What A New Market Rate Survey Tells Us (And Doesn’t Tell Us) About Child Care Costs

March 30th, 2021

Category: Early Childhood Education

The 2021 Local Child Care Market Rate Survey has officially arrivedcourtesy of Delaware’s Division of Social ServicesAnd while it shows a small uptick in child care tuition costs across the state (five to nine percent since 2018)—the true headline is that the survey will still help determine how (and how much) Delaware funds child care. And that’s a bad thing.  

“Market rates” are the prices providers charge private-paying families for care. The point of the survey is to collect confidence intervals (remember “percentiles” from statistics?) on what providers are charging. That information is then thrown into the equation for how much Delaware funds Purchase of Care (or POC)—a state subsidy that helps cover child care tuition for low-income parents. POC families make up a huge portion of many providers’ enrollees.  

And as any Delaware child care provider can tell you, Purchase of Care rates don’t come close to covering what it costs to care for a young child. Delaware only covers 65 percent of the 75th percentile of rates. 

The survey’s release marks another flashpoint in the odd and longstanding disconnect between state support of child care and the true needs of families and providers—who also happen to be struggling through a historic pandemic.  

As we’ve said before, using market rate studies to determine POC rates is not a great idea, for a lot of reasons.  

Even the 2021 report itself helped paint the dire predicament in which many providers find themselves…albeit in a sterile, academic presentation 

The majority (58%) of centers reported that their tuition prices had not changed due to COVID, while a majority (80%) reported that enrollments had declined due to COVID. Hence, total revenues may have declined for a majority of centers. This likely caused a contraction in the number of providers doing business.Delaware Division of Social Services

In other words, child care centers are in a major financial crisis. Since COVID, providers’ costs are up 50 percent. Staffing demands with COVID restrictions are significant—reducing opportunities to combine classrooms or leverage floater” teachers that go from room to room, and PPE costs are significant. 

Today, to reach the 75th percentile of 2021 rates (not 65 percent but the full 75th percentile), advocates are pushing for a $60 million state investment in FY2022: $40 million more in the state budget for POC rates and $20 million more to stabilize the industry. Learn more about how advocates are fighting to #FundOurFuture 

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Matt Amis




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