Transforming the Financing of Early Care and Education (2018) / Chapter Skim
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6 Estimating the Cost of High-Quality Early Care and Education
6 Estimating the Cost of High-Quality Early Care and Education
Pages 157-194
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From page 157... ...
yields the amount that public and/ or private groups will have to provide to fully fund access to high-quality early care and education for all children. This chapter first describes the elements that contribute to the cost of providing high-quality early care and education with a highly qualified workforce, as outlined in the Transforming report (Institute of Medicine and National Research Council, 2015)
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From page 158... ...
One consists of workforce development supports, including offsite training, ongoing professional learning, and higher education. The second category of system-level costs includes those related to quality assurance and improvement, such as monitoring and regulation, quality and systems improvement and accountability, data systems, and licensing and accreditation.2 Onsite Costs Onsite costs are determined by staff qualifications and compensation; staffing levels and structures; staff supports; operating hours and days; and nonpersonnel costs such as curricular materials, facilities, and equipment.
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From page 159... ...
suggest the staffing levels to apply when estimating the costs of a highly qualified and well-compensated ECE workforce. The requirements for child-to-staff ratio vary by age of children and by state.
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From page 160... ...
As described in previous chapters, the vast majority of ECE professionals receive low wages with low benefits, which affects their status and well-being and in turn may impede their ability to deliver quality care and instruction to children.4 This situation reflects insufficient levels of resources invested in early care and education and the absence of adequate educational and competency requirements, as well as historical perceptions about the workforce. Significantly higher levels of compensation will be required to recruit and retain a well-qualified workforce of lead educators and assistants, directors, 4 It is difficult to determine compensation for home-based providers because most home based providers are not paid a salary and even as the owners of businesses, it can be difficult for them to adequately compensate themselves.
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From page 161... ...
TABLE 6-2 NAEYC Recommended Child-to-Staff Ratios Within Group Size Group Sizeb Age Category Age Rangea 6 8 10 12 14 16 18 20 22 24 30 Infant Birth–15 months 3:1 4:1 Toddler/Two 12–28 months 3:1 4:1 4:1c 4:1 21–36 months 4:1 5:1 6:1 Prekindergarten 30–48 months (2½–4 years) 6:1 7:1 8:1 9:1 48–60 months (4–5 years)
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From page 162... ...
.6 Thus, they call for 5 The Transforming report envisions achieving a well-qualified workforce through strengthen ing foundational knowledge, with demonstrated competencies for all ECE professionals working with children, as well as implementing phased, multiyear pathways to transition to a minimum bachelor's degree requirement for lead educators. According to the Transforming report, these requirements for higher levels of education, foundational knowledge, and competencies must be linked with fair compensation to recognize the professionalization of the workforce and to ensure workforce recruitment and retention.
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From page 163... ...
. 9 The six programs that extend compensation parity only to lead educators in public pre kindergarten are Iowa Statewide Voluntary Preschool Program, Kentucky Preschool Program, Maryland Prekindergarten Program, the Missouri Preschool Program, the Nevada State Prekindergarten Program, and the Oklahoma Early Childhood Four-Year-Old Program (Barnett and Kasmin, 2017)
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From page 164... ...
used this approach to estimate the differential wage level of ECE professionals attributable to their occupation and found that women working in ECE occupations averaged 31 percent lower wages than other women when education, age, experience, location, and other variables predicting wages were held constant. If ECE compensation is currently low because of a disproportionate share of female and non-White staff in the occupation -- characteristics that may reflect discrimination rather than competence -- then cost estimates for adequate compensation, using this method, would need to be adjusted from current levels to levels that reflect a gender and racial composition similar to other occupations.
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From page 165... ...
. Onsite Professional Responsibilities and Learning As described in the Transforming report, consistent supports for professional responsibilities and professional learning during ongoing practice -- such as paid planning and assessment time, paid time for conferencing and communicating with families, paid time for professional sharing and reflection and for coaching and mentoring, and paid time for attending onsite professional development activities -- are critical for supporting the ECE workforce and delivering high-quality early care and education to children.
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From page 166... ...
These Head Start standards require that programs apply evidence-based teaching practices to support the growth of bilin The cost of providing these staff supports will vary depending on how much time is allotted for each activity and whether additional staff will need to be hired to provide the supports. For professional development and professional responsibilities, the frequency, duration, and approach will affect the cost.
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From page 167... ...
. For educator planning time, examples from Head Start, international sources, and the U.S.
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From page 168... ...
. The length of the year that ECE services are offered will also affect costs, and cost estimates may need to be adjusted based upon utilization trends.
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From page 169... ...
Facilities Facilities are an often overlooked but important element of onsite costs, since a high-quality ECE facility offers young children opportunities for cognitive, emotional, and physical development that go beyond basic expectations of physical protection. A small body of research has examined the costs of ECE facilities and found that two types of capital costs contribute to facilities costs: immediate costs for modernizing or building facilities (or transition costs)
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From page 170... ...
