Report - 2020 2020 Child Care Collaborative Task Force Report Bd5E1C98 844E 4467 B2D

Issuer: Congressional materials
Document type: Report
Case: 2020 2020 Child Care Collaborative Task Force Report Bd5E1C98 844E 4467 B2D

Summary

A report to the Washington Legislature and Governor by the Child Care Collaborative Task Force under 2SHB 1344, Laws of 2019, dated December 1, 2020 and issued through the Department of Commerce. The report, 2020 Child Care Policy Recommendations, addresses modeling the cost of quality child care, improving the Working Connections Subsidy Program, and workforce compensation and development. It opens with letters from the task force tri-chairs, Commerce Director Lisa Brown and DCYF Secretary Ross Hunter. Recommendations listed for first implementation include paying subsidy providers monthly, graduating copayments to eliminate the cliff effect, and shifting eligibility from 200% of federal poverty level to 85% of state median income. The report lists appendices including a COVID-19 Child Care Grant Matrix and closes with a bibliography.

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2020 Child Care Policy
Recommendations:
Modeling the Cost of Quality,
Improving the Working Connections Subsidy Program &
Supporting Workforce Compensation and Development

Child Care Collaborative Task Force Report to the Legislature and
Governor under 2SHB 1344, Laws of 2019

COMMUNITY ENGAGEMENT December 1, 2020
AND OUTREACH,
DIRECTOR'S OFFICE REPORT TO THE LEGISLATURE

Lisa Brown, Director
2.0
Acknowledgments
This report was made possible by the Child Care Collaborative Task Force, task force guest participants, ICF, and staff
of the Department of Commerce and Department of Children, Youth and Families.
Child Care Collaborative Task Force
2019-20 Role First Name Last Name Organization Appointed
Tri-Chair, Voting Amy Anderson Association of Washington Business 2018
Tri-Chair, Voting Luc Jasmin Washington Childcare Centers Association & 2018
Parkview Early Learning Center
Tri-Chair, Voting Ryan Pricco Child Care Aware of Washington 2018
Voting Erin Haick SEIU 925 2018
Voting Bob McCaslin 4th District (R), WA House of Representatives 2018
Voting Darlene Peters Port Gamble S'Klallam Tribe 2020
Voting Tana Senn 41st District (D), WA House of Representatives 2020
Voting Valisa Smith Start Early (Ounce of Prevention Fund) 2020
Voting Neil Strege Washington Roundtable 2018
Voting Claire Wilson 30th District (D), WA Senate 2019
Non-Voting David Beard School's Out Washington 2018
Non-Voting Sarah Clark Children's Alliance, SOAR 2019
Non-Voting Mary Curry Pathways Enrichment Academy 2018
Non-Voting Sydney Forrester Office of the Governor 2019
Non-Voting Christie Glassy Family, Friend and Neighbor Caregiver 2019
Non-Voting Jennifer Jennings-Shaffer Zero to Three 2019
Non-Voting Ruth Kagi Early Learning Ambassador 2018
Non-Voting Bethany Larsen Puget Sound Educational Service District 2018
Non-Voting Lois Martin Community Day Center for Children, Inc. 2018
Non-Voting ZamZam Mohamed Voices of Tomorrow 2019
Non-Voting Mary Ellen O’Keeffe Thrive Washington 2018
Non-Voting Jason Ramynke Department of Children, Youth and Families 2019
Non-Voting Cheryl Smith Department of Commerce 2018
Non-Voting Nicole Sohn Greater Spokane Inc. & Journey Discovery Center 2019
Non-Voting Ginger Still Kid's World Childcare 2018
Non-Voting Faith Trimble Capitol Campus Child Care Center 2018
Non-Voting Jodi Wall Educational Service District 112 2019
Participant Soleil Boyd Washington STEM N/A
Participant Susan Brown Kids Co. N/A
Participant Colleen Condon Lilac City Early Learning Center N/A
Participant Kelly Daniels Seattle Nanny Network N/A
Participant Sally Holloway Whatcom Community College N/A
Participant Regina Malveaux Women's Commission N/A
Facilitator Tim Jaasko-Fisher TJF Consulting, LLC N/A
Washington State Department of Children, Youth and Families
Genevieve Stokes, Government Affairs Advisor Angela Abrams, Professional Development Administrator
Nicole Rose, Director of Eligibility and Provider Supports Matt Judge, Child Care Administrator, Licensing Oversight

Washington State Department of Commerce
Cheryl Smith, Director of Community Engagement and Outreach, cheryl.smith@commerce.wa.gov
Jill Bushnell, Policy Advisor, 360.725.2818 or jill.bushnell@commerce.wa.gov
Mary Baldwin, Program Coordinator, 360.725.2815 or mary.baldwin@commerce.wa.gov

1011 Plum St. SE
P.O. Box 42525 www.commerce.wa.gov
Olympia, WA 98504-2525 To request this report in other formats, please call 360.725.4000 (TTY 360.586.0772).

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE
Table of Contents
Letter from the Task Force Tri-Chairs .......................................................................................................... 2

Letter from Commerce Director Dr. Lisa Brown............................................................................................. 3

Letter from DCYF Secretary Ross Hunter ...................................................................................................... 4

Executive Summary ..................................................................................................................................... 5

Introduction ................................................................................................................................................. 7

Child Care Cost of Quality Model ................................................................................................................ 20

Phased Implementation Plan for Subsidy Policy Changes ........................................................................... 25

Workforce Compensation and Professional Development Policy Recommendations ................................... 36

Conclusion ................................................................................................................................................ 47

Appendix A: Authorizing Legislation ........................................................................................................... 48

Appendix B: Task Force Overview .............................................................................................................. 50

Appendix C: COVID-19 Child Care Grant Matrix .......................................................................................... 51

Appendix D: Cost Model Background Information ....................................................................................... 53

Appendix E: 45 CFR § 98.45 - Equal Access ............................................................................................... 55

Bibliography .............................................................................................................................................. 58

Attachments:
ICF Child Care Cost Estimate Model Report
ICF Child Care Cost Estimate Model Excel Tools (Centers) (Family Homes)
ICF Report on Subsidy Policy Changes
ICF Report on Workforce Compensation Policies

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 1
Letter from the Task Force Tri-Chairs
It's hard to believe that only a year has passed since the task force issued initial recommendations for
improving child care in our state. What we saw as a crisis situation then has only intensified. Atop chronically
low wages and high turnover, the pandemic has layered on complex public health guidelines, child care and
school closures, changing family work arrangements, unemployment and new expectations to support student
remote learning.

Washington cannot have a healthy economy without a functional child care system. This essential system we
depend on so parents can work and children can thrive is unsustainable. In this third report, we present
recommendations for the state's child care subsidy system, workforce compensation, and a child care cost
model. These recommendations are a precursor to the task force's comprehensive June 2021 strategy for
accessible, affordable child care for all Washington families.

The task force urges policymakers to keep child care top-of-mind when investing to strengthen our economy.
Consider these recommendations to strengthen the child care industry and help families afford quality care.

Recommendations to implement first:

 Support providers participating in the state's child care subsidy program:

 Pay providers the same full-day subsidy rate for school-age children as for preschoolers (S1)
 Pay providers on a monthly basis, structured like the private pay market (S2)
 Restructure subsidy regions based on cost of living factors at the ZIP code level (S4)

 Help working parents enter, re-enter and stay in the labor force:

 Graduate subsidy copayments to eliminate the "cliff effect" (S3)
 Shift subsidy eligibility from 200% of federal poverty level to 85% of state median income (S5)
 Allow parents preparing to enter or re-enter the workforce, and parents participating in job training,
apprenticeships and higher education, to receive child care subsidies (S8)

 Begin improvements to child care workforce compensation and development:

 Take initial steps to understand and model the costs associated with quality child care (CM1, CM2)
 Find ways to increase access to healthcare insurance coverage and higher wages (WC2, WC3)
 Expand the Community-Based Pathway as a process for staff to demonstrate competencies (PD1)

On behalf of the Child Care Collaborative Task Force, we thank you for reading and considering these
recommendations.

Amy Anderson Luc Jasmin Ryan Pricco
Association of Washington Washington Childcare Centers Association & Child Care Aware of Washington
Business Parkview Early Learning Center

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 2
Letter from Commerce Director Dr. Lisa Brown
Parents and child care providers have long understood that our child care system is
inadequate. A well-functioning system would ensure that all parents and guardians have
affordable, high-quality options when and where they need it. Providers would be
compensated fairly for the important work they do and afforded opportunities for training and
career advancement that benefit them and the children for whom they care. With the onset of
the COVID-19 pandemic, there is a renewed recognition that child care is one of the most
essential pillars of a strong, resilient and equitable economy. Investing in a child care system that works for
children, parents, providers, and employers should be a priority in Washington State’s economic recovery
strategy.

The conundrum of child care economics is that paying providers adequately based on a provider-to-child ratio
that is developmentally appropriate for infants, toddlers and young children results in a cost that is too high for
many parents – especially single parents or low wage workers. Costs are typically more expensive than a
community college education. The public subsidy currently provided in Washington State only partially
addresses this conundrum. Ultimately there are too many gaps in options for parents and too many family
providers and centers teetering on the brink of closing their doors. The impacts ripple far and wide. Employers
bear costs related to lower employee productivity and business taxes to support child welfare and human
service programs that, in effect, remediate the lack of quality care for children. Pre-existing social inequities
are compounded. The child care workforce – which is a low wage workforce -- is disproportionately composed
of women and women of color, and families in many rural communities face “child care deserts.”

One priority recommendation in this report that would improve affordability for low wage workers is to correct
a flaw in the current child care subsidy known as the “cliff effect.” This occurs when a parent’s income
increases and they can no longer afford the steep increase in copay required to continue receiving a subsidy.
Ironically, they become worse off after a pay increase or an increase in hours worked. Eliminating this
disincentive is crucial to supporting all working parents as they move upward on the earnings ladder.

I appreciate the thoughtful work of the Child Care Collaborative Task Force to make recommendations on the
child care public subsidy program, workforce compensation, and a child care cost model for use in the future.
The diversity of perspectives represented on the task force makes their recommendations even more
significant. Their work also exemplifies the power of collaboration and inclusion. One size does not fit all when
it comes to child care, and only by working across sectors and across communities can we develop a system
that meets families where they are. Recently the Department of Commerce, in partnership with philanthropy,
was able to award grants to partnerships around the state developing plans to expand child care capacity in 40
communities. These community-led efforts demonstrate that a state investment in the system will be met by
communities eager to do their part to eliminate gaps in access and affordability. I look forward to continuing
this urgent dialogue and working with this task force as we lay the groundwork for a system that truly meets
the needs of Washington families.

Lisa J. Brown, Ph.D.
Director, Department of Commerce

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 3
Letter from DCYF Secretary Ross Hunter
The economics of the child care system in Washington are dysfunctional. They were
dysfunctional before COVID, and the pandemic has only made them worse. Many of the
thousands of mostly small businesses that offer care to children have invested in quality
improvement work even in the uncertain economic system so that young children can get
a quality start in life.

Unfortunately, most parents can’t afford safe, high-quality, licensed care: the fundamental economics of the
business make it too expensive for new parents to afford, and the work of the Child Care Collaborative Task
Force has drawn a bright highlighter over the realities of this market failure. There exist deep inequalities and
massive gaps in our child care system, even before the havoc created by the COVID-19 pandemic.

The task force has begun the heavy lift of re-envisioning this system. I am grateful for the deep thinking and
partnership that has gone into this work. This task force has demonstrated in stark terms that child care is
critical for the racial and gender equity our state is striving for. Furthermore, we know that our economy cannot
recover until people feel their kids can be in a safe, high-quality setting when they can’t be there to care for
them themselves.

As the Legislature convenes in January 2021 they will have a monumental task ahead of them, the likes of
which not seen since the Great Recession. They’ll need to make some statements about what value they place
on the child care system, and what kind of investment they’re willing to make towards supporting families
accessing child care and providers offering high-quality care. As recommended by the task force, the following
are good ideas:

Aligning the subsidy market reimbursement process with the private market, by switching to a monthly rate
for subsidy providers.
An end to the “benefit cliff,” where parents can’t accept raises or promotions because they’ll lose their
childcare benefits all at once. This means first tackling the copay cliff that makes subsidized care
unaffordable for families at the upper end of the eligibility spectrum.
Stabilizing and increasing rates for subsidy care. Ultimately, we need rates that cover the costs of providing
care, including salaries that enable teachers to make enough to stay in the profession. Turnover rates in
child care settings are concerning, limiting our ability to ensure quality care.

There are also some back-end technological improvements needed to bring our eligibility and payment
systems out of the dark ages so that money can efficiently and effectively go towards paying for high-quality
services. The problems across the nation with our unemployment technology systems in 2020 were a wakeup
call for many people to the consequence of chronically underfunding foundational IT infrastructure.

There is no silver bullet to fixing subsidized child care in Washington. COVID-19 has exacerbated existing
flaws, but the systemic solutions necessary before the pandemic are the same ones that will help the system
recover and help families thrive after the crisis abates.

This report is a good stepping stone on the path towards envisioning an affordable, high-quality child care
system that can be accessed by all families in Washington. I applaud the members of the task force for their
work thus far, and look forward to their final report in mid-2021.

Ross Hunter
Secretary, Department of Children, Youth, and Families

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 4
Executive Summary
The Child Care Collaborative Task Force (task force), comprised of a broad coalition of child care providers,
advocates, legislators, community members and representatives of the business community, reviewed the
industry assessment and also reflected on the status of child care industry before and during the COVID-19
pandemic. The task force found that:

Child care is essential infrastructure, critical to rebuilding Washington's economy.

Low- and middle-income working families, and parents seeking employment or participating in educational
pursuits, job training programs or apprenticeships, struggle to find and afford child care.

Expenses associated with operating a high-quality child care program are often higher than what families
can afford. Providers operate with slim margins and find it difficult to pay wages and benefits that reflect
the high value staff contribute to program quality and positive outcomes for children and families.

Competitive, living wages and access to healthcare insurance coverage are key components in stabilizing
the child care industry and addressing racial inequities for the child care workforce and the families they
serve.

Broad-scale change is necessary to build an accessible, affordable child care system.

With the pandemic still impacting our communities and an extensive economic recovery on the horizon, now is
the time to focus on improving our state's model for providing subsidized child care. Supporting low- and
middle-income working families, parents preparing to enter or reenter the workforce, and the child care
providers that serve them has widespread benefits. It is a win for families that can continue to participate in
the labor force, a win for employers that can recruit and retain employees, and a win for Washington
communities that benefit from viable economies and nurtured children.

The task force recognizes that while subsidy system improvements impact the child care industry overall, the
subsidy program directly serves only about one-third of the families that currently access licensed child care.
The task force recommends that policymakers consider options for additional systemic improvements to
support high-quality, affordable child care so it is available to all families that need it.

Several recommendations in this report involve additional evaluation and further recommendations, which the
task force will take up as part of its work for the June 2021 comprehensive strategy and implementation plan
for affordable and accessible child care for all families. The recommendations needing further work include:

Understand the costs associated with operating high-quality child care programs.

Determine sustainable child care business models that leverage public and private resources to cover the
costs of quality.

Assess alternative funding options to support competitive, living wages and benefits for child care
employees that reflect their valuable contributions to positive outcomes for children, families and our
economy.

Identify affordable healthcare insurance coverage options for the child care workforce.

Simplify child care rules to decrease administrative burdens.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 5
Table I below summarizes the task force's Cost Model, Subsidy, Workforce Compensation and Professional
Development policy recommendations presented with this report. Prior to the 2021 legislative session, the task
force will provide, as an addendum to this report, an estimate of costs to implement these recommendations.

