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The true cost of quality child care in Washington

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2022 Coh Commercereports Child Care Collaborative Task Force 3B7A3311 36D0
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2022 Coh Commercereports Child Care Collaborative Task Force 3B7A3311 36D0

Summary

The true cost of quality child care in Washington is the 2022 Child Care Collaborative Task Force report to the Legislature and governor under Chapter 368, Laws of 2019, issued by the Washington State Department of Commerce on December 15, 2022. It opens with letters from Commerce Director Lisa Brown and the task force tri-chairs and an executive summary describing the charge to report on the true cost of quality child care. The report states that child care providers rank in the third percentile of occupational wages, that the workforce turns over at a rate of 43% per year, and that 62,370 child care slots were maintained through $400 million in stabilization grants. The tri-chairs recommend a cost of quality care rate setting model with a living wage floor and salary scale. The report closes with tables of program enhancement options.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

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“The true cost of quality child care in Washington.” Original at app.leg.wa.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2022-coh-commercereports-child-care-collaborative-task-force-3b7a3311-36d0/, SHA-256 c55bbf0436c8f61945c391697fcba71809a430d41b9d9de0b79389b01ac26f37.

Full text

 The true cost of quality
 child care in Washington
 Recommendations to make care more accessible for families and
 sustainable for providers




2022 Child Care Collaborative Task Force report to the Legislature
and governor under Chapter 368, Laws of 2019




                                                 December 15, 2022
       COMMUNITY ENGAGEMENT
       AND OUTREACH,
       DIRECTOR'S OFFICE                         Report to the Legislature

                                                 Director Lisa Brown
V3.2
Acknowledgments
This report was developed by the Child Care Collaborative Task Force, task force guest participants, Prenatal
to Five Fiscal Strategies, and Department of Commerce and Department of Children, Youth, and Families
employees.

Child Care Collaborative Task Force

 Name                               Organization                                              Role
 Erin Haick                         SEIU 925                                                  Voting
 Ryan Pricco                        Child Care Aware of Washington                            Voting
 Luc Jasmin (served until October
                                    Washington Child Care Centers Association                 Voting
 2022)
 Valisa Smith                       Start Early                                               Voting
 Sen. Claire Wilson                 Washington State Senate                                   Voting
 Rep. Tana Senn                     Washington State House of Representatives                 Voting
 Darlene Peters                     Port Gamble S'Klallam Tribe                               Voting
 Amy Anderson                       Association of Washington Business                        Voting
 Cheryl Smith                       Department of Commerce                                    Non-voting
 Jason Ramynke                      Department of Children, Youth, and Families               Non-voting
 Sydney Forester                    Office of the Governor                                    Non-voting
 Christie Glassy                    Family, friend, and neighbor provider                     Non-voting
 Ginger Still                       Licensed child care center director                       Non-voting
 Mary Curry                         Family child care provider                                Non-voting
 David Beard                        School's Out Washington                                   Non-voting
 Dr. Stephan Blanford               Children's Alliance/Early Learning Action Alliance        Non-voting
 Lois Martin                        Community Day Center for Children                         Non-voting
 Jennifer Jennings-Schaffer         Zero to Three                                             Non-voting
 Zam Zam Mohamed                    Voices of Tomorrow                                        Non-voting
 Nicole Sohn                        Journey Discovery Center/Greater Spokane Inc.             Non-voting
 Jodi Wall                          Educational Services District 112                         Non-voting
 Ruth Kagi                          Early learning ambassador                                 Non-voting
 Adrienne Stuart                    Washington State Developmental Disabilities Council       Non-voting
 Dr. Soleil Boyd                    Washington STEM                                           Participant
 Susan Brown                        Kids Co.                                                  Participant
 Colleen Condon                     Lilac City Early Learning Center                          Participant
 Kelly Daniels                      Seattle Nanny Network                                     Participant
 Sally Holloway                     Whatcom Community College                                 Participant
 Regina Malveaux                    Women's Commission                                        Participant
 Marie Keller                       Imagine Institute                                         Participant
 Cate Bridenstine                   Imagine Institute                                         Participant




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT
Washington State Department of Commerce
Cheryl Smith, director, Community Engagement and Outreach Team

Washington Department of Children, Youth, and Families
Nicole Rose, assistant secretary, Early Learning

Matt Judge, child care administrator, Early Learning

Genevieve Stokes, government affairs advisor

Consultants
Casey Osborn-Hinman, consultant

Barbara Rosen, consultant

Tim Jaasko-Fisher, consultant

Simon Workman and Jeanna Capito, Prenatal to Five Fiscal Strategies, consultants



This report is dedicated to the memory of Tim Jaasko-Fisher, whose leadership is forever imprinted on
Washington’s child care system. As facilitator of the Child Care Collaborative Task Force, Tim designed
inclusive and effective meetings. He was wise, kind, strategic, patient and accepting – and absolutely brilliant.
We unexpectedly lost Tim in October. His ability to create a trusting and collaborative space allowed the task
force to come to agreement on these significant recommendations, as well as those in our previous reports.
He is missed by us all.



Washington Department of Commerce
Cheryl Smith, director
Community Engagement and Outreach
Cheryl.Smith@commerce.wa.gov
(360) 725-2808

COMMUNITY ENGAGEMENT AND OUTREACH
DIRECTOR'S OFFICE
1011 Plum St. SE
P.O. Box 42525
Olympia, WA 98504-2525

www.commerce.wa.gov

For people with disabilities, this report is available on
request in other formats. To submit a request, please
call 360-725-4000 (TTY 360-586-0772)




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                   3
Table of Contents
Executive summary ................................................................................................................................................ 6

Introduction .......................................................................................................................................................... 10

Guidance for readers of this report ...................................................................................................................... 13

Task force recommendations .............................................................................................................................. 14

Methodology and functionality ............................................................................................................................ 17

Management, transparency and updates to the cost model............................................................................... 25

Conclusion ............................................................................................................................................................ 26

Appendix A: Authorizing legislation .................................................................................................................... 27

Appendix B: Glossary ........................................................................................................................................... 29

Appendix C: Early Educator Design Team ........................................................................................................... 30

Appendix D: Case studies..................................................................................................................................... 31

Appendix E: Understanding the true cost of child care in Washington State: A cost estimation model to inform
policy change ........................................................................................................................................................ 36




  2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                                                                                 1
Letter from Director Lisa Brown,
Department of Commerce
The COVID-19 pandemic has laid bare what parents have long known: When child
care doesn’t work for families, families can’t work. In 2020, 71% of parents
reported that difficulty finding child care affected their ability to work. Even before
the pandemic, 63% of Washington children lived in child care deserts, areas with
inadequate supplies of licensed child care. For families that have been fortunate
enough to access care options, costs can be exorbitant.
                                                                                          Lisa Brown, PhD
Barriers to care are only worsening and, as the Child Care Collaborative Task Force
has long noted, workforce insecurity is at the heart of the crisis. The gap between fair pay for child care
workers and what parents can actually afford to pay is huge. It is time to address this gap that has always
been part of our child care system. Quality early childhood education is a public good that leads to better
outcomes for children, while also allowing parents to fully participate in the workforce.

Licensed child care programs operating on razor thin margins simply don’t have resources to compete with
larger employers in today’s hiring market. Despite their love for the children and families they serve, many child
care professionals are understandably choosing other employment opportunities with significantly higher
wages and benefits that support their own economic security. At a time when families in our state are eager to
reenter the workforce, too many early learning classrooms are empty and too many waitlists are full.

If children and families are to fully reap the benefits of access to high-quality early learning, we must urgently
address child care workforce recruitment and retention. Currently, the child care workforce turns over at a rate
of 43% per year. These high levels of churn are unsurprising since child care providers rank in the third
percentile of occupational wages (below pet groomers). In fact, 39% of Washington’s child care providers rely
on one or more sources of public assistance to make ends meet. Continuity of care between children and
providers – and the responsive, nurturing, and consistent relationships that result – is one of the most
important indicators of high-quality early learning. The stakes of inaction on child care workforce
compensation are too high and we cannot defer action any longer.

Over the last four years, the task force has studied and recommended strategies to increase access for
families, and we’ve made important progress. Most notably, the Fair Start for Kids Act expands affordable child
care for thousands of families and increases reimbursement rates for providers accepting Working
Connections Child Care subsidies. These changes are essential and yet, on their own, they don’t go far enough.

We must work together to build a child care system that makes it possible for all Washingtonians to benefit
from our shared prosperity. The Cost of Quality Care study recommendations provide a roadmap to do just
that. I am grateful to the Child Care Collaborative Task Force for its continued commitment to understanding
the complex dynamics of our child care system, and for recommending a path forward.




    Lisa Brown, PhD
    Director
    Department of Commerce



 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                             2
Letter from the Tri-Chairs
Child care was essential to our state’s frontline response to COVID-19 and it is essential for our state’s
economic recovery. Child care has always been essential for children, families, and economies. Four years of
research and recommendations by the Child Care Collaborative Task Force – and learning from one another’s
lived experiences – has made clear that, in addition to nurturing our most precious loved ones, the child care
industry is propping up other industries in Washington .

The percentage of families that reported difficulty finding space in licensed child care increased dramatically
from 22 percent in December 2021 to 58 percent in January 2022. Without intervention, these gaps in access
to high-quality care – and their disproportionate impacts on women – could grow. Licensed child care
programs face significant challenges recruiting and retaining staff in a tight labor market amid competition
from retail, hospitality, and service sectors that offer higher wages and benefits. In the meantime, while
parents look to return to the workforce and employers look to fill their rosters, licensed child care providers are
forced to close entire classrooms and, in some cases, permanently close their doors.

The good news is that we know what works! 62,370 child care slots were maintained in Washington through
$400 million in stabilization grants funded through the federal American Rescue Plan Act. Stabilization grants
serve as proof of concept that public funding can help licensed child care programs stay afloat, but these were
short-term relief programs that have already come to an end.

These policies, along with the commitment and resourcefulness of child care providers, have helped the child
care sector persevere through the public health emergency. However, the hardships endured over the past
three years illustrate the challenges of child care business models and the need for public policies and funding
that support the financial viability of the industry going forward. This study on the cost of quality care in
Washington comes at a crucial moment. The cost of quality care estimation model has allowed the task force
to consider policy and budget solutions to stabilize and grow the industry.

Together, we recommend adoption of a cost of quality care rate setting model that incorporates a living wage
floor and salary scale and delivers publicly funded wage boosts to staff in public and private licensed child
care settings. We have deferred action on compensation for too long. We must act now to preserve our child
care infrastructure and to build back stronger than before. Even in the best of times, poverty wages for the
child care workforce perpetuate the very economic inequalities our child care system is meant to address. Our
children and the parents and providers who care for them deserve systemic solutions to this crisis. Indeed, our
state depends on them.



    Amy Anderson
    Association of Washington Business

    Luc Jasmin (served until Oct. 2022)
    Washington Childcare Centers Association & Parkview Early Learning Center

    Ryan Pricco
    Child Care Aware of Washington




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                             3
Letter from Secretary Ross Hunter
Department of Children, Youth, and Families



                                                     Ross Hunter




2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                 4
2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT   5
Executive summary
The Child Care Collaborative Task Force
The Child Care Collaborative Task Force (task force) is comprised of a broad coalition of child care providers,
parents, advocates, legislators, community members and representatives of the business community. The task
force was created by the Washington State Legislature in 2018 (Chapter 91, Laws of 2018) to develop policy
recommendations to incentivize employer-supported child care and improve child care access and
affordability for employees. Most recently, the Legislature charged the task force with reporting findings and
recommendations on the true cost of quality child care based on a federally approved cost of quality care
study and cost estimation model. The authorizing legislation is as follows:

         Chapter 334, Laws of 2021, ESSB (Engrossed Substitute Senate Bill) 5092, Sec 127 pg 76

         (127) $240,000 of the general fund—state appropriation for fiscal year 2022 and $95,000 of the general
         fund—state appropriation for fiscal year 2023 are provided solely for the department to collaborate with
         the department of children, youth, and families to jointly convene and facilitate a child care
         collaborative task force to continue the work of the task force created in chapter 368, Laws 9 of 2019
         (2SHB 1344) to establish a true cost of quality of child care. The task force shall report its findings and
         recommendations to the governor and the appropriate committees of the legislature by November 1,
         2022.

The authorizing legislation for both the 2019 commencement of the study, and the 2021 directive to complete
the study, after it was paused due to the COVID-19 pandemic, is included in Appendix A.

The cost estimation model and cost of quality care study, developed by Prenatal to Five Fiscal Strategies, may
be found in Appendix E.


Market failures that harm access and sustainability
Child care is not financed as a public good like elementary education and secondary education. In Washington,
and across the country, individual families and child care providers carry the responsibility for financing child
care, except for our state’s child care subsidy program for families with qualifying incomes. Yet the child care
industry is unable to operate like other markets, where costs are set by supply and demand. Licensed child
care programs incur high costs to meet important health and safety licensing requirements, such as teacher-
to-child ratios. Most child care providers simply don’t have stable and sufficient sources of revenue to pay
more than minimal wages. Since 60% to 80% of a provider’s costs go toward wages and providers operate on
razor-thin margins, child care center and family home owners and directors often keep wages low for
themselves and their staff to balance their budgets. 1




1 Child Care Collaborative Task Force Action Plan, June 2021.




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                              6
Child care providers fuel economic growth, but it is frequently at the expense of their own economic security.
Providers rank in the third percentile of occupational wages. 2 The poverty rate for child care providers in
Washington is 17.7%, much higher than for Washington workers in general (8.2%) and 7.9 times as high as for
K-8 teachers (2.3%). In fact, 39% of Washington’s child care providers rely on one or more sources of public
assistance to make ends meet. 3
                                                                            A future with more closures,
The child care market is broken and it is children and parents who          growing child care deserts, and
suffer most as a result. Even before the pandemic, 63% of children          fewer options for families means
from birth through age five in Washington lived in areas with an            greater economic costs for
inadequate supply of child care. 4 For families that can access child       communities everywhere. Learn
care, costs are exorbitant: The cost of full-time child care for an infant  more about the economic
and a child in preschool can equal up to 35% of a two-parent family’s       realities of child care from the
income and up to 150% of a single-parent’s income – well beyond the         Center for American Progress in
federal standard for affordability of 7% of income. 5 The broken child      this video.
care market harms businesses too. Pre-pandemic, employee turnover
and missed work due to child care access issues cost Washington employers an estimated $2.08 billion
annually. 6



The child care crisis in Washington has intensified since the COVID-19 pandemic, with many licensed child
care programs either permanently closed or struggling to stay open, and relief funding is coming to an end.
Since 2020, DCYF has distributed $400 million in emergency stabilization grants for licensed child care
programs, funded through the federal American Rescue Plan Act (ARPA). In Washington, 62,370 child care
slots were maintained through ARPA funds. 7 Unfortunately, the federal Inflation Reduction Act did not include
provisions for additional child care funding, even though the House-passed version of the bill allocated nearly
$400 billion for child care and preschool funding. 8 Many licensed child care programs are experiencing a
funding cliff.


Cost model methodology and functionality
In 2019 9 and again in 2021, 10 the Legislature directed the task force to report on the true cost of quality care
based on a federally approved cost of quality care study and cost estimation model. A cost estimation model
is an Excel-based tool that estimates the per-child costs of operating a child care program. The Legislature
also directed the Department of Children, Youth, and Families (DCYF) to draw from the cost estimation model
to develop a rate setting model for reimbursement rates for the Working Connections Child Care (WCCC)
subsidy program.



2 Economic Policy Institute. The Cost of Child Care in Washington. Washington, DC: Economic Policy Institute, 2019
3 Gould, E., Whitebook, M., Mokhiber, Z., & Austin, L. (2020). Financing Early Educator Quality: A Values- Based Budget for Every State. A

series of state-by-state reports produced by the Economic Policy Institute and University of California Berkeley’s Center for the Study of
Child Care Employment.
4 Child Care Collaborative Task Force Washington Industry Assessment Report, August 2020.
5 Ibid.
6 Washington State Department of Commerce, The Mounting Costs of Child Care. 2019.
7 Julie Kashen and Rasheed Malik, “More than Three Million Child Care Spots Saved by American Rescue Plan Funding,” The Century

Foundation, March 9, 2022.
8 Transformative Investment in Child Care and Pre-K Included in Reconciliation Package.
9 Chapter 368, Laws of 2019
10 Chapter 334, Laws of 2021




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                                                     7
A rate setting model is used to determine reimbursement rates for child care programs accepting WCCC
subsidies. The new cost of quality care rate setting model is meant to replace the current methodology, which
is based on market prices that families can afford rather than on operating costs incurred by child care
providers. In addition to informing DCYF's rate setting model, the cost estimation model allows policymakers
and stakeholders to examine per-child costs and revenue sources to identify sustainable models for
supporting child care programs in Washington.

To develop a cost of quality care estimation model for Washington, a study was designed by Prenatal to Five
Fiscal Strategies (P5FS) (Appendix E). This cost of quality care study centered the experiences of providers.
P5FS used several modes of information gathering and input from providers and stakeholders, including a
provider survey, interviews with providers, and focus groups. Based on the cost of quality care study, P5FS
developed a cost estimation model to help policymakers estimate the costs of operating a child care program.
The cost estimation model is meant to estimate per-child costs; it is not a budgeting tool.