(Office of Head Start, 2015b) .14 Though the Head Start estimate assumes a minimum of 35 square feet of usable classroom space per child, in accordance with Head Start Program Performance Standards and NAEYC accreditation guidelines, this number may be low because multiple sources highlight the need for reception areas, staff lounges, and adequate storage space as critical components to maintaining high-quality ECE facilities (Child Care Inc., 2007; Mead, 2016; Singh and Bluestein, 2016)
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From page 171... ...
By comparison, such system-level mechanisms may not be required in a system that includes the costs of appropriate compensation and professional development supports for the ECE workforce as part of the cost of providing ECE services -- that is, where the ECE system reimburses these workforce costs as part of direct service provision. However, the transition phase during which the skills, competencies, and education of the current workforce are transformed to the levels required for the envisioned, highly qualified ECE workforce would entail nonecurring r system-level costs.
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From page 172... ...
Program-specific regulations are often associated with a particular funding stream such as Head Start or state prekindergarten programs. Costs are then associated with defining the program standards, monitoring funded providers to ensure that they achieve the program's requirements, and verifying whether providers that have failed to meet the program's standards do subsequently come into compliance.
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From page 173... ...
In this section, we review the costs of the rating process, as the costs of quality improvement supports were included in the above discussions of the onsite costs for professional responsibilities and learning and workforce development costs. The quality rating process encompasses assessment and rating of ECE providers; management and administration of the QRIS; evaluation and continuous improvement of the QRIS; and communication, outreach, and constituent engagement.
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From page 174... ...
The sections following this illustrative estimate of the total cost use this figure for total cost to illustrate one way to structure family contributions to the cost of high-quality early care and education and to estimate the share of funding that would need to come from public or private sources, based upon the family contribution. The committee's estimates for this illustration represent an up-to-date national calculation tied directly to the major recommendations of the Transforming report, particularly the recommendation that all lead educators have at least a bachelor's degree and receive considerable day-to-day as well as ongoing professional support.
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From page 175... ...
The example includes estimates for onsite costs, the costs of system-level workforce supports, and the costs of quality assessment and improvement systems. It thus provides a national-level perspective on the cost of implementing, over four phases, a high-quality ECE system with a highly qualified workforce.
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From page 176... ...
Similarly, the estimate assumes that the enhanced professional development resources and reduced child–to-adult ratios used in the illustrative cost estimate will facilitate the delivery of appropriate services to these children with special needs who are in mainstream settings. However, the partial costs of such staffing and supports are not shown separately.
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From page 177... ...
The committee therefore developed an illustrative scenario of changes in ECE utilization patterns over the four phases and calculated a dynamic estimate of costs that would be expected to result from higher quality and increased affordability to families, given the policy choices in this scenario. Since the literature on ECE utilization indicates that child age and family income are major predictors of the type and amount of early care and education used, the estimates applied were varied by age of child and family income group.
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From page 178... ...
home based) Net Subsidy Cost Adjust Current Hours of Hourly Cost of High- Dynamic Cost Estimate by Age of ECE, for Age and Income Quality ECE, for Each: Child, Type of ECE, Family Income groups: Times Equals • age of child Gross • % of children in ECE • type of ECE • subtract family payments • average hours per week (% of income by group)
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From page 179... ...
Thus, the committee assumes that more families will use early care and education, more will use center-based ECE options, and they will use more ECE hours per child, on average. Overall, the combined adjustments for these higher rates of center enrollment and additional weekly hours per enrolled child increased total hours of ECE utilization by 20 percent to 25 percent of total ECE hours for low-income families, 15 percent for middle-income families, and 10 percent for affluent families.
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From page 180... ...
The committee applied an increment of 8 percent a year to service delivery costs to estimate the system-level costs of workforce development supports and quality assurance and improvement systems in order to determine an illustrative estimate of the total cost of high-quality early care and education. The 8 percent was derived from adjusting cost estimates developed by Brandon and colleagues for the Financing Universal Access to ECE project, which developed a detailed cost estimate for a set of infrastructure and system support elements similar to those envisaged by the Transforming report (Brandon et al., 2004b; see also Institute of Medicine and National Research Council, 2015, Chapter 9 and Chapter 10)
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From page 181... ...
All cost estimates are presented in constant 2016 dollars to illustrate the impact of the assumed policies without adding in the potential costs of inflation. Unit Costs per Child Table 6-4 reports estimates of onsite center-based ECE costs on both a per-child-hour basis and an annual basis for full-time, full-year early care and education, all in 2016 dollars.
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From page 182... ...
