M be allocated to Infant and Toddler Quality Improvements; the Department began implementing various strategies, with the support of the Board, to increase quality for infants and toddlers, including: Direct Spending Related to Infants and Toddlers ($925,000) Development of the Infant and Toddler Learning Guidelines ($50,000) Improvement of Physical Environments Grant ($500,000) Early Literacy Grant to Support Family Child Care Educators ($175,000) CSEFEL Professional Development (up to $200,000) Spending Related to All Age Groups, Inclusive of Infants and Toddlers (~$1.6M) Communications Campaign ($498,500) Early Childhood Information System ($710,000) Readiness Centers ($400,000) To this end, the Department would like to prioritize additional funding that is directly linked to improving the quality of infant and toddler services; subject to future Board approval of the Infant and Toddler rate increase proposal, the Board voted in September to allow flexibility to spend ARRA funds (up to $3 million) to reduce the market rate gap by providing a 3% rate increase to all EEC Infant and Toddler educators across the Commonwealth. 4
Historical Discussion Of Rate Increase for Infants and Toddlers FY2010 - continued The Policy and Fiscal Committee: engaged in on-going discussions relative to supporting quality for this age group: September 13, 2010 Discussion Reviewed increased expectations for programs serving infants and toddlers (new Guidelines, QRIS etc.) October 4, 2010 Discussion Agreement, in principle, that the rate increase is important for infants and toddlers Interested in linking a potential increase to increased quality (via QRIS participation) Interested in a plan for sustainability November 1, 2010 Discussion Discussed the constant balance of access versus quality, and discussed their concerns: Making recommendations about a Rate Increase without knowing the agencys spending cap; impact on the FY12 budget Whether the link to QRIS is strong enough to ensure there is a link to quality (could potentially link to Level 2 or 3 on QRIS) October Board Agenda Item – Tabled (one public comment provided favored the proposed infant toddler rate increase) November – Board Discussion 5
Infant Toddler Rate Analysis Objective: Recommend to Board rate increase that: 1. Reduces the gap between EEC Rates and Market Median. 2. Rate increase falls within available funding & budget constrictions. 3. Rate increase is sustainable. 4. Maintain rates by region. The 2009 Child Care Market Survey results indicate EEC rates are significantly below median by region & type of care. The six regions percentage variance to median ranges are: 1. Center Based Child Care Blended Rate Ranges: 5.05% to 20.47%. 2. Family Child Care Rate Ranges: 5.94% to 33.94%. EEC reviewed various rate scenarios Assumptions: 1. Blended Infant/Toddler rate used for region & type of care. 2. FY2010 average headcount was used to calculate forecasted spending to account for attrition. 6
Infant Toddler Rate Analysis EEC reviewed various rate scenarios Results: 1. In order reduce the gap between the current EEC Rate & Market Survey Median the percentage increase would vary between region & type of care. 2. We reviewed percentage increases ranging from 1% to 12%. 3. Two of the six regions, Northeast and Greater Boston center based blended rate currently has the largest gap to the median and current child care rate is highest. 4. Three regions Northeast, Greater Boston and Boston family child care blended rates have significant variances to the median and also have the highest child care rate. 5. Annualized dollar impact at 3% increase ranges from approximately $4.2 to $5.0 million. Note: Projected dollar spending increase is dependent on no. of children & infant/toddler headcount mix and the rate (blended rate and/or Infant & Toddler individual rates) that the percentage increase is applied. 7
Infant Toddler Rate Analysis Recommendation: Link the 3% infant toddler rate increase to the Quality Rating and Improvement System (QRIS), as follows: 8 Fiscal YearActivity FY2011 Any program serving EEC supported infants and toddlers that is interested in the 3% rate increase would be required to provide a self assessment of their programs quality by participating in the FY2011 QRIS (January - March 2011). Programs would be required to advance at least one level on the QRIS in 18 months to receive additional rate increase (January 2011 – July 2012) Consider possible exemptions to maximize participation (e.g. Professional Development standards that cannot be made within the 18 month timeline) Participation in QRIS would be program-wide (not infant and toddler classroom based). Rate increase would not be available until on or after April 2011. FY2012 Revisit decision with current data and identify requirements for receiving a potential rate increase in FY2013 FY2013 To sustain or receive rate increase funding, all EEC supported programs serving infants and toddlers must be a verified QRIS Level 3 or 4.
