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

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.

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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

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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.

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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.

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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.

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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.

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Description Western Central Northeastern *2

Greater Boston *2 Southeast Boston

Infant Care

Median Market Price $ 225 $ 245 $ 304 $ 333 $ 245 $ 300

Median Average Cost 243 290 NA NA 233 NA

State Reimbursement 234 240 268 291 234 266

Rate Variability in Sample *1 Moderate Low NA NA Moderate NA

Toddler Care

Median Market Price $ 210 $ 224 $ 264 $ 300 $ 220 $ 251

Median Average Cost 191 217 NA $251 215 302

State Reimbursement 211 216 242 258 216 236

Rate Variability in Sample High Low NA Moderate Moderate LowPreschool Care

Median Market Price $ 165 $ 185 $ 211 $ 248 $ 185 $ 180

Median Average Cost 142 137 154 181 124 206

State Reimbursement 163 163 174 179 163 179

Rate Variability in Sample High Moderate Moderate Moderate Moderate Low

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. 8

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.

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2009 Market Price Study

Completed by

Mills Consulting Group and Goodman Research Group

with the Child Care Resource and Referral Network

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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

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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.

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Region Type Current Rate

Median 75th Percentile

Western (Region 1) INF $47.90 $51.00 $58.00

TOD $43.20 $46.00 $53.00

PS $33.40 $36.00 $44.39

Central (Region 2) INF $49.20 $54.00 $64.90

TOD $44.20 $50.00 $56.00

PS $33.40 $41.00 $46.88

Northeast (Region 3) INF $54.95 $67.00 $76.60

TOD $49.55 $60.00 $69.60

PS $35.65 $46.20 $55.80

Greater Boston (Region 4) INF $59.50 $73.40 $82.60

TOD $52.85 $67.80 $74.80

PS $36.70 $49.70 $61.40

Southeast (Region 5) INF $47.90 $50.00 $59.00

TOD $44.20 $47.00 $53.80

PS $33.40 $40.00 $45.40

Boston (Region 6) INF $54.55 $62.00 $92.40

TOD $48.40 $55.00 $68.28

PS $36.70 $40.00 $50.00

Massachusetts—2009 Market Price Study•GROUP CHILD CARE CENTERS

•Full Time Group Centers - Current Rates, Median and 75%ile of Prices

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

Region Type Current Rate

Median Percent Increase to

Median

Cost of Increase to

Median

Western (Region 1) INF $47.90 $51.00 6% $.26MTOD $43.20 $46.00 6% $.59MPS $33.40 $36.00 8% $1.74M

Central (Region 2) INF $49.20 $54.00 10% $.14MTOD $44.20 $50.00 13% $.55MPS $33.40 $41.00 23% $2.14M

Northeast (Region 3) INF $54.95 $67.00 22% $.58MTOD $49.55 $60.00 21% $1.59MPS $35.65 $46.20 30% $5.58M

Greater (Region 4) INF $59.50 $73.40 23% $.69MTOD $52.85 $67.80 28% $2.02MPS $36.70 $49.70 35% $7.5M

Southeast (Region 5) INF $47.90 $50.00 4% $.36MTOD $44.20 $47.00 6% $.93MPS $33.40 $40.00 20% $4.84M

Boston (Region 6) INF $54.55 $62.00 14% $.75MTOD $48.40 $55.00 14% $1.73MPS $36.70 $40.00 9% $2.57M

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Region Current Rate Median 75%ile

Western (Region 1) Infant $30.10 $32.00 $38.25

Western (Region 1) Toddler $30.10 $32.00 $36.00

Central (Region 2) Infant $31.80 $37.00 $40.50

Central (Region 2) Toddler $31.80 $36.00 $40.00

Northeast (Region 3) Infant $31.50 $40.00 $50.00

Northeast (Region 3) Toddler $31.50 $38.00 $50.00

Greater Boston (Region 4) Infant $34.35 $54.00 $60.00

Greater Boston (Region 4) Toddler $34.35 $50.00 $60.00

Southeast (Region 5) Infant $31.80 $40.00 $47.00

Southeast (Region 5) Toddler $31.80 $40.00 $45.00

Boston (Region 6) Infant $31.50 $33.00 $40.00

Boston (Region 6) Toddler $31.50 $30.00 $36.00

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

Region Current Rate Median 75%ile

Western (Region 1) $26.40 $31.00 $35.00

Central (Region 2) $26.40 $35.00 $40.00

Northeast (Region 3) $27.85 $37.00 $50.00

Greater (Region 4) $27.85 $50.00 $60.00

Southeast (Region 5) $26.40 $40.00 $45.00

(Region 6) $27.85 $30.00 $35.00

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

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All Family Providers by RegionPercent and Cost to Increase to Median

Region Percentage Increase for

FamilyProviders with

Children under 2

Percentage Increase for

FamilyProviders with Children over 2

Cost to Median for ALL Family

Providers serving children of all ages

Western (Region 1) 6% 17% $1.89M

Central (Region 2) 15% 33% $3.39M

Northeast (Region 3) 24% 33% $8.83M

Greater (Region 4) 50% 80% $3.75M

Southeast (Region 5) 26% 51% $4.03M

Boston (Region 6) 5% 7% $1.08M

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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?

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