Table I: List of Task Force Policy Recommendations
Topic Recommendation

CM1. Survey child care providers to identify the costs associated with operating quality
Cost of quality survey
child care programs, and revise the task force cost model tools.
CM2. Complete the task force cost model tools to address limitations and incorporate
Cost model findings of the child care provider cost study. Regularly update the cost model tools
based on child care provider surveys.
School-age subsidy rate S1. Raise the subsidy rate for full-day school-age child care to match the preschool rate.
S2. Pay providers a monthly rate for children enrolled in the subsidy system, structured
Monthly subsidy rate
like the private market.
Eliminate subsidy copay S3. Eliminate the subsidy copayment "cliff effect" for eligible families by limiting eligible
cliff effect families' copayments to no more than 7% of a family's income.
S4. Change subsidy geographic regions to reflect cost of living factors at the ZIP code
Subsidy regions
level, grouped by urbanicity (rural, suburban, urban, etc.).
S5. Shift the income eligibility measurement away from federal poverty to State Median
Subsidy income eligibility
Income (SMI), and increase eligibility to at least 85% of SMI.
S6/CM3. Raise subsidy rates to cover full cost of high-quality care, based on the task
Subsidy rates force cost model (once completed). In the short term, and until a Cost of Quality survey
can be completed, raise the base rate to the 100th percentile of market rate.
Subsidy cap S7. Eliminate the cap on WCCC participation.
Approved activities for S8. Expand allowable activities for subsidy eligibility to enable employed, unemployed and
subsidy eligibility student parents to seek and retain work and education.
WC1. Evaluate and recommend a compensation structure aligned to regional school
Salary scale / floor
system salary scales for use by DCYF to set subsidy rates.
WC2. Assess alternative funding streams (besides family tuition payments and subsidies)
Workforce compensation to support competitive, living wages and benefits for child care employees that reflect
their valuable contributions to positive outcomes for children, families and our economy.
WC3. Evaluate options to support access to affordable healthcare insurance coverage for
Workforce healthcare
child care staff. Options include, but are not limited to, the Health Benefit Exchange, Apple
insurance coverage
Health and association health plans.
WC4. Provide subsidy rate enhancements to incentivize provision of child care in unmet
Targeted investments
segments of the market, and to programs providing unique services.
PD1. Expand the Community-Based Pathway from pilot to statewide implementation as a
Workforce competencies
process for child care staff to demonstrate competencies.
PD2. Support professional development around skills the industry needs, and reimburse
Professional development
providers for participation (trauma-informed care, dual language, racial bias training, etc.).
PD3. Seek to resolve known issues with the quality of data in the MERIT data system,
Workforce data systems
such as the number of providers with verified education data.
PD4. Fully fund professional development, relationship-based professional development,
Professional development,
and financial incentives to support providers in meeting staff qualifications, ongoing
coaching, rating and
continuous quality improvement, and achieve high quality levels in Early Achievers and
quality incentives
school-age quality standards.
PD5. Expand eligibility requirements to use the state-funded early care and education
Substitute Pool
substitute pool so licensed child care providers have access to temporary staff coverage.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 6
Introduction
The Washington State Child Care Collaborative Task Force (task force) is pleased to present this interim report
to the Legislature and Governor Inslee. This report includes policy recommendations to begin building a high-
quality, sustainable child care system that supports Washington's children, families and communities. The task
force, a broad coalition of child care providers, advocates, legislators, community members and
representatives of the business community, reviewed the industry assessment and also reflected on the status
of child care industry before and during the COVID-19 pandemic to generate recommendations for this report.1
The task force recommends policies to model the costs associated with high-quality child care, improve the
state's child care subsidy system, and support competitive compensation and professional development of the
child care workforce. In June 2021, the task force will submit a strategy, timeline and implementation plan for
achieving the goal of access to affordable, high-quality child care for all Washington families by 2025.

Child care is essential infrastructure and critical to rebuilding Washington's economy.

Families, employers and policymakers have grown to realize, especially during the pandemic, that child care
plays an essential role for child outcomes, workforce participation and economic recovery. But many child care
providers are unable to charge parents the tuition rates it would require to cover all of the costs associated
with quality care, as parents cannot afford to pay for the full value of the services. With insufficient revenue,
providers are unable to pay competitive wages and provide employment benefits to staff. This results in high
employee turnover, disincentives for workers to pursue professional development to advance in the field, and
overall instability in the child care system. It also perpetuates systemic inequalities for women and people of
color that make up a disproportionate amount of the child care workforce. These factors hold true for
subsidized child care and the child care market as a whole.

Availability of high-quality care helps people go to work. The task force found that among Washington parents
that participated in a spring 2020 survey: 71% used some form of licensed or informal child care by someone
other than a parent, 38% indicated that affording child care was a challenge, and nearly half (47%) of
unemployed parents considered child care issues a barrier to reemployment. This varied by the gender of the
respondent--51% among unemployed women and 41% among unemployed men.2 Parents also reported
challenges finding available care options nearby. One in four parents (25%) indicated they needed child care
during nontraditional work hours (outside weekday hours of 6:00 am to 6:00 pm). Low- and middle-income
working families, parents seeking employment and parents participating in educational pursuits, job training or
apprenticeships, struggle to find and afford child care.

Broad-scale change is necessary to build an accessible, affordable child care system.

With the pandemic still affecting our communities and an extensive economic recovery on the horizon, now is
the time to focus on improving our state's model for providing subsidized child care. Supporting low- and
middle-income working families, families preparing to enter or reenter the workforce, and child care providers
that accept child care subsidies has widespread benefits. It is a win for families that can continue to
participate in the labor force, a win for employers that can recruit and retain employees, and a win for
Washington communities that benefit from viable economies and nurtured children.

1 See Appendix A for the authorizing legislation for this report, and Appendix B for information about the task force.
2 (ICF 2020). 1,536 Washington parents with children under 12 responded to the survey in total; 106 of the parents were unemployed.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 7
Although subsidy system improvements positively impact the child care industry overall, subsidies serve only
about one-third of the families that currently access licensed child care. The task force recommends that
policymakers consider options for additional systemic improvements to support high-quality, affordable child
care so it is available to all families that need it.

We must identify sustainable child care business models to ensure Washington families can access
affordable, quality child care options.

Expenses associated with operating a high-quality child care program are often higher than what families can
afford to pay. Providers operate with slim margins and find it difficult to pay wages and benefits that reflect
the high value staff contribute to program quality and positive outcomes for children and families. The task
force began the process of identifying and modeling the true costs of quality child care, and more work must
be done to gather provider financial data to complete the cost model. The task force recommends the state
conduct a comprehensive, federally-approved Cost of Quality survey in collaboration with partner organizations
to ensure broad participation by child care providers. The completed cost model will allow policymakers and
stakeholders to examine costs and revenue sources to identify sustainable models for operating child care
programs and support a functional child care system.

Competitive, living wages and access to healthcare insurance coverage are key components in stabilizing the
child care industry and addressing racial inequities for the child care workforce and the families they serve.

The child care workforce is comprised disproportionately of low-income women of color: 94% of the U.S. child
care workforce are women3, 50% of Washington's child care workforce are people of color, and 30% are
bilingual or multilingual.4 This is both a strength and an opportunity for the field. Research has suggested that
young children with providers and caregivers that reflect their home cultures and speak their home languages
have better continuity between home and child care settings. Diverse providers can support children's healthy
development.5 Studies have found that the presence of a consistent caring adult in a child's life in the early
years, as well as in childhood and adolescence, is associated better academic grades, healthier behaviors,
more positive peer interactions and a greater ability to handle stress later in life.6 However, over half of
American child care workers live in households that need to access public assistance. In Washington, child
care employees rank in the third percentile of total earnings among occupational groups. A Bachelor of Arts in
early childhood education was found to have the lowest projected lifetime earnings of 80 college majors
considered.7 In a 2015 national study, just 15% of child care staff had employer-provided healthcare insurance
coverage, compared to 50% of all other workers.8 Child care professionals leave the industry to go to entry-
level jobs with better wages and benefits in other sectors, such as retail.

3 (Child Care Aware of America 2019)
4 (ICF and Fran Kipnis 2020)
5 (Center for Law and Social Policy 2017)
6 (Child Welfare Information Gateway n.d.), (Murphey, et al. 2013)
7 (Child Care Collaborative Task Force 2019)
8 (Gould 2015)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 8
third of child care capacity. Subsidy rates alone will not support a statewide salary floor. However, subsidy
rates that are at or very near the cost of providing quality child care will increase providers' ability to sustain
their business, participate in the subsidy program and compensate staff appropriately. The task force will
continue evaluating options to support living wages and access to affordable healthcare insurance coverage
for the entire child care workforce, and will provide further recommendations in the next report.

Further recommendations include:

Understand the costs associated with operating high-quality child care programs.

Determine sustainable child care business models that leverage public and private resources to cover the
costs of quality.

Assess alternative funding streams (besides tuition and subsidies) to support competitive, living wages
and benefits for child care employees that reflect their valuable contributions to positive outcomes for
children, families and our economy.

Identify affordable healthcare insurance coverage options for the child care workforce.

Simplify child care rules to decrease administrative burdens.

The task force will include these recommendations in its June 2021 child care access strategy. Table I
summarizes the task force's Cost Model, Subsidy, and Workforce Compensation and Professional
Development policy recommendations presented with this report. Prior to the 2021 legislative session, the task
force will provide, as an addendum to this report, an estimate of costs to implement these recommendations.

We must continue to work toward achieving equitable racial outcomes.

The task force has committed to applying a lens of racial equity theory of change to policy recommendations.
While drafting this report, a workgroup discussed tools and strategies the task force could use to fulfill this
commitment. The workgroup advised the task force to host a workshop on racial equity, inclusion, implicit bias
and anti-racism to ground task force members in common information and learn together how to apply anti-
racist principles to policy recommendations and strategies in the June 2021 report.

As an initial step before this workshop occurs, the task force answered the questions below to evaluate
potential unintended consequences of policies recommended in this report:

"What impact do you think these recommendations would have on Black, Indigenous, People of Color
(BIPOC) communities?"

"How might we mitigate negative impacts or accentuate positive impacts?"

These questions served as a first step to assist the task force with abiding by its commitment to remove
institutional barriers that keep families, and the child care industry, from achieving equitable outcomes for all
children. The task force will continue this work, and aims to recommend policies and strategies that will result
in equitable racial outcomes for children, families and child care educators.

Lastly, the task force recognizes there are opportunities to decrease administrative burdens associated with
child care licensing and subsidy programs. The Department of Children, Youth and Families (DCYF) should
continue to work with child care providers to simplify Washington Administrative Code (WAC) to reduce

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 9
administrative burdens for families and child care providers, while minimizing eligibility and payment errors.
This would build upon the successful negotiated rulemaking processes and communication forums DCYF has
established with child care providers, and help fulfill the 2019 task force recommendation of developing and
sustaining a culture of mutual respect and collaboration among licensors, regulators and providers. DCYF has
made notable improvements in this area, and continued effort will build a more collaborative regulatory
environment.

Summary of Policy Recommendations
In this report, the task force recommends a series of policy changes for modeling costs associated with
providing quality child care, stabilizing Working Connections Child Care (WCCC) subsidy payments for
providers, linking subsidy rates to the cost of providing care, increasing child care subsidy eligibility, adjusting
subsidy regions to reflect economic conditions at a ZIP code level, and incentivizing increased compensation
and professional development of the child care workforce. Task force recommendations are described in
Table 1 and listed below.

Policy recommendations:

 CM1. Survey child care providers to identify the costs associated with operating quality child care
programs, and revise the task force cost model tools.
 CM2. Complete the task force cost model tools to address limitations and incorporate findings of the
child care provider cost study. Regularly model tools based on child care provider surveys.
 S1. Raise the subsidy rate for full-day school-age child care to match the preschool rate.
 S2. Pay providers a monthly rate for children enrolled in the subsidy system, structured like the private
market.
 S3. Eliminate the subsidy copayment "cliff effect" for eligible families by limiting eligible families'
copayments to no more than 7% of a family's income.
 S4. Change subsidy geographic regions to reflect cost of living factors at the ZIP code level, grouped by
urbanicity (rural, suburban, urban, etc.).
 S5. Shift the income eligibility measurement away from federal poverty to State Median Income (SMI),
and increase eligibility to at least 85% of SMI.
 S6/CM3. Raise subsidy rates to cover full cost of high-quality care, based on the task force cost model
(once completed). In the short term, and until a Cost of Quality survey can be completed, raise the base
rate to the 100th percentile of market rate.
 S7. Eliminate the cap on WCCC participation.
 S8. Expand allowable activities for subsidy eligibility to enable employed, unemployed and student
parents to seek and retain work and education.
 WC1. Evaluate and recommend a compensation structure aligned to regional school system salary
scales for use by DCYF to set subsidy rates.
 WC2. Assess alternative funding streams (besides family tuition payments and subsidies) to support
competitive, living wages and benefits for child care employees that reflect their valuable contributions
to positive outcomes for children, families and our economy.
 WC3. Evaluate options to support access to affordable healthcare insurance coverage for child care
staff. Options include, but are not limited to, the Health Benefit Exchange, Apple Health and association
health plans.
 WC4. Provide subsidy rate enhancements to incentivize provision of child care in unmet segments of
the market, and to programs providing unique services.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 10
 PD1. Expand the Community-Based Pathway from pilot to statewide implementation as a process for
child care staff to demonstrate competencies.
 PD2. Support professional development around skills the industry needs, and reimburse providers for
participation (trauma-informed care, dual language, racial bias training, etc.).
 PD3. Seek to resolve known issues with the quality of data in the MERIT data system, such as the
number of providers with verified education data.
 PD4. Fully fund professional development, relationship-based professional development, and financial
incentives to support providers in meeting staff qualifications, ongoing continuous quality
improvement, and achieve high quality levels in Early Achievers and school-age quality standards.
 PD5. Expand eligibility requirements to use the state-funded early care and education substitute pool so
licensed child care providers have access to temporary staff coverage.

