Massachusetts Child Care Market Board of Early Education & Care Price Survey Board of Early Education & Care April 12, 2011 Kenley Branscome Kate Giapponi & Emma Cohen Applied Policy Analytics Public Consulting Group, Inc.

Overview of Discussion Survey Purpose and Context Survey Scope & Methodology Highlights of Survey Findings Results of Market Price Survey Next Steps and Supporting Analyses Quick overview. Should do quick round of introductions. Page 2 Massachusetts Market Price Survey

Survey Purpose & Context Federal Requirements & How Other States Compare U.S. Office of Child Care requires states to conduct a market price survey every two years as part of Child Care & Development Fund (CCDF) requirements and encourages setting child care reimbursement rates at or above the 75th percentile of prices in the private market. Seen as benchmark rather than requirement The prices for child care in Massachusetts are the highest in the nation, as reported by NACCRRA in 2010. Comparing prices across states, however, is complicated by a lack of standardized methods and definitions used to collect state price data Both the 2006 and 2008 surveys found that the state did not meet the 75th percentile benchmark in any region for any type of care. Nationally, only six states met that benchmark in 2010. Down from nine states in 2009. (Schulman & Blank, 2010) Comparing states that have met the benchmark with those that have not is a challenge, as each state balances priorities for quality, access and affordability in different ways – e.g., some states serve a larger share of children in unregulated settings, have lower income eligibility limits, and/or charge higher parent co-pays Certainly many reasons to look at market prices, but Mass and other states conduct mps largely because of federal mandate We do not have perfect data by which to compare Massachusetts prices to those in other states, but NACCRRA reports show the state as having the most expensive care in the nation. Again, the data are drawn from state market price surveys, which vary significantly in terms of the methods used for collection, the definitions used and the level at which data are collected and reported. We know that child care prices are influenced by a combination of demographic, economic and policy factors. On the supply side, family incomes are a major determinant of prices and on the demand side we know that labor is a major determinant of prices. Multiple studies have shown that labor accounts for about 70% of the cost of center-based care on average, and higher for younger children. Additionally, polices regarding unregulated care vary significantly nationwide and such policies have an effect on the supply and price of care. A California study also found that state subsidy policy also had modest influences on the price of care. Comparing which states have met the federal benchmark can be tricky, as different states have different policy priorities that affect how much state/federal money may be available for rates. For example, nationwide 20% of the children that receive CCDF-funded assistance are cared for in non-regulated settings, with some states serving more than 50% of children in such settings. In Massachusetts, only 4% of children receiving child care assistance are served in non-regulated settings….while in New York it’s 43%....based on 2008 data from ACF. Page 3 Massachusetts Market Price Survey

Survey Scope & Methodology Survey Scope & Project Goals Project Goal - Conduct a credible study of market prices in each region of the state and across all program types to assist EEC in evaluating the adequacy of rates for the purpose of demonstrating equal access to child care for low-income families. The survey and companion analyses: Examines the market prices for the 25th, 30th, 40th, 50th, 60th and 75th percentiles for each type of care with each of EEC’s rate regions Highlights significant price changes between 2008 and 2010 Compares market prices to practitioner wages Considers other questions raised by the Evaluation Subcommittee during the 2008 market price survey – e.g., absentee policies, etc. Examines possible alternatives to existing rate areas, especially in regions with clusters of prices that are higher than the region as a whole Point here is to remind folks of what this study does. Very similar to previous surveys in design and scope. Page 4 Massachusetts Market Price Survey

Survey Scope & Methodology Overview of Survey Design Relied on a random sample of 4,800 programs, including approximately 2,000 licensed child care centers and out-of-school-time programs and 2,800 family child care providers, stratified by EEC region and type of care. The survey excluded programs that were: Free to income-eligible families Part-time only Not currently providing care Licensed-exempt Conducted outreach campaign with letters and e-mails sent from Commissioner to all programs in the sample in English and Spanish with link to on-line survey. Followed up by postcards and up to three phone attempts. Provided a nominal incentive for participation The response rate was high, with responses from 90% of center-based and out-of-school-time programs and 78% of family child care providers . Page 5 Massachusetts Market Price Survey

