1. Infant Toddler Rate Increase October 2010

2. 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 EEC’s 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

3. 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. 3

4. 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. 4

5. Infant Toddler Rate Analysis Linking Infant Toddler Rate Increase to Quality Recommendation: Link the 3% infant toddler rate increase to the Quality Rating and Improvement System (QRIS), as follows: 5 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 funding (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 March 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.

6. Infant Toddler Rate Analysis 6 * 3% increase over current blended rate.

7. Impact to Headcount 7 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.  Approximately 617 children reduction on average for all age groups will be needed to offset proposed increase in Infant /Toddler rate to be effective and completed by 10/1/2011. 1. Use attrition to manage reduction 2. Temporarily close wait list 3. 617 children reduction to be effective and completed by 10/1/2011 4. Reduction will be proportionate to average headcount in all programs funded by vouchers: Child Care Funded by Voucher Program $HDC Infant Toddler24.83% 1,029,88693 Preschool29.66% 1,230,321159 School Age45.51% 1,887,625364 100.00% 4,147,832617

8. Infant Toddler Rate Analysis 8 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 program’s 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.

9. Infant Toddler Rate Analysis 9 Below is a second example of a center based program’s 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)

10. Infant Toddler Rate Analysis 10 Below is a third example of a center based program’s 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)

11. Infant Toddler Rate Analysis 11 COST CATEGORY Infant/Toddler CLASSROOM BUDGET COST ASSUMPTIONS PersonnelAnnual Basis FTE 1=40 hrs/wk Program Director 50,000.000.20 $ 10,000 Assumes a 5-classroom center, hence a 20% allocation per classroom. Program Assistant 30,000.000.20 6,000 Assumes a 5-classroom center, hence a 20% allocation per classroom. Lead Teacher 35,000.001.00 35,000 Teacher 30,000.001.00 30,000 Teacher Assistant 25,000.000.80 20,000 Part time teacher provides coverage for lunch / breaks and accommodates the 10-hour service day. Total Salaries $ 101,000 Fringe Benefits28.5% $ 28,785 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 $ 141,209 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 $ 16,875 Facilities cost is estimated at $25 per Gross Square Foot. Base rent is estimated at $15 SF; 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) $ 163,484 General Administrative (G&A) Overhead15% $ 24,523 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 $ 188,007 Number of Children per Classroom9 Annual Cost per Child $ 20,890 DAILY COST PER CHILD $ 80.04 Assumes 261 service days per year. Current EEC Infant/Toddler Rate for Region 6 $ 51.50