Infant Toddler Rate Analysis EEC applied the following assumptions to determine who from the universe of infant/toddler programs could participate in QRIS in order to calculate financial impact. Assumptions: 1. 100 % of the Center Based Programs provided self assessments. 2. 60% of Family Child Care – Independent & System Programs provided services for families with contracts provided self assessments. 3. 40% of Family Child Care – Independent & System Programs providing services for families with vouchers provided self assessments. 4. Rate increase would be implemented April 2011. Results: 1. Annualized dollar impact at a 3% increase when tied to QRIS participation is approximately $3.4 million. 9
Infant Toddler Rate Analysis 10 Implementation Recommendation In order to sustain the Infant Toddler rate increase in subsequent fiscal years a reduction to the number of Infant/Toddler, Preschool, and School Age Children may be necessary if additional funding is not available. Based on $3.4M (the annualized figure), approximately 504 fewer children on average will be served in all age groups to offset the proposed increase. This can be achieved as follows: 1. Use attrition to manage reduction 2. Temporarily close wait list 3. Reduction will be proportionate to average headcount in all programs funded by vouchers: Child Care Funded by Voucher Program $Headcount Infant Toddler24.83% 841,55776 Preschool29.66% 1,005,340130 School Age45.51% 1,542,447297 100.00% 3,389,344504
Infant Toddler Rate Analysis 11 EEC is proposing two decisions that are needed to move forward. Should we fund the infant/toddler rate increase? Under what conditions can we afford the infant/toddler increase?
Infant Toddler Rate Analysis Four center based facilities that provide infant/toddler programs provided EEC with revenue/expense budgets. 1. One budget was provided by Region 1 – Central. 2. One budget was provided by Region 6 – Boston. 3. Two budgets were provided from Region 2 – Metro. The EEC daily rate per child varies by region from $45.60 to $56.15. The daily rate per child in the data provided for the 3 regions ranges from $45.60 to $51.50. The revenue for the four center based infant/toddler programs range from $11.8K to $12.1K annually per child. The annual reported cost for the infant toddler classroom for the 4 center based programs ranges from $106K to 166K. The per child expense ranges from $15.2K to $18.5K. Budgeted expenses include staffing salaries & benefits, supplies, and occupancy, and a prorated administration expense. 1. The total teacher per classroom (excluding substitutes) salaries and benefits for region 2 range from $75K to $98.5 annually. 2. The total teacher per classroom reported salaries (excluding substitutes) and benefits for region 1 & 6 range from $97K to $99K. The four center based infant/toddler programs reported a loss per child ranging from $1,400 to $5,400 per child. 12
Infant Toddler Rate Analysis 13 Current Annual Revenue/Classroom # of Children Rate per Day # Days Total 7$46.70 260 $ 84,994 Expenses Staffing Lead $ 31,200 Teacher $ 24,960 Teacher $ 24,960 Site Mgmt. $ 6,000 $87,120.00 Benefits @ 20% $17,424.00 Occupancy Maint. & Utilities $ 2,500.00 Mortgage Int. $ 1,400.00 Office Costs Phones, Computers, Liability Ins., etc. $ 2,000.00 Supplies $ 800.00 Training $ 750.00 Depreciation $ 2,000.00 General Admin. $ 5,524.61 $ 119,518.61 Net Loss $ (34,524.61) Net Loss/Child/Day $ (18.97) Net Loss/Child/Year $ (4,951.06) Below is an example of a center based programs revenues/expenses from one of their Infant/Toddler Classrooms. In this program, EEC revenues total $84,994 annually, while expenses total $119,518, for a total loss of $34,524 annually ($4,951/child). This program serves eighty-seven EEC funded Infants and Toddlers, which reflects a total annual loss of $430,737 to provide these services.
Infant Toddler Rate Analysis 14 Below is a second example of a center based programs revenues/expenses from one of their Infant/Toddler Classrooms. In this program, EEC revenues total $106,704 annually, while expenses total $155,506 for a total loss of $48,802 annually ($5,422/child). This program serves 147 EEC funded Infants and Toddlers, which reflects a total annual loss of $ $797,098 to provide these services. Current Annual Revenue/Classroom # of Children Rate per Day # Days Total 9$45.60 260 $ 106,704 Expenses Staffing Lead $ 28,000 Teacher $ 22,000 Teacher $ 22,000 Substitutes $ 5,775 Site Mgmt. $ 6,250 $84,025.00 Benefits @ 25% $21,006.00 Occupancy (includes Depreciation) $30,550.00 Office Costs Phones, Computers, Liability Ins., etc. $ 1,950.00 Supplies $ 2,975.00 General Admin. $15,000.00 $ 155,506.00 Net Loss $ (48,802.00) Net Loss/Child/Day $ (20.86) Net Loss/Child/Year $ (5,422.44)