Results of Market Price Survey Overview of Findings Prices for center-based care are highest in Boston, Metro and Northeastern regions. Lowest in the Western, Central and Southeastern regions. Prices for family child care are highest in the Metro region and lowest in the Boston and Western regions Current EEC rates are below the 75th percentile in all regions. Rates are below the 50th percentile in all regions, except for after-school care in the Western Region. While out-of-school-time rates are generally above the 25th percentile in most cases, center-based and family child care rates remain below the 25th percentile in all cases except for center-based infant care in the Western region and family child care for infants/toddlers in the Western, Northeastern and Boston regions Prices decrease significantly in center-based settings as the age of the child increases, while prices in family child care settings decrease less as the age of child increases Median prices have increased at a slower pace during the last two years, as compared to the price increases reported in last market price survey . Page 6 Massachusetts Market Price Survey

Results of Market Price Survey Center-Based 75th Price Percentiles & EEC Rates Will use the graph to point out highlights in the following areas: Talk about variations among regions. Remind folks that research shows prices highly correlated with family income…and that we find the highest prices in the same regions that have the highest incomes – e.g., Boston and Metro Boston Talk about variations by age group. Prices tend to decrease consistently with the age of the child. As ratios increase with the age of the child, the cost of care and prices tend to decrease. Point out the most significant gaps with the 75th percentile. Page 7 Massachusetts Market Price Survey

Results of Market Price Survey Center-Based 50th Price Percentiles & EEC Rates Just changes the benchmark from the 75th to the 50th to show the gap with EEC rates an the 50th percentile (or median). Page 8 Massachusetts Market Price Survey

Results of Market Price Survey Family Child Care 75th Price Percentiles & EEC Rates Repeat some of the key observations made in previous graphs. Page 9 Massachusetts Market Price Survey

Results of Market Price Survey Family Child Care 50th Price Percentiles & EEC Rates Repeat some of the key observations made in previous graphs. Page 10 Massachusetts Market Price Survey

Results of Market Price Survey Out-of-School-Time 75th Price Percentiles & EEC Rates Repeat some of the key observations made in previous graphs. Page 11 Massachusetts Market Price Survey

Results of Market Price Survey Out-of-School-Time 50th Price Percentiles & EEC Rates Repeat some of the key observations made in previous graphs. Page 12 Massachusetts Market Price Survey

Results of Market Price Survey Price Changes Since 2008 and 2006 Since 2008, overall median prices increased slightly across all types of care as inflation increased by 4.3%: Median prices for center-based care increased, on average, by 1% for infant care, 3% percent for toddler care and preschool. Highest increases in Boston and Northeast regions. Lowest in Southeast Median prices for family child care increased, on average, by 4% for infants/toddlers and 1% for children over two. Highest increases in Boston and Central regions. Lowest in Southeast Median prices for after-school care increased, on average, by 4%. Largest increase in Metro region and lowest in Boston Since 2006, the median price of care has increased 10% to 16%, across all types of care compared to an inflation rate of 9.3% Page 13 Massachusetts Market Price Survey

Next Steps Additional Analysis Planned Additional research questions were raised in RFP, during the kick-off meeting and by board committees. In response, the following additional analyses are planned: Analysis of Local Price Variations – Will analyze the extent to which prices vary among towns within EEC regions. Will rely on zip-code level price data collected in 2008 and update with 2010 price data Analysis of Practitioner Wage Data – Will analyze the extent to which wages vary across different segments of the early childhood and out-of-school-time workforce. Will be limited to analysis of extant secondary data in the new Professional Qualifications Registry All work is expected to be complete on or before June 1 Page 14 Massachusetts Market Price Survey

Sources Datta, A.R., Goerge, R., and Yan, T. (2010). Design Phase of the National Study of Child Care Supply and Demand (NSCCSD): Final Report. With additional contributions by Witte, A., Guzman, L., Kreader, L., Weber, R., Schexnayder, D., Zaslow, M., and Wolter, K. Chicago: NORC. Marrufo, G., O’Brien-Strain, M. and Oliver, H. (2003). Child Care Price Dynamics in California. San Francisco, CA: Public Policy Institute of California. National Association of Child Care Resource and Referral Agencies. (2010). Parents and the High Cost of Care Schulman, K. & Blank, H. (2010). National Women’s Law Center. State Child Care Assistance Policies 2010: New Federal Funds Help States Weather The Storm. Page 15 Massachusetts Market Price Survey