The cost of quality care study and the cost estimation model confirm that current sources of revenue are
insufficient for licensed child care programs, both public and private. Even when estimating the cost of care
using current provider wages (which are overwhelmingly low), subsidy reimbursement rates barely cover the
cost of providing care – in some cases, subsidy rates fall short of actual costs. The cost estimation model
highlights the essential need for public investments in living wages, benefits and activities that support quality
improvement.

Per the Legislature's directive, the task force is pleased to present P5FS's technical report (see Appendix E)
and related recommendations for adopting the cost of quality care estimation model to make child care more
affordable for families and more sustainable for providers.


Recommendations
Per the Legislature's directive, the recommendations in this report are focused on the child care workforce and
are in service of increasing access to affordable, high-quality care for children and families. 11 The task force
discussed the Working Connections Child Care (WCCC) subsidy system as a potential mechanism for
addressing workforce compensation and expanding access for families most in need. However, because only
13% of eligible children from birth through five years currently receive assistance through the WCCC subsidy
program, there are limitations to relying on subsidy rates alone to fix the broken child care market. 12 Ultimately,
the task force adopted the four recommendations below to stabilize the industry — public and private
programs alike — in anticipation of future expansions to WCCC. These synthesized recommendations are
outlined in greater detail in the Recommendations section of this report.

        Recommendation 1: Adopt a WCCC rate setting model in the 2025-27 biennial budget based on the cost
        estimation model and incorporating living wage salaries, benefits, and resources for program
        enhancements that support quality.

        Recommendation 2: Distribute significant relief payments to licensed child care programs serving
        children from birth through age 12 and to individual members of the child care workforce.




11 Child Care Access Strategy and Action Plan
12 Malik, Rasheed. “The Build Back Better Act Substantially Expands Child Care Assistance.” Center for American Progress, December 2,

2021.


 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                                               8
      Recommendation 3: Recommend and develop implementation plans for delivering publicly funded wage
      supplements and benefits to the entire child care workforce in conjunction with the transition to the cost
      of quality care rate setting model.

      Recommendation 4: Create a comprehensive economic development and workforce development
      strategy, including plans for a career pipeline, in partnership with providers, parents, and stakeholders.


The Fair Start for Kids Act
The recommendations in this report are built upon the foundation of Washington's Fair Start for Kids Act
(FSKA), passed in May 2021. The FSKA addresses affordability for families through reduced copayments for
Working Connections Child Care (WCCC) and through expansions to WCCC and the Early Childhood Education
and Assistance Program (ECEAP). The FSKA also increases rates for child care providers. Continued
implementation of the FSKA is essential. These recommendations go beyond the FSKA to address
fundamental market failures that require comprehensive solutions that address child care workforce
recruitment and retention.


Living wages for the child care workforce
The true cost of quality child care includes living wages and benefits for providers. The task force
recommends a living wage floor based on MIT’s Living Wage Model for the workforce, while adjusting for the
additional responsibilities of different staff positions. MIT’s Living Wage Model is an alternative measure of
basic needs. It is a market-based approach that draws upon geographically specific expenditure data related
to a family’s likely minimum costs for food, child care, health insurance, housing, transportation and other
basic necessities. The living wage draws on these cost elements and the rough effects of income and payroll
taxes to determine the minimum earnings necessary to meet a family’s basic needs while maintaining self-
sufficiency. A table comparing living wages and current wages for child care providers is in the methodology
and functionality section of this report.

Without intervention, the child care industry will continue to fall short of meeting the demand for affordable
quality care and early childhood education. It is a precarious and unstable situation that needs and deserves to
be addressed — for the sake of children and families, and the workforce that cares for them. The task force
urges policymakers to consider significant public investments in the child care market beyond the subsidy
system to make child care affordable for families and sustainable for providers.




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                                9
Introduction
The Child Care Collaborative Task Force (task force) comprises a broad coalition of child care providers,
advocates, legislators, community members and representatives of the business community. The task force
was created by the Washington State Legislature in 2018 (Chapter 91, Laws of 2018) to develop policy
recommendations to incentivize employer-supported child care and improve child care access and
affordability for employees. Legislation passed in 2019 (Chapter 368, Laws of 2019) extended the task force
and expanded its scope of work. This report was produced to satisfy the portion of the requirements of
Chapter 368, Laws of 2019 and Chapter 334, Laws of 2021 (the biennial operating budget). The full citation is
available in Appendix A.

This report draws significantly on the Prenatal to Five Fiscal Strategies' (P5FS) October 2022 report,
"Understanding the true cost of child care in Washington state: A cost estimation model to inform policy
change" (Appendix E) and builds on four years of previous task force research and recommendations,
including the June 2021 report, "Washington State Child Care Access Strategy and Action Plan." The 2021
report called for broad change to support child care as an essential infrastructure critical to rebuilding
Washington's economy. Task force reports to the Legislature between 2018 and 2022 include:

   •   Report #1, Nov. 1, 2019: Policy recommendations to incentivize employer-supported child care and
       improve access and affordability for employees.
   •   Report #2, July 1, 2020: Child care industry assessment and facility needs assessment, including
       results from the State Employee Child Care Access Survey.
   •   Report #3: Dec. 1, 2020: Child care cost estimation model and workforce and subsidy
       recommendations.
   •   Report #4, June 30, 2021: Child care access strategy: A strategy, timeline and implementation plan to
       reach accessible, affordable child care by 2025.
   •   Report #5 (this report), December 2022: Report findings and recommendations on the true cost of
       quality child care in Washington.

An additional report, "The Mounting Costs of Child Care," was published in 2019 by several task force partner
organizations, including the Washington State Department of Commerce, U.S. Chamber of Commerce
Foundation, Association of Washington Business, Child Care Aware of Washington, and the Children's Alliance.
This report was not submitted to or directed by the Legislature. It served to inform this report and the work of
the task force.

Over the past four years, the Department of Commerce has collaborated with the Department of Children,
Youth, and Families (DCYF) to convene the task force and establish research and policy recommendations.
This work informed recent policy changes and investments in early learning, including Washington's Fair Start
for Kids Act (FSKA), passed in 2021. The FSKA doubled Washington's investments in child care and early
learning, primarily by expanding eligibility and increasing rates for the Working Connections Child Care (WCCC)
program and the Early Childhood Education and Assistance Program (ECEAP).

Implementation of the FSKA coincided with the COVID-19 pandemic and has been an essential lifeline for
many families and providers. However, the pandemic amplified major issues that already existed in the child
care industry and remain largely unaddressed in the FSKA. These include inadequate compensation and
support for the child care workforce, which is disproportionately comprised of low-income women of color,




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                          10
enormous gaps in access to affordable child care, and the outsized burden that remains on women to fill the
unpaid role of caring for children at home. 13

In response to the immediate crisis of COVID-19, DCYF distributed $400 million in stabilization grants funded
through the federal American Rescue Plan Act (ARPA) to licensed child care programs. These emergency relief
funds kept many child care businesses afloat during the pandemic. In Washington, 62,370 child care slots
were maintained through ARPA funds. Of providers who received ARPA stabilization grants nationally: 14

    •   92% said the funding helped them stay open
    •   46% used the funds to pay debts taken on during the pandemic, including 63% of those in family homes
    •   75% used the funds for compensation, but still struggle to provide competitive wages and benefits to
        attract and retain staff

Stabilization grants demonstrated that public funding can help licensed child care programs stay open, but the
grants have concluded and were intended to provide short-term relief rather than address this industry's
systemic challenges. Emergency funding, and the commitment and resourcefulness of child care providers,
helped the child care sector persevere through the initial stage of the public health emergency.

Licensed child care programs face significant challenges recruiting, retaining and supporting staff in a tight
labor market amid rising inflation and competition from retail, hospitality and service sectors that offer higher
wages and benefits. Nationally, the child care workforce's August 2022 level was 8.4% below its employment
levels in February 2020, with 88,300 child care jobs lost. 15 Child care providers, despite having specialized
expertise and training, can frequently earn higher wages and receive better benefits at big box retailers and
fast-food restaurants than they can educating our children.

Even before COVID-19, Washington was short thousands of child care openings: The task force’s 2021 industry
assessment revealed that 63% of children lived in areas with inadequate supplies of licensed child care. 16 The
task force’s 2019 “Mounting Costs of Child Care” analysis estimated that, due to child care issues, 27% of
Washington parents with young children reduced to part-time work hours and 18% quit. The collective impacts
of child care shortages are staggering:

    •   Pre-pandemic, employee turnover and missed work due to child care access issues cost Washington
        employers an estimated $2.08 billion annually.
    •   Including missed opportunities for businesses and consumer spending, Washington’s economy loses
        an estimated $6.5 billion annually because of child care shortages.
    •   Lack of access to affordable child care leads to working parents in Washington foregoing $14 billion
        in lost wages each year. 17
    •   In a January 2022 survey, 71% of parents reported that difficulty finding child care affected their
        ability to work. 18




13 Child Care Collaborative Task Force Washington Industry Assessment Report, August 2020
14 Julie Kashen and Rasheed Malik, “More than three million child care spots saved by American Rescue Plan Funding,” The Century

Foundation, March 9, 2022.
15 Maureen Coffey and Rose Khattar, “The Child Care Sector Will Continue to Struggle Hiring Staff Unless It Creates Good Jobs” Center

for American Progress, September 2, 2022.
16 C3TF, Child Care Access Strategy, June 202.
17 Washington State Department of Commerce, The Mounting Costs of Child Care. 2019.
18 Rapid-EC Survey, March 2022




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                                              11
    •    A family with two young children in Washington currently spends about 35.5% of its income to send
         two children to child care. 19

Fortunately, the cost of quality care estimation model is a timely tool that can help stabilize and grow
Washington's child care system through significant public investments. The task force is pleased to submit the
enclosed recommendations to the Legislature. Together with the cost estimation model, these
recommendations present a plan for addressing child care workforce recruitment and retention in service of
increasing access, affordability, and quality for children and families. Without intervention, the child care
market will continue to fall short of meeting demand. It is a precarious and unstable situation that needs and
deserves to be addressed — for the sake of our children, families, and economy.




19 Economic Policy Institute. Child Care Costs in the U.S., Washington




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                       12
Guidance for readers of this report
The cost of quality care estimation model is customized for Washington and is based on financial data
collected through provider interviews, focus groups and surveys. This study was conducted with advisory
support from an ad hoc provider workgroup. During a series of meetings, the work group shared its hopes and
fears related to implementation of future policy changes, including changes related to the cost of quality care
estimation model. The perspectives of providers informed the following guidance for readers, with the goal of
clarifying intentions, maximizing impacts and preventing unintended harm:


 This report is intended to:                                           This report is not intended to:
      •   Recognize providers for the work they are already
          doing by subsidizing existing costs
      •   Identify the true cost of high-quality child care
      •   Communicate the urgent need for increased                       •   Create unfunded mandates for licensed providers
          wages and benefits for members of the child care                •   Require additional training, education, work
          workforce                                                           experience and/or credentials
      •   Honor teacher training, education, work                         •   Create new or additional licensing or quality
          experience, and/or credentials through increased                    standards for providers
          compensation and supports                                       •   Inform the subsidy rate to cover the full cost of
      •   Ensure subsidy rates cover the full cost of child                   child care for 2022-24
          care by 2025, including living wages, benefits, and
          program enhancements to help meet Early
          Achievers quality standards



The ad hoc provider workgroup shared concerns about the potential for early educators to be left out of
opportunities for increased compensation or professional growth. Pushes for traditional measures of quality in
the early care and education field have sometimes led to increased requirements for providers without
sufficient supports. Early educators can face barriers to continued education and training, such as limited
language options for coursework, a lack of course offerings during non-traditional hours, lack of substitute
coverage, and low compensation that does not make the cost of tuition a viable investment. 20 Unfunded
mandates could result in negative equity implications in the early child care workforce.




20 Metivier, K. (2020). Envisioning Higher Education as Anti-Racist.




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                                        13
Task force recommendations
The New York Times recently reported on the child care crisis with a frighteningly succinct headline: “Why You
Can’t Find Child Care: 100,000 Workers Are Missing.” The sub-headline is "Where did they go? To better-paying
jobs stocking shelves, cleaning offices, or doing anything that pays more than $15 an hour." In contrast to
private sector employment, which has stabilized, the Times reveals that the national child care sector is 9.7%
smaller than it was in February 2020.

This report offers a comprehensive set of urgently needed actions to ensure that the state stabilizes and
expands the child care industry and workforce. The cost of quality care estimation model highlights the
limitations of relying on subsidy rates alone to fix the broken child care market. To qualify for assistance
through Working Connections Child Care (WCCC), families must earn less than 60% of the state median
income, or around $67,000 for a family of four. 21 Even when families do qualify, the most recent data available
estimates that only 13% of eligible children from birth through age five actually received assistance through
the subsidy program in Washington. 22 Task force discussions confirmed that solutions to workforce
compensation should include public and private programs alike.

In 2019 23 and again in 2021, 24 the Legislature directed the task force to report on the true cost of quality care
based on a federally approved cost of quality care study and cost estimation model. The Washington cost
estimation model is an Excel-based tool that estimates the per-child costs of operating a child care program.
The estimation model is a tool that can estimate the fiscal impacts of policy and budget changes. It can be
used to inform short- and long-term fiscal planning, including revenue-generation planning. 25 The
recommendations that follow leverage the cost estimation model as an essential tool for addressing
workforce recruitment and retention.


Cost of Care Study recommendations
Recommendation 1: Adopt a WCCC rate-setting model in the 2025-27 biennial budget
based on the cost of care estimation model and incorporating living wage salaries,
benefits, and resources for program enhancements that support quality.
The task force recommends using MIT’s Living Wage model, which estimates the cost of living in a region
based on typical family expenses, to establish a wage floor and salary scale that adjusts for the additional
responsibilities of different early childhood education staff positions. WCCC rate setting should include costs
for program enhancements that support quality, such as parent-teacher conferences, family engagement
specialists, substitutes to cover planning time and training, child assessment tools, and curriculum support.

Increasing the subsidy rate alone will not stabilize child care in Washington. Only one third of providers in
Washington currently accept subsidies, and just 20% of all licensed child care slots are funded through WCCC.
Further, it is possible that significantly raising subsidy rates to cover the cost of quality care will put pressure
on providers to increase their private pay rates, making care even less affordable for private pay families. For



21 DCYF: Basic Eligibility Requirements for Child Care Subsidy (PDF).
22 Malik, Rasheed. “The Build Back Better Act Substantially Expands Child Care Assistance.” Center for American Progress, December 2,

2021.
23 Chapter 368, Laws of 2019
24 Chapter 334, Laws of 2021
25 Jeanna Capito, Katie Fallin Kenyon, and Simon Workman, “Understanding the True Cost of Child Care in California: Building a cost

model to inform policy change,” Prenatal to Five Fiscal Strategies, 2022.


 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                                               14
parents currently billed private-pay tuition rates, the cost of child care is already a disproportionate burden: A
family in Washington currently spends about 35.5% of its income to send two children to child care — well
beyond the federal standard of affordability of 7% of income for a comparable family. 26 The task force
recommends further analysis to identify effective mechanisms to raise wages for all child care workers, to be
implemented in parallel to the subsidy rate increase. See recommendations number 2 and number 3, below.

Recommendation 2: Distribute significant relief payments to licensed child care
programs serving children from birth through age 12 and to individual members of
the child care workforce.
    Relief payments should be available in FY 2023 through FY 2025, or until implementation of a wage
    supplement system for the entire child care workforce occurs (see Recommendation 3).

Stabilization grants were a temporary fix applied to a long-term structural issue. Washington must act now to
address this funding disparity. In Washington, stabilization grants funded through American Rescue Plan Act
(ARPA) kept many businesses afloat during the pandemic. 27 Before stabilization grants, DCYF provided three
rounds of COVID-19 grants using stimulus funds. DCYF also used stimulus funds to expand eligibility for child
care subsidies, reduce subsidy co-pays and increase subsidy base rates. All stimulus funds are now either
spent or dedicated to initiatives underway.

The task force recognizes what P5FS notes: That the pandemic affected all parts of the system, not just
publicly funded programs, and that child care plays a vital role in the economy. Washington can build upon the
approaches used in other states to supplement provider wages. States such as Alabama used ARPA funds to
pay child care staff up to $3,000 in quarterly bonus payments, and the District of Columbia recently announced
a plan for short-term direct payments of $10,000 to $14,000 until a long-term payment mechanism can be
identified and implemented. Policymakers should also consider strategies for retaining Early Achievers
coaches, who are a fundamental part of Washington’s quality system.

Recommendation 3: Recommend and develop implementation plans for delivering
publicly funded wage supplements and benefits to the child care workforce in
conjunction with the transition to the cost of quality care rate setting model.
    In the 2023-25 biennial budget, the Legislature should provide funding for the DCYF to develop
    recommendations and implementation plans to deliver wage supplements and benefits to the child care
    workforce, all in partnership with providers, parents, and stakeholders.
    By Dec. 1, 2023, DCYF should submit an interim progress report to the Office of the Governor and the
    Legislature.
    By Sept. 1, 2024, DCYF should submit recommendations and implementation plans to the Office of the
    Governor and the Legislature.

