2009 Market Rate Study Overview and Update

Look familiar? Where does this data come from? The Market Rate Survey… EEC Rates as a Percentile of Market Rates for All Regions This analysis of the 2006 market prices indicates that it would cost $37 million to raise reimbursement rates to the median market price across the state.

Outline Background for Market Price Study Changes in the 2009 Market Price Study – Cost and Design Timeline for Completion of the study Analysis of the Data Policy Decisions

Reasons for Market Rate Studies and the Importance of Accurate Findings Mandated in CCDF Final Rule as tool to provide equal access (45 CFR 98 and 99) Ensure parental access to child care market in their community Conduct no earlier than 2 years prior to submission of CCDF plan Influences maximum subsidy rates Maximum subsidy rates that match community prices are most likely to provide access Access to community child care facilities may affect family financial independence, parental choice, and child care quality Provides insight into how child care market operates in a state Characteristics that are associated with price differences Study of child care prices, a market price study

Changes to the Design of the 2009 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. While this produced accurate regional prices it resulted in a number of areas of the state not having prices for certain types of care. This method did not allow EEC to examine other geographic clusters for prices and for establishing rate reimbursement to providers. One finding of the 2006 Market Rate Survey was that the regions varied greatly in the range of prices that regions contained. Collecting rate information at the zip code level requires that EEC collect data from more providers than in the past. This year EEC is collecting data from all full day, full week providers to allow analysis at finer level. This data can be used to describe the actual locations of providers with similar rates and allow EEC to review the existing rate regions and explore amending these regions to better reflect actual provider price groupings.

Tight fiscal times… working with partners to complete study EEC, the EEC Market Price Study Advisory Team, Mills Consulting Group and the CCR&Rs redesigned the surveys used in the earlier studies to simplify them so that the CCRRs could collect uniform data from providers. Data was collected between January and early March. The Child Care Resource and Referral (CCRRR) Network collected the price data using NACCRAware, the data system that they use to track provider characteristics and prices. As a result of working with our partners, the total cost of the 2009 Market Price Study is half of the cost of earlier surveys.

Timeline for Market Price Study Task Timeline Design project and Determine most efficient way to gather data Fall 2008 Issue RFR for Market Price Survey Researcher November 2008 Amend contract with CCRR Network December 2008 Review responses and award contract for MPS Researcher Issue emails and letters to programs from the Commissioner making them aware of MPS January 2009 Monitor progress with CCRR Network February 2009 Download and clean data with Researchers March 2009 Consult with Researchers about report Mar-Apr 2009 75th Percentiles for regions reported April 2009 Final Report May 2009 EEC Board Presentation June –July 2009

Data Analysis Once the price data is collected and compiled by type of care by zip code level, it can be used to determine different percentiles of the areas: Since ACF requires that states report the 75th percentile of prices, EEC determines this data as follows: All zip code data can be grouped by region to determine the different percentiles and the median price of care. This is done by listing the prices of all providers within a geographic area and ranking them from highest to lowest. The capacity of each provider is also listed. Then the 75th percentile of all the prices is determined based on the price paid for the child ranked at 75% of all children served in the area.

For example, this map identifies the 75th percentile of preschool prices for children in Massachusetts zip codes using test data from 2008. The prices are grouped into four brackets: Below the lowest rate for preschoolers, the rates between the lowest and $40 per day etc. White spaces are where data was not available.

Alignment of Geographic Unit and Child Care Markets Geographic unit options: county, administrative regions, geographic groupings composed of clusters of counties or zip codes Challenges: Large number of child care markets Limited number of price clusters County may include more than one price cluster Solutions include creating geographic groupings composed of counties or zip codes which link each grouping with: A price cluster; or A demographic characteristic highly correlated with child care prices (e.g., female earnings, median housing, household earnings, or percent urban) The following charts and maps are examples of how Massachusetts data may look after this analysis. These maps describe the frequencies of preschool zip code prices for 2008. There were 4 zip codes where the 75th percentile is about $148 per week. Then this distribution of data was analyzed using a statistical package to identify 3 and 4 natural breaks and then mapped.

Distribution of 75th Percentiles by Zip Code (from prior MPS)

Example of Rate Regions Based on 4 groupings of Preschool 75th percentile Market Prices using Jenks Natural Breaks

Example of Three Price Groupings Of Preschool 75th percentiles using Jenks Natural Breaks

For more information: Rod Southwick Director of Research Rod.southwick@state.ma.us 617-988-6617 Corey Zimmerman Director of Strategic Planning and Analysis Corey.zimmerman@state.ma.us 617-988-6635