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

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

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

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

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

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

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

Provider perspective: Iron Triangle

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

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

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

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

Scenario 1: BLUE line on graph

Scenario 2: RED line on graph

Scenario 3: GREEN line on graph