As noted in recommendation 1, it is possible that significantly raising subsidy rates to cover the cost of quality
care without simultaneously increasing wages for all child care workers will put pressure on private-pay
providers to increase their rates, thus making care even less affordable for private-pay families. Raising
subsidy rates alone could also disrupt the private market by causing providers who do not currently accept
subsidies to lose staff to programs who can offer higher subsidized wages. To avoid these potential



26 Economic Policy Institute. Child Care Costs in the U.S., Washington
27 Julie Kashen and Rasheed Malik, “More than Three Million Child Care Spots Saved by American Rescue Plan Funding,” The Century

Foundation, March 9, 2022.


 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                                           15
unintended consequences and to stabilize and support the child care industry, the task force recommends
that the licensed child care workforce — regardless of whether they serve subsidized children — make at
least a living wage and benefits, supplemented by public funds beyond the subsidy system.

Recommendations on payment mechanisms for wage supplements should include:
   • Examples of mechanisms used for similar purposes by other countries, states, and/or municipalities.
   • Analysis of intersections between the subsidized and private-pay child care markets and
     recommendations for sequencing implementation of wage supplements to avoid disruption to families
     accessing care through either market.
   • Accountability measures for ensuring responsible and effective stewardship of public funds that make
     sure dollars go toward increased wages and benefits for early care and school age educators, with the
     ultimate goal to improve access to child care for children and families.
   • Examples of industries in Washington, and/or other states, that received public funds to supplement
     the wages of employees directly or indirectly, and relevant lessons learned.
   • Strategies for streamlined reporting, public transparency and course correction to improve program
     performance.
   • Recommendations regarding requirements for receiving wage supplements at each licensed early
     childhood education job position within centers and family homes, for school age child care positions,
     and for full-time and part-time workers.
   • Data and technology infrastructure required to track payments effectively.
   • Implications of wage supplements and benefits on eligibility for public benefit programs.
   • Estimates of the total cost to implement publicly funded wage supplements.

Recommendation 4: Create a comprehensive economic development and workforce
development framework for the child care sector in partnership with providers,
parents, and stakeholders.
   In the 2023-25 biennial budget, the Legislature should provide funding for the Department of Commerce
   to work in partnership with DCYF, the Washington Workforce Training and Education Coordinating Board,
   and providers, parents, and stakeholders to develop a comprehensive strategic plan for supporting the
   growth and sustainability of the child care workforce and sector into the future, as an essential sector in
   our state's economy. This will include strategies for ensuring a continuing pipeline of trained child care
   professionals into the future.
   By Dec. 1, 2023, the Department of Commerce should submit a coordinated strategic plan to the Office of
   the Governor and the Legislature.

Child care providers are professionals, and they are best situated to identify challenges and develop solutions
as a self-governing group. Commerce should consult and collaborate with providers to understand the
approaches and strategies most supportive to sustaining the field. Commerce should also partner with entities
that are already providing business supports, such as shared services models and employer-supported care.




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                        16
Methodology and functionality
Background on rate setting methodologies
The prevailing method for setting reimbursement rates for child care subsidy programs under the federal Child
Care and Development Fund (CCDF) is through a market rate approach. This approach, which is currently used
to set Working Connections Child Care (WCCC) subsidy rates, relies on a study of market prices for child care
through a market rate survey. States are required to conduct
market rate surveys every three years and are encouraged to
set rates at a level that provides for equal access to the market "Understanding the true cost of child care
for families using subsidy and those paying full tuition (see     in Washington State" defines these terms:
                                                                  Price of care means the tuition prices that
"Understanding the true cost of child care in Washington state"
                                                                  programs set, which are usually based on local
for more information on equal access).
                                                                                 market conditions and what families can afford,
                                                                                 ensuring that programs are competitive within
Market rate setting methodologies negatively affect
                                                                                 their local market and can operate at as close
communities with high concentrations of families with low                        to full enrollment as possible.
incomes because rates are based on what families can afford
rather than the true cost of care. They can also disincentivize                  Cost of care means the actual expenses
licensed programs from serving children who need specialized                     providers incur to operate their program,
                                                                                 including any in-kind contributions such as
care. For example, a provider might be able to affordably
                                                                                 reduced rent. It includes allocating expenses
provide care for preschool-age children, but if that same
                                                                                 across classrooms and enrolled children based
program serves infants and toddlers, or meets higher program                     on the cost of providing service, not on what
standards, it would operate at a deficit.                                        parents can afford.

As explained in "Understanding the true cost of child care in                    Cost of quality care means the true cost of
Washington State," since the 2014 reauthorization of the Child                   care. It refers to the cost of operating a high-
Care Development Block Grant, which funds CCDF, states can                       quality program with the staff and materials
                                                                                 needed to meet quality standards and provide a
use an "alternative methodology" to set rates. This alternative
                                                                                 developmentally appropriate learning
methodology can take the form of a cost study or a cost
                                                                                 environment for all children. It includes
estimation model:                                                                adequate compensation, wages and benefits to
                                                                                 recruit and retain a professional and stable
    A cost study involves collecting data from providers about                   workforce.
    their operating costs for a program that meets licensing
    standards and other quality standards, reflecting point-in-
    time data about provider costs.
    A cost estimation model is a tool that can estimate the fiscal impact(s) of policy and budget changes. It
    can be used to inform short- and long-term fiscal planning, including revenue-generation planning. 28

Washington cost of quality care study
Prenatal to 5 Fiscal Strategies (P5FS) designed and conducted a study to develop a cost estimation model for
Washington. This cost of quality care study centered the experiences of providers. As indicated in Figure 1
(cost estimation model constituent input), P5FS used several modes of information gathering and input from
providers and stakeholders, including a provider survey, interviews with providers, and focus groups. For more
information on methodology for the cost model analysis, see the full technical report "Understanding the true



28 Jeanna Capito, Katie Fallin Kenyon, and Simon Workman, “Understanding the True Cost of Child Care in California: Building a cost

model to inform policy change,” Prenatal to Five Fiscal Strategies, 2022.


 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                                               17
cost of child care in Washington State." In addition to the leadership of the task force, an ad hoc provider work
group gave more detailed input on the study and model development. The ad hoc workgroup included family
child care (FCC) providers, center based providers, providers in urban and rural areas, for-profit and not-for-
profit programs, and programs serving children of different ages. Child care providers were compensated for
their time and expertise.

Figure 1: Cost estimation model constituent input

                                           Program Survey      Program Interviews




                     Child Care Provider
                                                                                    FCC Focus Groups
                         Workgroup




                  Child Care                                                               Project Leadership
                                                     Cost Estimation
              Collaborative Task                                                         (C3TF, DCYF, DEEL, BSK
                    Force                                Model                                King County)




Washington cost estimation model
As part of the "Understanding the true cost of child care in Washington state" (Appendix E) study, P5FS
developed a cost estimation model to help policymakers estimate the costs of operating a child care program.
At its core, the model estimates what it would cost per child to operate a program meeting a set of
characteristics, regardless of who is paying for that care. Whether a child care seat is filled by a child whose
parents are paying full tuition or by a child whose family qualifies for the WCCC subsidy program, the provider
still needs to generate a set amount of revenue to cover costs. The cost estimation model is not a budgeting
tool; it is meant to estimate per-child costs. The task force considers living wages and benefits for child care
providers as an essential part of the cost of quality care and recommends adoption of this tool.

Cost estimation model functionality
The task force recommends that the child care workforce earn living wages, as calculated using the MIT Living
Wage Calculator, and benefits. However, the cost estimation model can be used to consider additional wage
and benefits scenarios, including:

   Current salaries from the cost of care survey.
   Compensation Technical Work Group salary scale. This salary scale was developed in 2019 by the
   legislatively created work group. The scale has a range for each position, based on educational attainment
   and credentials. The cost model uses the midpoint of the range.




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                               18
    Kindergarten teacher salaries. This option uses data from the Bureau of Labor Statistics on kindergarten
    teacher salaries across the state. Total annual salaries are used, not adjusted to account for the length of
    the child care year versus the school year.
    MIT Living Wage Calculator. This option uses workforce demographic data on family compensation to
    establish the living wage base for the teacher assistant position. Other positions in the model are adjusted
    to account for additional responsibilities of those staff. Living wage data from MIT is used for each county
    and aggregated metropolitan statistical area to create a regional living wage for use in the model. 29
    User input, which requires completion of wage data for each position.

For more detail on the components of the model that affect the cost of care, see the full technical report in
Appendix E.

Mandatory and discretionary benefits
According to the Prenatal to 5 Fiscal Strategies report, mandatory benefits are included for all salaried staff as
part of the cost estimation model, including FICA-Social Security at 6.2%, Medicare at 1.45%, unemployment
insurance at 1% and workers’ compensation at 2%. By default, 10 days paid sick leave and 10 days paid leave
is included for all staff. This is captured as an expense by including the cost to pay a substitute teacher to
provide classroom coverage.

Discretionary benefits can be included at either $6,000 or $9,000 per employee per year. This might be used as
a contribution to health insurance or for a suite of discretionary benefits. Data from the Kaiser Family
Foundation finds that the average annual single premium employer contribution to health insurance in
Washington is $6,305. A contribution to retirement can also be modified by the user, based on a percentage of
an employee’s salary. By default, the model includes a 6% contribution. 30

The cost scenarios were built using these defaults:
1) Program size: The default program sizes used in this section of the report are based on analysis of data
   from the child care provider survey and input from the ad hoc provider workgroup.

2) Benefits: The default scenario includes $6,000 per employee in discretionary benefits and a 6%
   contribution to health insurance, as well as 10 days paid sick leave and 10 days paid vacation. All results
   are shown as an annual cost per child for each of the seven regions and as a statewide average. 31




29 Family composition of teacher assistants was not available in Washington, so the study team used data recently collected in the

California ECE Workforce Study as a proxy.
30 Jeanna Capito and Simon Workman, Understanding the True Cost of Child Care in Washington State: A cost estimation model to

inform policy change, Prenatal to Five Fiscal Strategies, 2022.
31 Ibid.




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                                                  19
MIT's Living Wage Model
The Child Care Collaborative Task Force recommends setting a living wage floor based on MIT’s Living Wage Model for
every member of the workforce while adjusting for the additional responsibilities of different staff positions. MIT’s Living
Wage Model is an alternative measure of basic needs. It is a market-based approach that draws upon geographically
specific expenditure data related to a family’s likely costs for minimum food, child care, health insurance, housing,
transportation and other basic necessities. The living wage draws on these cost elements and the rough effects of
income and payroll taxes to determine the minimum earnings necessary to meet a family’s basic needs while
maintaining self-sufficiency.

    Salary scales in model (centers)             Current salaries                     MIT living wage salaries

    Program director                             $35,265 - $40,569                    $85,245 - $106,257

    Assistant director                           $31,449 - $36,512                    $70,451 - $87,816


    Administrative assistant                     $30,139 - $34,715                    $44,420 - $55,369


    Lead teacher                                 $31,302 - $37,261                    $57,746 - $71,980


    Assistant teacher                            $26,040 - $29,126                    $44,420 - $55,369


    Aide/floater                                 $19,781 - $26,597                    $44,420 - $55,369



    Salary scales in model (family
    homes)                                       Current salaries                     MIT living wage salaries

    Family child care provider/owner             $34,427 - $58,042                    $73,702 - $91,695


    Family child care assistant teacher          $26,040 - $29,126                    $44,420 - $55,369



Ranges indicate variation across regions. Living wage data from the MIT Living Wage calculator is calculated based on
simulated family size of assistant teacher or FCC providers, and is adjusted for other positions to account for additional
responsibilities.




2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                                      20
Program enhancements that support quality
Beyond meeting base licensing standards, the model also integrates several additional program
enhancements so users can estimate the additional cost of providing high-quality care. These selections can
be used to estimate the cost of meeting different levels of Early Achievers, Washington's Quality Rating and
Improvement System. Figure 2 highlights the increased costs associated with meeting higher levers of Early
Achievers and the P5FS technical report provides additional details of these values.

Figure 2: Per-child costs of providing child care at licensing, Early Achievers Level 3
and Early Achievers Level 5




Primary sources of program revenue
The model includes revenue data for the purpose of understanding the sufficiency of current revenue streams
to support the cost of quality care. The following revenue data from P5FS's report is included, allowing users to
compare estimated costs to potential revenue: 32

Child Care Subsidy – federal Child Care and Development Block Grant funding
Working Connections Child Care (WCCC) subsidy rate data is used for both center and home-based settings,
and includes quality differentials for Early Achievers levels. The model uses the most recently implemented
market rates as of August 2022, which are based on the 85th percentile of the 2018 market rate survey.
Because the WCCC subsidy regions are different from the Child Care Aware of Washington regions used for
the cost analysis, users must select which subsidy region to use for comparing cost to subsidy rates. Users
can also choose an Early Achievers level to include the higher WCCC rates for programs that have reached
different Early Achievers levels.



32 Ibid.




  2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                         21
Private tuition
Tuition data is included in the model based on the 2021 market rate study. The model uses the 85th percentile
of the market rate as the tuition amount to align with DCYF-set WCCC subsidy rates. Users must select which
market region to use for comparing cost to market tuition, given that the market rate study regions are
different from the Child Care Aware of Washington regions used for the cost analysis.

Child and Adult Care Food Program
The cost estimation model accounts for revenue from the federal Child and Adult Care Food Program
(CACFP). The federal food program reimburses providers for meals served to children, with different rates
based on family eligibility. The most recent CACFP rates are included, and the model assumes that all children
eligible for a subsidy are also eligible for CACFP.

Even with low provider wages, WCCC reimbursement rates fall short
As part of the cost of quality care study, P5FS analyzed current costs — including current provider wages,
which we know to be insufficient — to provide a baseline against which to measure proposed policy changes.
Table 1 details average current salaries for child care providers by role and region for child care centers and
family child care homes. P5FS's report notes that current WCCC subsidy rates throughout the technical report
are based on market rate data from 2018. Data from the 2021 market rate study are available, though at the
release of this report reimbursement rates were not calculated using the updated rate study.

Table 1: Current child care provider salaries based on survey data

                   Central        Eastern         King &          Northwest       Olympic         Southwest
                   Wash.          Wash.           Pierce          Wash.           Peninsula       Wash.

 Program
                   $35,265        $34,944         $40,569         $40,035         $35,626         $37,503
 Director

 Assistant
                   $31,738        $31,449         $36,512         $36,032         $32,063         $33,752
 Director

 Admin.
                   $30,139        $30,139         $34,175         $30,139         $30,139         $30,139
 Assistant

 Lead Teacher      $32,550        $32,552         $37,261         $36,252         $31,302         $33,210

 Assistant
                   $28,579        $28,451         $29,126         $27,772         $26,040         $26,780
 Teacher

 Aide/Floater      $22,616        $26,597         $26,342         $23,656         $19,781         $20,625

 FCC
                   $58,043        $32,493         $42,462         $36,079         $40,789         $34,427
 Provider/Owner

 FCC Assistant
                   $28,579        $28,451         $29,126         $27,772         $26,040         $26,780
 Teacher
Source: P5FS cost of quality survey, administered March–April 2022.



 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                         22
The true cost of quality care requires investments for living wages
The task force sees living wages, benefits and program enhancements as essential components of the true
cost of quality child care. Table 2 estimates living wages using MIT's Living Wage Model for child care
providers by role and region for child care centers and family child care homes.

Table 2: MIT Living Wage salaries for child care providers

                  Central        Eastern         King &         Northwest    Olympic        Southwest
                  Wash.          Wash.           Pierce         Wash.        Peninsula      Wash.

 Program
                  $85,245        $86,041         $106,257       $96,248      $91,075        $90,857
 Director

 Assistant
                  $70,451        $71,108         $87,816        $79,544      $75,268        $75,088
 Director

 Admin.
                  $44,420        $44,835         $55,369        $50,154      $47,458        $47,344
 Assistant

 Lead Teacher     $57,746        $58,286         $71,980        $65,200      $61,695        $61,548

 Assistant
                  $44,420        $44,835         $55,369        $50,154      $47,458        $47,344
 Teacher

 Aide/Floater     $44,420        $44,835         $55,369        $50,154      $47,458        $47,344

 FCC
                  $73,702        $75,164         $91,695        $84,133      $78,881        $78,995
 Provider/Owner
Source: P5FS cost of quality survey, administered March–April 2022




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                   23
Figures 3 and 4 illustrate the gap between the true cost of quality child care — including living wages and
benefits — and current WCCC subsidy rates for center-based programs first and family child care programs
second.

Figure 3: Annual cost per child with living wage salaries and benefits compared with
WCCC base subsidy rate, child care center, statewide average




Figure 4: Annual cost per child with living wage salaries and benefits compared with
WCCC base subsidy rate, family child care, statewide average




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                           24
Management, transparency and updates to the cost
model
The task force recommends that DCYF manage and own the child care cost estimation model because it is
being used to inform subsidy rate setting. The tool can and should be updated by the model owners as
program requirements change and as additional workforce data is available. This will ensure that the model
outputs continue to reflect the true cost of child care. The living wage compensation data should be refreshed
at least annually, and WCCC rates based on the data refresh schedule according to the Child Care
Development Block Grant (CCDBG). Data updates will be reported to existing oversight committees for DCYF,
including the Early Learning Advisory Council (ELAC).