TABLE 6-4 Estimated Onsite Costs for High-Quality Early Care and Education, Center-Based and Home-Based, 182 Unit Costs per Child, Compared to Current Prices NSECE Estimates, Adjusted to 2016 Estimated Cost per Child, Illustrative Scenario Median Price Mean Price Phase 1 Phase 2 Phase 3 Phase 4 Center-Based ECE Prekindergartners, ages 3–5 years Annualized, FT/FY $8,278 $14,040 $9,416 $10,538 $12,271 $13,655 Per child-hour $3.98 $6.75 $4.53 $5.07 $5.90 $6.57 Toddlers, ages 12–36 months Annualized, FT/FY $8,944 $15,080 $16,382 $18,806 $24,715 $28,203 Per child-hour $4.30 $7.25 $7.88 $9.04 $11.88 $13.56 Infants, age <12 months Annualized, FT/FY $10,130 $17,950 $16,045 $21,389 $23,654 $35,354 Per child-hour $4.87 $8.63 $7.71 $10.28 $11.37 $17.00 Home-Based ECEa Prekindergartners, ages 3–5 years 0.76 Ratio, homes/centers Annualized, FT/FY $8,112 $10,712 $7,156 $8,009 $9,326 $10,378 Per child-hour $3.90 $5.15 $3.44 $3.85 $4.48 $4.99 Toddlers, ages 12–36 months 0.63 Ratio, homes/centers Annualized, FT/FY $7,696 $10,192 $10,321 $11,848 $15,570 $17,768 Per child-hour $3.70 $4.90 $4.96 $5.70 $7.48 $8.54
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From page 183... ...
, adjusted to 2016 dollars. Estimated costs for the phases in the illustrative scenario were generated by the committee.
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From page 184... ...
Aggregate National Costs for High-Quality Early Care and Education For this illustrative scenario, the committee also projected total aggregate national costs (including onsite costs and system-level costs) , showing both a static estimate and a dynamic estimate.26 These values are based on applying the estimated costs per child-hour to the current and projected utilization patterns by age of child and family income group, as reported in the NSECE (as opposed to the illustrative full-time, full-year annualized costs in Table 6-4)
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From page 185... ...
In the dynamic estimate, the committee assumes a steady increase in overall utilization of early care and education, with a shift toward more use of center-based ECE options over the four phases. This approach produces an overall increase in the share of children and families using ECE services by about 6 percent for upper-middle income families to 15 to 20 percent for low-to-middle-income families that are currently more constrained by price.
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From page 186... ...
This family payment schedule is an example an equitable, progressive pattern that decreases payment shares for low-tomoderate-income families and increases payment shares for more-affluent families, compared to the current payment structure. Figure 6-2 shows a comparison of current payment rates as a share of family income to the illustrative family payment schedule.
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From page 187... ...
This is referred to as the "top-out income level." b Maximum payment is limited to maximum cost, which equals about 12 percent of mean income for the highest income group SOURCE: Current median and mean data from Latham (2017) , using data from the 2012 National Survey of Early Care and Education Public Data Set.
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From page 188... ...
out* Current - median Proposed - B FIGURE 6-2 Comparison of current payment rates as a share of family income to the illustrative family payment schedule.
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From page 189... ...
would pay a substantially greater share of total payments than their share of total households, contributing 64 percent of all family payments while constituting just 34 percent of households. EXAMPLE PART III: SHARING THE COST, FILLING THE GAP The committee's estimate of the total cost of a high-quality ECE system, based on specific, hypothetical assumptions and quality-related policy choices over four phases of implementation, was reported above in "Example Part I: Illustration of a Total Cost Estimate." In the Example Part II section, the committee offered an example of an affordable and progressive pattern of family shares.
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From page 190... ...
, using data from the 2012 National Survey of Early Care and Education Public Data Set. Share of total family payments for illustrative scenario were generated by the committee.
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From page 191... ...
TABLE 6-8 Static Estimate, Total Cost (onsite and system level) by Transformation Phase: Family and Public Contributions, Billions of Dollars, Constant 2016 Dollars Phase 1 Phase 2 Phase 3 Phase 4 Total $65.7 $76.1 $93.2 $109.5 Family payment $32.2 $34.0 $36.7 $39.6 Public cost $33.5 $42.2 $56.5 $69.9 Share of total Family payment 49% 45% 39% 36% Public cost 51% 55% 61% 64%
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From page 192... ...
CONCLUSION In this chapter, the committee provides an illustrative but hypothetical example of a national-level estimate for total costs of offering accessible and affordable high-quality early care and education with a highly qualified workforce to all children, consistent with the Transforming report. Once fully implemented (i.e., in phase 4 of a four-phase process to realize a 31 Whereas the share of income contributed by each income group remains constant across phases, the total cost of family payments increases for two reasons.
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From page 193... ...
suggests that current funding levels are well below what would be necessary to support access to high-quality early care and education for all children. If families contribute to the costs as shown in our illustration of an affordable family payment schedule (again, a hypothetical example dependent on a specific set of assumptions)
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From page 194... ...
Moreover, the estimated total cost of high-quality early care and education amounts to only about 12 percent of total K–12 expenditures36 in phase 1 and rises to about 22 percent in phase 4.37 That is, expenditures for one-third as many children of ages 0 to 5 years as children of ages 6 to 18 years would cost only from one-seventh to one-fifth as much.38 If families contribute to the costs using the illustrative family payment schedule, public ECE costs would only rise from about 5 percent of total K–12 expenditures to 13 percent of total K–12 expenditures across the phases. Of course, the precise cost of a high-quality ECE system that is accessible and affordable to all families depends on the specific details of the system.
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