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The following are acknowledged for their assistance with this study: The Delaware Division of Social Services, especially Elaine Archangelo, Director of Division of Social Services and Eulinda DiPietro, Social Service Senior Administrator, Division of Social Services. We also thank The Family & Workplace Connection, especially Evelyn Keating, for assistance with the provider sampling frame and with communication to the provider community.
This study would not have been possible without the gracious cooperation of the Delaware child care providers who took the time to participate in the interviews and help with the study. Thank you all.
The 2007 Delaware Child Care Market Rate Study was conducted to meet federal requirements of 45 Code of Federal Regulations Parts 98 & 99 to ensure that reimbursement rates allow subsidized low-income children equal access to early education and care. The goal of this Rate Study was to develop statistically credible pricing information on the present market prices charged by licensed child-care providers in Delaware. “Market prices” are prices charged by providers for private-paying children in their care.
The Delaware Division of Social Services (the Division) contracted with the consulting firm Workplace Solutions in Reading, Massachusetts to undertake this study. The firm has conducted previous market rate studies for the Division and has substantial experience with these surveys. Workplace Solutions' consulting group consisted of a team of researchers including: Marie Sweeney (MBA, M.Ed.), Principal of Workplace Solutions; Ann Witte (Ph.D., Economics), Professor of Economics, Wellesley College; Peter Schmidt (Ph.D., Economics), University Distinguished Professor of Economics, Michigan State University; and William Horrace (Ph.D., Economics, MBA Finance), Associate Professor of Economics, Syracuse University. Project Manager Sweeney worked closely with the Division’s Project Coordinator Eulinda DiPietro to plan and implement the study.
Because of the importance of obtaining accurate pricing information, the study was carefully planned and executed. The project began in February 2007. The Division and Workplace Solutions planned the study during February and March. Interviews were conducted over a five-week period, during March and April. The researchers submitted final 75th percentile prices to the Division in April 2007.
The outline of the report follows. The following section describes the methodology for how the Market Rate Survey was carried out. This includes descriptions of the sample design, the selection of the sample, the survey, and the interviews in the field. The next section describes the findings of the survey including the response rates, the accuracy of the study, and the range of prices at the 75th percentile. It also includes the 75th percentile prices per county and per age group, prices paid by Delaware families, and change in prices since the 2005 Market Rate Survey. The final page contains three tables presenting the 2007 75th percentile prices for the center and family child care markets.
Workplace Solutions implemented the survey to obtain prices for private-paying children in child care at the time of the study. The researchers selected a representative sample of providers throughout Delaware and contacted the sample providers through telephone interviews to obtain prices for private-paying children. Utilizing these prices, researchers calculated the 75th percentiles of market prices for full-time infant, toddler, and preschool care and market prices for part-day school-age care. The 75th percentile price is such that 25% of the prices are at or above the price and 75% are below the price. Estimates of the accuracy of the 75th percentiles of market prices confirm that the Delaware market rate study achieved a high degree of precision.
The sampling frame for the family child-care sample and the center/school-age sample consisted of Delaware's Office of Child Care Licensing's data of licensed providers as of February 2007, merged with The Family & Workplace Connection’s data of family child care and center/school-age providers as of March 2007. This enabled the researchers to design the center sample per age category. This also allowed all providers in the state to have the opportunity to be selected for the interviews and reduced the likelihood of a non-representative sample.
As part of the development of the sampling frame, Workplace Solutions and The Family & Workplace Connection reviewed the center and school-age data to delete categories of providers that were outside the parameters of the study. The consultants then determined that the total size of the sampling frame for this study was 1874 providers. This included 370 licensed center/school-age providers and 1504 licensed family child care and large family child care providers.
The researchers developed a plan for a stratified random sample of the provider population in order to determine the child care prices in Delaware. The sample design was based on the previous design developed for the successful 2005 Delaware Child Care Market Rate Survey. The sampling plan targeted all licensed child-care providers in the state and called for sampling 45% of the providers. The consultants planned that the sample be developed to equalize the accuracy with which the market price is established for the center and for the family child care market segments.
The researchers designed the sample for full-time care for centers and family child-care providers and for part-day care for school-age care. The sample was segmented by:
Regions were the three counties in the state. The types of care were (1) center and school-age care and (2) family child care and large family child care. The age-groupings were infant, toddler, preschool and school-age.