To provide accessibility and transparency to the child care cost estimation model, DCYF should provide links to
the Center and Family Child Care Cost Estimation Excel tools on its website. The website links will allow users
to download the Excel spreadsheet and input information on center or family home “profiles” (such as number
of classrooms), as well as certain variables and scenarios for that provider (such as number of children on
subsidy, benefits offered, salaries and others), along with a description of the child care cost estimation model
analysis. To prevent user error with the Excel-based tool, the underlying data that drives the model should not
be made visible, and only the owners of the model should be able to update this data.




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                          25
Conclusion
Parents, providers, and employers have long known that high-quality child care is essential. During the COVID-
19 pandemic and in these early stages of recovery, it is increasingly apparent that child care isn’t only essential
for parents, providers and employers — it is essential for our entire state. Since 2018, The Child Care
Collaborative Task Force has examined the child care system in Washington and advocated for policy changes
to make child care more accessible and more affordable for families and more sustainable for providers. We
recognize that child care is an essential industry that supports other sectors to keep our society and economy
functioning.

The cost of quality care estimation model, developed at the request of the Washington State Legislature,
makes it possible for policymakers and administrators to better understand and address significant gaps in
public funding for child care. The COVID-19 pandemic has made it clear that providers and parents cannot
continue bearing the burden of a failed market system alone. Especially in the absence of federal solutions, the
stakes for inaction here in Washington are too high.

These recommendations build on the critical foundation of the Fair Start for Kids Act (FSKA), passed in May
2021, which improves access and affordability for working families through the Working Connections Child
Care (WCCC) subsidy program. However, even with passage of FSKA, most Washington parents remain solely
responsible for child care expenses. Only 13% of eligible children from birth through age five currently receive
assistance through the subsidy program in Washington. 33 The task force identified a gap in policy and budget
solutions that address public and private licensed child care programs and discussed the importance of
stabilizing both markets to ensure access for families.

The urgency to act begins with the health and well-being of children and working families, but it does not stop
there. Child care is an essential industry that supports other sectors and keeps our economy functioning.
Washington’s recovery from the COVID-19 pandemic is jeopardized by the child care workforce shortage.

Even without access to affordable health care coverage, early vaccinations and personal protective equipment,
the child care workforce showed up for families and employers of essential workers during the COVID-19
crisis. When school buildings closed, child care programs remained open and even pushed the limits of their
budgets to make space for additional children. Parents are stretched thin, too. The cost of full-time child care
for an infant and a child in preschool can equal up to 35% of a two-parent family’s income and up to 150% of a
single-parent’s income – well beyond the federal standard for affordability of 7% of income. 34

The task force recommends adoption of a cost of quality child care estimation model that incorporates living
wages, benefits, and program enhancements that support quality. Without intervention, the child care industry
will continue to fall short of meeting the demand for affordable quality care and early childhood education. It
is a precarious and unstable situation that needs and deserves to be addressed — for the sake of children
and families and the workforce that cares for them.




33 Malik, Rasheed. “The Build Back Better Act Substantially Expands Child Care Assistance.” Center for American Progress, December 2,

2021.
34 Ibid.




  2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                                            26
Appendix A: Authorizing legislation
In 2019, the legislature directed that a cost of care study be undertaken by the task force. The study was
started but was not able to be completed due to the COVID-19 pandemic. In 2021, the legislature directed that
the study recommence. The two legislative directives are listed below.



2019 legislative directive
RCW 43.330.527 (Chapter 368, Laws of 2019), the authorizing legislation for this report, states:

3) 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:

            (1) Regional differences;

            (2) Employee salaries and benefits;

            (3) Enrollment levels;

            (4) Facility costs; and

            (5) 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;


 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                           27
       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;

       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:

           (1) Families enrolled in the early childhood education and assistance program;

           (2) Underserved geographic communities;

           (3) Underserved ethnic or linguistic communities;

           (4) Underserved age groups such as infants and toddlers; and

           (5) Populations with specialized health or educational needs

               While the task force commenced work on the cost of care study in 2019 as directed, the study
               had to be paused after the onset of the Covid-19 pandemic in Washington. The study required
               engagement of and participation from child care providers during a time of upheaval and
               uncertainty as providers faced the rapidly changing conditions that came with navigating the
               challenges of continuing to provide care. It was not possible to complete the study at that time.
               In 2021, the legislature directed the task force to complete the study.

2021 legislative directive
        Chapter 334, Laws of 2021, ESSB (Engrossed Substitute Senate Bill) 5092, Sec 127 pg 76
       (127) $240,000 of the general fund—state appropriation for fiscal year 2022 and $95,000 of the
       general fund—state appropriation for fiscal year 2023 are provided solely for the department to
       collaborate with the department of children, youth, and families to jointly convene and facilitate
       a child care collaborative task force to continue the work of the task force created in chapter
       368, Laws 9 of 2019 (2SHB 1344) to establish a true cost of quality of child care. The task
       force shall report its findings and recommendations to the governor and the appropriate
       committees of the legislature by November 1, 2022.


 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                             28
Appendix B: Glossary
Words like “compensation,” “parity,” and “living wage” are used in this report to describe salaries and benefits
in early care and education. 35 Clarification on these terms, and other key terms used in this report, are below:

Compensation: “A term used to encompass the entire range of wages and benefits, both current and deferred,
that employees receive in return for their work,” as defined by the Bureau of Labor Statistics.

Living wage: Typically refers to a minimum threshold for affording basic necessities, which varies by
household type and local cost of living. A living wage calculator for various geographies was developed by the
Massachusetts Institute of Technology (MIT) and is used in this report.

Compensation parity: The state or condition of being equal, especially regarding status or pay. For child care
and early learning, it typically refers to comparability between early educator pay and K-3 teacher pay.

Compensation strategy/initiatives: Initiatives that increase workers’ base annual salaries or hourly wages
and/or provide benefits such as health insurance or retirement plans.

Wage supplements: Funds that employees receive in addition to their regular wages.

Financial relief initiatives: Initiatives that provide additional income or financial relief outside a worker’s wages
and benefits, based on eligibility, such as stipends or tax credits.

Stipend: A stipend refers to a supplemental or non-wage cash award that an educator may receive more than
once (such as every six months or every year), often intended to support retention.

Bonus: A bonus refers to a cash award provided as a one-off recognition of a particular educational
achievement (such as completion of a degree or credential).

Early childhood education, also referred to as early care and education: Typically refers to care and education
for children from birth through age five.

Family child care (FCC): A form of early childhood education in which a caregiver looks after children in their
own home.

School-age child care: Typically refers to care provided during the before- and after-school hours for children
ages 5-12. Programs may also offer care during school holidays and summer breaks. Some family child care
providers and child care centers offer school-age care in addition to early care and education, while other
programs offer school-age care only.




35 Center for the Study of Child Care Employment 2020 Workforce Index.




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                              29
Appendix C: Early Educator Design Team
The Early Educator Design Team, supported by Child Care Aware of Washington and its partners, is a
workgroup comprising 34 child care providers, families, and advocates. The design team has unified around a
Liberatory Design Process 36 to identify scalable policy solutions, inclusive of the recommendations in this
report, for stabilizing and growing the child care workforce. Design team participants were selected to
represent diverse workforce roles, geographic locations, racial/ethnic and linguistic identities, and
programmatic characteristics.

The provider design team began meeting regularly in spring 2022 to develop a comprehensive policy proposal
to advance workforce compensation in the 2023 legislative session. The design team's goal is to increase
access to high quality, affordable child care through comprehensive budget and policy solutions that recruit
and retain a diverse and thriving workforce.

The design team’s efforts build on work already underway, including implementation of the Fair Start for Kids
Act and the recommendations included in this Child Care Collaborative Task Force Report. It also identifies
additional policy proposals related to:

    •    Compensation and well being
    •    Professional growth opportunities
    •    Equitable opportunities to meet changing requirements
    •    Child care system reforms
    •    Small business supports for the child care industry

At the time of this report, the design team’s work had not concluded. A written report is expected from Child
Care Aware of Washington in late 2022.




36 Developed by the National Equity Project, Liberatory Design is a problem-solving process where people most impacted by a problem

co-develop a solution that prioritizes racial equity in process and in outcome. More information is available online.



 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                                            30
Appendix D: Case studies
Across the U.S., the gap between the expenses providers incur and the revenues they can generate is
significant – especially for infant and toddler child care. Understanding how this gap varies by child age,
program type and geographic location can help better target resources to the areas of highest need. Due to the
broken nature of the child care market, where the consumers — parents — cannot pay for the full cost of the
service they are purchasing, using the standard market rate-setting approach that relies on the tuition these
consumers can pay presents an inherently inaccurate relationship between rates and the true costs of the
service that are taken on by the provider. The alternative methodology approach sets rates based on the actual
costs experienced by child care providers in their delivery of services, based on the type of care, age of the
child, and state licensing and quality regulations.

Below are some recent examples of cost of quality care analyses to inform alternative methodology for
subsidy rates, as well as a recent policy movement on provider compensation and financing mechanisms at
the state level.

Case study: California uses the MIT Living Wage Floor to build a salary scale
for early childhood education providers
California developed a cost estimation model to understand the cost of quality care and to set child care
subsidy rates. P5FS found built salaries for all the child care positions in early childhood education using used
data collected from California child care programs. 37 Program-level data demonstrates the difference in salary
or wage points across positions in center or family child care homes. The cost estimation model includes
several salary options, including:

    •    Bureau of Labor Statistics (BLS) wage data from May 2021
    •    2020 Workforce Survey wage data
    •    MIT Living Wage Calculator Option 1 (using workforce demographic data on family composition to
         establish the living wage base for the teacher assistant position, since the living wage calculation is
         based on family size)
    •    MIT Living Wage Calculator Option 2 (calculator results for the living wage needed for a single person,
         no children, to establish the living wage base for teacher assistant position)
    •    University of Washington Self-Sufficiency Standard Calculator, which defines the minimum adequate
         income working families need and accounts for family composition, ages of children and geographic
         differences in costs
    •    User input, which requires completion of wages data for each position

The California Rate and Quality Workgroup recommended that child care providers earn at least a living wage,
and therefore the default scenarios in the cost model use the MIT Living Wage Salary Option 1, with regional
variations included. The family size assumptions are calculated using a weighted average of the living wage
across six different family size/compositions for early childhood professionals in California. These program
data were used to build a salary scale reflective of the different responsibilities for each position, including
director, assistant director, teacher/lead teacher, assistant teacher, and floater/substitute. 38




37 Jeanna Capito, Katie Fallin Kenyon, and Simon Workman, “Understanding the True Cost of Child Care in California: Building a cost

model to inform policy change,” Prenatal to Five Fiscal Strategies, 2022.
38 Ibid.




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                                               31
District of Columbia subsidy rate-setting, short-term compensation relief,
and long-term compensation pay parity for early childhood teachers
The District of Columbia’s Child Care and Development Fund (CCDF) began using a cost of quality approach to
set subsidy rates in 2018, and until 2021 it was the only state or district utilizing this methodology (as of this
writing, New Mexico and Virginia have joined it). In the District, the implementation of alternative methodology
for rate setting, instead of the market rate, resulted in higher payment rates for all providers in all types of care
settings, compared to setting rates at even the highest percentile of the market-rate survey. The alternative
methodology approach encourages quality by basing child care rates on the actual operating costs of
delivering quality child care. 39

Additionally, recent developments in the district illustrate an approach that provides short-term financial relief
for providers with a goal to develop long-term compensation reform. In January 2022, after more than a
decade of successful organizing, the district advanced pay parity for infant-toddler teachers with recent
recommendations from the Early Childhood Educator Equitable Compensation Task Force. The
recommendations included short-term direct payments of $10,000 to $14,000 to eligible educators to meet
their immediate needs while the foundation for compensation reform is being built.

The district's Early Childhood Educator Task Force will provide implementation recommendations on increased
employee compensation for all early childhood workers. The district determined that the two funding
mechanisms it currently has in place (child care subsidies and grants) are not workable for distributing funds
to the entire workforce. It recommended developing a new payment mechanism. The task force should also
consider monitoring and enforcement mechanisms to ensure that payments made to providers translate into
increased staff pay. 40 These are necessary mechanisms to raise pay while minimizing the burden on child care
providers. There will also be needed technical assistance and support to help providers implement the
compensation scale.

This permanent, publicly funded compensation program is designed to ensure that early educators are paid
salaries comparable to educators of older children. The district is also are offering free or low-cost health
insurance to eligible staff at licensed child care facilities. 41 Eligibility is not based on income or immigration
status, but a person must be an employee and not a contractor of a child care provider. 42 Both programs are
funded by the district's Pay Equity Fund, a permanent, dedicated funding source for compensation initiatives in
early childhood education.

In the long term, a program-level funding formula will include a salary scale that offers parity for educators
across settings with their K-8 counterparts. This is possible because of public funds dedicated for early
childhood pay equity, highlighting the importance of a local revenue strategy. Beginning in October 2023, the
Office of the State Superintendent of Education will shift to distributing funds to child development facilities;
facilities that accept funds will be required to pay eligible child care professionals wages that reflect the
recommendations of the Early Childhood Pay Equity Task Force. OSSE will continue to engage early childhood
stakeholders in the coming months to inform the design, implementation and launch of the program for fiscal
year 2024 and beyond.



39 Jeanna Capito, Jessica Rodriguez-Duggan, Simon Workman, “Understanding the cost of quality child care in New Mexico: A cost

estimation model to inform subsidy rate setting,” (Prenatal to Five Fiscal Strategies, 2021)
40
   Compensation Scale for the DC Child Care Workforce: As Required by Birth-to-Three for All DC Act. OSSE, October 2021.
41 Under 3 DC, “DC Announces Free Health Insurance for Child Care Workers and their Families.”
42 HealthCare4ChildCare FAQs.




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                                              32
Delaware’s approach to online access and updates to the cost of quality
model
The Department of Health and Social Services (DHSS) and the Department of Education, in consultation with
the Delaware Early Childhood Council, created a cost of quality care estimator tool that enables the state to
model the actual costs of providing quality child care. The work on the cost estimator tool was informed by
Delaware's 2021 Cost of Care Study, the 2021 Market Rate Survey, the child care wage scale work completed
in 2022, and national and local experts, advocates, and early childhood educators.

DHSS provides a description of this work and links to the Center and Family Child Care Cost Estimation Tools
on its website. The website allows users to download the Excel spreadsheet and input information on center or
family home “profiles” (such as number of classrooms) and certain variables and scenarios for that provider
(such as number of children on subsidy, salaries, benefits). However, the underlying data that drives the model
is not visible, and only the owners of the model can update this data. This is because allowing access to the
underlying formulas and background data makes it easier for individual user error and/or “breaking” formulas
in the model, which could result in the model providing incorrect numbers. The tool can and should be updated
by the model owners as program requirements change, and as additional workforce data is available, to ensure
that the model outputs continue to reflect the true cost of child care.

New Mexico’s cost study finds current rates are a disincentive to meet
higher quality
In New Mexico, recent positive changes in early care and education encouraged state leaders to seek federal
approval to pursue alternative methodology for setting child care subsidy rates under the Child Care
Development Block Grant (CCDBG). System improvements, including launching a state department focused on
early care and education, are focused on aligning programming and funding, meeting the needs of children and
families, and increasing the capacity of providers to deliver quality services. In March 2020, the governor and
Legislature enacted the Early Childhood Trust Fund, which will fund the work of the new department. New
Mexico developed a cost estimation model to inform subsidy rate setting. The alternative methodology
approach involves setting rates based on the actual costs experienced by child care providers in their delivery
of services: type of care, age of the child, and state licensing and quality regulations. Wages in the model were
based on a higher statewide minimum wage as a floor, with Bureau of Labor Statistics salary data for each
child care position, and higher wage levels aligned with New Mexico’s Quality Rating and Improvement System.
With all this cost data informing an alternative methodology, the state has an accurate picture of the cost of
child care services and has used this approach to inform subsidy rate setting since 2021.

At the same time, New Mexico expanded eligibility to up to 400% of the federal poverty level through June
2023, making it the first state to offer no-cost care for such a broad range of incomes. Because of this, most
families in the state now qualify for the subsidy. The median household income in New Mexico is $51,243, so a
family of four earning up to about $111,000 would be eligible for free child care under the new program. 43

The New Mexico cost model development process pointed to several key themes:

    •    Current rates are insufficient at any level of quality for services to children from birth to five years. The
         quality incentive structure for the state Quality Rating and Improvement System does not keep up with
         the actual increased costs at higher levels of quality, and current rates are actually a disincentive to


43 Parks, Casey. “New Mexico to offer a year of free child care to most residents.” The Washington Post. April 28, 2022.




 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                                        33
        operate at the higher-quality levels. Programs need to serve mixed ages to cover some of the steepest
        losses, but in all instances, programs are operating at an overall loss.
    •   The cost model results show where state quality requirements are misaligned with the reality of
        program operations. State policies on child-to-adult ratios and taxing structures affect the program
        bottom line and drive decisions that impact quality and costs levied on families. For example, the
        current rate structure disincentivizes serving 3-year-olds in a 5 Star program, and licensing ratios and
        group size requirements are the same for 3- and 4-year-olds until a program reaches a 5 Star
        designation. 44

New York state’s wage scenarios in a cost of quality study
New York state engaged in a cost of quality care study in 2019 to inform advocacy efforts. QUALITYstarsNY
(QSNY) is the state’s quality rating and improvement system. It is used as the starting definition of quality for
the state – staffing patterns in the model reflect personnel needed to meet QSNY star level 3. Model
assumptions for wages included mandatory benefits for full-time employees, including workers compensation,
unemployment insurance, and disability insurance. Discretionary benefits are based on the QSNY benefit
options for full-time staff, which includes health insurance; 5 days of paid leave; and $1,000 annually per staff
for training/consulting.