Table 1: Summary of Task Force Policy Recommendations for Cost Model, Subsidy
and Workforce Compensation and Professional Development
Topic Recommendation Rationale Next Steps to Implement
Get federal approval for
a cost study/model
Provider data is necessary for estimating "alternative
CM1. Survey child care
and modeling cost of quality. methodology" for use in
providers to identify
Task force was unable to survey the state's Child Care
the costs associated
providers during the pandemic. and Development Fund
Cost of quality with operating quality
Cost models help policymakers, (CCDF) plan.
survey child care programs,
stakeholders and providers identify Collaborate with
and revise the task
sustainable business models. partners to complete a
force cost model
Cost of quality is a more rational and child care provider cost
tools.
sufficient basis subsidy rates. survey in conjunction
with 2022 market rate
survey, if possible.
CM2. Complete the Task force was unable to survey Use survey/cost study
task force cost model providers during the pandemic. data to update the ICF
tools to address Cost model in progress has significant cost model tools.
limitations and limitations due to insufficient data. Update cost model tools
incorporate findings of Need to update cost model to meet all to reflect provider cost
Cost model
the child care provider requirements of 45 CFR 98.45 and reflect data, subsidy policy
cost study. Regularly costs associated with cost drivers changes and additional
update model tools identified by the task force, as well as cost drivers.
based on child care other cost drivers identified through the Continue to regularly
provider surveys. provider cost survey. update the model tools.
COVID-19 has caused schools to operate
remotely or with hybrid remote and in-
person models, creating an emergent,
Increase the full-day
temporary need for more full-day child
subsidy rate for school-
care with remote learning support.
age children to match
S1. Raise the subsidy Full-day school-age subsidy rates are
the subsidy rate for
rate for full-day based on lower child-to-staff ratios than
School-age preschool, at least
school-age child care are permissible or possible during the
subsidy rate temporarily while public
to match the pandemic.
health guidelines are in
preschool rate. Current full-day rates are much lower
place and until schools
than the costs of providing care,
return to classroom-
especially with lower ratios of staff to
based learning.
children, additional costs associated
with staff and supplies, and lower
enrollment.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 11
Topic Recommendation Rationale Next Steps to Implement
Make accessing a
Stabilized market during pandemic.
S2. Pay providers a monthly payment as
Structured like the private market.
monthly rate for simple as possible for
Simpler for child care providers.
Monthly children enrolled in the child care professionals.
Reduces opportunity for subsidy
subsidy rate subsidy system, Consider the use of
overpayments.
structured like the contracted slots for
Explore contracts for certain types of
private market. incentivizing care of
care.
special populations.
S3. Eliminate the
Federal benchmark is 7%.
subsidy copayment
Parents drop out of the workforce when
"cliff effect" for eligible Implement new
Eliminate child care is unaffordable.
families by limiting copayment structure to
subsidy copay Adjustments to copay structure can be
eligible families' enable parents to retain
cliff effect made within existing budget.
copayments to no employment.
Additional investments could help
more than 7% of a
smooth the eligibility cliff into a slope.
family's income.
Current region structure does not
S4. Change subsidy DCYF should continue
adequately account for economic
geographic regions to developing this subsidy
variations or cost of quality.
reflect cost of living region methodology.
Subsidy Task force considered alternatives,
factors at the ZIP code Collaborate with
regions including cost clusters based on labor
level, grouped by providers and partners
markets and hybrid approaches.
urbanicity (rural, to assess impacts
Oregon approach of grouping ZIP codes
suburban, urban, etc.). before implementing.
based on cost of living was best option.
S5. Shift the income
eligibility Increase eligibility to
State has a relatively high cost of living,
measurement away 85% of SMI.
Subsidy so SMI is a preferable measure.
from federal poverty to Examine the feasibility
income SMI is used to determine financial
State Median Income of providing subsidy to
eligibility assistance for higher education and
(SMI), and increase families up to 100% of
should also be used for child care.
eligibility to at least the SMI.
85% of SMI.
S6/CM3. Raise
subsidy rates to cover In the short term, until a
full cost of high-quality Cost of Quality survey
Studies have found existing subsidy
care, based on the can be completed, raise
rates to be inadequate to support access
task force cost model the subsidy base rate to
and quality.
(once completed). In the 100th percentile of
Increases sustainability of business
Subsidy rates the short term, and market rate.
model for providers accepting subsidy.
until a Cost of Quality Once federally approved
Factors in competitive compensation for
survey can be cost model is available
staff, including healthcare insurance
completed, raise the (CM1 and CM2), use the
coverage and retirement benefits.
base rate to the 100th cost model to set
percentile of market subsidy rates.
rate.
If more than 33,000 eligible families seek
Legislature should
to enroll in the subsidy program, the cap
remove the cap to
S7. Eliminate the cap will preclude parents from accessing
enable parents to obtain
Subsidy cap on WCCC high-quality care. This would fall short of
affordable child care in
participation. meeting federal requirements.
order to work or go to
Child care affordability is a significant
school.
challenge for working families.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 12
Topic Recommendation Rationale Next Steps to Implement
S8. Expand allowable
Simplify eligibility
activities for subsidy
State law is more restrictive than federal requirements.
Approved eligibility to enable
guidelines. Increase approved
activities for employed,
Flexibility is important for families that activities to meet federal
subsidy unemployed and
may have job or education changes, guidelines.
eligibility student parents to
especially during the pandemic. Evaluate options to
seek and retain work
increase flexibility.
and education.
WC1. Evaluate and
Raising wages would sustain workforce Revise the
recommend a
diversity, decrease turnover, attract new Compensation
compensation
educators, and help professionalize the Technical Workgroup's
Salary scale / structure aligned to
field and prepare it for future growth. proposed salary scale.
floor regional school
Compensation structure would include a Use the recommended
system salary scales
salary floor and scale based on regional compensation structure
for use by DCYF to set
school salary scales. to set subsidy rates.
subsidy rates.
WC2. Assess
alternative funding
streams (besides
family tuition
Child care subsidies only reach a portion Task force researches
payments and
of the system. options for increasing
subsidies) to support
Options exist, but most would require compensation across
Workforce competitive, living
legislation and significant new the child care system.
compensation wages and benefits for
investments. Task force recommends
child care employees
Continue researching and evaluating options in June 2021
that reflect their
options. task force report.
valuable contributions
to positive outcomes
for children, families
and our economy.
Task force consults with
WC3. Evaluate options
healthcare insurance
to support access to
agencies and programs
affordable healthcare
to determine options.
insurance coverage Child care providers and staff exit the
Task force researches
Workforce for child care staff. industry for entry level jobs that offer
options to streamline
healthcare Options include, but better compensation.
enrollment, ensure
insurance are not limited to, the Options exist, but child care stakeholders
adequate coverage, and
coverage Health Benefit will need to research how providers and
provide bridge funding
Exchange, Apple staff can access them.
for employee premiums.
Health and
Task force recommends
association health
options in June 2021
plans.
task force report.
Identify options to
This would provide additional targeted
WC4. Provide subsidy provide rate
investments for important services such
rate enhancements to enhancements now.
as: nontraditional hour care, care in
incentivize provision When implementing
underserved geographic communities,
Targeted of child care in unmet cost-based subsidy
care for underserved ethnic or linguistic
investments segments of the rates and/or updating
communities, dual-language
market and to the CCDF plan,
programming, care for populations with
programs providing incorporate the listed
specialized health or educational needs,
unique services. subsidy rate
and care for infants and toddlers.
enhancements.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 13
Topic Recommendation Rationale Next Steps to Implement
PD1. Expand the
A range of options to meet education Identify resources
Community-Based
requirements supports preserving and needed to implement
Pathway from pilot to
increasing the racial, ethnic, cultural, and the Community-Based
Workforce statewide
linguistic diversity of our state's child Pathway statewide as a
competencies implementation as a
care workforce. process for child care
process for child care
HB 2556 created a framework for a staff to demonstrate
staff to demonstrate
Community-Based Pathway. competencies.
competencies.
PD2. Support
professional Providers and stakeholders have
development around recognized a need for more staff with Identify resources
skills the industry skills/training in trauma-informed care, needed to identify high-
Professional needs, and reimburse dual language, racial bias training, etc. demand skills and
development providers for Supporting professional development support professional
participation (trauma- will lead to increased availability of these development training
informed care, dual skills in the industry and may lead to and reimbursement.
language, racial bias increased compensation of trainees.
training, etc.).
Identify resources
needed to increase
education data
PD3. Seek to resolve Education data elements are essential to
verification.
known issues with the assessing accomplishments and
Explore options to
quality of data in the inequities across service delivery, with
Workforce capture Community
MERIT data system, emphasis on racial and ethnic groups,
data systems Based Pathway
such as the number of language groups and regions, as well as
competencies in MERIT.
providers with verified estimating costs to implement salary
If wage discrepancies
education data. scales based on position and education.
based on race/ethnicity
are found, make a plan
to support equalization.
PD4. Fully fund
Child care professionals accepting
professional
subsidy are required to comply with Early
development,
Achievers but the program has never
relationship-based
been sufficiently funded. Identify resources
professional
Systemic investments are needed to needed to assure
Professional development, and
support providers in achieving high professional
development, financial incentives to
quality levels in Early Achievers and development, coaching,
coaching, support providers in
school-age quality standards. rating and quality
rating, and meeting staff
Incentives for professional development, incentives provide
quality qualifications, ongoing
coaching, rating and quality would help financial support to
incentives continuous quality
providers and staff increase achieving high quality
improvement, and
competencies and quality. This would levels.
achieve high quality
help staff become eligible for increased
levels in Early
compensation and help providers meet
Achievers and school-
compensation goals.
age quality standards.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 14
Topic Recommendation Rationale Next Steps to Implement
Identify costs
associated with allowing
The substitute pool is currently available
more providers to use
PD5. Expand eligibility to providers working towards an Early
the substitute pool.
requirements to use Achievers Level 3 rating.
Assess providers'
the state-funded early Increasing access to the substitute pool
potential demand for the
care and education would give providers a resource to meet
Substitute substitute pool, and
substitute pool so staffing needs and stay open while
Pool compare demand to the
licensed child care employees participate in professional
existing substitute pool
providers have access development or take time off.
to identify gaps.
to temporary staff This contributes to the stability and
Evaluate options for
coverage. sustainability of child care programs and
expanding eligibility and
workforce.
increasing access to the
substitute pool.

Impacts of the COVID-19 Pandemic
COVID-19 Impacts on Child Care Revenue and Expenses
The COVID-19 pandemic has changed how providers are offering care and how families are accessing it. DCYF
is in the process of surveying Washington families to better understand the demand and preferences for child
care during the pandemic, and what we might anticipate when society achieves a post-pandemic "new normal."
National studies have shown that earlier in the pandemic, families were making different child care decisions.9
Fear of transmitting the virus, working from home, work schedule changes, school schedule changes, remote
learning, furloughs and unemployment have influenced families' approaches to child care arrangements. The
situation has evolved, and will continue to shift until public health and economic conditions improve.

Later in this report, you will read about the task force's recommendations to complete a child care cost model,
which is intended to reflect expenses and revenues associated with operating a child care program. We know
that many drivers of cost and revenue for child care programs have been impacted by the COVID-19 pandemic.
The impacts have varied over time and affected communities in different ways. It’s important to highlight how
cost drivers have been affected by COVID-19 so we can differentiate pandemic-era costs from historical trends
in child care -- recognizing that some pandemic-related changes may be lasting or permanent. Pinpointing
exact differences pre- and post-pandemic is beyond the scope of this analysis, but below we indicate cost
drivers and whether COVID-19 is increasing or decreasing cost or revenue:

Group size: COVID-19 is increasing cost –

 Providers, especially centers, are required to have more teachers to serve fewer children, driving up
staffing costs.
 Department of Health social distancing requirements exceed licensing requirements. Some providers
may follow them for health and safety of children and staff, driving up staffing costs.
 Changes to the facility environment may be needed to meet group size requirements, driving up
environmental costs.
 Some school-age child care providers have effectively cut in half their program capacity to maintain
physical distancing, driving down revenue. Additionally, the school-age child care subsidy rate assumes

9 (Smith and Tracey 2020)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 15
more children per teacher, and is far below the costs associated with caring for school-age children and
supporting remote learning. This issue is addressed in Subsidy Recommendation S1 of this report.

Staff-to-child ratios: COVID-19 is increasing cost –

 Especially for centers, more staff are needed earlier in the day to maintain cohorts and required ratios,
driving up staffing costs.
 Providers may limit program hours because of ratio requirements, and also to help minimize staff
burnout, driving down revenue.

Salary and Benefits: COVID-19 may be increasing cost for some providers –

 Some providers may offer higher salaries or better benefits to meet increased demand, driving up
staffing costs.
 Staff call in sick more often, so providers must bring on more staff to cover shifts, driving up costs.

Revenue: COVID-19 may be increasing or decreasing depending on demand –

 Providers in high-demand locations, or experiencing increased costs, may increase private pay rates,
driving up revenue.
 Providers in locations where attendance is down may decrease private pay rates, or experience low
attendance, decreasing revenue.

Materials: COVID-19 is increasing cost for many providers –

 Costs for obtaining necessary personal protective equipment (PPE) and cleaning supplies have been an
unexpected added expense for many providers, driving up environmental costs.
 Not only are PPE and cleaning supplies costly, but hard to find and buy. Some vendors are not allowing
child care providers to purchase them because they are reserved for first responders and the
healthcare system. Providers have suggested it would be helpful to have arrangements with vendors to
increase purchasing power. When a provider cannot access supplies needed to safely operate their
program, they may need to temporarily close, driving down revenue.
 Providers caring for school-age children engaged in distance learning are incurring new costs for
technology equipment (tablets, headphones, etc.), higher-speed internet and additional staff supports,
driving up non-personnel and staffing costs.

COVID-19 Impacts to the Subsidy System
When the pandemic took hold in Washington, the state became concerned about both the survival of the child
care system and ensuring that critical healthcare workers had care if Washington had the same kind of
hospital overload that New York had. During the initial stages many child care providers stayed open and
stepped up to help out essential workers needing care. With schools shut down, many parents needed to shift
to full-day care, but many others kept their kids at home, either because they weren’t working, were working at
home or were just reasonably cautious about group settings.

With most schools starting the fall in distance learning, and some fluctuating with hybrid models, many
families still need access to full-time child care. Prior to the pandemic there were 640,821 total children age 5-
12 (“school age”). Of those, about 68%, or 432,000, had all parents in the household working. Given the
increase in unemployment, estimates put the total decrease from 432,000 to about 385,000 school age
children who have all available parents working.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 16
Some of them already had child care set up, and many are covered by parents working at home, grandparents,
or other arrangements. To handle this surge of demand, estimates suggested that Washington would need
about 100,000 more school age slots than the 60,000 we had before the pandemic. This is almost a tripling of
capacity. In addition, the increased cost of care or the need to find care was unanticipated for families and
enormously unaffordable for many.

DCYF has been tracking closely the capacity of the child care system during the pandemic, including
temporary/permanent provider closures, new provider openings, and uptake of subsidy. A snapshot of this
data is available on the DCYF website.

System Investments to Support and Stabilize Child Care during COVID-19
In March and April, DCYF took a number of steps to stabilize the child care market and ensure that hospitals
had enough employees that could go to work and know their kids were safe. Utilizing federal CARES Act
dollars, the agency made the following investments:

In spring of 2020, provided $29 million in one-time sustainability grants to help child care providers deal
with costs associated with COVID-19, such as purchasing protective equipment or cleaning supplies, hiring
extra staff, etc.

Between March 16 and June 30, 2020, in an effort to stabilize centers and family home providers, DCYF
shifted to paying providers with a monthly subsidy rate. The intent was to mimic the private market where
families pay for the month regardless of their child’s attendance.

On March 25, developed emergency child care rules to help licensed child care and early learning providers
cope with the pandemic. These rules allowed licensed providers to waive or vary from historical licensing
rules if such variance was needed to slow the spread of COVID-19 and protect the health and safety of their
staff and children in care. To date, only a small handful of providers have taken advantage of this option.
DCYF has placed great emphasis on supporting existing licensed providers to remain open or re-open,
offering waivers or variances where necessary to help maintain consistent and safe operations.

Between April and July 2020, shifted all the half-day subsidy authorizations to full day automatically, at a
cost of almost $15 million. This eliminated the need for parents or providers to have to individually apply
for the increase in hours that they clearly needed.

Between April and June 2020, waived subsidy copays for parents. Many families were in chaos with the
pandemic and the agency wanted to make sure kids were in a safe place, particularly if their parent had to
be out looking for work. This cost the state $10.2 million.

The Legislature funded in the 2020 supplemental budget a subsidy rate increase of about 15%. This raised
subsidy rates to 65% of the market rate -- for a total of $31.9 million -- to subsidy providers. This increase
was maintained and delivered to providers in July, despite looming fiscal problems, in recognition of its
critical function in stabilizing the market.

The pandemic and its impacts had not abated by the beginning of the 2020-21 school year. DCYF received
authorization to undertake a second phase of COVID-19 child care support. Estimates at the time of writing
this report put the cost of this second round of investments at around $78 million. Investments include:

Another $30 million round of grants to licensed child care providers to help with COVID-19 costs and
stabilize the system. This includes some fiscal support for formal family, friends and neighbor providers.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 17
Waiving copays for families from October 1 through the end of the year, and capping them at $115 a month
until June of 2021.

Funding for increased costs for full-day care while schools are in distance learning or hybrid models.

Extra support for families caring for foster children to ensure they can manage dealing with the school and
child care impacts of the pandemic.

In addition to the investments made by DCYF, there were a number of other state, local, and private grants and
supports provided to support families and providers during this extraordinary time. See Appendix C for a list of
some of these financial supports.

Because the emergency rules process has been useful, DCYF decided that permanent emergency procedures
should be codified. In 2021, DCYF will adopt rules to permanently establish an emergency licensing program
that can be used to quickly issue emergency licenses in any future state or local crisis. This will allow for an
efficient and rapid-response approach to child care needs during all future emergencies such as new
pandemics or natural disasters.

In addition to the emergency rule process, and to address the need to reduce the spread of COVID-19, DCYF
has developed a process to conduct monitoring inspections using virtual platforms (Zoom, FaceTime, etc.).
This allows licensing staff to "see" that the provider is maintaining compliance with WACs and provide
technical assistance as needed. If a high-risk rule is found out of compliance, licensing staff will assure a
health and safety recheck is completed either virtually or in-person if necessary. DCYF is exploring ways to
incorporate virtual monitoring into its permanent licensing processes so that it is an available tool where
appropriate, even after the pandemic ends.

The task force notes that while the above-mentioned investments seem large, the data found within the
industry assessment clearly shows that the child care market was fragile prior to the COVID-19 pandemic, and
this temporary funding was necessary to keep the system from total collapse. The near-overnight closures of
schools in the spring, the frequently changing guidance for group sizes, PPE and cleaning supply shortages,
and a K-12 system in upheaval have added enormous strain into a system already stretched thin.

It is also critical to note the heavily disproportionate impact this pandemic has had on communities of color.
The Centers for Disease Control and Prevention (CDC) has noted that inequities in social determinants of
health, including but not limited to discrimination, healthcare access and utilization, housing, occupation, and
gaps in education, income and wealth, are associated with higher rates of COVID-19 infections,
hospitalizations and deaths in areas where racial and ethnic minority groups live, learn, work, play and worship.
These inequities have contributed to higher rates of certain medical conditions that put individuals at
increased risk of severe illness from COVID-19. The CDC stated that additionally, community strategies to slow
the spread of COVID-19 may cause some racial and ethnic minority groups unintentional harm, such as higher
stress, lower access to services and lost wages.10 The child care provider community is disproportionally
comprised of people of color compared to the rest of the Washington population, and is at increased risk.
Given this, the task force acknowledges the need for targeted supports for our state’s providers.

At the time of writing this report, COVID-19 cases across the country were once again skyrocketing, with
increases in hospitalizations and no additional economic stimulus packages coming from the federal

10 (Centers for Disease Control and Prevention 2020)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 18
government such as were seen earlier in the disaster. Previous supply and demand models for child care
cannot adequately predict the need for care week-to-week during this upheaval, and there is no concrete way
to know what the new “normal” will look like once a vaccine is widely available.

We do know, however, that children will continue to need safe, caring, high-quality child care environments, and
that parents will continue to have to make difficult choices about child care and work opportunities. We know
that after every other pandemic we saw people return to work and group settings. Our Washington state
economy cannot recover without the ability of workers to access employment if they can’t also access child
care. The system as it was before this disaster is inadequate and that the trauma of COVID-19 will require
economic and emotional healing for years to come. The work reflected in this report is part of a vision for a
post-pandemic world that is rebuilt with families and children at its center.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 19
Child Care Cost of Quality Model
Introduction Figure 1: Child care costs
Child care is a unique industry with multiple goals and complexities:

It supports parents to work and children to thrive.