Infant Toddler Rate Analysis 15 Below is a third example of a center based programs revenues/expenses from one of their Infant/Toddler Classrooms. In this program, EEC revenues total $93,985 annually, while expenses total $106,499 for a total loss per ($1,390/child). Current Annual Revenue/Classroom # of Children Rate per Day # Days Total Revenue EEC 7$46.70 260 84,994 Dept of Education 7$4.94 260 8,991 Expenses $ 93,985 Staffing Lead Teacher $ 29,432 Teacher $ 17,680 Teacher $ 14,677 Site management $ 4,102 $65,890.62 Benefits $13,178.12 Occupancy (includes Depreciation) $ 8,667.50 Direct Expenses (food,supplies,t raining) $ 9,835.35 General Admin. $ 8,927.18 $ 106,498.77 Net Loss $ (12,513.97) Net Loss/Child/Day $ (6.88) Net Loss/Child/Year $ (1,390.44)
Infant Toddler Rate Analysis 16 Below is a fourth example of a center based programs revenues/expenses from one of their Infant/Toddler Classrooms. In this program, EEC revenues total $120,973.50 annually, while expenses total $166,080.00 for a total loss per ($5,011.83/child). COST CATEGORY Infant/Toddler CLASSROOM BUDGET COST ASSUMPTIONS PersonnelAnnual Basis FTE 1=40 hrs/wk Program Director 50,0000.20 $ 10,000 Assumes a 5-classroom center, hence a 20% allocation per classroom. Program Assistant 30,0000.20 6,000 Assumes a 5-classroom center, hence a 20% allocation per classroom. Lead Teacher 33,0001.00 33,000 Teacher 27,0001.00 27,000 Teacher Assistant 22,0000.80 17,600 Part time teacher provides coverage for lunch / breaks and accommodates the 10-hour service day. Total Salaries $ 93,600 Fringe Benefits25.5% $ 23,868 Fringe includes FICA at 7.65%, Unemployment at 2%, WC at 1.5%, Health Insurance at 13%, Dental at 1%, Life/Disability at.35%, Retirement @ 3%. Teacher Substitutes $ 11,424 Each teacher receives 30 days of compensated absences a year Vacation = 15, Sick = 12, Personal = 3. Substitute coverage is estimated at 240 hours per FTE at a rate of $17 per hour. Total Personnel $ 128,892 Other Operating Costs (ODC's) $ 5,400 Other operating expenses (i.e., supplies, training, equipment, rental, telecommnuication, printing etc. ) are estimated at $600 per child)] Facilities/Occupancy $ 10,125 Facilities cost is estimated at $15 per Gross Square Foot. Base rent plus facilities operations (i.e. depreciation, utilities, cleaning, expendable repairs & maintenance, and property & general liability insurance, etc.) is estimated at $10 SF. GSF per child is $75. Total Direct Costs (TDC) $ 144,417 General Administrative (G&A) Overhead15% $ 21,663 G&A overhead includes CEO, Accounting, HR,IT and Facilities Management. G&A is estimated here at 15% of Total Direct Costs (TDC). Total Annual Cost Per Classroom $ 166,080 Number of Children per Classroom9 Annual Cost per Child $ 18,453 DAILY COST PER CHILD $ 70.70 Assumes 261 service days per year. Current EEC Infant/Toddler Rate for Region 6 $ 51.50
Infant Toddler Rate Analysis 17 * 3% increase over current blended rate for programs participating in the FY2011 QRIS & provides a self assessment. Region Total EEC Rate Blended Rate Market Survey Median Blended Rate Average Headcount FY2010 Projected Eligible Headcount for Increase April 1, 2011 - Sept 31, 2011 6 Months Oct 1, 2011 - June 30, 2012 9 Months Annualized Increase in Spending 1 - Western 2,293 $ 290,493 $ 434,630 $ 578,768 - Center Based Child Care $45.60$48.69 1,318 $ 236,196 $ 353,393 $ 470,589 - Family Child Care $30.10$32.00 975 459 $ 54,296 $ 81,237 $ 108,179 2 - Central 1,464 $ 158,805 $ 237,601 $ 316,398 - Center Based Child Care $46.70$52.00 550 $ 100,942 $ 151,028 $ 201,114 - Family Child Care $31.80$36.50 914 463 $ 57,863 $ 86,574 $ 115,284 3 - Northeast 2,829 $ 303,179 $ 453,611 $ 604,043 - Center Based Child Care $52.30$63.50 939 $ 193,001 $ 288,765 $ 384,529 - Family Child Care $31.50$39.00 1,890 890 $ 110,178 $ 164,846 $ 219,514 4 - Greater Boston 1,041 $ 185,201 $ 277,095 $ 368,988 - Center Based Child Care $56.15$70.60 742 $ 163,737 $ 244,980 $ 326,224 - Family Child Care $34.35$52.00 299 159 $ 21,464 $ 32,115 $ 42,764 5 - Southeast 2,414 $ 360,708 $ 539,685 $ 718,662 - Center Based Child Care $46.05$48.50 1,768 $ 319,966 $ 478,728 $ 637,490 - Family Child Care $31.80$40.00 646 326 $ 40,742 $ 60,957 $ 81,172 6 - Boston 2,970 $ 402,780 $ 602,632 $ 802,485 - Center Based Child Care $51.50$58.50 1,598 $ 323,427 $ 483,906 $ 644,386 - Family Child Care $31.50 1,372 642 $ 79,353 $ 118,726 $ 158,099 12,915 $ 1,701,165 $ 2,545,255 $ 3,389,344