Analysis includes three scenarios to understand cost at different quality levels:

    •   Scenario 1: With current salaries (based on Aspire registry data) by age group and region. Compares
        costs and gaps in revenue between current subsidy payments.
    •   Scenario 2: Increased salaries. All staff earn at least $15/hour and other salaries adjusted
        proportionally (a 36% increase to salaries for most staff). Compares costs and gaps in revenue
        between current subsidy payments.
    •   Scenario 3: K-12 teacher parity, by age group and geographic region. Lead teachers paid equivalent to
        25th percentile of classroom teacher salaries, reflecting higher turnover rates among the early
        childhood workforce. Other staff receive proportionate raises. Compares costs and gaps in revenue
        between current subsidy payments.

In the family child care home model, the owner receives a salary equivalent to a lead teacher in each of the
scenarios above.

Key findings from New York Cost of Quality Analysis:
   Current child care subsidy rates are insufficient to cover the cost of quality

    •   The size of the gap between subsidy rates and the true cost of quality varies by region, but exists
        across the state for infants and toddlers.
    •   In family child care homes, subsidy rates are insufficient to support a living wage for the provider.

    Insufficient revenues keep workforce wages low and limit provider quality

    •   Current annual lead teacher salaries average around $30,000 outside of New York City and $43,000 in
        New York City, the equivalent of $14.50/hour and $20/hour, respectively.




44 Jeanna Capito, Jessica Rodriguez-Duggan, Simon Workman, “Understanding the cost of quality child care in New Mexico: A cost

estimation model to inform subsidy rate setting,” (Prenatal to Five Fiscal Strategies, 2021)



 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                                              34
    •    Recruiting teachers with higher education requirements requires paying higher salaries, which in turn,
         increases the gap between revenues and expenses.
    •    If early childhood educators were paid comparable wages to K-12 teachers, the annual cost of infant
         care would be between $28,000 and $37,500 in a child care center, and between $22,000 and $29,000
         in a family child care home. 45

New York City’s roadmap to K-12 wage parity for early child care providers
In 2019, New York City established agreements to fund starting salary parity for all certified teachers in
community-based early childhood education settings and to provide raises for unionized, non-certified
teachers and other staff by 2021, a positive step forward that could provide a model for the rest of the
country. 46

Salary parity for early educators across program settings became a major issue in 2014 when New York City
began to implement full-day universal pre-kindergarten. More than half of all kids in universal pre-K were
served in community based organizations (CBOs), yet the pay and benefits gap between early childhood
education public school teachers and CBO teachers with comparable education and experience became quite
large ($15,000 to $17,000 by 2018). This pay gap created severe retention and recruitment problems for CBOs,
as certified teachers left to work in early childhood education programs located in public schools. The
Campaign for Children, a broad coalition of 150 providers, organized to build support for closing the teacher
pay gap, resulting in a critical budget agreement to reach salary parity.

    There are three big challenges for New York City's kindergarten parity implementation: comprehensive
    salary parity, enhanced career ladder opportunities, and family child care investments. 47

    •    Comprehensive salary parity. Beyond starting pay levels, improvements need to be made to account
         for:

         •   Differences in the length of the work year
         •   Wage increases for other teachers
         •   Longevity pay
         •   Differences in health insurance benefits, retirement coverage, and other fringe benefits

    Enhanced career ladder. The Early Childhood Career Ladder (ECCL) program is successfully aiding the
    career advancement of teachers of color — more than 98% of those who enrolled in ECCL courses since
    spring 2018 were Black, Latino, Asian, or multiracial. More focus is needed on supporting uncertified and
    assistant teachers seeking to access additional education and certification, including through raising the
    intermediate pay steps between assistant teacher and certified teacher with a bachelor's degree.
    Family child care investments: The city and state should increase investments in family child care,
    including in the compensation for providers. The 2019 salary parity commitment applied only to center-
    based early childhood education programs, not to home-based family child care providers.




45 Center for American Progress. New York State Cost of Quality Child Care Study (PowerPoint presentation). Simon Workman and

Steven Jessen-Howard. November 2019.
46 Center for the Study of Child Care Employment (CSCCE), Berkeley, University of CA. Early Childhood Educator Workforce Policies,

Indicator 2: Does the state set required compensation standards for ECE settings outside of public pre-K programs?
47 Parrott, J.A. (2020). The Road to and from Salary Parity in New York City: Nonprofits and Collective Bargaining in Early Childhood

Education. New York, NY: Center for New York City Affairs, The New School.


 2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT                                                                                 35
             color                 black/white



Understanding the true cost of
    P 5
child care in Washington State:
                                 P 5
   F i sestimation
A cost  cal                   F i s cpolicy
                   model to inform    a l change
     Strategies                   Strategies



                                          Jeanna Capito and
P 5                          P 5          Simon Workman
Fiscal                       Fiscal
Strategies                   Strategies   October 2022
                         i
                                                                Fiscal                           Fis
                                                                Strategies                        Strat




                                                       P 5                                  P 5
                                                           Fiscal                           Fiscal
About Prenatal to Five Fiscal Strategies                   Strategies                       Strategies


Prenatal to Five Fiscal Strategies is a national initiative, founded by Jeanna Capito
and Simon Workman, that seeks to address the broken fiscal and governance
structures within the prenatal to five system with a comprehensive, cross-agen-

                                                       P 5
cy, cross-service approach. The initiative is founded in a set of shared principles
that centers on the needs of children, families, providers, and the workforce.              P 5
This approach fundamentally rethinks the current system F i s c atol better tackle equity   Fiscal
in funding and access.                                  Strategies                          Strategies


For more information about P5 Fiscal Strategies, please visit:
www.prenatal5fiscal.org


Acknowledgments
The authors wish to thank the child care providers of Washington who graciously
gave their time and expertise to inform this study, sharing data on program
operations and financials through surveys and interviews, and participating in the
provider workgroup. The work of this study also benefited greatly from the input
and contributions of the Washington Child Care Collaborative Task Force as well
as staff at the Department of Commerce, the Department of Children, Youth and
Families, King County Best Start for Kids and the Seattle Department of Educa-
tion and Early Learning.

The authors also acknowledge the contributions of P5 Fiscal Strategies team
members who supported provider data collection and outreach, including Jessica
Rodriguez-Duggan who led outreach to Spanish-speaking providers, and Casey
Amayun who led provider interviews. The Agile Visual Analytic Lab (AVAL) at the
UCLA Luskin School of Public Affairs also provided support in administering the
online survey and tracking responses.

Report design by Barbara Dufford. Cover image art by L.Winger




Suggested Citation
Jeanna Capito and Simon Workman, “Understanding the true cost of child care
in Washington State: Building a cost model to inform policy change,” Prenatal to
Five Fiscal Strategies, 2022

                                                      ii
Table of Contents

Introduction and Background...................................................................................................1
     Subsidy Rate Setting in a Broken Child Care Market....................................................1

Washington Cost of Quality Study. ..........................................................................................4
    Constituent Engagement and Input.................................................................................4
    Provider Data Collection. .................................................................................................5

Washington Cost Estimation Model. .....................................................................................10
    Cost Model Methodology. ..............................................................................................10

Scenario Results. .......................................................................................................................15
    Cost of Care Using Current Salaries .............................................................................16
    Cost of Care Using MIT Living Wage Salary Scale......................................................18
    Cost of Care with Program Enhancements. .................................................................20
    Potential Impact of 2021 Market Rate Study................................................................26

Conclusion and Additional Considerations..........................................................................28

Appendix....................................................................................................................................30
    A. Salary Tables. ...............................................................................................................30
    B. Program Enhancement Details..................................................................................32




                                                                                     iii
Introduction and Background
Washington State has a demonstrated commit-                   rate setting. The model was also developed with
ment to supporting the needs of young children                input from the Seattle Department of Early Educa-
and families. The Child Care Collaborative Task               tion and Learning, and King County Best Start for
Force, created by the state legislature in 2018, has          Kids, to develop a tool that could also support local
helped elevate the needs of the early childhood               efforts to better understand the true cost of care.
sector, especially considering the impacts of the
COVID-19 pandemic. A key part of the Task                     This report provides background on the provid-
Force’s charge is to increase access to affordable            er engagement activities that informed the cost
child care for all Washington families. To further            model, details on the cost model methodology, and
this goal, the Task Force commissioned a study                results of default scenarios to illustrate the func-
to better understand the true cost of providing               tionality of the cost model tool.
high-quality child care across the state.
                                                              Subsidy Rate Setting in a Broken
In fall 2021, Prenatal to Five Fiscal Strategies (P5FS)
                                                              Child Care Market
launched a child care cost of quality study, which
included developing a dynamic cost estimation                 The prevalent method of setting reimbursement
model to address the immediate questions around               rates for publicly funded child care under the fed-
cost and to serve as a tool to support long-term              eral Child Care and Development Fund, or CCDF,
planning in the state. This work built on efforts             is through a market rate approach. This approach,
begun in 2019, when P5FS supported a cost study               currently used in Washington to set Working Con-
and development of a cost model. This work was                nections Child Care subsidy rates, relies on a study
interrupted by the COVID-19 pandemic and the                  of market prices for child care through a market
study team opted not to add additional burden to              rate survey. Data from the market rate survey is
providers by requesting their participation. As a             then used to set maximum reimbursement rates
result, the study was missing a vital component               for subsidized child care. States are required to
in that it did not include input and feedback from            conduct CCDF rate setting every three years and
child care providers themselves. For this most                are encouraged to set rates at a level that provides
recent study, the P5FS team conducted deep constit-           for “equal access” to the market for families using
uent and provider engagement to inform the study,             subsidies and those paying full tuition.
determine assumptions, vet cost data, and review
initial results from the cost model. Development of           However, the market-based approach to subsidy
the model was commissioned by the Department                  rate setting results in subsidy rates that reflect pric-
of Commerce on behalf of the statewide Child                  es providers charge families, which are frequently a
Care Collaborative Task Force, with support from              reflection of what families can afford, not the actual
the Department of Children, Youth and Families                cost of the care. The cost of child care for a family
(DCYF), the state agency with responsibility for              with young children can be an overwhelming
Working Connections Child Care Program subsidy                burden, particularly for a family earning a low


                                                          1
income. Programs must set tuition at what families            Defining terms
in their community are able to afford, rather than
                                                              PRICE OF CARE means the tuition prices that
what the service costs. This creates an inequitable
                                                              programs set, which are usually based on local
system that perpetuates inequality between high-
                                                              market conditions and what families can afford,
er-income and lower-income communities. Pro-
                                                              ensuring that programs are competitive within
viders in communities where families cannot afford
                                                              their local market and can operate at as close to
high tuition receive lower reimbursement rates
                                                              full enrollment as possible.
than providers in higher-income neighborhoods.
This often results in lower educator compensation             COST OF CARE means the actual expenses
and higher staff turnover in lower-income com-                providers incur to operate their program, includ-
munities. Setting rates based on the current market           ing any in-kind contributions such as reduced
also serves to maintain the low wages that early              rent. It includes allocating expenses across class-
childhood educators receive, particularly in low-in-          rooms and enrolled children based on the cost
come communities. The impact of this market                   of providing service and not on what parents can
failure exacerbates lower-quality settings and lower          afford.
wages across child care, disproportionately affect-           TRUE COST OF CARE refers to the cost of
ing low-income communities, minority groups                   operating a high-quality program with the staff
and communities of color. The market, driven by               and materials needed to meet quality standards
tuition or the price that families are able to pay, is        and provide a developmentally appropriate
not representative of the cost of child care.                 learning environment for all children. Cost of
                                                              quality is another term often used to refer to the
In a functioning market where parents as the                  true cost of care. The true cost includes adequate
consumer can afford the true cost of care, setting            compensation, wages and benefits, to recruit and
rates based on price would allow subsidy-eligible             retain a professional and stable workforce.
families to have access to child care equal to the
access of those paying tuition. However, because
most families cannot afford the cost of child care,
programs face a disincentive to serve children for           pandemic have left the child care sector reeling.
whom the gap between what families can afford                Policymakers are increasingly recognizing the defi-
and what it costs to provide care are greatest. For          ciencies of the market price-based approach to rate
example, a provider might be able to achieve finan-          setting and the need to better align investments to
cial stability when serving preschool-age children,          the cost of the service.
or in a program that meets state licensing stan-
dards, but if that same program serves infants and           Since the 2014 reauthorization of the Child Care
toddlers, or meets higher program standards, this            Development Block Grant, which funds CCDF,
can leave them operating at a deficit.                       states have another option of setting rates, called
                                                             an ‘alternative methodology.’ This methodology is
The ongoing impacts of the pandemic have exac-               an alternative to the market rate survey approach,
erbated the broken nature of the child care mar-             which was the only methodology prior to 2014 reau-
ket. Operating on razor-thin margins already, the            thorization. This alternative methodology can take
increased costs and decreased revenue due to the             the form of a cost study or a cost estimation model:

                                                         2
• A cost study involves collecting data from pro-          recognizing the importance of developing a deep-
  viders about their current costs of operating a          er understanding of the true costs of operating
  program that meets licensing standards as well           high-quality programming and seeking alternative
  as other quality standards, reflecting point-in-         ways to set subsidy rates, such as through a cost
  time data about provider costs.                          estimation model.
• A cost estimation model involves building a tool
  that is informed by provider data and that can           Beyond subsidy rate setting, development of a cost
  run multiple scenarios to estimate the impact of         estimation model can support states to develop
  several variables on cost, such as program char-         policy solutions that increase access to affordable
  acteristics (e.g., size and age mix), child popu-        child care. By understanding the true cost of care,
  lations served, program quality, and location in         policymakers can see the limited impact the sub-
  the state.                                               sidy system will have when eligibility levels fail to
                                                           provide support to middle-income families. Many
Whichever approach is used, an alternative                 families earn too much to qualify for child care
methodology takes into account the actual costs            subsidy assistance, but too little to be able to afford
incurred by providers to meet state standards or           the true cost of care. A robust child care system
quality requirements, with variations by setting,          where all providers have access to the resources
geography, age of child served, and other program          they need to provide high-quality child care
or child characteristics. As states across the coun-       requires an honest assessment of what it costs to
try consider ways to stabilize and strengthen their        provide that care, and where the burden of paying
early childhood systems, they are increasingly             for that care should land.




