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

November 2011

RATE REFORM

• The Department is initiating the process of conducting an analysis of the current cost of providing quality, whole child education and care reimbursement in the Massachusetts mix delivery system.

• This approach will be the first step in the reform of the child care rates for subsidized child care that takes into account all costs associated with quality programs.

• The Department is exploring a more thoughtful and different methodology in this rate reform analysis.

In the Past…

In the previous processes to ascertain the rates in Massachusetts the Department embarked upon a market survey of different geographic areas in Massachusetts.

The Department analyzed the different rates in the geographic areas and essentially established rates that were based on the average fees in that specific area.

A Different Approach

The Department is contemplating establishing rates for subsidized child care based on the quality of the early education services to children.

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Child

Operating Costs:

RentUtilities

Licensing feesEducational Materials

FurnishingsRepair and Renovations

InsuranceNon-educational Materials

Educators cost:

SalaryBenefits

In-service TrainingTuition for Degrees

Collective Bargaining

Community Resources:

Playgrounds and ParksLibrariesPublic Transportation

Funding Sources:

EEC GrantsSubsidized

Other:

Lawyers FeesAccountant FeesAdvertising feesTransportation

Inputs to Costs

Licensing and QRIS Costs

Using 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.

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.

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.

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Item High Impact Moderate Impact Low ImpactFees      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

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?

Is this the right approach 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…..