The Massachusetts Child Care Quality Cost Model

Presentation to the Massachusetts Department of Early Education and Care September 28, 2012

Andrew Brodsky Anne Mitchell

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

Full Enrollment Full Fee Collection Revenues Cover Per-Child Cost

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 DRAFT - 3-27-12

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 DRAFT - 3-27-12

Massachusetts QRIS System

Curriculum and Learning Level 1 (from regs) Max group & staff Infants: 7 w/2 staff Toddlers: 9 w/2 staff Preschoolers: 20 w/2 staff School-age: 26 w/2 staff Written child progress report shared with parents: 4 x year for infants/toddlers 2 x preschoolers 1 x school-agers

Level 2 professional development in curriculum, screening tools, and formative assessment ITERS/ECERS self assessed score avg 3.0

(no item below 3.0) Level 3 professional development in the curriculum; using the MA ELGs; documenting children's progress; and working with children from diverse languages and cultures and second language acquisition.

reliable scores: ITERS/ECERS avg 5.0 (no item below 4.0) CLASS 3+ Progress reports with parents 3 x year and 4 x year for 0-3 +/or CWD level 4 reliable scores: ITERS/ECERS avg 6.0 (no item below 5.0) CLASS score 6-7 outside consultants with expertise in children's behavior and mental health to provide support and assistance to staff

Massachusetts QRIS System

Workforce qualifications and professional development Level 1 Director I: lead teacher qualified plus 2 credits in child care admin and 2 credits in ECE/CD Director II: same as I plus 2 credits Lead teacher: age 21, high school plus 12 credits ECE/CD or high school plus CDA (specific to 0-3 or preschool) Teacher: age 21 or high school diploma/GED plus two-year high school vocational program in early childhood education or CDA Teacher assistant: age16 or high school diploma

Level 2 Administrator has CDA plus training in adult supervision, MA ELGs, Strengthening Families, and MA core competencies All staff min high school plus all educators min 3 credits in ECE 50% of classrooms have educator with BA or higher Level 3 Administrator has BA (or progress toward achieving it) with 24 credits ECE and 9 credits admin/mgt 75% have BA or higher level 4 Plus 5 years’ experience 100% BA or higher and all have 30 credits ECE

20 hrs PD annually (FT staff)

All staff have IPDP

Example Provider-Level Output (NOT Mass.) Center: 106 children, infants, toddlers and preschoolers

QUALITY

Regulated Star 2 Star 3

$828,943 $847,626 $18,683

Expense Revenue Net Income Net Income as % of Expense

2% $846,319 $847,626 $1,307

Expense Revenue Net Income

$890,845 $855,825 ($35,020)

Expense Revenue Net Income

Star 4

$946,116 $873,394

Expense Revenue

($72,722)

Net Income

Star 5

$1,014,520 $882,765 ($131,756)

Expense Revenue Net Income

0% -4% -8% -13%

Annual Gap/Child

$176 $12 ($330) ($686) ($1,243)

Quantify the Gap in $

Quantify the Gap as %

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