Department of Early Education and Care Rate Reform/Cost of Quality Discussion November 2011

RATE REFORM The Department is initiating the process of an analysis of the current cost of providing quality, whole-child education and care reimbursement in the Massachusetts mixed delivery system. This approach will be the first step in the reform of the child care rates for subsidized child care. The Department will take a thoughtful, comprehensive approach to defining the costs associated with quality programming.

Historically… Federal regulation has required all states to conduct a market rate survey every two years. Subsided rates are required to be based upon the current market rate. Massachusetts has conducted the survey across geographic areas and service delivery types in Massachusetts and used this information to establish rates. Key Factor for Consideration: Many factors currently impact rates, such as geography. Which could be eliminated as factors? What would be the impact? How will we decide with factors to keep vs. eliminate? Should they convert into a form of weighting of rates instead?

A Different Approach The Department is contemplating the establishment of rates for subsidized child care based on the quality of the early education services provided to children.

5 Child Operating Costs: Rent Utilities Licensing fees Educational Materials Furnishings Repair and Renovations Insurance Non-educational Materials Administrative Cost Educators cost: Salary Benefits In-service Training Tuition for Degrees Collective Bargaining Community Resources: Playgrounds and Parks Libraries Public Transportation Funding Sources: EEC Grants Subsidized Other state funds Other: Lawyers Fees Accountant Fees Advertising fees Transportation Inputs to Costs

Licensing and QRIS Costs U sing licensing as the basis for quality. Apply the entry costs of participation in the Quality Rating and Improvement system (QRIS). Apply the costs for each level of the QRIS as a means of verifying higher levels of quality. There will be different costs for additional quality components which may or may not be covered or included in the base rates of reimbursement for subsidized child care as actual costs is calculated. Key Factor for Consideration: Market Rates do not account for or assure quality.

Determining Cost Per Child Propose conducting a study of the per child cost of early education including the additional requirements of QRIS continuum. The study will also explore different costs per child according to the ages of children and settings of child care to establish items in the business of early childhood program delivery. Key Factors for Consideration: An increase in rates will mean a decrease in access when many are currently waiting for care. What will the impact be? Can we identify who would not receive care? Where? Would private rates increase? Programs currently balance their budget via different rates for age groups that off-set each other (SACC, Infant Toddler, Preschool.) Changing the way rates are set will disrupt the current system.

What is the Approach to Take In a preparation of that the Department wants to foster discussion of that concept. Other states, such as New York, Ohio, Minnesota and Colorado have undertaken similar projects.

9 ItemHigh ImpactModerate ImpactLow Impact Fees Rent Utilities Furnishing: rugs, window treatments, appropriate size furniture, etc. Instructional materials: assessments, screening, consultant costs such as speech, mental health, occupational therapy, health consultant, etc. Non-instructional materials: food diapers, toys, soap, paper, crayons, etc. Professional development: cost of tuition and replacement of staff to attend in-service. Staff salaries Staff benefits Other items: IT support, lawyer and account fees, translation of materials, advertising, etc. Impacts to Costs Key Factors for Consideration: Build into the rate costs related to serving children and families with multiple needs, i.e. the cost of a social worker or an Ed. Coordinator. Examine the role of grants and other funding sources (like ASOST and DPH funds) that support programs. Consider the cost of summer camp in the discussion.

Considerations What is included in the cost per child? What is the total cost per day per child? What is the cost analysis for the various levels (1-4) in QRIS? What are the inputs for funding a program? What costs does a program need to cover? What variables to you consider as impacts to high quality care? Key Factor for Consideration: Science points to the damaging effects of interruptions in relationship development for children due to multiple transitions should we build in a length of eligibility that supports this? Examine the intersection between rate reform and staff compensation. Should the state mandate a % of the rate that must be passed on to staff? What about non-teaching staff?

Is this the right approach to take in establishing how rates are determined? How would this impact programs? In looking at the Curriculum and Learning section of the Massachusetts QRIS system, including assessments, licensing requirements, professional development and screening tools, what are the drivers for cost for programs? Thoughts…..

In the QRIS standard for Safe, Healthy Indoor and Outdoor Environments that include health consultation, staff training and facilities cost what are primary expenditures that programs have that drive up the cost? In the QRIS standard for Workforce Qualifications and Professional Development that includes salaries and ongoing training costs what are the primary cost factors for a child care program? Thoughts…..

In the QRIS Standard for Family and Community Engagement including communications and materials what are the primary contributors for cost? For example:  Newsletters  home visiting  open houses  events for parents Thoughts…..

In QRIS standard for the Leadership, Management and Administration including salary scales, review costs, planning time and material costs what are the primary contributors for cost for programs? Thoughts…..

What is the opinion about using alternative funding strategies to reduce cost to programs included in quality such as state funded formative assessments, one time material grants in line with QRIS standards? Thoughts…..