Delaware Crunching the Numbers on Child Care Investment Rates: Is Support on the Way for Providers?

As we have written about in the past, the rates at which Delaware funds child care remain too low for providers to support quality—let alone to cover basic costs required to operate, like paying staff, rising wages and costs, driven by minimum wage increases and inflation.

Delaware has long relied on a “market rate” study to set those rates. That study process has come under fire since it reflects what parents are able to pay in tuition. As a result, the state is moving toward utilizing a cost of care methodology—a study that examines what it actually costs to provide quality care.

What’s Underway and What Can We Expect

The Delaware Department of Health and Social Services is currently conducting both studies—and there are opportunities for child care programs to provide input in the coming weeks on “what it truly costs to provide quality child care—not just what families can afford.” Both studies are due later this spring.

Typically, the state has conducted a market rate study each year, and rates typically go up two to three percent per year or about nine to 10 percent every three years.

We anticipate the cost estimation to rise based on increases, including in:

• Minimum wage, which will have gone up 50 percent in January since 2020 (from $9.725 to $15/hour), causing other wages to increase. In an ideal system, child care workers would be paid on a target compensation scale on par with K-12 public educators).
• Hiring needs, because new hires don’t always show up when expected and turnover is significant.
• Behavioral challenges from children and increased developmental delays identified.
• Requirements to meet quality standards of the state, which are important for child development and still not yet high enough. One example is greater family service coordination to support wraparound care for families as well as qualification requirements for educators.

What’s Next

Based on the results of the studies, the policy- and budget-making process requires rate changes. For example, the budget epilogue last year indicated that Purchase of Care rates should be set at 100 percent of the 75^th percentile of the 2021 market rate—which would necessitate change to 2024 rates. And the Department of Education determined that state funded pre-K (ECAP) would be based on the 2021 cost of care rates for FY24, but FY25 remains to be determined.

1. Early care and education programs, participate in cost of care info sessions.
   1. Prenatal to Five Fiscal Strategies (P5FS) is seeking input on the cost of child care from early care and education providers, including child care centers and family child care homes, to help inform Delaware’s child care subsidy payment rates. Make your voice heard by participating in a Virtual Input Session.
2. Stay tuned for the release of the 2024 Market Rate Study and Cost of Care Estimation Model (both anticipated March/April). Sign up for the Delaware Early Childhood Council newsletter for updates and related events.
3. Advocate for Increased Rates during the FY25 Budget Development.
   1. Reach out to legislators through this platform or directly to tell them to increase investments.
      1. The Joint Finance Committee, which builds on the Governor’s Recommended Budget, meets again starting May 28.
   2. Save the date: Early Childhood Advocacy Day will be May 16 in Dover.

Related Topics: child care, childcare, cost of care, delaware child care, early childhood education, early learning, investment agenda, teachers