It is financed by both the public sector (through subsidy, grants,
supports, professional development, etc.) and the private sector in the
form of parent payments.

Programs are privately operated, allowing for parent choice, and
providers braid the public and private sector resources together.

This system must be available, affordable and high-quality for ALL
children, of all economic backgrounds, to be successful. Source: Child Care Aware of America, 2018

The complexity of this system is also its strength. It allows the system to be responsive to community and
family needs.

We need a cost model that helps determine how the public and private resources can be best leveraged to
create a sustainable system that serves children, families and providers.

Paradoxically, parents pay high tuition prices and yet the child care workforce makes very low wages--in the
third percentile of occupational wages in Washington.11 This phenomenon is explained in Figure 2 below.

Figure 2: High Price, Low Wages of Child Care Explained12
Why is child care so unaffordable for families, and yet the child care workforce makes among the lowest
wages across employment sectors?

According to Child Care Aware of America, it’s because there is a flaw in the system: the fees parents pay do not cover
the full cost of providing the service.

For example, a center with 40 children paying the national average of $10,000 per year would generate $400,000 in
total revenue. Subtracting 12% for rent, utilities, and maintenance, and 23% for classroom materials, food, and
administrative costs, leaves 65%--in this example, $260,000--for personnel. If the center in this example has three
classrooms operating 10 hours a day, and a staff of 3 lead teachers, 6 assistant teachers, and a director, the hourly
rates available to pay these staff are $10.50 per hour for assistant teachers, $13.00 per hour for lead teachers, and
$22.00 per hour for the director. There are no funds for health, retirement, paid time off, or other benefits.

Note that in Washington, the minimum wage is $13.50 per hour in 2020 and $13.69 in 2021. In our state, we could not
employ all 10 staff for $260,000 even if we paid minimum wages. We would need to cut staff (increasing the child-
teacher ratio) and/or increase tuition to make this example work.

11 (Child Care Collaborative Task Force 2019)
12 (Child Care Aware of America 2018), (Washington State Department of Labor and Industries 2020)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 20
Status of Washington's Child Care Cost Model
A child care cost model, also known as a cost estimation model or a cost of quality model, is a tool that helps
estimate the one-time and ongoing costs associated with providing child care services--and the level of
revenue needed to cover those costs.

Cost models can examine aspects of the child care system for different public policy purposes.13 The task
force, as per RCW 43.330.527, examined:14

Costs of providing licensed care, including personnel and non-personnel costs, by region
Costs of compliance with quality rating and improvement systems

The task force worked with consulting firm ICF to develop Microsoft Excel-based cost model tools for child
care centers and child care family homes based on the Provider Cost of Quality Calculator (PCQC). The PCQC
is a free, web-based tool available from the U.S. Department of Health and Human Services Administration for
Children and Families Office of Child Care.15 The PCQC can answer questions such as:

What is the annual cost of operating a basic licensed program?
Are very small centers and family homes financially sustainable?
How many infants proportionally can a center or family home enroll and remain sustainable?
What is the level of financial supports necessary to allow programs to be profitable?16

Due to the COVID-19 pandemic, the ICF research team was unable to survey child care providers to gather the
information needed to complete the cost model tools.

The task force recommends completing a comprehensive study of child care costs based on a survey of child
care providers. Additionally, to enable DCYF to determine Working Connections Child Care (WCCC) subsidy
rates based on costs (rather than market tuition rates), the task force recommends that DCYF obtain approval
from the U.S. Health and Human Services Administration for Children and Families (ACF) to use the survey of
child care providers and cost models as an "alternative methodology" to a market rate survey. Determining
child care subsidy rates based on the total cost of providing high-quality care, with a competitively
compensated, qualified workforce, is a recommended practice for quality-oriented early care and education
systems.17 RCW 43.216.749 requires DCYF to begin using the task force cost model to determine WCCC
subsidy rates by January 1, 2025.

Cost Model Recommendations
CM1. Survey child care providers to identify the costs associated with operating quality child care
programs. Develop and deploy the survey in collaboration with trusted partner organizations. Explore
leveraging DCYF's planned 2022 Market Rate Survey (MRS) to collect child care provider cost information
and perform a federally compliant cost study in conjunction with the MRS.

CM2. Complete the task force cost model tools to address limitations and incorporate findings of the child
care provider cost survey. Regularly update the cost model tools based on child care provider surveys.

13 (National Academy of Sciences, Engineering, and Medicine 2018)
14 (Child care collaborative task force—Duties, Rev. Code of Wa. § 43.330.527 2019)
15 (U.S. Department of Health and Human Services Administration for Children and Families 2019)
16 (U.S. Department of Health and Human Services Administration for Children and Families 2015)
17 (National Academy of Sciences, Engineering, and Medicine 2018)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 21
CM3/S6. Raise subsidy rates to cover full cost of high-quality care, based on the task force cost model
(once completed). In the short term, and until a Cost of Quality survey can be completed, raise the base
rate to the 100th percentile of market rate.

Discussion
CM1. Survey child care providers to identify the costs associated with operating quality child care programs:

 Develop and deploy the survey in collaboration with trusted partner organizations.
 Explore leveraging DCYF's planned 2022 Market Rate Survey (MRS) to collect child care provider cost
information and perform a federally compliant cost study in conjunction with the MRS.

Develop and deploy the survey in collaboration with trusted partner organizations.

Costs vary greatly across programs The cost model will need to instill confidence in the field and among policy
makers that the numbers are as accurate as possible. The cost model will balance an evidence-based,
objective methodology with representative cost information supplied by a large sample of child care providers
across the state. Input from child care providers will enable the model to factor in relevant drivers of cost for
centers, family homes, and school-age-only programs by licensed capacity, age of children served, geography,
quality rating, supports for children and families served, and other program attributes.

The task force recognizes that child care providers may be reluctant to share financial information and
business details. Child care providers may feel less vulnerable and be more inclined to complete cost surveys
if trusted partner organizations reached out to explain the purpose, potential benefits, and use of information
being collected.

The task force recommends DCYF develop and deploy the child care cost survey in collaboration with trusted
partners, and take steps to ensure the survey is successful and reflective the actual cost of care needed to
support the child care field. This includes, but is not limited to, the following measures:

Collaborate with partner organizations, such as Child Care Aware of Washington, child care resource and
referral agencies, Washington Childcare Centers Association, Washington Communities for Children, SEIU
925, and School's Out Washington, in the development of and rollout of the child care provider survey.

Develop a robust campaign to share information about the survey and explain why it is important. Clarify
how and why the information is being gathered and how it will be used. Explain the benefits of the cost of
quality study and cost model.

Conduct outreach through multiple methods, including outreach by trusted organizations and individuals,
such as Early Achievers coaches; professional organizations; outreach to school-age programs; and
outreach in various languages.

Identify how to invest resources and engage with partners to get the most accurate and complete survey
responses. Consider providing incentives for completing the survey, such as gift cards or giveaways.

Additionally, the task force would like the child care survey to capture disaggregated data to support
communities of color. If providers from communities of color respond to the cost model survey, the data will
be beneficial.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 22
Explore leveraging DCYF's planned 2022 Market Rate Survey (MRS) to collect child care provider cost
information and perform a federally compliant cost study in conjunction with the MRS.

The task force advises DCYF to review 45 CFR 98.45 "alternative methodology" requirements and consult with
ACF before initiating a child care provider cost survey. DCYF should consider a two-part methodology of a
"cost study" to inform a "cost model" that may be used in place of, or as a hybrid with, the market rate survey.
Review how these methodologies are used in other states.18

Completing the survey in this manner, with federal approval, will support the task force's goal to transition
away from a market rate survey to a cost-based methodology for determining WCCC subsidy rates.

CM2. Complete the task force cost model tools to address limitations and incorporate findings of the child
care provider cost study. Regularly update the cost model tools based on child care provider surveys.

The task force provides this information and the "incomplete" cost model tools with strong caveats that
additional work must be done to complete the cost model tools prior to use by DCYF. The task force suggests
considering these tools as works-in-progress rather than the tool the task force intends for DCYF to use to
determine subsidy rates. RCW 43.216.749 requires DCYF to begin using the task force cost model to
determine child care subsidy rates by January 1, 2025.

The cost model tools should be updated the following ways:

Meet all requirements of 45 CFR 98.45.
Reflect costs associated with the following cost drivers, as well as other cost drivers identified through the
child care provider cost survey:

 Access to behavioral/mental health consultation and developmental supports
 Achieving various levels of quality using Washington State Quality Standards for Afterschool and Youth
Development Programs
 Child assessment tools and the staff training to use them
 Classroom materials
 Competitive compensation including living wages and health, dental and retirement benefits, as
described in the Workforce Compensation section of this report
 Culturally appropriate care
 Developmentally appropriate care, including for children with developmental disabilities
 Dual-language programs
 Evidence-based curriculum and the staff training to use it
 Initial and ongoing staff training and professional development
 Licensed facility and environmental improvements
 Linguistically appropriate or multilingual care
 Ongoing changes to Early Achievers and Quality Standards for Afterschool and Youth Development
Programs, as the program criteria or quality standards change in the future
 Subsidy region structure changes, such as regions based on groupings of ZIP codes by cost of living
indices recommended in this report (S4)
 Substitutes

18 (Bipartisan Policy Center 2020), (ICF 2020)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 23
 Trauma-informed care

The task force emphasizes that the cost model will need to be flexible and adaptive. The child care industry
has experienced dramatic shifts due to the COVID-19 pandemic, and we expect some shifts may be long-term.
See Appendix D for additional discussion of the cost model.

CM3/S6. Raise subsidy rates to cover full cost of high-quality care, based on the task force cost model (once
completed). In the short term, and until a Cost of Quality survey can be completed, raise the base rate to the
100th percentile of market rate. (See also Subsidy Recommendation S6)

The task force recommended in 2019 that the state "enable child care providers to care for children eligible for
state child care subsidies by adjusting provider subsidy rate payments to cover the full cost associated with
providing high-quality child care" (Recommendation D4).19 The task force continues to support this approach,
using a cost of quality basis to set WCCC subsidy rates.

There are important differences between basing WCCC subsidy rates on estimated costs of providing care
versus the market rate. The market rate tells us what the market can afford. We already recognize that the
child care system is flawed because families cannot afford to pay what the service actually costs. Reimbursing
providers a proportion of what families can afford (currently, the WCCC reimbursement rate is about 65% of
the market rate) will make the "flaw" more pronounced for the providers serving families with low income and
other barriers to accessing care. The cost model tells us what it actually costs to provide high quality, culturally
responsive care across the regions of the state.

The task force recommends that the cost of quality identified by the cost model serve as the subsidy base
rate. The subsidy rate should be enhanced to:

Cover additional costs associated with programs that meet the needs of the children in care, such as:

 Children with special needs
 Families needing care during nontraditional hours

Incentivize provision of care in underserved segments of the market, such as:

 Areas with little child care availability relative to demand
 Multilingual and dual-language programs
 Infant care20

The task force assumes that policy recommendations, such as subsidy rates based on the cost of quality, will
be implemented so as to "do no harm" to existing child care providers and the families that access their
services. The task force cautions policymakers to consider impacts to private tuition rates when subsidy rates
are increased. Currently, providers cannot accept a subsidy rate higher than the rate they charge private pay
families. In some communities, increases in subsidy rates -- not the market -- drive private tuition prices. Seek
to avoid these unintended consequences.

19 (Child Care Collaborative Task Force 2019)
20 See also Recommendation WC4 in this report.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 24
Phased Implementation Plan for Subsidy Policy
Changes
Introduction
Child care allows families to participate in the workforce. The Working Connections Child Care subsidy
program ("WCCC" or "subsidy" program) aims to help working parents with low income access child care. Yet
affordability was noted as the greatest barrier for Washington families seeking child care, according to surveys
and interviews conducted as part of the task force's 2020 Child Care Industry Assessment.21 Steep differences
in family subsidy copayments ("copays"), policies that result in families disqualifying for subsidy following
minor pay raises, and policies that prohibit families from accessing subsidies while searching for a job or
participating in an education program, make the subsidy system complicated for families to use.

Washington State generally pays child care providers a subsidy reimbursement rate ("subsidy rate") that is less
than the regional market rate for private tuition payments. Research has suggested that lower subsidy rates
contribute to low child care staff wages and a less stable child care workforce.22

The task force recommends implementing the following policies to increase families' ability to participate in
the subsidy system, attain child care and participate in Washington's labor force:

Limit copays to no more than 7% of family income to eliminate the copay "cliff effect" that occurs when a
family's income raises just above a copay rate threshold, causing a sudden and significant increase in the
copay amount. (S3)

Smooth the copay eligibility "cliff effect," which happens when a family's income reaches the copay
eligibility maximum of 200% of federal poverty level (FPL), by increasing subsidy eligibility to at least 85%
of state median income (SMI). Use SMI instead of FPL as the basis for subsidy eligibility. (S5)

Allow parents that are seeking employment or participating in an education or work training program to be
eligible to participate in the subsidy program. (S8) When more families are using the subsidy program
(subsidy "uptake" increases), eliminate the cap on the number of families that may participate in the
subsidy program. (S7)

The task force recommends implementing the following policies to support child care providers' participation
in the subsidy program so subsidized child care is available to families that qualify:

Support provision of full-day school-age child care with supervision of remote learning during the pandemic
by increasing the full-day subsidy rate for school-age children, at least temporarily. (S1)

Simplify and stabilize subsidy payments by structuring them to be monthly, based on enrollment like in the
private child care market. (S2)

Right-size subsidy rates by changing subsidy regions to reflect cost of living factors at the ZIP code level
(S4), and raising subsidy rates to cover full cost of high-quality care according to a cost model. (S6)

21 (ICF 2020)
22 (Child Care Collaborative Task Force 2019)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 25
Recommended Policy Changes
S1. Raise the subsidy rate for full-day school-age child care to match the early learning rate.

S2. Pay providers a monthly rate for children enrolled in the subsidy system, structured like the private
market. Consider the use of contracted slots for incentivizing care of special populations. Make accessing
this monthly payment as simple as possible for child care professionals.

S3. Eliminate the subsidy copay "cliff effect" for eligible families by limiting eligible families' copays to no
more than 7% of a family's income.

S4. Change subsidy geographic regions to reflect cost of living factors at the ZIP code level, grouped by
urbanicity (rural, suburban, urban, etc.).

S5. Shift the income eligibility measurement away from Federal Poverty Level to State Median Income, and
increase eligibility to at least 85% of SMI.

S6/CM3. Raise subsidy rates to cover full cost of high-quality care, based on the task force cost model
(once completed). In the short term, and until a Cost of Quality survey can be completed, raise the base
rate to the 100th percentile of market rate.

S7. Eliminate the cap on WCCC participation.

S8. Expand allowable activities for subsidy eligibility to enable employed, unemployed and student parents
to seek and retain work and education.

Discussion
History
Before 1996, federal law contained two entitlement programs for child care assistance that maximized
likelihood families would receive this assistance as they transitioned from “welfare” programs to work. In
1996, the Personal Responsibility and Work Opportunity Reconciliation Act (PWORA) eliminated the
entitlement for families leaving government assistance programs and established a single program, now
known as the Child Care and Development Fund (CCDF).23 CCDF gave states flexibility in determining their own
priorities for child care subsidies, such as whether to continue guaranteeing child care assistance to families
leaving other assistance programs.

Beginning in the 1990s, the Working Connections Child Care (WCCC) subsidy program was designed, under the
federal Child Care and Development Block Grant Act, CCDF, and state legislative priorities, to accomplish
several things:

Provide working families with low incomes support for child care.
Provide a mechanism to reimburse child care providers for caring for children from low income families.
Prevent fraud and financial abuse from families and child care providers.

23 (Personal Responsibility and Work Opportunity Reconciliation Act, H.R. 3734, 104th Cong. § 2 1996)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 26
As the task force has explored the impacts on our economy due to a lack of affordable, accessible child care,
the task force recommends WCCC should be designed to do the following:

Be part of a system that helps low income and middle class families thrive.

Address historical inequities among communities of color by undoing institutional racism in the early
childhood and education system to ensure access to child care that meets the needs of each family.

Make child care affordable for working families.

Help families experiencing financial crises (loss of job or housing) to regain stability.

Prioritize access to stable, high-quality child care for families and children furthest from opportunity and for
families with incomes at the higher end of poverty.

Create a stable and sustainable child care workforce.

Subsidy Policy Legacies of the Great Recession
In the course of researching subsidy policies for this report, the task force found several legacies of budget
decisions made during or as a result of the Great Recession of 2007-2009. These legacies include the use of
income eligibility thresholds not based on the cost of living in our state, the current WCCC copay structure, and
the existence of a cap on subsidy program enrollment.