                                                       3
Washington Cost of Quality Study
To develop a cost estimation model for Washington,            including family child care home providers, pro-
a study was designed in line with P5FS’s approach to          viders in urban and rural areas, for-profit and not-
cost modeling. This approach centers on the voice of          for-profit child care centers, and programs serving
providers to inform the development of the model              children of different ages. Child care providers
and ensure that it reflects the reality programs expe-        were compensated for their workgroup time. This
rience delivering high-quality child care.                    workgroup met five times during the study, provid-
                                                              ing input on:
Figure 1: Prenatal to Five Fiscal Strategies
          Cost Modeling Approach                              • the cost-survey approach and reach
       Engage Constituents                                    • the cost estimation model
                                                              • the program variables that frame the model
         J Collect Data                                       • the model’s data gathering and analysis assump-
                                                                tions
             Develop Model                                    • ensuring that providers are engaged in data
                                                                gathering and in the review of model results
            Run Scenarios
                                                              • modifications to the model based on analysis of
      Support System and Policy Change                          interim results
                                                              • feedback and validation of assumptions in the
                                                                model.
Constituent Engagement and Input
Aligned with the values of the Child Care Collab-             Figure 2 details the multiple methods of provider
orative Task Force, the study team ensured that               input into the cost estimation model and Table 1
there were multiple opportunities for providers               lists the key constituent meetings.
and other interested constituents to participate in           Figure 2: Cost Estimation Model
the study. P5FS used several modes of information                       Constituent Input
gathering and input from constituents, including                 Program Survey                       Program Interviews
an online child care provider survey, one-on-one
interviews with providers, family child care focus            Child Care                                     Family Child
                                                               Provider                                      Care Focus
groups, and presentations to provider groups or               Workgroup                                        Groups
associations to provide information about the                                           Cost
study and gather input.                                        Child Care            Estimation
                                                              Collaborative                                    Project
                                                               Task Force
                                                                                       Model                 Leadership*
Beyond leadership and input from the Child Care
Collaborative Task Force, a child care provider
                                                             *Project leadership included representatives from the
ad-hoc workgroup was formed to provide more                   Department of Commerce, on behalf of the Child Care
detailed input and support model development.                 Collaborative Task Force, the Department of Children,
                                                              Youth and Families, King County Best Start for Kids, and the
The workgroup included providers representing                 Seattle Department of Education and Early Learning
the diversity of the provider types in Washington,
                                                         4
Table 1: List of constituent meetings                 Provider Data Collection
Child Care Ad-Hoc Workgroup                           Child Care Provider Online Survey
Meeting 1: February 3, 2022                           P5FS developed and deployed an online survey to
Meeting 2: March 3, 2022                              gather data from child care providers about their
Meeting 3: March 24, 2022
Meeting 4: April 7, 2022                              program type, size, and children served, their
Meeting 5: July 22, 2022                              staffing model (including ratios and group sizes),
                                                      program expenses (personnel and non-person-
Child Care Collaborative Task Force
                                                      nel), and revenue details. These data were used to
November 17, 2021
January 11, 2022                                      inform estimates of the cost per child with varia-
May 6, 2022                                           tions for program type, location, and age of child
July 11, 2022                                         served. By conducting a statewide survey, P5FS
August 12, 2022                                       was able to engage a large number of providers
August 18, 2022
                                                      in all parts of the state in a relatively short time
Constituent Meetings                                  period. P5FS used past experience engaging child
Greater Seattle Child Care Business Coalition –       care providers to develop a survey that minimized
December 16, 2021
                                                      burden on providers by focusing on questions that
Seattle CCAP Providers –
                                                      relate to the major cost drivers faced by child care
Jan 27, 2022
                                                      programs. The main content areas covered by the
Washington Communities for Children/
First 5 FUNdamentals –                                survey were:
February 8, 2022
                                                      1. Program characteristics, such as size, ages of
Washington Federation of Independent Schools –
                                                         children served, type of program, and funding
February 24, 2022
                                                         streams accessed
Washington Child Care Association –
February 22, 2022                                     2. Staffing patterns, including number of program
Child Care Aware of Washington,                          staff and number of teaching staff
Team Leads Meeting –                                  3. Compensation, including average salaries for
March 2, 2022                                            employees currently, and ideal salaries and
Imagine Institute –                                      benefits to attract and keep staff
March 18, 2022                                        4. Occupancy expenses, including rent/lease/
ELAC Provider Supports –                                 mortgage and utilities.
April 6, 2022

FCC Focus Groups                                      The survey included specific additional questions
April 25, 2022, 1pm – English                         for different provider types, including number of
April 27, 2022, 6pm – English
                                                      hours spent providing child care and conducting
May 3, 2022, 1pm – Spanish
May 7, 2022, 9am – Somali                             child care-related work for home-based providers,
May 10, 2022, 6pm – Spanish                           and an understanding of different expenses for
May 17, 2022, 1pm – English                           family friend and neighbor providers and school-
May 19, 2022, 1pm – English                           age-only child care providers.
May 24, 2022, 1pm – Spanish

One-on-one Provider Interviews                        The online survey and associated materials were
52 Interviews conducted March – May 2022              available in seven languages: English, Spanish,

                                                  5
Somali, Russian, Amharic, Arabic and Vietnamese.                 survey. Several providers with multiple sites pre-
The survey was shared through multiple channels                  ferred this option rather than completing multiple
to reach providers across the state. DCYF sent it                online survey entries.
to all licensed providers; the Child Care Collabo-
rative Task Force shared it with their email list; the           The survey was launched at the beginning of
Department of Commerce promoted it via their                     March 2022 and was open until mid-April 2022. To
social media and other communications; Seattle                   encourage participation, survey respondents were
DEEL sent it to Child Care Assistance Program                    entered into a raffle to win one of 10 gift cards with
providers; King County Best Start for Kids shared                a $50 value. The survey was launched with a video
it with their provider community. P5FS also spoke                from Dr. Lisa Brown, Director of the Washington
on several child care association calls to provide               State Department of Commerce. A total of 2,018
background on the study and encourage participa-                 responses were received. Responses comprised
tion. In addition, a link to the survey was included             family child care (FCC) providers (58%); centers
on a Washington-specific page on the Prenatal to                 (37%); and school-age-only child care (SACC)
Five Fiscal Strategies website, which also included              (2%). This distribution across provider types is
background information on the study and a link                   similar to the distribution of all providers in the
for providers who preferred to engage in a one-on-               state, as shown in Figure 3.
one interview with P5FS rather than complete the

Figure 3: Survey responses by provider type, compared to provider population


           Other          0.0%
                          4.0%

                                 11.0%
           SACC
                                  2.0%

                                                                                 57.0%
           FCCs
                                                                                 58.0%

                                                           32.0%
         Centers
                                                           37.0%

                   0.0%             20.0%                40.0%                60.0%              80.0%             100.0%

                                                  Licensed Providers        Survey Responses




                                                           6
Responses were received from across the state,               geographic regions were included. Figure 4 illus-
covering all subsidy regions. P5FS used geomapping           trates the geographic spread of responses across the
to track survey responses relative to concentrations         state, with areas in green indicating where responses
of licensed providers in the state to guide additional       were received from all licensed providers in that
outreach efforts to ensure that providers from all           area.

Figure 4: Geographic distribution of responses




The Task Force and Workgroup provided guidance               a preference for using the Child Care Aware of
to P5FS regarding geographic groupings across the            Washington regional groupings instead. This allows
state. Currently, DCYF sets rates for eight subsidy          for some additional comparisons of cost data with
regions based on groupings of child care prices.             other data that are already grouped by the Child
However, as the cost study looks beyond tuition              Care Aware of Washington regions. These regions
prices and considers cost, constituents indicated            are shown in Figure 5.

Figure 5: Child Care Aware of Washington, Regional Map




                                                         7
Almost 50% of survey responses came from King                      of providers across the state. Figure 6 compares the
and Pierce counties. While this is a large portion of              distribution of survey responses by region with the
the responses, data on licensed child care providers               distribution of licensed providers by region.
show that this aligns closely with the distribution

Figure 6: Comparison of distribution of survey responses and licensed providers, by region

   Southwest WA            5.5%
                           6.0%

Olympic Peninsula          7.4%
                           7.0%
                                  13.3%
   Northwest WA
                                  9.0%

                                  11.1%
      Eastern WA
                                  12.0%

                                    13.3%
      Central WA
                                    16.0%

                                                                            49.4%
    King & Pierce
                                                                            49.0%

                    0.0%           20.0%                   40.0%                    60.0%
                                                                                                           80.0%      100.0%
                                          Percent of total licensed providers       Percent of survey responses



Survey responses were also analyzed for the lan-                   survey captures the characteristics of only the per-
guage in which respondents chose to complete the                   son taking the actual survey, which may or may not
survey and the race/ethnicity of the respondent.                   match the population of the other staff of the pro-
However, a vast majority of respondents chose not                  gram or of children for whom they provide care.
to answer the question about their race/ethnicity.                 The data in Tables 2 and 3 present the language and
In addition, it is important to note that the race/                race/ethnicity of survey respondents but are shared
ethnicity data and language connected with the                     with those caveats.

Table 2: Race/Ethnicity of survey                                  Table 3: Language in which survey was
         respondents                                                        taken
Unknown/Prefer not to say                         67.02%           English                                         88.00%
White                                             14.18%           Vietnamese                                      12.00%
Hispanic                                           7.14%           Spanish                                         10.00%
Black/African American                             6.31%           Chinese                                          1.00%
Multiracial                                        3.33%           Somali                                          0.71%
Asian/Pacific Islander                             1.76%           Amharic                                         0.20%
American Indian/Alaskan Native                     0.26%           Arabic                                          0.20%



                                                              8
Child Care Provider Interviews &                           During March and May 2022, the study team
Focus Groups                                               conducted interviews with 52 providers, many of
In addition to the survey, interviews were con-            whom represented multiple programs or programs
ducted with child care providers to gather addi-           with multiple sites. Data collected from these 52
tional data. The purpose of the interviews was to:         providers represented over 400 classrooms across
(1) gather deeper data on the cost of operating a          more than 100 sites.
program than could be captured through an online
survey, (2) ensure data were collected from pro-           In addition to the interviews, P5FS convened eight
viders serving specific populations, such as infants       focus groups of family child care providers. In
and toddlers and children in rural communities,            parallel to the cost of care study, P5FS also worked
and providers accessing public funding, and (3)            with DCYF to support a specific cost analysis of
reach providers who preferred not to complete              family child care providers as required under a
an online survey. All providers could request an           Memorandum of Understanding (MOU) with the
interview rather than completing the online survey.        child care providers union, Service Employees
Those who did complete the survey were prompted            International Union-925. P5FS was able to engage
to respond whether they would like to participate          in an efficient approach to gathering cost data for
in an interview to share information not collected         both studies, using the seven focus groups required
in the survey. Proactive outreach was conducted            under the MOU to gather additional and comple-
through key state partners such Child Care Aware           mentary data for the cost of care study, without
of Washington and the Imagine Institute to identify        adding additional burden to providers. An addi-
additional programs to interview. Interviews were          tional focus group was added to support further
conducted in English and Spanish, via zoom or              data collection from Spanish-speaking providers.
telephone at a time to suit the provider.                  Across the eight focus groups, three were conduct-
                                                           ed in Spanish, one in Somali, and four in English.
During later stages of the data collection, outreach       A total of 62 family child care providers participat-
was targeted to providers in regions of the state          ed in focus groups in April and May 2022.
that had not participated in the survey or in an
interview. Targeted outreach was conducted for any         The focus groups included questions related to
underrepresented provider groups. The interviews           (1) staffing, (2) compensation, and (3) opportuni-
provided additional information on how providers           ties for quality improvement. As a complement to
manage their program, including what elements,             the focus group, participants were also invited to
and their associated expenses, are necessary to            fill out a short survey with details of their non-per-
meet the current licensing standards and the               sonnel expenses.
requirements of Early Achievers, the state’s quality
rating and improvement system. In addition, the            Both interviewees and focus group participants
interviews provided an opportunity to ask about            received a stipend of $100 to recognize the time
what it would take to recruit and retain staff and         spent participating in the study.
have a financially sustainable and stable program.




                                                       9
Washington Cost Estimation Model
P5FS developed a cost estimation model to sup-                licensing, the model also includes several program
port Washington State in understanding the cost               enhancements to increase understanding of the
of operating a child care program. The model was              cost of going beyond minimum licensing stan-
informed by the constituent input described in the            dards. This section of the report details the com-
prior section, drawing from provider data collec-             ponents of the model that impact the cost of care
tion and provider input to ensure that the final              at both the base licensing level and with additional
model reflected the realities faced by child care             program enhancements.
providers.
                                                              Determining the Base Cost of Care
At its core, the model estimates what it would                Ratio and Group Size
cost to operate a program meeting a chosen set of             The cost model uses ratio and group size data from
characteristics, regardless of who is paying for that         Washington’s child care licensing regulations as
care. Whether a child care “slot” is filled by a child        detailed below.
whose parents are paying full tuition or by a child
whose family qualifies for the Working Connec-                Table 4: Center Ratio and Group Size
tions Child Care subsidy program, the provider                Age Group          Ratio             Group size
still needs to generate a set amount of revenue to            Infant                     1:4              8
cover their costs to provide care. The model can be           Toddler                    1:7              4
used by policymakers to understand the level of               Preschool                  1:10            20
investment needed to support providers as well as             School age                 1:15            30
the fiscal impact of policy decisions, and it can also
be used by advocates to make the case for increased
                                                              The family child care home model allows the user
investments, expanded family support with paying
                                                              to enter the number of children at each age, up to a
for child care, or to demonstrate the sufficiency or
                                                              maximum of 10.
insufficiency of current investments.

                                                              Users of the model can choose a program size
Cost Model Methodology                                        based on the number of classrooms for each age
The cost estimation model is an Excel-based tool              or the number of total children in a home-based
based on the methodology used in the Provider                 setting, allowing for understanding how the cost
Cost of Quality Calculator, an online tool from               of care varies based on program size or mix of ages
the U.S. Office of Child Care. The Excel model                served.
is customized for Washington’s specific context,
building on the tool P5FS developed for the Task              Staffing and Personnel Expenses
Force in 2020. The model allows users to estimate             The personnel calculations are based on a standard
the cost of meeting base licensing standards, with            staffing pattern typical of most centers, with the
variations for program size, program type, ages of            following assumptions built in:
children served, and geographic location. Beyond

                                                         10
Non-teaching staff                                             salaries are used, not adjusted to account for the
• Program director (one full time)                             length of the child care year versus the school
• Assistant director (0.5 FTE if less than 50 chil-            year.
  dren, 1.0 FTE up to 100 children, 1.5 up to 150            • MIT Living Wage Calculator. This option uses
  children, 2.0 FTE if over 150 children)                      workforce demographic data on family com-
• Administrative assistant (0.5 FTE if less than 50            pensation to establish the living wage base for
  children, 1.0 FTE up to 100 children, 1.5 up to              the teacher assistant position. Other positions in
  150 children, 2.0 FTE if over 150 children)                  the model are adjusted to account for additional
                                                               responsibilities of those staff. Living Wage data
Classroom staff                                                from MIT is used for each county and aggregat-
The number of teachers and assistant teachers is               ed to create a regional living wage for use in the
driven by Washington’s ratio and group size reg-               model.1
ulations. Each classroom has a lead teacher, with            • User Input, which requires completion of wages
additional staff counted as assistant teachers to              data for each position.
meet ratio requirements.
                                                             Each of these salary options, except for the Com-
In addition, the model includes an additional 0.2            pensation Technical Workgroup (CTW) scale, have
FTE per classroom teaching staff to allow for cov-           regional variations for salaries. Table 5 presents the
erage throughout the day for breaks and opening/             statewide average annual salary for a lead teacher
closing. This reflects that the program is open more         in a child care center and an FCC provider/owner
than 40 hours per week. To always maintain ratios,           under each of these salary selection points. The
additional staffing capacity is needed.                      annual salaries used for each of these selections for
                                                             all positions and each region is detailed in
Family child care homes
                                                             Appendix A.
In licensed homes, the owner/lead educator is the
only staff member unless more than two infants are           Table 5: Annual salaries for lead teacher
present, in which case an assistant is added.                and FCC provider/owner under each
                                                             salary scale included in cost model,
Wages                                                        statewide average
The model includes several salary data sources to                                        Lead Teacher Provider/
estimate the cost of care at different salary levels.                                    in Child Care Owner
                                                                                         Center
The salary selection points include:
• Current salaries from the cost of care survey              Current Salaries                $34,341          $40,716
• Compensation Technical Workgroup salary                    Compensation                    $50,248          $55,100
                                                             Technical Workgroup
   scale. This salary scale was developed in 2019 by
   the legislatively created workgroup. The scale has
                                                             Kindergarten                    $76,712         $105,479
                                                             Teacher
   a range for each position, based on educational
                                                             MIT Living Wage                 $68,819          $80,428
   attainment and credentials. The cost model uses
   the midpoint of the range.
• Kindergarten Teacher salaries. This option uses        1
                                                             Family composition of teacher assistants in Washington
   data from the Bureau of Labor Statistics on kin-          State was not available so the study team used data recently
   dergarten salaries across the state. Total annual         collected in the California ECE Workforce Study as a proxy.


                                                        11
For family child care homes, the model includes                single premium employer contribution to health
a salary for the provider/owner. Many of these                 insurance in Washington is $6,305.
providers do not pay themselves a salary, as small
business owners their income is usually whatever               A contribution to retirement can also be modified
is left over after all expenses have been paid. How-           by the user, based on a percentage of an employee’s
ever, to estimate the true cost of care, and to better         salary. By default, the model includes a 6% contri-
compare the cost of center-based and home-based                bution.
care, the cost model includes a salary line for the
provider/owner, while acknowledging that individ-              Non-personnel Expenses
ual providers will make their own decisions about              Non-personnel costs are aggregated into the
how they use these funds. The CTW salary scale                 following categories:
includes a position for the FCC provider/owner.                Education Program for Children and Staff,
When the “current salary” option is selected, the              which includes:
FCC salary is equal to the provider’s reported aver-
                                                               • Education/Program—Child: Food/food relat-
age annual income in the cost of care survey. For
                                                                 ed, classroom/child supplies, medical supplies,
kindergarten salary option, the FCC provider/own-
                                                                 postage, advertising, field trips, transportation,
er salary is based on the lead teacher salary in the
                                                                 child assessment materials.
center model, adjusted to account for the longer
                                                               • Education/Program—Staff: Professional con-
hours worked. In the MIT Living Wage Calculator
                                                                 sultants, training, professional development,‌
scenario, the FCC salary is calculated based on the
                                                                 conferences, staff travel.
living wage calculation for a typical family com-
position of an FCC provider, adjusted to account               Occupancy: Rent/lease or mortgage, real estate
for the longer hours worked and the additional                 taxes, maintenance, janitorial, repairs, and other
responsibilities provider/owners have.                         occupancy-related costs.

