Cost and Price in Massachusetts Center-Based Care and Results of the 2009 Price Study

1. Cost and Price in Massachusetts Center-Based Care and Results of the 2009 Price Study

2. Overview • Highlights from the 2006-2007 price and cost surveys* • Findings and Future Analysis of the 2009 Market Price Study *Highlights from A.D. Witte et al. (2008) The Massachusetts 2006 Provider Cost Study Wellesley College, for the Department of Early Education and Care.

3. Purposes of the Cost Survey • To assess the cost of providing early education and care services in centers, after school programs and family child care across Massachusetts • To determine the relationship between provider costs and prices for early education and care services; • To examine the relation of structural quality measures to the cost of providing care

4. Cost Survey Design • Three different detailed surveys were used to determine cost in centers, school age, and family child care programs. • Survey Sample consisted of 1,000 programs (300 centers, 300 school age, and 400 family child care). • The elements included in the determination of cost were: Teachers’ Salaries, Operating Costs, Implicit Donations costs, and Implicit Housing costs • The findings for family child care were of limited use due to the reliance on estimated costs for family providers and the high degree of variability of family child care costs.

5. Cost Findings • Center costs vary across the state with costs higher in the eastern part of the state and lower in central and Western Massachusetts. • Accredited centers have higher classroom costs than non-accredited centers. Specifically infant and toddler classrooms have 20% to 33% higher costs. • Preschool Programs with accreditation and more educated staff have 19% higher costs than other centers. Infant and Toddler Centers that are accredited or have more educated staff have costs 22% higher than those programs with less educated staff or are not accredited. • Centers that provide a high level of supplemental services have costs that are 32-40% higher than other providers.

6. Comparing Cost to Price • Prices in this report were the regional private-pay full-day median price derived from the 2006 Market Rate Survey completed several months before the Cost Survey. • For Centers, the comparison between price and cost show significant variation across regions and types of care, but generally the regions with the highest costs also tend to have the highest prices. This relationship indicates that prices are indicative of costs and reflect market forces.

7. Costs and Prices are related to each other in the following ways: • Generally, Infant prices are slightly lower than costs. • Toddler prices are equal to or slightly higher than cost • Preschool prices are higher than costs in all regions except Boston. • These differences in price and cost support the common view that many providers who provide infant/toddler care supplement the cost with preschool tuitions.

8. 2007 Median Weekly Prices, Cost and State Reimbursement (Per Child) [1]The cost variability is a measure of the degree to which the per-child costs vary between providers sampled within a region. For regions in which the variability is low (coefficient of variation <.3), the cost per child is more similar across the providers interviewed. For regions where the cost variability is high, the cost per child varies more (coefficient of variation > .5). [2] The average cost per child could not be calculated for these regions due to samples sizes that were too small.

9. Next Steps and Research Questions • While the cost study determined non-causal relationship between structural quality and costs, other important elements of quality such as child/teacher interactions and relationships were not included in the study. EEC would need to study how programs use which resources to improve quality and at what cost to analyze the cost of specific quality characteristics.

10. 2009 Market Price StudyCompleted byMills Consulting Group and Goodman Research Groupwith the Child Care Resource and Referral Network

11. Reasons for Market Rate Studies and the Importance of Accurate Findings The Administration for Children and Families (ACF) requires states to perform a Market Price Survey (MPS) every two years. The MPS influences maximum subsidy rates • Setting maximum subsidy rates that match community prices are most likely to provide access • Providing access to community child care facilities may affect family financial independence, parental choice, and child care quality The MPS provides insight into how the child care market operates in a state • Learn about characteristics that are associated with price differences • Study child care prices, a market price study

12. Changes to the Design of the2009 Market Price Study • Data for the 2009 Market Price Study was collected at the zip code level. In prior surveys a sample of providers was used to survey the price of care in each region. • Collecting rate information at the zip code level required that EEC collect data from more providers than in the past . • This year EEC collected data from all active full day, full week providers to allow analysis at a finer level. • This data allow EEC to review the existing rate regions and explore amending these regions to better reflect actual provider price groupings.

13. Massachusetts—2009 Market Price Study • GROUP CHILD CARE CENTERS • Full Time Group Centers - Current Rates, Median and 75%ile of Prices

14. Group Centers by Region and Program Type Percent Increase and Cost to Reach Median Price

15. Full Time Family Child Care (<2 Years) Current Rates, Median and 75%ile of Prices

16. Full Time Family Child Care (≥ 2 Years) Current Rates, Median and 75%ile of Prices

17. All Family Providers by RegionPercent and Cost to Increase to Median

18. Future Analyses Options Using Price Data • Determine the percentile of the current EEC rates. • Determine if adjustments should be made to EEC rates and reimbursement regions • Examine Rate Disparities : • Dollar difference between current rate and the median price in market areas • Determine the percentile of the prices at which programs should be reimbursed in each region and program type. • Examine the relation between Price and characteristics of Quality: • For example; what is the price difference between accredited and non-accredited programs?