The understanding of child care, and the perception of the role it plays in our economy, has evolved since the
Great Recession-era budget cuts. A decade ago, child care subsidy was viewed as a support program for low
income parents. By contrast, policy makers and community members now recognize child care critical to a
thriving economy.

Several changes to CCDF and the WCCC program over the past few years have sought, in small ways, to rectify
the program’s barriers to access and sustainability (12-month eligibility, eligibility for some student parents,
and homeless grace period), but these have been piecemeal and haven’t been extensive enough to undo the
inherent flaws with the system.

The task force believes that broad scale change is necessary. Now is a critical time to put in place key policies
that will allow us to focus our recovery efforts on a significantly improved model for providing subsidized child
care in Washington.

Comprehensive Implementation
It should be noted that these subsidy recommendations are not intended to be piecemeal or implemented in
half measures. Only partially implementing these recommendations may further exacerbate siloes,
administrative inefficiencies and the burden on families and providers that must navigate an increasingly
complex system. Partial implementation may end up doing more harm than good.

Furthermore, the order in which they are implemented is critical. If the subsidy copay cliff is not adequately
addressed, increasing eligibility to at least 85% SMI will not result in the increased access that is this task
force's intent. Additionally, if subsidy rates are not raised to cover the cost of providing care, access for
families, regardless of the income eligibility, will continue to be limited. And if the rates are not organized in a
regional structure that links to the true cost of providing care, increased rates will not have the intended impact
for many providers.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 27
Finally, while the task force was not specifically asked to weigh in on the back-end technology that powers this
system of child care, it would be remiss in not noting the critical importance of adequate technological
infrastructure in administering effective programs. To enable subsidy policy changes to work as intended with
minimal administrative burden, the task force recommends:

Upgrade or replace the provider payment system, the Social Service Payment System (SSPS), with one that
is digital and mobile-friendly, and links to all other provider systems.

Replace the WCCC subsidy eligibility determination system, Barcode, with an improved eligibility system
that is digital and linked seamlessly to all other eligibility systems.

The latter should be done as part of the Washington Health and Human Services Enterprise Coalition (HHS
Coalition) Integrated Eligibility Workgroup. The HHS Coalition is a collaborative that provides strategic
direction, cross-organizational information technology project support and federal funding guidance across
HHS state agencies.24 The task force recommends investment in these infrastructure fixes in the short term, to
garner long-term savings and improvements for delivery of child care.

S1. Raise the subsidy rate for full-day school-age child care to match the preschool rate.

The COVID-19 pandemic has caused schools to operate remotely or with hybrid remote and in-person models,
creating a significant need for full-day school-age child care. Many providers have stepped up to fulfill the
temporary, emergent need, and also oversee remote learning of children in their care. However, providers that
receive subsidy payments have found that the school-age full-day rates, based on pre-COVID staff-to-child
ratios, are much lower than what it costs to provide full-day care during the pandemic. The pandemic has
required lower ratios of staff to children, increasing providers' staffing costs. Providers are also finding
increased supply and facility-related costs, and unstable or reduced enrollment.

To support providers serving school-age children during the pandemic, the task force recommends increasing
the full-day subsidy rate for school-age children to match the subsidy rate for preschool. This measure should
last at least until schools are operating in-person classrooms on typical school year schedules, and public
health guidelines allow for pre-COVID staffing ratios.

S2. Pay providers a monthly rate for children enrolled in the subsidy system. Consider the use of contracted
slots for incentivizing care of special populations.

In 2014, the U.S. Department of Health and Human Services (HHS) made changes under the reauthorization of
the CCDF block grant to reaffirm their priorities of providing equal access to stable, high-quality child care for
low-income children and to better support the child care workforce.25 To accomplish these goals, ACF requires
states to de-link provider payments from attendance to the extent practicable and encourages state agencies
to pay based on the child’s enrollment in care.26

In 2019, House Bill 1391 directed DCYF to evaluate options and propose recommendations related to paying
child care subsidy providers a set monthly rate, rather than the current practice of paying a daily rate.27

24 (Health and Human Services Enterprise Coalition 2019)
25 (U.S. Office of Child Care 2016)
26 (U.S. Office of Child Care 2016)
27 Read DCYF's report here: https://www.dcyf.wa.gov/sites/default/files/pdf/reports/ChildCareSubsidyMonthlyRate2019.pdf

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 28
WCCC currently works on a model where families receive authorization for a certain number of hours of care
per day in the month, and providers are reimbursed based on daily attendance. This introduces a significant
burden on child care providers. Children with subsidized care do not offer the same stability as children in
families that directly pay a single monthly tuition rate to hold their slot at the child care. This creates a higher
burden on providers for billing subsidy clients than their private pay clients.

During the COVID-19 pandemic, DCYF has temporarily implemented enrollment-based payments which is
similar to a monthly rate for providers, demonstrating it is both possible to implement and seen as a critical
step to stabilize the market (see section on COVID-19 impacts for more details). Furthermore, at least 15 other
states in the country report using a monthly rate structure in their CCDF plan, including all other states in our
federal Region X (Alaska, Oregon, Idaho, and Montana). The experience of our neighboring states provides a
roadmap for the successful implementation of monthly rates in Washington.

With a monthly rate structure, providers would simply claim for one unit of care when a child attends care in
the month. Necessary overtime care will be averaged and claimed as a separate monthly unit. Current rules
regarding holidays, special needs and fees such as non-standard bonus hours for evening and weekend care
would remain. DCYF would calculate monthly rates on the current regional structure and age ranges for daily
rates.

Transitioning to monthly rates for all licensed providers would better align with center private pay practices
and capture the administrative efficiencies of a simplified subsidy program for all licensed care. Furthermore,
moving to monthly rates would significantly reduce the instances of improper payments, which often lead to
sanctions on providers or the state, and the possibility of reduced federal funding. The task force recommends
that the WCCC system move to a monthly rate structure in order to increase provider supply and family choice.

The task force also considered the use of contracted slots. While there was discussion about the stability
value they could provide, there was also discussion about the complex and large administrative burden that
this model would create if used for all WCCC slots. Instead, the task force recommends that DCYF consider a
pilot of contracted slots, in the immediate term for incentivizing and guaranteeing service for children and
families of special populations (foster children, families needing overnight/weekend care, children with special
behavioral needs, etc.).

S3. Eliminate the subsidy copayment "cliff effect" for eligible families by limiting eligible families'
copayments to no more than 7% of a family's income.

Federal CCDF guidelines require the state to establish “a sliding fee scale(s) for families that receive subsidy.”
State law has implemented that guideline with a copay schedule found in administrative rule.28 This copay
schedule is listed here:

If a consumer’s income is X, then the consumer’s copay is Y:

 At or below 82% of the federal poverty guideline (FPG)29: $15
 Above 82% of the FPG up to 137.5% of the FPG: $65
 Above 137.5% of the FPG through 200% of the FPG: the dollar amount equal to subtracting 137.5% of
the FPG from countable income, multiplying by 50%, then adding $65

28 (Determining income eligibility and copayment amounts, Wa. Admin. Code § 110-15-0075 2018)
29 For the purpose of this report, federal poverty guideline (FPG) and federal poverty line (FPL) are used synonymously.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 29
Figure 3: Comparison of Proposed versus Current Copayment by Percent of the
Federal Poverty Level for a Family of Four

Copay Comparison by Percent of FPL for Family of Four
$800

$700

$600

$500

$400

$300

$200

$100

$0 0%
8%
15%
22%
30%
37%
44%
52%
59%
66%
74%
81%
88%
96%
103%
110%
118%
125%
132%
140%
147%
154%
162%
169%
176%
184%
191%
198%
206%
213%
220%
228%
235%
242%
250%
257%
264%
272%
279%
286%
294%
301%
308%
Proposed Copay at 7% of Income at 137.5% FPL and Increasing Eligibility to 85% SMI Current Copay

The “copay cliff” occurs when a family is making between 137.5% of FPL, where their copay is $65 a month, up
to the income cutoff for the program. See the orange line in Figure 3 above. A cliff effect occurs when a small
increase in a family’s earned income causes a significantly larger increase in the family’s child care
expenditure and, therefore, a reduction in the family’s total resources. This cliff can happen at either the
subsidy income eligibility cutoff or within eligibility if the copay structure is not set for a proportional and
gradual increase.

The U.S. Department of Health and Human Services recommends limiting family copays to 7% of family
income in the CCDF final rule.30 Tying eligibility and/or copays to a percentage of family income is a means of
reducing or eliminating the “cliff effect.” The task force finds that the cliff effect prevents families from being
able to afford subsidy child care, and in fact punishes families for increasing their income. This is not a means,
therefore, of helping families achieve economic self-sufficiency.

The task force recommends smoothing out the copay structure to 7% of an eligible family's income beginning
at the SMI equivalent of 137.5% FPL, up to at least the recommended 85% SMI.31 See the blue line in Figure 3
above. This will improve access for families at the higher end of the income eligibility, and for smaller families.
Smaller families currently pay more of their household income toward their copay than larger families (see
income tables under S4 for examples). Maintaining the $15 and $65 copay steps will support those families at

30 (U.S. Office of Child Care Early Childhood Training and Technical Assistance System 2020)
31 Currently, subsidy eligibility is based upon FPL. The task force recommends shifting from FPL to SMI in Subsidy Recommendation

S5. At the time of writing, analysis was primarily measured in terms of FPL. See Tables 3 and 4 for crosswalks between FPL and SMI.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 30
the lowest end of the income scale and enable accurate implementation of copays for families with little to no
income. The task force encourages the state to devise income verification processes that are not burdensome
for families applying, in order to not have the opposite of the intended effect of increasing access.

Furthermore, the task force notes that child care continues to be a significant percentage of a family’s income
even at 100% of SMI. The Legislature has previously acted to allow eligibility of up to 100% of SMI for
assistance with higher education costs as in House Bill 2158.32 The task force recommends increasing WCCC
eligibility beyond 85% SMI so that child care is affordable and accessible for working families. In doing so, the
task force recommends instituting a gradual increase of up to 15% income for copays for families above the
100% SMI threshold.

S4. Change subsidy geographic regions to reflect cost of living factors at the ZIP code level, grouped by
urbanicity (rural, suburban, urban, etc.).

The current subsidy regions for the Working Connections Child Care program are a patchwork inheritance.
DSHS developed six regions for administrative efficiency in the 1990s, then in 2005 added Spokane County to
account for its economy. Other exceptions were made later to account for local economies, e.g. reimbursing
Clark County at Region 3 levels despite it being situated within Region 6. These exceptions point to the
underlying issue: the current structure does not adequately account for local economic variations or speak to
the cost to provide high quality care.

ICF’s recommended alternatives and their methodologies all improve significantly on the current regional
structure. Basing the regional structure on county-level labor markets clearly establishes a closer tie to local
economies and the cost to staff high quality child care, than the current structure. But as acknowledged in
ICF’s Subsidy Policy Report, the recommendations represent an inevitable compromise because “subsidy
policy analysis could not be completed due to a pause on provider data collection and cost modeling caused
by the COVID-19 pandemic.”33

ICF’s report notes further challenges with their approach: cost clusters based on labor markets “[r]equires data
on workforce compensation that stakeholders will consider representative of the workforce in Washington.
Using data from the Bureau of Labor Statistics to model normative funding levels may build in inequities that
exist due to existing low levels of compensation.”34

In light of this, an alternative approach to subsidy region restructure is being developed, one that offers
advantages as to the challenges ICF noted, and in other areas. While these approaches can be viewed as
separate options, a hybrid approach might also be considered as a “best of both worlds” option.

This approach entails considering U.S. Census Bureau cost of living indexes for all Washington ZIP codes and
setting rates at the ZIP code level in groups similar to the State of Oregon's approach. Oregon groups ZIP
codes in three categories roughly corresponding to rural, suburban, and urban areas. Washington’s current
approach is a four-rate group model based on ZIP codes and smoothed based on cities. Discrete high cost
areas within some cities are included in the next highest range group when appropriate to ensure access to
care (similar to the Oregon model). Table 2 below shows how these groups break down using a hybrid of the
Oregon and Washington approaches.

32 (Workforce Education Investment Act - Chapter 406, Washington Laws 2019)
33 (ICF 2020)
34 Ibid.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 31
Table 2: Four-Rate Subsidy Group Model Based on ZIP Code Cost of Living Factors
Group 1 Areas with lower cost of living (rural, smaller towns that aren’t close to a metropolitan area)

Group 2 Medium to large towns and cities across the state with mid-range cost of living (Vancouver, Spokane,
Tacoma, Olympia, Bellingham)

Group 3 Most of King County, more expensive areas of Snohomish, Clark, and Pierce Counties

Group 4 Very high cost of living areas in King and Snohomish Counties (includes Bellevue, Edmonds, Kirkland, and
parts of Seattle)

There are several advantages to this approach:

The cost of living index factors in various metrics that drive both family capacity to pay for child care and
provider cost of doing business: groceries, housing, utilities, transportation, health care, and miscellaneous
goods and services.

ZIP code level analysis is more geared toward families and what they can afford to pay for child care in a
given area.

Child care markets function on a more local level. ZIP code level analysis mirrors that. As noted in ICF’s
report, “[g]eographically, early education and out-of-school-time markets tend to be small and localized
because parents overwhelmingly prefer to have children cared for in their own residential neighborhoods
(Witte, 1998).”35

It’s easy to explain to families and providers how ZIP code cost of living analysis would drive subsidy rates.

Development of this approach is in its early stages, so more specific information was not available at the time
of writing this report. However, the task force believes this approach to determining subsidy rate regions to be
sound, and recommends the state fully develop and implement a subsidy group model based on ZIP code cost
of living factors as part of the plan to achieve the goal of access to affordable, high-quality child care for all
Washington families by 2025.

S5. Use 85% of state median income as a basis for child care eligibility rather than 200% of the federal
poverty level.

High quality child care is expensive - it depends on low educator to child ratios and is highly regulated.
Washington parents that participated in child care industry assessment surveys and focus groups in late 2019
and early 2020 consistently indicated affordability is the greatest barrier to accessing child care. Over a third of
parents surveyed (36%) reported that their household had experienced financial hardship or had made
financial changes as a result of the cost of care.36 The task force recommends a significant increase in the
income threshold for eligibility and a restructuring of how eligibility is measured.

Federal CCDF guidelines state that “family income must be <85% SMI and assets <$1 mil.” However,
Washington State subsidy rules further limit family income eligibility, stating that families must “have

35 (ICF 2020)
36 (ICF 2020)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 32
countable income at or below two hundred percent of the federal poverty guidelines (FPG) and have resources
under one million dollars”.37 Tables 3 and 4 show a comparison of the SMI and the Federal Poverty Level.

Table 3: Comparison of Washington State Median Income and Federal Poverty Level
Number in 100% Federal Poverty 200% Federal Poverty 85% State Median 100% State Median
Family Level Monthly Level Monthly Income Monthly Income Monthly
2 $1,437 $2,874 $4,663 $5,541

3 $1,810 $3,620 $5,760 $6,845

4 $2,183 $4,366 $6,857 $8,149

FPL is an inexact measurement given the different costs of living across the country, and in a high cost of
living state like Washington puts downward pressure on eligibility. By contrast, SMI or Area Median Income
(AMI) better capture the high cost of living in Washington. The key to note is that while the median income in
Washington is higher than in a number of states, due to some robust economic regions and a relatively high
minimum wage, the cost of living outstrips what many Washingtonians can afford. Notably, the annual median
cost of care averages between $11,000 for preschool to $15,000 for infant care in a center, per Child Care
Aware of Washington.

Table 4: Child Care Cost as a Percentage of State Median Income by Family Size
Number in 100% State Median Annual Median Cost for 1 % of Cost for 2 % of
Family Income Monthly Income child in care income children in care income
2 $5,541 $66,492 $13,000 20% - -

3 $6,845 $82,140 $13,000 16% $26,000 32%

4 $8,149 $97,788 $13,000 13% $26,000 27%

Table 4 above demonstrates that even for families making the median income in Washington, the cost of child
care is much higher than the recommended 7% of family income. It also demonstrates that while incomes may
be higher in Washington, the cost for fundamental services like child care are still not affordable.

Therefore, given that the state has the ability under CCDF guidelines to utilize SMI as an eligibility
determination, and to raise its eligibility limit to 85% of the SMI and still receive federal match, this task force
recommends increasing subsidy eligibility to 85% of SMI. Furthermore, given the discrepancy between the 85%
SMI cutoff and the cost of care, the state should examine the feasibility of providing subsidy to families up to
100% of the SMI.

Finally, the task force explored briefly the option of using AMI as a measurement, instead of SMI. At the time of
writing this report there was insufficient data to make a determination about the feasibility or usefulness of
this approach, but the task force encourages the state to evaluate this option.