Mandatory and Discretionary Benefits                           Program Management and Administration:
Mandatory benefits are included for all salaried               Office supplies, telephone, internet, insurance, legal
staff, including FICA-Social Security at 6.2%,                 and professional fees, permits, fundraising, mem-
Medicare at 1.45%, unemployment insurance at 1%                berships, administration fees.
and workers’ compensation at 2%.
                                                               Values for each of these non-personnel catego-
By default, 10 days paid sick leave and 10 days paid           ries is based on data collected from Washington
leave is included for all staff. This is captured as an        child care providers for this study. The table below
expense by including the cost to pay a substitute              provides the values used in the default scenario
teacher to provide classroom coverage.                         (Center: four classrooms, serving children birth
                                                               through school age; FCC: eight children).
Discretionary benefits can be included at either
$6,000 or $9,000 per employee per year. This might
be used as a contribution to health insurance or for
a suite of discretionary benefits. Data from the Kai-
ser Family Foundation find that the average annual


                                                          12
Table 6: Non-personnel expenses                                rates for programs that have reached different
                                                               Early Achievers levels.
Expense Category     Child Care      Family Child
                     Center –        Care Home –
                     Annual          Annual                    Private tuition
                     Amount          Amount
                                                               Tuition data are included in the model based
Education        $2,199              $1,080                    on the 2021 market rate study. The model uses
Program Expenses per child           per child
                                                               the 85th percentile of the market rate as the
Occupancy            $19,089 per     $6,512 per
                     classroom       home                      tuition amount to align with where DCYF
Program              $365 per        $524 per                  sets WCCC subsidy rates. Users must select
Management and       child           child                     which market region to use for comparing cost
Administration
                                                               to market tuition, given that the market rate
                                                               study regions are different from the Child Care
In addition to these expenses, the model also
                                                               Aware of Washington regions used for the cost
includes a 5% contribution to an operating reserve,
                                                               analysis.
a practice that contributes to long-term financial
sustainability, and helps programs survive unex-
                                                               Child and Adult Care Food Program
pected interruptions to their revenue or unantici-
                                                               The cost-estimation model accounts for rev-
pated one-time expenses.
                                                               enue from the federal Child and Adult Care
                                                               Food Program, or CACFP. The federal food
Revenue
                                                               program reimburses providers for meals served
For the purposes of understanding the sufficiency
                                                               to children, with different rates based on family
of current revenue streams to support the cost of
                                                               eligibility. The most recent CACFP rates are
quality child care, the model includes revenue data.
                                                               included, and the model assumes that all chil-
The following revenue data are included allowing
                                                               dren eligible for a subsidy are also eligible for
the user to compare estimated costs to potential
                                                               CACFP.
revenue:

   Child Care Subsidy – federal Child Care and              Adjustments to Anticipated Revenue
   Development Block Grant funding                          The model takes into account how providers
   Working Connections Child Care (WCCC)                    operate. No program is always 100% full and as
   subsidy rate data are used for center and home-          such the model adjusts the expected revenue to
   based settings, and include quality differentials        account for classrooms not operating at full capac-
   for Early Achievers levels. The model uses the           ity. By default, this enrollment efficiency is set at
   most recently implemented market rates as of             85%, which is the industry standard, meaning that
   August 2022, which are based on the 85th per-            the cost per child calculations are based on the
   centile of the 2018 market rate survey. Because          program needing to cover its expenses when only
   the WCCC subsidy regions are different from              collecting revenue from 85% of the total licensed
   the Child Care Aware of Washington regions               capacity.
   used for the cost analysis, users must select
   which subsidy region to use for comparing cost           In addition, the model also accounts for uncol-
   to subsidy rates. Users can also choose an Early         lected, or bad, debt. This reflects the reality that
   Achievers level to include the higher WCCC               programs are not always able to collect full tuition

                                                       13
from families, or families leave the program while           Training/Professional Development
still owing tuition. This also accounts for uncol-           The model includes 10 hours per employee or
lected subsidy co-payments. The model uses the               provider annually to meet licensing standards.
industry default of 3% bad debt.                             In the enhancements, the model allows for 5
                                                             or 10 additional hours per year for additional
Beyond the Base — Program                                    training or professional development.
Enhancements
Beyond meeting base licensing standards, the                 Family Engagement
model also integrates several additional program             The model allows users to include the cost of
enhancements so that users can estimate the addi-            two or three family conferences per year as well
tional cost of these enhancements. These selections          as funds for the program to complete a family
can also be used to estimate the cost of meeting             engagement plan for each enrolled child.
different Early Achievers levels. Program enhance-
ments included in the model are detailed below.              Educational Materials
Many of the enhancements include several levels              The model can include the cost of child assess-
with different values. Table B1 in the appendix              ment tools, at increasing amounts per child, as
provides additional details of these values.                 well as the cost of a curriculum.

   Planning Time                                             Inclusion Supports
   Additional release time to allow teaching staff to        The model can estimate the cost for addition-
   engage in lesson planning, data analysis and oth-         al supports to provide an inclusive learning
   er activities while not covering the classroom. In        environment, including the cost of additional
   centers, this translates into additional classroom        materials and the cost for an instructional aide
   coverage for a floater or substitute at increasing        to support children’s learning and development.
   levels. In family child care homes this translates
   to either a part- time or full-time assistant.




                                                        14
Scenario Results
As a dynamic tool, the cost estimation model can             ysis of data from the child care provider survey and
ultimately be used to calculate how much it costs            input from the provider workgroup. The results in
to provide high-quality child care in Washington             this section are based on programs with the follow-
State. However, this seemingly simple question               ing characteristics:
hides several additional questions that impact the
                                                             • a center-based program serving 72 children,
answer, such as where the program is located, how
                                                               birth through school age, with one classroom
old the children are, and whether the program pro-
                                                               of each age group (infant, toddler, preschooler,
vides services above and beyond those required by
                                                               school age),
licensing. All these questions are addressed in the
                                                             • a family child care program serving 8 children,
model, providing the user with an answer to their
                                                               birth through school age (1 infant, 1 toddler, 3
specific question.
                                                               preschoolers and 3 school age children).

To illustrate the functionality of the model and
                                                             The default program includes $6,000 per employee
provide some insight into what it truly costs to
                                                             in discretionary benefits and a 6% contribution to
provide child care in Washington, P5FS developed
                                                             health insurance, as well as 10 days paid sick leave
a set of scenarios. While the model can run multi-
                                                             and 10 days paid vacation.
ple scenarios, these example scenarios use a default
program size to show the impact of different vari-           All results are shown as an annual cost per child,
ables on the cost of care. The default program sizes         for each of the six regions and as a statewide
used in this section of the report are based on anal-        average.




                                                        15
Cost of Care Using Current                                          io 1. Figures 7 and 8 following illustrate the gap
                                                                    between the cost of care and WCCC subsidy rates
Salaries                                                            at the licensed level, as of August 2022 (which are
This first scenario uses the current salary data                    based on the 85th percentile of the 2018 market
option as the wage selection. These salaries are                    rate survey). Because WCCC subsidy rates are set
detailed in Appendix A, with lead teacher hourly                    on different geographic regions to the regions used
wage ranging from around $15–$18 depending                          in the cost model, this comparison is done using
on the region. Table 7 details the estimated annual                 the statewide cost numbers and a statewide average
cost of care in a center, while Table 8 provides the                WCCC rate.
same for a family child care home under scenar-




Table 7: Annual cost per child, scenario 1, child care center
                 Central           Eastern         King &       Northwest          Olympic     Southwest   Statewide
Age Group         WA                 WA            Pierce          WA              Peninsula      WA
Infants          $19,916           $20,225         $21,289          $20,608         $19,158     $19,679      $20,146
Toddlers         $14,902           $15,091         $15,875          $15,405         $14,436     $14,789      $15,083
Preschoolers     $12,896           $13,038         $13,710          $13,324         $12,548     $12,833      $13,058
School age        $6,460            $6,461          $6,833           $6,672          $6,305      $6,451       $6,530




Figure 7: Comparison between annual cost per child, and WCCC base subsidy rate,
          scenario 1, child care center, statewide average
$ 25,000
               $20,146
$ 20,000                 $18,234
                                             $15,083 $15,533
                                                                                   $14,094
$ 15,000                                                                 $13,058

$ 10,000
                                                                                                   $6,530 $6,355
 $ 5,000


     $0
                   Infants                       Toddlers                   Preschoolers            School age

                                              Cost per Child                  WCCC Base Rate




                                                               16
Table 8: Annual cost per child, scenario 1, family child care
                 Central         Eastern         King &        Northwest        Olympic      Southwest     Statewide
Age Group         WA               WA            Pierce           WA            Peninsula       WA
Infants/
Toddlers/        $15,998         $10,771         $12,811          $11,505       $12,469       $11,167        $12,453
Preschoolers
School age        $7,741          $5,212          $6,199           $5,567         $6,033       $5,403          $6,026




Figure 8: Comparison between annual cost per child, and WCCC base subsidy rate,
           scenario 1, family child care, statewide average
$ 14,000
               $12,453 $12,287             $12,453                    $12,453
$ 12,000                                             $11,078
                                                                                $10,292
$ 10,000


 $ 8,000
                                                                                                 $6,026
 $ 6,000                                                                                                  $5,276

 $ 4,000


 $ 2,000


     $0
                   Infants                     Toddlers                 Preschoolers              School age

                                            Cost per Child                  WCCC Base Rate




                                                             17
Cost of Care Using MIT Living                                      in child care earns at least a living wage. Table 9
                                                                   details the estimated annual cost of care in a center,
Wage Salary Scale                                                  while Table 10 provides the same for a family child
This second scenario uses the MIT Living Wage                      care home under scenario 2. Figures 9 and 10 illus-
salary data option as the wage selection, identify-                trate the gap between the cost of care and current
ing the true cost of care when everyone working                    WCCC subsidy rates at the licensed level.




Table 9: Annual cost per child, scenario 2, child care center
                 Central           Eastern        King &         Northwest         Olympic     Southwest     Statewide
Age Group         WA                 WA           Pierce            WA             Peninsula      WA
Infants          $29,767           $29,977        $35,304          $32,666          $31,303     $31,246        $34,074
Toddlers         $21,863           $22,009        $25,704          $23,875          $22,929     $22,889        $24,851
Preschoolers     $18,702           $18,822        $21,864          $20,358          $19,579     $19,546        $21,162
School age        $9,232            $9,291        $10,786          $10,046           $9,663      $9,647        $10,441




Figure 9: Comparison between annual cost per child, and WCCC base subsidy rate,
           scenario 2, child care center, statewide average
$40,000

               $34,074
$35,000


$ 30,000
                                             $24,851
$ 25,000
                                                                         $21,162
$ 20,000                 $18,234
                                                       $15,533
                                                                                   $14,094
$ 15,000
                                                                                                  $10,441
$ 10,000
                                                                                                            $6,355
 $ 5,000


     $0
                   Infants                      Toddlers                   Preschoolers              School age

                                             Cost per Child                  WCCC Base Rate




                                                              18
Table 10: Annual cost per child, scenario 2, family child care
                 Central           Eastern         King &        Northwest        Olympic      Southwest     Statewide
Age Group         WA                 WA            Pierce           WA            Peninsula       WA
Infants/
Toddlers/        $19,201           $19,500         $22,882          $21,335       $20,261       $20,284        $20,577
Preschoolers
School age       $9,291            $9,436          $11,072          $10,324        $9,804       $9,815         $9,957




Figure 10: Comparison between annual cost per child, and WCCC base subsidy rate,
           scenario 2, family child care, statewide average
$ 25,000
               $20,577                       $20,577                    $20,577
$ 20,000


$ 15,000
                         $12,287
                                                       $11,078                    $10,292          $9,957
$ 10,000
                                                                                                            $5,276
 $ 5,000


     $0
                   Infants                       Toddlers                 Preschoolers              School age

                                              Cost per Child                  WCCC Base Rate




                                                               19
Cost of Care with Program                                     Scenario 3 aligns with the requirements for a
                                                              program to meet Early Achievers Level 3. Scenario
Enhancements                                                  4 aligns with the requirements for a program to
The cost estimation model includes the ability to             meet Early Achievers Level 5. As the Early Achiev-
run scenarios for multiple types of programs with             ers standards allow programs to achieve levels
different characteristics and meeting different qual-         based on points earned across domains there are
ity standards. Two additional scenarios were creat-           different paths individual providers might take to
ed for illustrative purposes in this report, including        reach these levels. Therefore, the study team made
additional program enhancements to understand                 assumptions to determine the variables included in
the cost when a program goes beyond minimum                   the model at these two levels, as detailed in Table
licensing requirements. These two scenarios use               11. Details of all the program enhancement selec-
the MIT Living Wage salary selection, ensuring                tion points in the model are included in the appen-
that all members of the child care workforce earn             dix, Table B1.
at least a living wage.

Table 11: Program Enhancements included in additional scenarios
Program Enhancement                     Scenario 3 – EA Level 3                Scenario 4 – EA Level 5
Family Engagement                       Family conferences twice per           Family conferences three times
                                        year                                   per year
                                        $50 annually per child for family $75 annually per child for family
                                        engagement plan                   engagement plan
Training/Professional Development  15 hours annually per staff                 20 hours annually per staff
Planning Release Time              8 hours per classroom per week              24 hours per classroom per week
                                   for Centers                                 for Centers; 20 hours assistant
                                   20 hours assistant time per week            time per week for FCC
                                   for FCC
Educational Materials & Curriculum $50 annually per child for                  $100 annually per child for
                                   assessment tools; $3,000 per                assessment tools;
                                   classroom/$1500 per FCC for                 $3,000 per classroom/$1500 per
                                   curriculum                                  FCC for curriculum
Discretionary Benefits             15 days paid leave                          20 days paid leave
                                   10 days paid sick                           20 days paid sick
                                   $6,000 contribution to health               $9,000 contribution to health
                                   insurance                                   insurance
                                   6% contribution to retirement               6% contribution to retirement




                                                         20
Tables 12–15 detail the annual cost per child under                 ment for a program meeting Early Achievers Level
these two scenarios for child care centers and                      3. Scenario 4 uses the rate for a program meeting
family child care homes. Figures 11–14 present the                  Early Achievers Level 5. As shown in these charts,
average cost per child alongside the WCCC subsidy                   despite the higher subsidy rates that programs
program reimbursement rate, using statewide aver-                   meeting higher levels can receive, there is still a gap
ages for both the cost and the revenue. Scenario 3                  between this potential revenue and the estimated
uses the WCCC rate with the higher reimburse-                       cost per child.

Table 12: Annual cost per child, scenario 3, child care center
                 Central           Eastern         King &        Northwest          Olympic     Southwest      Statewide
Age Group         WA                 WA            Pierce           WA              Peninsula      WA
Infants          $31,176           $31,396         $36,988          $34,220         $32,789      $32,728         $35,697
Toddlers         $23,167           $23,322         $27,257          $25,309         $24,302      $24,260         $26,349
Preschoolers     $19,964           $20,093         $23,365          $21,745         $20,907      $20,872         $22,610
School age        $9,754            $9,816         $11,402          $10,617         $10,211      $10,194         $11,036




Figure 11: Comparison between annual cost per child under scenario 3, and WCCC subsidy
           rate at EA Level 3, child care center
$40,000
               $35,697
$35,000


$ 30,000
                                             $26,349
$ 25,000                                                                  $22,610
                         $19,693
$ 20,000
                                                       $16,775
                                                                                    $15,222
$ 15,000
                                                                                                    $11,036
$ 10,000
                                                                                                              $6,863

 $ 5,000


     $0
                   Infants                       Toddlers                   Preschoolers               School age

                                              Cost per Child           WCCC Subsidy – Level 3




                                                               21
Table 13: Annual cost per child, scenario 3, family child care
                 Central           Eastern         King &        Northwest        Olympic      Southwest     Statewide
Age Group         WA                 WA            Pierce           WA            Peninsula       WA
Infants/
Toddlers/        $28,875           $29,267         $34,742          $32,166       $30,544       $30,548        $31,860
Preschoolers
School age       $13,972           $14,161         $16,811          $15,564       $14,779       $14,781        $15,416




Figure 12: Comparison between annual cost per child scenario 3, and WCCC subsidy rate
           at EA Level 3, family child care
$35,000
               $31,860                       $31,860                    $31,860
$ 30,000


$ 25,000


$ 20,000
                                                                                                  $15,416
$ 15,000                 $13,762
                                                       $12,407                    $11,527
$ 10,000
                                                                                                            $5,909
 $ 5,000


     $0
                   Infants                       Toddlers                  Preschoolers             School age

                                              Cost per Child          WCCC Subsidy – Level 3




                                                               22
Table 14: Annual cost per child, scenario 4, child care center
                 Central           Eastern         King &        Northwest        Olympic         Southwest     Statewide
Age Group         WA                 WA            Pierce           WA            Peninsula          WA
Infants          $34,353           $34,595         $40,746          $37,701         $36,127        $36,060        $39,326
Toddlers         $26,028           $26,202         $30,621          $28,433         $27,303        $27,255        $29,601
Preschoolers     $22,698           $22,845         $26,571          $24,727         $23,773        $23,733        $25,711
School age       $10,827           $10,896         $12,645          $11,779         $11,331        $11,312        $12,241




Figure 13: Comparison between annual cost per child under scenario 4, and WCCC subsidy
           rate at EA Level 5, child care center
$45,000

               $39,326
$40,000


$35,000

                                             $29,601
$ 30,000
                                                                        $25,711
$ 25,000
                         $21,881
$ 20,000                                               $18,639
                                                                                   $16,913

$ 15,000                                                                                             $12,241

$ 10,000                                                                                                       $7,626

 $ 5,000


     $0
                   Infants                       Toddlers                 Preschoolers                 School age

                                              Cost per Child                  Subsidy – Level 5




                                                               23
Table 15: Annual cost per child, scenario 4, family child care
                 Central           Eastern         King &        Northwest         Olympic     Southwest     Statewide
Age Group         WA                 WA            Pierce           WA             Peninsula      WA
Infants/
Toddlers/        $30,985           $31,401         $37,157          $34,452        $32,741      $32,747        $34,094
Preschoolers
School age       $14,993           $15,194         $17,979          $16,670        $15,843      $15,845        $16,497




Figure 14: Comparison between annual cost per child under scenario 4, and WCCC subsidy
           rate at Level 5, family child care
$40,000

               $34,094                       $34,094                     $34,094
$35,000


$ 30,000


$ 25,000


$ 20,000
                                                                                                  $16,497
                         $14,745
$ 15,000                                               $13,293
                                                                                   $12,351

$ 10,000
                                                                                                            $6,331
 $ 5,000


     $0
                   Infants                       Toddlers                  Preschoolers             School age

                                              Cost per Child          WCCC Subsidy – Level 5




                                                               24
To illustrate how costs differ based on the quality                As shown, in the child care center setting costs
standards and enhancements programs meet, Fig-                     increase 5–7% at EA level 3, and a further 10–14%
ure 15 presents a comparison of the statewide cost                 at EA level 5. In the family child care setting, costs
per child results using the MIT Living Wage salary                 increase 55% at EA level 3, and then a further 7%
option for a program meeting:                                      at level 5. The increase to level 3 for family child
                                                                   care is larger than centers due to the inclusion of
   (a) licensing standards,
                                                                   a part time assistant at this level to allow for plan-
   (b) Early Achievers Level 3 standards, and
                                                                   ning and release time, which is a significant cost
   (c) Early Achievers Level 5 standards.
                                                                   driver shared across a small number of children.