37 (Eligibility, Wa. Admin. Code § 110-15-0005 2019)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 33
S6/CM3. In the short term, and until a Cost of Quality survey can be completed, raise the base rate to the
100th percentile of market rate. (See also Cost Model Recommendation CM3.)

Federal CCDF guidelines recommend that states make their base reimbursement for subsidy rates at least in
the 75th percentile of the market rate. The summer 2020 subsidy policy analysis report produced for the task
force by ICF noted that: "multiple studies have found existing Working Connections subsidy rates to be
inadequate to support access and quality. The 2018 Child Care Market Rate Study found all DCYF subsidy
rates for Working Connections for child care centers were below the 75th percentile target market rate, with
most rates for infants, toddlers and preschool-aged children between the 10th and 40th percentiles."38
Furthermore, even providers that have successfully rated a level 3 or above in Early Achievers and are receiving
tiered reimbursement for their efforts find the subsidy rate insufficient to cover the cost of providing this
program.

Additional investment made by the state in 2020 raised the subsidy base rate to approximately the 65th
percentile of market rate. However, the preliminary cost model analysis that was developed through the Child
Care Industry Assessment highlighted the gap between the estimated cost of child care and the current DCYF
Working Connections subsidy rates, and this recent increase in rates did not completely close that gap.39

This task force acknowledges that the cost model it had hoped to include is not complete due to COVID-
related delays and disruptions. The task force recommends that the state shift from its triennial Market Rate
Survey to a Cost of Quality Survey, in line with CCDF allowances, in order to determine the true cost of
providing the high-quality care it mandates with its Early Achievers system. It should then use the survey
results to determine how to raise base subsidy rates and the system of tiered reimbursement.

The task force believes that the base rate should be sufficient to pay for high-quality care, while tiered
reimbursements should be used to pay for additional specialties (like dual-language programs) and to support
caring for special populations (like children with high degrees of trauma).

In the short term, and until a Cost of Quality survey can be completed, the task force recommends raising the
subsidy base rate to the 100th percentile of market rate. While this is an imperfect and imprecise measure of
the true cost of providing care, this would at least ensure that subsidy rates are competitive with market rates,
and improve stability for providers accepting subsidy. This must be done in conjunction with institution of
monthly rates outlined in S2 of this section, and based on the regional model discussed in S4 of this section.

S7. Eliminate the cap on WCCC participation.

During the 2008 recession, the State of Washington limited WCCC enrollment to a maximum of 33,000 families
to reduce the program's fiscal impact. It is important to note that there are no federal guidelines that limit
states to a cap of participating households as long as other eligibility requirements are met.

Prior to COVID-19, WCCC caseload hovered at about 25,000 households, or roughly 42,500 children. There are
several reasons that many eligible families chose to not use the child care subsidy program. Reasons include:

Presence of a subsidy "cliff" that makes the system unaffordable for families at the upper income limits
and families with smaller households. (See S3.)
Lack of access to nearby subsidy providers.

38 (ICF 2020)
39 Ibid.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 34
Cost of living increases that have outpaced income growth.

Smoothing the subsidy cliff and improving subsidy rates to allow more child care providers to accept subsidies
would, by design, increase access to the WCCC program. The task force expects this would thereby increase
the number of families participating in the program.

The task force recommends eliminating the cap on WCCC participation in addition to the other policy changes
recommended herein.

S8. Expand allowable activities for subsidy eligibility to enable employed, unemployed and student parents to
seek and retain work and education.

Federal CCDF guidelines state that in order to participate in a federal subsidy program, a child must reside with
a parent(s) working, attending job training or an educational program, or needing protective services. State law
gives categorical eligibility for families involved in Child Protective Services (CPS), Child Welfare Services
(CWS) and Family Assessment Response (FAR), and exempts some families from work requirements, such as
student parents.40 State rules provide list of approved activities including WorkFirst participation or types of
employment.41 Currently, the list of approved activities does not allow an unemployed parent seeking work to
be eligible for subsidized child care. The state's 12-month authorization period for subsidy program eligibility
provides some flexibility for enrolled families that experience employment or activity changes. However, this
flexibility does not apply at initial application.

This complex system of determining eligibility for families creates a siloed series of behavior modification
tactics instead of a system that ensures children who need high-quality care are able to receive it. Simplified
eligibility requirements would increase access to child care. Given the unprecedented economic upheaval our
state and its residents are facing as a result of the COVID-19 pandemic, we expect that the number of families
that shift their activities from stable work to job search or education will continue to be higher than average in
the coming months and years. Adequate access to high-quality child care is essential for getting people back
to work.

The task force therefore recommends that the state should expand what it considers "allowable activities" for
eligibility to include job search and higher education pursuits. Furthermore, the task force recommends
offering all families full-day child care rather than "nickel-and-diming" families with part-day care based on the
number of hours of their allowable activities.

40 (Child care providers—Subsidy requirements—Tiered reimbursements—Copayments, Rev. Code of Wa. § 43.216.135 2020)
41 (Approved activities for applicants and consumers participating in WorkFirst, Wa. Admin. Code § 110-15-0040 2018), (Approved

activities for applicants and consumers not participating in WorkFirst, Wa. Admin. Code § 110-15-0045 2019)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 35
Workforce Compensation and Professional
Development Policy Recommendations
Introduction
Competitive, living wages and access to healthcare insurance coverage are key Figure 4: Diverse
components in stabilizing the child care industry and addressing racial inequities for Child Care Workforce
the child care workforce and the families they serve.

The child care workforce is comprised disproportionately of low-income women of
color: 94% of the U.S. child care workforce is women, 50% of Washington's child care
workforce is people of color, and 30% is bilingual or multilingual.42 (See Figure 4.) This
is both a strength and an opportunity for the field. Research has suggested that young
children with providers and caregivers that reflect their home cultures and speak their
home languages have better continuity between home and child care settings. Diverse
providers can support children's healthy development.43

However, over half of American child care workers live in households that need public
assistance.44 In Washington, child care employees rank in the third percentile of total
earnings among occupational groups. A Bachelor of Arts in early childhood education
was found to have the lowest projected lifetime earnings of 80 college majors
considered.45 In a 2015 national study, just 15% of child care staff had employer-
provided healthcare insurance coverage, compared to 50% of all other workers.46

The child care workforce is underpaid for the high value they provide for children, families, society and the
economy. Nobel Laureate economist James J. Heckman has said, "The best investment [for human capital] is
in quality early childhood development from birth to five for disadvantaged children and their families," with
lifecycle benefits emerging as a promising way to break the cycle of poverty.47 Child care professionals leave
the industry for entry-level jobs in other sectors that have better wages and benefits, such as retail.

Retaining child care professionals in the field, and supporting their career progression, will not only support
child care staff and their employers -- children and families will also benefit. Research suggests that the
presence of a consistent caring adult in a child's life in the early years, as well as in childhood and
adolescence, is associated better academic grades, healthier behaviors, more positive peer interactions and a
greater ability to handle stress later in life.48 Child care educators that are well-equipped with professional
resources, such as training and coaching, and adequately compensated will be less stressed and more present
with the children in their care. Studies have found that low pay contributes to provider stress, which can lead to
less responsive and harsher interactions with children and lower quality classroom environments.49

42 (Child Care Aware of America 2019), (ICF and Fran Kipnis 2020)
43 (Center for Law and Social Policy 2017)
44 (Whitebook, et al. 2018)
45 (Child Care Collaborative Task Force 2019)
46 (Gould 2015)
47 (Heckman 2020)
48 (Murphey, et al. 2013)
49 (Committee for Economic Development 2020)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 36
Child care access depends on an adequate supply of child care providers and staff. Washington child care
providers have reported difficulty staffing their programs and high staff turnover rates. Research suggests that
low wages contribute to child care staff turnover--and turnover increases the cost of professional development
and staff training, and reduces quality of care for children.50

The task force recommends measures to support a competitively compensated child care workforce with
access to affordable healthcare insurance coverage, employment benefits and professional development
opportunities. In 2019, the task force recommended the state support compensating the child care workforce
competitively with educators in the state’s education continuum in order to provide living wages, reduce
turnover and promote longevity of skilled providers in the child care workforce (Recommendation A1).51 This
recommendation has become more urgent as families, employers and policymakers have grown to appreciate,
especially during the pandemic, the essential role of child care for child outcomes, workforce participation and
economic recovery.

High-quality child care programs support children's cognitive, social, physical, behavioral and emotional
development.52 Positive interactions and healthy relationships with caring adults, such as child care staff, help
children build foundational skills that help with intelligence, language, emotions and social competence.
Research has shown that high-quality child care can lead to higher reading and math achievement, higher
likelihood to complete college and become employed, and increased earnings and better health later in life.53

Parents with access to affordable child care are more likely to participate in the labor force, upgrade their skills
through education and become more financially independent. This contributes to long-term economic growth
and productivity.54 The task force's 2020 Child Care Industry Assessment estimated that lack of access to
child care results in:

133,000 fewer potential workers in Washington's labor force per year, on average
$34.8 billion reduction in Gross State Product per year, on average
$1.03 billion less in sales and business and occupation tax revenue per year, on average55

Child care staff should earn a living wage, reflective of the area they live. How to support compensation of a
largely private-sector workforce is the question. The child care system is made up of various program types
and funding structures. Many of them are private, for-profit businesses that are unable to accept child care
subsidies. The task force has not yet identified a recommended mechanism to support competitive
compensation of child care employees. Increased subsidy rates and rate enhancements are a means of
indirectly compensating a segment of the child care workforce, but subsidized spaces represent less than one-
third of child care capacity. Subsidy rates alone will not support a statewide salary floor. However, subsidy
rates that are at or very near the cost of providing quality child care will increase providers' ability to sustain
their business, participate in the subsidy program and compensate staff appropriately. The task force will
continue evaluating options to support living wages and access to affordable healthcare insurance coverage
for the entire child care workforce, and will provide further recommendations in the next report.

50 (Child Care Collaborative Task Force 2019)
51 Ibid.
52 (ICF 2020)
53 (Zero to Three 2019)
54 (Committee for Economic Development 2019)
55 (ICF 2020)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 37
Recommendations
Workforce Compensation
WC1. Evaluate and recommend a compensation structure aligned to regional school system salary scales,
and support its use by providers accepting subsidies.

WC2. Assess alternative funding streams (besides family tuition payments and subsidies) to support
competitive, living wages and benefits for child care employees that reflect their valuable contributions to
positive outcomes for children, families and our economy.

WC3. Evaluate options to support access to affordable healthcare insurance coverage for child care staff.
Options include, but are not limited to, the Health Benefit Exchange, Apple Health and association health
plans.

WC4. Provide subsidy rate enhancements to incentivize provision of child care in unmet segments of the
market, and to programs providing unique services.

Professional Development
PD1. Expand the Community-Based Pathway from pilot to statewide implementation as a process for child
care staff to demonstrate competencies.

PD2. Support professional development around skills the industry needs, and reimburse providers for
participation (trauma-informed care, dual language, racial bias training, etc.).

PD3. Seek to resolve known issues with the quality of data in the MERIT data system, such as the number
of providers with verified education data.

PD4. Fully fund professional development, relationship-based professional development, and financial
incentives to support providers in meeting staff qualifications, ongoing continuous quality improvement,
and achieve high quality levels in Early Achievers and school-age quality standards.

PD5. Increase access to the state-funded early childhood education substitute pool so licensed child care
providers have access to temporary staff coverage.

Discussion
In 1988, the Washington State Legislature declared that it shall be policy of the State of Washington to:
“Promote the growth, development and safety of children by working with community groups including
providers and parents to establish standards for quality service, training of child care providers, fair and
equitable monitoring, and salary levels commensurate with provider responsibilities and support services."56

The task force supports the concept of establishing standards for salary levels commensurate with provider
responsibilities and support services. However, as the National Academy of Sciences noted in 2018, "Despite
an increased emphasis on raising the qualifications and education level of [early childhood education]

56 (Child Care Coordinating Committee--Child Care Expansion Grant Fund - Ch. 213, Washington Laws 1988)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 38
educators over the past two decades, there has not been a commensurate emphasis on raising the
compensation of the workforce."57 Along this line, the task force found in 2019 that:

Child care access depends on an adequate supply of child care providers and staff.
Washington providers have reported difficulty staffing their programs and high staff turnover rates.
Research suggests that low wages contribute to child care staff turnover.58

Attracting and retaining child care professionals has continued to be a challenge, leading to continued
challenges for families to access high quality care.

Assumptions and Key Questions
The task force assumes:

Improving compensation and professional development, including career development pathways, will
preserve and increase racial and ethnic equity and diversity in the child care workforce. The policy
recommendations in this section would contribute to this outcome.

Recommended policy changes will not reduce or limit the number of providers of color in the field.

Policy changes will “do no harm.” Policymakers and administrators will implement changes with care not
to adversely impact child care affordability and access. For example, policymakers and administrators will
prevent child care providers currently receiving a certain base rate from receiving a lower base rate due to
changes in the regional structure; seek to prevent inflation of private pay rates as a consequence of
increased subsidy rate payments; and seek to incentivize provision of care in underserved locations or for
underserved market segments rather than exacerbate the issue.

Recommended workforce compensation policy changes will be made in tandem with, or following,
changes to the subsidy system:

 Subsidy rates will shift from a market rate basis to a cost of quality basis. (CM3/S6)
 Subsidy regions will be revised to capture ZIP code cost of living, rather than geography. (S4)
 Subsidy base rates will be adjusted to cover full costs associated with high-quality child care
administered by competitively compensated staff. (CM3/S6)
 In addition to the base rates, providers will receive additional funds for meeting additional criteria, such
as attaining higher quality ratings and serving families with barriers to accessing child care. (WC4)

If resources are limited, investments should prioritize addressing inequities across racial and ethnic
groups, language groups, and regions of the state.

The task force identified these key questions to explore further, before making final recommendations in the
June 2021 report:

How do we address compensation for the entire workforce, and not just employees of providers that
accept subsidies?

57 (National Academy of Sciences, Engineering, and Medicine 2018)
58 (Child Care Collaborative Task Force 2019)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 39
How can we ensure these additional investments can come from DCYF directly to the workers, and not
“trickle-down economics” of giving to the business with the expectation it carries through to the workforce?

Workforce Compensation
WC1. Evaluate and recommend a compensation structure aligned to regional school system salary scales to
be incorporated into the child care cost model and used by DCYF to set subsidy rates.

The task force recommends that the state develop a child care compensation structure, including a salary
scale and employment benefits (health care, dental, retirement, etc.), for each staff role employed in a licensed
child care setting that is aligned to regional school system salary scales. The task force further recommends
that DCYF reflect this compensation structure in the child care cost model (see CM2) that will be used to
inform WCCC subsidy rates (see CM3/S6).

As directed by the authorizing legislation, the task force evaluated recommendations of the Compensation
Technical Workgroup (CTW).59 The task force agreed with many elements of CTW Recommendation A-1:
Salary Scale:

Use a grid that represents pay ranges for each job class and incremental steps of increased pay.

Accommodate various factors that could influence where an employee starts on the scale, such as
longevity, training, academic achievement, credentials, credential equivalencies and geographic location.

Employees would achieve higher steps in the pay range as the factors above change, to provide wage
enhancements for linguistic or other skills and to incentivize service in high-need or underserved areas.

Build on existing laws, such as RCW 43.216.675 (Career and Wage Ladder), to ensure availability of funding
statewide for child care centers, school-age only programs, and family home.

The task force recommends reviewing the CTW Salary Scale and making adjustments, such as ensuring wages
are congruent with the goal of indexing salaries against the state's education continuum.

Supportive relationships and dependable interaction with caring adults help children develop cognitive,
emotional and social skills needed to succeed in school and life. Stable relationships with responsive
caregivers have the potential to protect children from the effects of toxic stress, which could negatively affect
their development.60 Research has suggested that high-quality child care programs contribute to reading and
math achievement, college completion, employment, earning potential and adult health outcomes.61 An
estimated 21% of the U.S. labor force has children under age 14 and no available caregiver in the household.62
Parents with access to affordable child care are more likely to participate in the labor force, upgrade their skills
through education and become more financially independent. This contributes to long-term economic growth

59 (Washington State Department of Children, Youth and Families 2019)
60 (Center on the Developing Child at Harvard University 2007)
61 (Zero to Three 2019)
62 (Dingel, Patterson and Vavra 2020)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 40
and productivity.63 The task force's 2020 Child Care Industry Assessment estimated that lack of access to
child care results in:

The child care workforce should earn a living wage for the essential and valuable services they provide.
Increased subsidy rate payments will support the portion of providers that serve children enrolled in the WCCC
subsidy program. The task force will continue to evaluate options to implement an alternative funding stream,
in addition to subsidy payments and private tuition payments from families, to support compensation of the
entire child care workforce. The task force will make further recommendations in the June 2021 report.

Bolstering the subsidy system, which supports families that use about a third of licensed child care capacity,
will not result in a compensation increase for the remainder of the workforce. The task force heard from child
care providers that raising non-subsidy (private pay tuition) rates to the level needed to offer all employees
competitive compensation and benefits would likely further price out private pay families. The child care
system does not follow conventional market principles of supply and demand. Increased demand is not
necessarily met with an increased supply, and the cost of providing the service often exceeds what families
can afford to pay for it. We also know that high-quality child care supports healthy development, academic
success and positive outcomes for children and their families. High-quality child care helps equip children to
be contributing members of society and tomorrow's workforce. This justifies, and even necessitates, additional
public investment in the system--because it is a public benefit, similar to public education.

Initial analysis of options that may increase compensation of the workforce in any child care setting,
regardless of whether the program accepts subsidies or is private-pay-only, is described in Table 5 below.
Further work is needed to evaluate and recommend an approach for supporting increased compensation.

Table 5: Options for Increasing Compensation of the Entire Child Care Workforce

Option Pros Cons

Raise subsidy base rates above
current levels based on costs The state would pay for the cost to Entities with few or no subsidy
associated with provision of high- provide the quality mandated by children would not see any
quality child care by highly qualified, statute. increased support.
competitively compensated staff

RCW 43.216.675 is in place for centers Only in place for centers with
Fund and implement a career and
accepting subsidy and participating in narrow requirements; legislation
wage ladder that any provider can
the Early Achievers quality rating and is outdated; requires change in
use.
improvement system. legislation to broaden.

63 (Committee for Economic Development 2019)
64 (ICF 2020)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 41
Option Pros Cons

Fund/implement a career and wage
Gives most freedom to child care
ladder that individual workers can
workers, allows them to move to new Mechanism to pay does not exist;
utilize based on personal
employers without losing ladder requires legislation.
qualifications, regardless of where
benefits.
they work.

State contracts with child care May work well for highly specialized May be too small scale or high
providers to access additional funds. care. administrative burden.

A model exists. It was noted that SEIU
Child care professionals form
775 bargains a wage (versus a rate)
organizations that can collectively
with the state (see SEIU 775 Collective More is research needed.
contract with the state to access
Bargaining Agreement Appendix A) for
additional funds.
the WCCC subsidy program.

Requires legislation; would need
Require a salary scale/compensation
to avoid gifting of public funds;
structure with some additional Could provide all licensed entities a
may require support to ensure
funding from the state outside of the better compensation package.
compensation reaches front line
existing subsidy system.
workers.

Affordable healthcare insurance coverage will help child care staff access health care and maintain
employment in the child care field. Child care providers on the task force emphasized that access to
healthcare insurance is a very high priority, especially during the COVID-19 pandemic.

The task force recognizes that options for health insurance coverage exist, and we need to learn more about
them before recommending a specific approach to supporting access to affordable coverage by the child care
workforce. Since there are conversations happening now with interested stakeholders and health plans, the
task force has identified health coverage as potentially "low hanging fruit" to address in the near term. The task
force will consult with Health Benefit Exchange administrators, healthcare insurance plans, and the Health
Care Authority, evaluate options and make further recommendations in the June 2021 task force report.

The task force evaluated the CTW recommendations related to health insurance coverage for the child care
workforce. The CTW recommended funding a health care contribution for the child care workforce,
incorporating coverage if an educator qualifies for Apple Health as an entitlement, and assuming coverage by
plans available on the Washington Health Benefit Exchange when an educator’s income exceeds Apple
Health’s 138% of the federal poverty level ceiling. The package also includes a state contribution toward
retirement, affordable options for retirement savings plans, paid holidays, employees covering a share of
benefits, incentives for employers to participate in benefit pools and shared service models, and a requirement

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 42
that workforce members have affordable, accessible, voluntary options for income replacement, life insurance
and accidental death and dismemberment policy coverage.65

The task force discussed the need to better understand the availability of Apple Health and other coverage
options, and whether the options would offer adequate insurance coverage reflective of the value placed on
early learning and child care. Task force members expressed concern with the CTW assumption that some
child care professionals will continue to receive coverage through Apple Health. Currently, a parent with
children under the age of 18 may qualify for Apple Health if their income is at or below $972 per month in a 4-
person household, or $658 per in a 2-person household. This is only 45% of FPL.66 Assuming child care staff
will qualify for Apple Health may be incongruous with the objected stated in Section (1)(c) of the authorizing
legislation for this report, RCW 43.330.527, of achieving pay parity with K-12 teachers by January 1, 2025.67

The recommendation in this report aligns with the task force's 2019 recommendation that the state ensure
child care staff can access employment benefits and other strategies to prevent workforce burnout and
support the wellbeing of child care staff, including include access to health insurance, dental insurance, paid
leave and retirement benefits.68 The task force also suggested identifying ways to streamline enrollment in
healthcare insurance plans, and considering bridge funding to cover employees' shares of benefit programs
help more child care staff access healthcare insurance coverage.

WC4. Provide subsidy rate enhancements to incentivize provision of child care in unmet segments of the
market and to programs providing unique services.

Legislation directed the task force to recommend policies to provide additional targeted investments for
providers serving a high proportion of working connections child care families, providers demonstrating
additional linguistic or cultural competency, and providers serving populations furthest from opportunity,
including: (A) Families enrolled in the early childhood education and assistance program; (B) Underserved
geographic communities; (C) Underserved ethnic or linguistic communities; (D) Underserved age groups such
as infants and toddlers; and (E) Populations with specialized health or educational needs.

The task force recommends a combination of subsidy rate enhancements (tiered reimbursements) and direct
support for professional development (see PD2). The task force discussed the need for increased
compensation for dual-language staff. Challenges associated with funding staff with specialties, certifications
or endorsements, such as interpreters and case/social workers, were noted as some specialties may need
specific certificates, skills or credentials to be hired into certain roles. Some asked, how can specialties be
provided or funded at the community level? This is a consideration for the next task force report.

The task force recommends the state use tiered subsidy reimbursements or rate enhancements to incentivize
programs providing care in unmet segments of the market, including for programs that provide unique
services, such as:

Nontraditional hour care
Care in underserved geographic, ethnic or linguistic communities
Dual-language programming
Care for populations with specialized health or educational needs

65 (Washington State Department of Children, Youth and Families 2019)
66 (Washington State Health Care Authority 2020). See Tables 3 and 4 in S4 of this report for a comparison to FPL and SMI.
67 (Child care collaborative task force—Duties, Rev. Code of Wa. § 43.330.527 2019)
68 (Child Care Collaborative Task Force 2019)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 43
Care for underserved age groups such as infants and toddlers

Professional Development
In 2019, the task force recommended the state support professional development of the current and future
workforce (Recommendation A4).69 Recommendations in this report specify measures to provide this support.

PD1. Expand the Community-Based Pathway from pilot to statewide implementation as a process for child
care staff to demonstrate competencies.

The task force recognizes that a one-size-fits-all approach to demonstrating workforce qualifications and
competencies is insufficient for recognizing all the ways child care educators learn, build skills and add value
to child care programs and the industry. An approach centered a specific framework, such as higher education,
is antithetical to the goal of preserving and increasing the racial, ethnic, cultural, and linguistic diversity of our
state's child care workforce. The task force supports providers having a range of options to meet education
requirements, including a noncredit-bearing community-based training pathway, such as the Community-Based
Pathway created by House Bill 2556.70

In its Workforce Compensation Policy Analyses Report, ICF stated that "implementing a well-developed
professional development plan concurrently with a salary initiative based on educational levels is essential to
countering wage inequities endemic to those who lack access to higher education opportunities."71 ICF found
that ongoing investment into professional development systems helps to sustain and enhance pathways that
are essential for the recruitment and retention of diverse providers throughout the state. ICF noted that House
Bill 2556 begins to create movement for a legislatively mandated pathway that allows providers to meet
licensing standards with a training program, and creates opportunities for partnership between training
delivery and the community college system.72

The task force recommends full-scale implementation of the Community-Based Pathway as a process for child
care staff to demonstrate competencies. This will recognize experience and credential equivalencies of the
child care workforce.

PD2. Support professional development around skills the industry needs, and reimburse providers for
participation (trauma-informed care, dual language, racial bias training, etc.).

The task force recommends the state support professional development for in-demand skills, such as trauma-
informed care, dual language programming and racial bias training. The support provided by the state should
include helping providers identify, enroll in, attend and pay for training and professional development
opportunities. The state should reimburse providers for direct costs related to participating in professional
development for these and other high-priority content areas identified by the state.

This recommendation provides targeted investments to providers with in-demand skills, and aligns with
Recommendation WC4 to "provide subsidy rate enhancements to incentivize provision of child care in unmet
segments of the market, and to programs providing unique services." This also supports the task force's 2019
recommendations, including "Promote diverse and inclusive child care settings so children have equitable
opportunities for learning that help them achieve their full potential as engaged learners" (A10); "Support and

69 Ibid.
70 (Early Learning Providers - Training - Ch. 342, Washington Laws 2020)
71 (ICF and Fran Kipnis 2020)
72 Ibid.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 44
enable child care and related programs to implement trauma-informed, culturally responsive, and bias-reducing
practices, including providing opportunities for education on implicit and explicit bias and other types of
cultural competency-focused training" (D5); and "Incentivize provision of child care in the child's home
language, and support dual language learning" (D7).73

PD3. Seek to resolve known issues with the quality of data in the MERIT data system, such as the number of
providers with verified education data.

In its report on workforce compensation policies, ICF noted that DCYF has successfully collected
comprehensive workforce data that is essential to all workforce planning efforts. ICF suggested that DCYF
should continue to verify the education data in the MERIT database, because the data elements are essential
to assessing accomplishments and inequities across service delivery, with emphasis on racial and ethnic
groups, language groups and regions of the state. Additionally, ICF advised that education data are also
needed to estimate costs of implementing various salary scales that are based on job title and educational
level. ICF suggested that DCYF explore strategies to collect wage and benefits data to track wage variations
across the workforce as well as monitor progress from compensation initiatives.74

The task force agreed with these suggestions, and has included them as a recommendation. Additionally, the
task force advises DCYF to ensure non-education competencies, including the Community-Based Pathway, are
reflected in MERIT. The task force further suggests that if DCYF identifies wage discrepancies based on race
and ethnicity, DCYF develop a plan to support wage equalization.

PD4. Fully fund professional development, relationship-based professional development, and financial
incentives to support providers in meeting staff qualifications, ongoing continuous quality improvement, and
achieve high quality levels in Early Achievers and school-age quality standards.

The task force notes that child care programs that accept subsidies must participate in the Early Achievers
quality rating system, but providers may need financial assistance to attain professional development,
implement environmental improvements and make other programmatic changes needed to reach higher
quality ratings. Systemic investments in Early Achievers and Washington State Quality Standards for
Afterschool and Youth Development Programs, as well as targeted rate increases for high-need populations
and community-based pathways, are necessary for child care providers and staff to become eligible for
increased compensation and meet compensation goals.

Early Achievers uses a rating system to track growth in quality improvement of participating early care
providers. At Levels 1 and 2, early learning professionals are “participating in quality improvement” through
training and activities. Facilities that are rated Levels 3 through 5 have achieved a “quality level of excellence”
through an on-site evaluation.75 In October 2020, 3,778 licensed family home and center providers out of 5,191
eligible to participate, or 73%, were enrolled in Early Achievers.76

The task force recommends that the state pay for, or provide financial incentives for child care providers to pay
for, professional development opportunities and program improvements to meet Early Achievers and school-
age quality standards.

73 (Child Care Collaborative Task Force 2019)
74 (ICF and Fran Kipnis 2020)
75 (Washington State Department of Children, Youth and Families n.d.)
76 (Washington State Department of Children, Youth and Families 2020)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 45
PD5. Expand eligibility requirements to use the state-funded early care and education substitute pool so
licensed child care providers have access to temporary staff coverage.

The task force believes that increasing access to the state-funded substitute pool would provide another
resource for licensed child care providers to access temporary staff coverage and support a stable,
sustainable child care workforce and industry. In its initial report, the task force recommended the
development of a network of local substitute pools across the state to allow child care staff and providers time
off to attend training, take personal or vacation time and recover from illness (2019 Recommendation A3).77
This aligns to CTW Recommendation B: "Early childhood educators have access to the State-sponsored
substitute pool to provide classroom coverage when taking time off."78

DCYF oversees the state's Early Care and Education Substitute Pool. The substitute pool, administered by The
Imagine Institute, is designed to support family home and child care center providers in accessing release time
so they can work on professional development goals to reach Early Achievers Level 3 or higher. Providers may
request a qualified substitute if they meet eligibility requirements:

Enrolled in Early Achievers and working towards a Level 3 rating.
Have served at least one child receiving WCCC subsidy in the last 12 months.
Are in good licensing status, meaning the provider's license is not expired, suspended, revoked or on
probationary status.

The task force recommends expanding eligibility to allow licensed providers to request a qualified substitute
through the pool. However, the task force recognizes more work needs to be done to understand the demand
for substitutes, costs associated with meeting increased demand, and how to ensure a sufficient, sustainable
pool of substitutes can support all types of providers across the state.

The task force suggests taking these initial steps to implement this recommendation:

Identify costs associated with allowing more providers to use the substitute pool.
Assess providers' potential demand for the substitute pool, and compare demand to the existing substitute
pool to identify gaps.
Evaluate options for expanding eligibility and increasing access to the substitute pool.

Increasing access to the state-funded substitute pool will support child care providers and the workforce.

77 (Child Care Collaborative Task Force 2019)
78 (Washington State Department of Children, Youth and Families 2019)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 46
Conclusion
This year, we have seen the child care industry demonstrate its value and resilience despite an inherently
flawed model. Child care delivers a public good through, primarily, small businesses that cannot charge
customers (working families) the price necessary to cover costs associated with the essential service
provided. High-quality child care promotes healthy childhood development, lets parents go to work and helps
employers retain talent and maintain productivity.

Families, employers and our state's economy recovery require a stable and multifaceted child care industry
with options to meet families' varying needs. In this report, the task force outlined recommendations for
system-wide improvements to:

Leverage public and private resources to identify sustainable child care business models (CM1, CM2,
CM3).

Help low- and middle-income working families, parents preparing to enter or reenter the labor force and
parents participating in educational and job training pursuits access high-quality child care (S3, S5, S7, S8).

Increase availability of subsidized child care by offering providers rates that cover the costs associated
with high-quality care so families have options and child care programs are sustainable (S1, S2, S4, S6).

Support competitive compensation, with living wages and access to affordable healthcare insurance
coverage, for the child care workforce (WC1, WC2, WC3, WC4).

Expand access to child care professional development options (PD1, PD2, PD3, PD4, PD5).

In its final June 2021 report, the task force will review Child Care Industry Assessment findings and compile
recommendations to date into a strategy, timeline and implementation plan to reach the goal of accessible and
affordable child care for all Washington families by the year of 2025.

The task force appreciates the efforts of the Legislature, Governor Inslee and the agencies, organizations, child
care providers and community members to stabilize, support and expand Washington's child care system.
Working together, we can build the nation's most equitable, affordable and accessible child care system that
benefits all our children, parents, child care staff and providers, employees and communities.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 47
Appendix A: Authorizing Legislation
What the Legislation Says
RCW 43.330.527 (2SHB 1344(6), Laws of 2019), the authorizing legislation for this report, states:

(1) The child care collaborative task force shall:

(a)(i) Develop a child care cost estimate model to determine the full costs providers would incur when
providing high quality child care, including recommended teacher-child ratios based on research and
best practices. The model must include:

(A) Regional differences;
(B) Employee salaries and benefits;
(C) Enrollment levels;
(D) Facility costs; and
(E) Costs associated with compliance with statutory and regulatory requirements, including quality
rating system participation and identify specific costs associated with each level of the rating
system and any quality indicators utilized.