Figure 15: Comparison of cost per child at different quality levels

$45,000

                      $39,326
$40,000

           $34,074                                                                                      $34,094
$35,000
                 $35,697
                                       $29,601
$ 30,000                                                                                         $31,860
                            $24,851                          $25,711
$ 25,000                          $26,349
                                              $21,162                                       $20,557
$ 20,000                                            $22,610
                                                                                                                            $16,497
$ 15,000
                                                                                  $12,241                              $15,416
                                                                    $10,441                                       $9,957
$ 10,000
                                                                         $11,036

 $ 5,000


     $0
                Center –         Center –           Center –             Center –              FCC – Birth-5      FCC – School age
                 Infants         Toddlers         Preschoolers          School age

                                       Licensing Standards         EA – Level 3        EA – Level 5




                                                              25
Potential Impact of 2021 Market                              As demonstrated, gaps continue to exist across all
                                                             age groups and settings, especially for infants and
Rate Study                                                   toddlers in child care centers, and across infants,
The current WCCC subsidy rates are based on                  toddlers and preschoolers in family child care
market rate data from 2018 and have not been                 homes. These results highlight that even if WCCC
updated by DCYF to reflect the most recent market            subsidy rates were set at the 85th percentile of the
rate survey. However, data from the 2021 market              most recent market rate survey, providers would
rate study are available, allowing for a comparison          still face a shortfall between reimbursement rates
of the estimated cost per child with the most recent         and the true cost of care. These data also show that
data on the prices families are paying or care.              the prices private-pay families are currently able
Figures 16 and 17 illustrate the annual gap between          to afford are also insufficient meaning that child
the statewide average cost of care for each age group        care providers cannot cover the true cost of care
under scenario 2, using MIT living wage salaries,            through either WCCC subsidy or parent tuition.
and the 85th percentile of the 2021 market rates.




                                                        26
Figure 16: Comparison between annual cost of care and 85th percentile of the 2021
           market rate survey, statewide average, child care center
$40,000

           $34,074
$35,000


$ 30,000
                               $24,851
$ 25,000
                                                           $21,162
                     $20,117
$ 20,000                                 $17,925
                                                                     $15,821
$ 15,000
                                                                                    $10,441
                                                                                              $8,952
$ 10,000


 $ 5,000


     $0
               Infants             Toddlers                   Preschoolers             School age

                                Cost per Child        85th percentile 2021 prices




Figure 17: Comparison between annual cost of care and 85th percentile of the 2021
           market rate survey, statewide average, family child care
$ 25,000
           $20,577             $20,557                     $20,557
$ 20,000
                     $16,962
                                         $14,950
$ 15,000                                                             $13,129
                                                                                     $9,957 $10,312
$ 10,000


 $ 5,000


     $0
               Infants             Toddlers                   Preschoolers             School age

                                Cost per Child        85th percentile 2021 prices




                                                 27
Conclusion and Additional
Considerations
This cost of quality study illustrates the reality             what they deserve leaves a large gap between what
faced by child care providers across the state of              providers currently receive through WCCC and
Washington: Current revenues are insufficient to               the true cost with higher salaries. Given that cur-
cover the true cost of child care. As shown in the             rent WCCC rates are based on market prices, it is
default scenario results, when estimating the cost             logical to also assume that families cannot afford
of care using current salaries, the Working Con-               the cost of care with living wage salaries either.
nections Child Care subsidy rates barely cover the
cost of care. For infants, the cost of care exceeds the        The cost model can help illustrate how Washing-
state reimbursement rate and is higher than most               ton State can make changes to stabilize the child
families can afford. This reality becomes even more            care system and ensure it has a sustainable future.
stark when considering higher salaries for the child           Policymakers can use the model to inform WCCC
care workforce. Data from the cost of care survey              subsidy rate setting, ensuring that subsidy reim-
found lead teachers earning around $15 an hour                 bursement rates are sufficient to cover the cost of
on average. This is not a competitive wage in most             operating a program. The model can also be used
communities, leaving child care providers strug-               to understand the cost of program enhancements,
gling to recruit and retain teachers, forced to close          including those aligned with Early Achievers.
classrooms, or putting extra strain on the remain-             While the state currently offers a higher reim-
ing workforce. The study results demonstrate that              bursement rate based on Early Achievers level, the
the child care system is built on the backs of a               model can show what that rate differential needs
workforce that is insufficiently compensated for               to be to cover the additional costs faced by provid-
the critical role it plays in both enabling parents to         ers at higher levels of Early Achievers. The model
work and educating the next generation.                        also demonstrates the impact of different payment
                                                               policies and practices. When a percentage of antic-
Given the importance of the child care workforce,              ipated revenue is not collected, programs already
the cost estimation model developed for this study             struggling to survive on razor-thin margins face
estimated the cost of providing child care with                economic peril. Policies such as paying subsidy
higher workforce compensation. The scenarios                   reimbursement based on child enrollment rather
showing the cost of care when all child care provid-           than attendance and increasing the use of contract-
ers earn at least a living wage offers one possibility         ing for WCCC slots can help address this issue,
for what this higher compensation could look like.             providing more stable funding for providers.
Using living wage as a baseline enables providers
to offer competitive salaries for every member of              This cost study and the cost estimation model
the workforce, while also adjusting for the addi-              highlight the limitations of subsidy rates to fix the
tional responsibilities of different staff. The results        broken child care system. To qualify for assistance
of these scenarios illustrate that paying educators            under WCCC, families must earn under 60% of

                                                          28
the state median income, or around $51,000 for a               states experiment with many different approaches
family of three. And even when families do qual-               to funding child care programs, including direct
ify, the most recent data available estimates only             grants to programs and stipends to educators,
13% of eligible children birth through five actually           recognizing that the pandemic was impacting all
received assistance through the subsidy program.               parts of the system, not just the publicly funded
As shown in Figures 16 and 17, the true cost of care           programs, and that child care played a vital role in
is higher than the prices families are currently pay-          the economy.
ing in the private market as of 2021, making it clear
policymakers need to address the need for support              The crisis in child care existed long before the pan-
beyond families who currently qualify for WCCC,                demic and will continue long after if no enduring
with the true cost of child care being unaffordable            changes are made to the way child care programs
for all but the wealthiest families in Washington              are funded. Washington state leaders have shown
State. When considering the true cost of child care,           a significant commitment to early childhood in
policymakers should consider eligibility levels for            recent years. The results of this cost study and the
public assistance to ensure that all families are able         cost estimation model can serve as invaluable tools
to access affordable child care. In addition, the state        to policymakers to guide future decisions and
can look at ways to support all child care provid-             ensure that the child care system is fully funded
ers, beyond the subsidy system. The results of the             and able to meet the needs of children, the early
cost model can help illustrate what level of sup-              childhood workforce, child care providers, and the
port is needed to provide a stable and sustainable             broader economy that relies on parents’ ability to
child care program. The COVID-19 pandemic saw                  access affordable child care.




                                                          29
Appendix
Table A1: Current salaries, based on cost of quality survey data
                                  Central         Eastern          King &      Northwest       Olympic       Southwest
                                   WA               WA             Pierce         WA           Peninsula        WA
Program Director                  $35,265         $34,944          $40,569      $40,035         $35,626        $37,503
Assistant Director                $31,738         $31,449          $36,512      $36,032         $32,063        $33,752
Admin Assistant                   $30,139         $30,139          $34,175      $30,139         $30,139        $30,139
Lead Teacher                      $32,550         $32,552          $37,261      $36,252         $31,302        $33,210
Assistant Teacher                 $28,579         $28,451          $29,126      $27,772         $26,040        $26,780
Aide/Floater                      $22,616         $26,597          $26,342      $23,656         $19,781        $20,625
FCC Provider/Owner                $58,043         $32,493          $42,462      $36,079         $40,789        $34,427
FCC Assistant Teacher             $28,579         $28,451          $29,126      $27,772         $26,040        $26,780
Source: P5FS cost of quality survey, administered March–April 2022.




Table A2: Compensation Technical                               Notes: The CTW salary scale provides a statewide
Workgroup Salary Scale salaries used                           compensation number, so no regional salaries are
                                                               displayed under this option. The salary scale includes
in model                                                       different salary points based on the education levels and
                                                               credit hours of individual staff members. For modeling
                                     Mid-point of              purposes, the average of the top and bottom points
                                   CTW Salary Scale
                                                               on the salary scale is used in the model when the CTW
Program Director                        $54,654                option is selected.
Assistant Director                      $49,188                Source: Washington State Department of Children, Youth,
                                                               and Families, “Report to the Washington State Legislature:
Admin Assistant                         $45,936                Compensation Technical Workgroup”, (DCFY, 2019). Available
                                                               at https://www.dcyf.wa.gov/sites/default/files/pdf/reports/
Lead Teacher                            $50,248                CompensationTechWrkgrpRprt.pdf
Assistant Teacher                       $46,738
Aide/Floater                            $35,540
FCC Provider/Owner                      $55,100
FCC Assistant Teacher                   $46,738




                                                              30
Table A3: Kindergarten parity salaries used in model
                                 Central        Eastern          King &       Northwest       Olympic        Southwest
                                  WA              WA             Pierce          WA           Peninsula         WA
Program Director                $108,619       $105,622        $119,557       $115,572        $110,523        $119,557
Assistant Director               $89,768        $87,291         $98,808        $95,514         $91,341         $98,808
Admin Assistant                  $51,506        $50,085         $56,693        $54,803         $52,409         $56,693
Lead Teacher                     $73,580        $71,550         $80,990        $78,290         $74,870         $80,090
Assistant Teacher                $51,506        $50,085         $56,693        $54,803         $52,409         $56,693
Aide/Floater                     $51,506        $50,085         $56,693        $54,803         $52,409         $56,693
FCC Provider/Owner              $101,173         $98,381       $111,361       $107,649        $102,946        $111,361
FCC Assistant Teacher            $51,506         $50,085        $56,693        $54,803         $52,409         $56,693
Notes: Regional salaries derived from metropolitan and non-metropolitan area estimates. FCC provider/owner
salary is based on lead teacher hourly pay (annual salary divided by 2,080 hours per year), multiplied at 55 hours
per week to account for the longer hours worked by home-based providers.
Source: Source: U.S. Bureau of Labor Statistics, Occupational Employment and Wage Statistics, “May 2021 State Occupational
Employment and Wage Estimates: Washington”, (U.S. Department of Labor, Washington, DC: 2021).
Available at: https://www.bls.gov/oes/current/oes_wa.htm.




Table A4: MIT Living Wage salaries used in model
                                 Central         Eastern         King &       Northwest       Olympic        Southwest
                                  WA               WA            Pierce          WA           Peninsula         WA
Program Director                 $85,245         $86,041         $106,257       $96,248         $91,075        $90,857
Assistant Director               $70,451         $71,108         $87,816        $79,544         $75,268        $75,088
Admin Assistant                  $44,420         $44,835         $55,369        $50,154         $47,458        $47,344
Lead Teacher                     $57,746         $58,286         $71,980        $65,200         $61,695        $61,548
Assistant Teacher                $44,420         $44,835         $55,369        $50,154         $47,458        $47,344
Aide/Floater                     $44,420         $44,835         $55,369        $50,154         $47,458        $47,344
FCC Provider/Owner               $73,702         $75,164         $91,695        $84,133         $78,881        $78,995
FCC Assistant Teacher            $44,420         $44,835         $55,369        $50,154         $47,458        $47,344
Notes: To estimate the living wage for each region, the study team collected data from the MIT Living Wage
calculator for the counties in each of the six regions. Because living wage varies based on family composition,
the study team developed a composite living wage based on the typical family size of an assistant teacher
and a family child care provider in a nearby populous state where this data was available (it was not available
for Washington State). This allowed for the calculation of two living wages for each region, adjusted for family
composition. The first, based on family composition of assistant teachers, is used in the child care center model
for the lowest paid members of the workforce, namely the assistant teacher and aide/floater. This is also used for
the assistant teacher in the home-based model. Salaries for other staff positions are computed based on this living
wage, increased to account for the additional job responsibilities. This increase is based on data collection in
Washington State and data collected in similar studies P5FS has conducted in several other states to understand
the spread between pay of the different members of the early childhood workforce. The second calculated
living wage, based on the family composition of family child care providers, is used in the family child care cost
model for the provider/owner. The hourly wage is adjusted to reflect the responsibilities of a provider/owner and
multiplied by 2,860 hours to calculate an annual salary based on a 55-hour work week for the provider/owner.


                                                            31
Table B1: Program Enhancement Options
Variable/ Base Value             Additional Selection     Additional Selection     Additional Selection
Setting   (Licensing)            Point 1                  Point 2                  Point 3
Non-Classroom Staffing Pattern
Center    • Program Director      Add Curriculum
            (1.0 FTE)             Coordinator
          • Program Supervisor/ • (0.5 FTE if <50
            Assistant Director     children, 1 FTE up
            (0.5 FTE if <50        to 100 children,
            children, 1 FTE up     1.5 FTE up to 150
            to 100 children, 1.5   children, 2 FTE if
            FTE up to 150 chil-    over 150 children)
            dren, 2 FTE if over
            150 children)
          • Administrative
            Assistant (0.5 FTE if
            <50 children, 1 FTE
            up to 100 children,
            1.5 FTE up to 150
            children, 2 FTE if
            over 150 children)

FCC       • Full time
            Provider Owner
Plannning Time
Center    None                   10% additional           20% additional           30% additional
                                 coverage per classroom   coverage per             coverage per
                                 for quality-related      classroom for quality-   classroom for quality-
                                 activities               related activities       related activities
                                 • 8 hours per class-     • 16 hours per class-    • 24 hours per class-
                                   room per week            room per week            room per week
FCC       None                   Add assistant teacher    Add assistant teacher
                                 • 20 hours per week      • 40 hours per week

Training/Professional Development
Center  10 hours per provider/ 15 hours per provider/ 20 hours per provider/
and FCC employee, annually     employee per year      employee per year




                                                  32
Table B1: Program Enhancement Options Continued
Variable/ Base Value              Additional Selection      Additional Selection      Additional Selection
Setting   (Licensing)             Point 1                   Point 2                   Point 3
Family Engagement
Center    Complete self-          Conferences 2 times a     Conferences 3 times a     Conferences 3 times a
and FCC   assessment, attempt     year, per child           year, per child           year, per child
          to review with family   • 2 hours of floater/     • 2 hours of floater/     • 2 hours of floater/
          • 1 hour of planning      substitute coverage       substitute coverage       substitute coverage
            time, per child         per conference            per conference            per conference
            annually              $50 per child             $75 per child for         $100 per child for
                                  annually for family       family engagement         family engagement
                                  engagement plan           plan                      plan
                                                                                      Family Engagement
                                                                                      Specialist, 1 FTE per
                                                                                      46 children, paid at
                                                                                      assistant director
                                                                                      salary

Educational Materials
Center    Included in             Child assessment          Child assessment          Child assessment
and FCC   nonpersonnel            tools                     tools                     tools
          default                 • $50 per child per       • $75 per child per       • $100 per child per
                                    year                      year                      year
                                  Curriculum                Curriculum                Curriculum
                                  • $3,000 per class-       • $3,000 per class-       • $3,000 per class-
                                    room (Centers)            room (Centers)            room (Centers)
                                  • $1,500 per FCC          • $1,500 per FCC          • $1,500 per FCC
Inclusion Supports
Center    None required with      $250 per child on         $375 per child on IEP     $500 per child on IEP
and FCC   cost drivers            Individualized            per year, for materials   per year, for materials
                                  Education Plan (IEP)      10 hours per week         15 hours per week
                                  per year, for materials   per child, for            per child, for
                                  5 hours per week          instructional aid         instructional aid
                                  per child, for
                                  instructional aid




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