(ii) The model must utilize existing data and research available from existing studies and reports.
(iii) The model must consider differentiating subsidy rates by child age and region, evaluate the
effectiveness of current child care subsidy region boundaries, and examine alternatives such as ZIP
code level regions or regionalization based on urban, suburban, and rural designations;

(b) Consider how the measure of state median income could be used in place of federal poverty level
when determining eligibility for child care subsidy;
(c) Evaluate recommendations from the department of children, youth, and families' technical work group
on compensation, including consideration of pay scale changes, to achieve pay parity with K-12
teachers by January 1, 2025. When considering implementation of the technical work group
recommendations, the task force shall further develop policy recommendations for the department of
children, youth, and families that:

(i) Endeavor to preserve and increase racial and ethnic equity and diversity in the child care workforce
and recognize the value of cultural competency and multilingualism;
(ii) Include a salary floor that supports recruitment and retention of a qualified workforce in every early
learning setting, determined by an analysis of fields that compete to recruit workers with
comparable skills, competencies, and experience of early childhood educators;
(iii) Index salaries for providers against the salary for a typical preschool lead teacher, differentiating
base compensation for varying levels of responsibility within the early childhood workplace
including consideration of center directors, assistant directors, lead teachers, assistant teachers,
paraprofessionals, family child care owners, and family home assistants;
(iv) Incentivize advancements in relevant higher education credentials and credential equivalencies,
training, and years of experience, by increasing compensation for each of these, including early
learning certificates, associate degrees, bachelor's degrees, master's degrees, and doctoral
degrees;
(v) Consider credential equivalencies, including certified demonstration of competencies developed
through apprenticeships, peer learning models, community-based training, and other strategies;

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 48
(vi) Consider a provider's years of experience in the field and years of experience at his or her current
site;
(vii) Differentiate subsidy rates by region; and
(viii) Provide additional targeted investments for providers serving a high proportion of working
connections child care families, providers demonstrating additional linguistic or cultural
competency, and providers serving populations furthest from opportunity, including:
(A) Families enrolled in the early childhood education and assistance program;
(B) Underserved geographic communities;
(C) Underserved ethnic or linguistic communities;
(D) Underserved age groups such as infants and toddlers; and
(E) Populations with specialized health or educational needs

(d) Develop a phased implementation plan for policy changes to the working connections child care
program. The implementation plan must focus on children and families furthest from opportunity as
defined by income and must include recommended targeted supports for providers serving children
who are underserved and emphasize greater racial equity. Implementation plan components must
include:

(i) Increasing program income eligibility to three hundred percent of the federal poverty level or eighty-
five percent of the state median income;
(ii) Establishing a graduated system of copayments that eliminates the cliff effect for families and
limits the amount a family pays for child care to a maximum of seven percent of the family's
income by January 1, 2025;
(iii) Developing a model to enable the state to provide contracted slots to programs serving working
connections child care families in order to expand access for low-income families;
(iv) Eliminating work requirements for student families participating in the working connections child
care program; and
(v) Eliminating the fiscal cap on working connections child care enrollment

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 49
Appendix B: Task Force Overview
The task force was established in 2018 to make policy recommendations about the child care system to better
meet the needs of families, employers and child care providers. Task force reports and milestones are
summarized in Figure B1.

Figure B1: Child Care Collaborative Task Force Milestones

In its initial report, the task force recommended policy changes in four goal areas:

(A) Stabilize, support and sustain the child care workforce, providers and industry.
(B) Increase employer supports for child care.
(C) Streamline permitting and licensing to better support the construction, renovation and acquisition of
child care facilities.
(D) Reduce disparities and disproportionalities in child care service delivery and access.

The task force developed a vision for child care in Washington displayed in Figure B2 below.79

Figure B2: Child Care Collaborative Task Force Vision

The task force envisions Washington State as the nation's most equitable,
affordable and accessible child care system that benefits all our children, parents,
child care staff and providers, employees and communities:
Increased workforce
Quality, affordable, An economically healthy productivity when New strategies and
accessible licensed child and diverse child care employers support the child investments from the
care that gives parents industry with a supported, care needs of their public and private sectors
diverse choices to meet well-compensated employees through the that engage employers in
their family and workforce that meets the availability of a scalable set supporting all working
employment needs, supply and choice of tools and incentives that families' access to high-
regardless of their income, requirements of families increase access and quality, affordable child
race or where they live. and employers. affordability of high-quality care.
child care.

In 2020, the task force published an in-depth Child Care Industry Assessment report. Find information about
the task force and access to task force reports at the Washington Child Care Collaborative Task Force website.

79 (Child Care Collaborative Task Force 2019)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 50
Appendix C: COVID-19 Child Care Grant Matrix

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 51
DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 52
Appendix D: Cost Model Background Information
The task force engaged with contractor ICF and subcontractor Capito Associates to develop a child care cost
estimate model, kicking off the effort in February 2020 and concluding the process in June 2020. In February,
the research team hosted a workshop with over 30 stakeholders to identify child care cost drivers and discuss
costs associated with meeting levels of the Early Achievers quality rating and improvement system. It should
be noted that direct child care providers comprised just under 30% of attendees.

The research team prepared to launch a March-April 2020 financial survey of child care providers, seeking to
gather data from and interview a representative sample of providers across Washington's child care
landscape. However, due to impacts of the COVID-19 pandemic, the task force and cost model steering
committee advised the research team to suspend plans for a survey and instead use extant data and reports to
build the cost model. The research team therefore elected to use information gathered at the cost model
steering committee meeting, combined with currently available data from DCYF’s 2018 Market Rate Survey to
develop the model. Missing the critical input of child care provider budget and financial data, the research
team provided the task force a set of "incomplete" cost model tools containing placeholder information until
provider survey is possible. The research team also provided a report describing a model of costs to provide
high-quality early care and education services by program type, size, location, and quality level. The research
team's report and "incomplete" cost model tools are attached and available for download.

The model provides valuable insight into cost of quality through provider staff costs, a central driver, at various
quality levels. However, the task force wants to underscore the limitations acknowledged by ICF’s report, and
recommends that model updates with additional data from providers be incorporated when using the model to
better capture regional variations, realities of service implementation, and variations in compensation across
providers.

To illustrate, here we highlight some of the major limitations of the model for the purpose of indicating areas
where it could evolve to be more comprehensive:

The staffing salaries the model uses are based on the responses from DCYF’s 2018 Market Rate Survey.
However, the survey’s salary questions were not mandatory and DCYF believes the data’s reliability is
limited.

The salary figures used for family home providers are based on a center director’s salary. Depending on the
business structure, a family home provider may not receive salaries, but rather profits from their business.

Data on Early Achievers provider quality levels in from the 2018 Market Rate Survey used for the model was
limited – in 2018 there were many fewer providers rated than we now have.

The regional variations in salaries used in the model are based on the variations in subsidy rates for current
regions. A provider that currently receives a subsidy rate that is low compared to economic realities would
continue to see this disparity reflected in the model.

There is a lack of granularity between the quality levels discussed: "Licensing," "Level 3" and "Aspirational."
Further, reliance of staff costs means there is no indication of what drives cost in the Early Achievers

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 53
progression at different levels. The cost model should reflect cost drivers at each level of Early Achievers,
as well as Washington State Quality Standards for Afterschool and Youth Development Programs.80

The model will need to be adjusted based upon changes to the Early Achievers quality rating and
improvement system and quality systems related to school-age child care. Some task force members
noted that current Early Achievers standards prescribe specific approaches to achieving outcomes, which
are associated with certain costs. Should Early Achievers allow for flexibility in achieving outcomes, the
associated costs may change.

School-age specific child care has not had the opportunity to complete a quality cost model study, so there
is work to be done to ensure school-age providers can meet costs associated with high-quality
programming.

The model should reflect the Community-Based Pathway as a process for child care staff to demonstrate
competencies, as well as provider experience, education, and training. Competencies, experience,
education and training are factors for recruitment, competitive compensation of staff and professional
development costs. The model (and quality standards, such as Early Achievers) should acknowledge and
support competencies, experience and training, which will promote a diverse workforce.

The model should reflect locally adjusted capital cost estimates associated with acquisition, construction,
renovation, maintenance and appreciation or depreciation of capital assets.

Further, under CCDF rules, in order for Washington to use a cost of quality model to determine its subsidy base
rates, the model must include the priced child care market, contain complete and current data, represent
geographic variation, use rigorous data collection procedures, and analyze data in a manner that captures
market differences. More specifically, it must analyze the cost of providing child services that meet basic
health, safety, quality and staffing requirements (45 CFR 98.45(b)(3), (f)(1)(ii)(A), and (f)(2)(ii)), and higher-
quality care at each level of quality. (45 CFR 98.45(b)(4), (f)(1)(ii)(B), and (f)(2)(iii)). The issues described in the
bullets above may be obstacles to obtaining ACF approval to use this model to set rates. In addition, CCDF
requires the model to track provider participation in subsidy, and barriers to it related to payment rates and
practices (45 CFR 98.45(d)(2)(i)), which the model currently does not do. See 45 CFR 98.45 in Appendix E.

The task force suggests consideration of cost of quality drivers not substantially discussed in the report or
fully factored into the model. Some of these may be further elucidated through a provider survey, as discussed
in the Cost Model section of the report. While staff salaries are the biggest cost driver for many providers, the
model does not fully discuss other sources that may make up a significant portion of provider overhead. Other
cost sources may include, for example: licensed facility and environmental improvements, evidence-based
curriculum, materials for children, access to behavioral and mental health consultation, and staff training to
support use of curriculum, assessment tools, trauma-informed care, etc.

80 (School's Out Washington 2014)

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 54
Appendix E: 45 CFR § 98.45 - Equal Access
(a) The Lead Agency shall certify that the payment rates for the provision of child care services under this part
are sufficient to ensure equal access, for eligible families in the area served by the Lead Agency, to child
care services comparable to those provided to families not eligible to receive CCDF assistance or child
care assistance under any other Federal, State, or tribal programs.
(b) The Lead Agency shall provide in the Plan a summary of the data and facts relied on to determine that its
payment rates ensure equal access. At a minimum, the summary shall include facts showing:

(1) How a choice of the full range of providers is made available, and the extent to which child care
providers participate in the CCDF subsidy system and any barriers to participation including barriers
related to payment rates and practices, based on information obtained in accordance with paragraph
(d)(2) of this section;
(2) How payment rates are adequate and have been established based on the most recent market rate
survey or alternative methodology conducted in accordance with paragraph (c) of this section;
(3) How base payment rates enable providers to meet health, safety, quality, and staffing requirements in
accordance with paragraphs (f)(1)(ii)(A) and (f)(2)(ii) of this section;
(4) How the Lead Agency took the cost of higher quality into account in accordance with paragraph
(f)(2)(iii) of this section, including how payment rates for higher-quality care, as defined by the Lead
Agency using a quality rating and improvement system or other system of quality indicators, relate to
the estimated cost of care at each level of quality;
(5) How co-payments based on a sliding fee scale are affordable, as stipulated at paragraph (k) of this
section; if applicable, a rationale for the Lead Agency's policy on whether child care providers may
charge additional amounts to families above the required family co-payment, including a demonstration
that the policy promotes affordability and access; analysis of the interaction between any such
additional amounts with the required family co-payments, and of the ability of subsidy payment rates to
provide access to care without additional fees; and data on the extent to which CCDF providers charge
such additional amounts to families (based on information obtained in accordance with paragraph
(d)(2) of this section);
(6) How the Lead Agency's payment practices support equal access to a range of providers by providing
stability of funding and encouraging more child care providers to serve children receiving CCDF
subsidies, in accordance with paragraph (l) of this section;
(7) How and on what factors the Lead Agency differentiates payment rates; and
(8) Any additional facts the Lead Agency considered in determining that its payment rates ensure equal
access.

(c) The Lead Agency shall demonstrate in the Plan that it has developed and conducted, not earlier than two
years before the date of the submission of the Plan, either:
(1) A statistically valid and reliable survey of the market rates for child care services; or
(2) An alternative methodology, such as a cost estimation model, that has been:

(i) Proposed by the Lead Agency; and
(ii) Approved in advance by ACF.

(d) The Lead Agency must:

(1) Ensure that the market rate survey or alternative methodology reflects variations by geographic
location, category of provider, and age of child;
(2) Track through the market rate survey or alternative methodology, or through a separate source,
information on the extent to which:

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 55
(i) Child care providers are participating in the CCDF subsidy program and any barriers to participation,
including barriers related to payment rates and practices; and
(ii) CCDF child care providers charge amounts to families more than the required family co-payment
(under paragraph (k) of this section) in instances where the provider's price exceeds the subsidy
payment, including data on the size and frequency of any such amounts.

(e) Prior to conducting the market rate survey or alternative methodology, the Lead Agency must consult with:

(1) The State Advisory Council on Early Childhood Education and Care (designated or established pursuant
to section 642B(b)(1)(A)(i) of the Head Start Act (42 U.S.C. 9837b(b)(1)(A)(i)) or similar coordinating
body, local child care program administrators, local child care resource and referral agencies, and other
appropriate entities; and
(2) Organizations representing child care caregivers, teachers, and directors.

(f) After conducting the market rate survey or alternative methodology, the Lead Agency must:

(1) Prepare a detailed report containing the results, and make the report widely available, including by
posting it on the Internet, not later than 30 days after the completion of the report. The report must
include:

(i) The results of the market rate survey or alternative methodology;
(ii) The estimated cost of care necessary (including any relevant variation by geographic location,
category of provider, or age of child) to support:

(A) Child care providers' implementation of the health, safety, quality, and staffing requirements at
§§ 98.41 through 98.44; and
(B) Higher-quality care, as defined by the Lead Agency using a quality rating and improvement
system or other system of quality indicators, at each level of quality; and
(iii) The Lead Agency's response to stakeholder views and comments.

(2) Set payment rates for CCDF assistance:

(i) In accordance with the results of the most recent market rate survey or alternative methodology
conducted pursuant to paragraph (c) of this section;
(ii) With base payment rates established at least at a level sufficient for child care providers to meet
health, safety quality, and staffing requirements in accordance with paragraph (f)(1)(ii)(A) of this
section;
(iii) Taking into consideration the cost of providing higher-quality child care services, including
consideration of the information at each level of higher quality required by paragraph (f)(1)(ii)(B) of
this section;
(iv) Taking into consideration the views and comments of the public obtained in accordance with
paragraph (e) and through other processes determined by the Lead Agency; and
(v) Without, to the extent practicable, reducing the number of families receiving CCDF assistance.

(g) A Lead Agency may not establish different payment rates based on a family's eligibility status, such as
TANF status.
(h) Payment rates under paragraph (a) of this section shall be consistent with the parental requirements in §
98.30
(i) Nothing in this section shall be construed to create a private right of action if the Lead Agency acts in
accordance with the Act and this part.

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 56
(j) Nothing in this part shall be construed to prevent a Lead Agency from differentiating payment rates on the
basis of such factors as:

(1) Geographic location of child care providers (such as location in an urban or rural area);
(2) Age or particular needs of children (such as the needs of children with disabilities, children served by
child protective services, and children experiencing homelessness);
(3) Whether child care providers provide services during the weekend or other non-traditional hours; or
(4) The Lead Agency's determination that such differential payment rates may enable a parent to choose
high-quality child care that best fits the parents' needs.

(k) Lead Agencies shall establish, and periodically revise, by rule, a sliding fee scale(s) for families that receive
CCDF child care services that:

(1) Helps families afford child care and enables choice of a range of child care options;
(2) Is based on income and the size of the family and may be based on other factors as appropriate, but
may not be based on the cost of care or amount of subsidy payment;
(3) Provides for affordable family co-payments that are not a barrier to families receiving assistance under
this part; and
(4) At Lead Agency discretion, allows for co-payments to be waived for families whose incomes are at or
below the poverty level for a family of the same size, that have children who receive or need to receive
protective services, or that meet other criteria established by the Lead Agency.

(l) The Lead Agency shall demonstrate in the Plan that it has established payment practices applicable to all
CCDF child care providers that:

(1) Ensure timeliness of payment by either:
(i) Paying prospectively prior to the delivery of services; or
(ii) Paying within no more than 21 calendar days of the receipt of a complete invoice for services.
(2) To the extent practicable, support the fixed costs of providing child care services by delinking provider
payments from a child's occasional absences by:
(i) Paying based on a child's enrollment rather than attendance;
(ii) Providing full payment if a child attends at least 85 percent of the authorized time;
(iii) Providing full payment if a child is absent for five or fewer days in a month; or
(iv) An alternative approach for which the Lead Agency provides a justification in its Plan.
(3) Reflect generally-accepted payment practices of child care providers that serve children who do not
receive CCDF subsidies, which must include (unless the Lead Agency provides evidence in the Plan that
such practices are not generally-accepted in the State or service area):
(i) Paying on a part-time or full-time basis (rather than paying for hours of service or smaller increments
of time); and
(ii) Paying for reasonable mandatory registration fees that the provider charges to private-paying parents:
(4) Ensure child care providers receive payment for any services in accordance with a written payment
agreement or authorization for services that includes, at a minimum, information regarding provider
payment policies, including rates, schedules, any fees charged to providers, and the dispute resolution
process required by paragraph (l)(6);
(5) Ensure child care providers receive prompt notice of changes to a family's eligibility status that may
impact payment, and that such notice is sent to providers no later than the day the Lead Agency
becomes aware that such a change will occur;
(6) Include timely appeal and resolution processes for any payment inaccuracies and disputes.

[81 FR 67586, Sept. 30, 2016]

DECEMBER 2020 RECOMMENDATIONS - CHILD CARE COLLABORATIVE TASK FORCE 57
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