The economists selected providers at random from each market segment. That is, they selected a separate random sample for each of the market segments or cells in the sample design, with each sample corresponding in size to the Sampling Plan. In all, the sample contained 677 family child care providers and 167 center/school-age providers.
| County | FCC | Center/School Age |
|---|---|---|
| Sussex | 168 | 35 |
| Kent | 184 | 33 |
| New Castle | 325 | 99 |
| Total | 677 | 167 |
A wide range of providers was selected for the sample. These included: family child care providers serving few children, large family child care providers, centers serving all age categories, centers serving only one age category, multi-site child care providers, centers that were part of a large national chain, free-standing school-age programs, school-age providers that were part of a larger program, for profit programs and non-profit programs. The researchers also selected providers for the sample that reported scarce types of care in 2005 (infant care, odd-hour care).
Workplace Solutions designed the questionnaire as a telephone survey. It was developed to collect comprehensive and accurate information about prices charged to private-paying parents.
The consultants utilized two surveys for this study: one for the center/school-age market, a second for the family child care and large family child care market.
The center survey asked providers to quote their prices for:
The family child care survey asked providers to quote individual prices for private-paying children in their care, since some FCC providers may not have a set rate for their child care. Thus, the FCC survey was designed to collect:
Both surveys were designed to be easy for the providers yet enable the researchers to address the complex pricing strategies of the provider community.
Odd-hour Care and Special Needs Care
The Division also requested that additional information be collected for two types of care: odd hour care (evening, overnight and weekend care) and special- needs care. The survey collected prices for odd-hour care for private-paying children and cost information for special-needs care.
During the planning phase of the project, the Division and Workplace Solutions undertook various steps to encourage providers to participate in the interviews:
Opinion Dynamics, a professional telephone interview group, was selected to conduct interviews in the field. This group also conducted interviews for the 2000, 2003 and 2005 Delaware Child Care Market Rate Studies. The interviewers used a CATI system (Computer-Assisted Telephone Interviewing) for conducting the interviews and recording the results. As the interviewers asked the survey questions, they entered the providers' responses directly into the computerized database. The interviewers attempted to contact and interview all of the providers in the sample including many of the back-up replacement sample (e.g., all FCC back-up providers in Kent and Sussex were added to the sample). Interviewers made up to ten "call attempts" to a provider to obtain a completed interview. In all, 1276 providers were called for the rate survey interview.
The response rates obtained for this study reflect the cooperation and professionalism of the Delaware providers. A 95% response rate was obtained for the center/school-age interviews. The response rate for the family child care interviews was 71%. In all, 674 providers reported prices for private-paying children in their care. These are very good response rates and reflect the ongoing efforts of Division of Social Services to encourage provider participation in the rate survey. The refusal rate for the study was quite low: 7% of the family child care sample and 4% of the center/school-age sample.
The researchers converted prices obtained in the interviews into daily rates then estimated the 75th percentiles of the distribution of daily rates for each market segment. (See Tables A-C of this Executive Summary.)
The goal of the Delaware 2007 Child Care Market Rate Study was to develop statistically credible pricing information of the present market prices charged by the child care providers in the state. This goal was met since the researchers used a statistically valid methodology, and since the relevant market prices were estimated with a verifiable and high degree of precision. For the infant, toddler and preschool market segments for both the center and family child care markets, the 95% confidence interval is typically about plus or minus 5% of the estimate. For school-age care, the range of statistical uncertainty is somewhat larger. For all of the market segments in the study, the level of accuracy should be considered a more than acceptably high level of precision.
Prices can vary widely in the state, by over 100% among different segments of the market. At the 75th percentile, results of the study reveal that the daily market prices for full time care range from $20 to $44.98. Part-day school-age prices range from $10.25 to $18.
Care is generally lower in price in family child care homes than in centers. As an example, for full-time family child care in Sussex, the daily rate at the 75th percentile for toddler care is $23.88. For full-time center care in Sussex, the daily rate at the 75th percentile for toddler care is $26.25.
Prices vary substantially by geographic region in Delaware. For center and family child care, prices are highest for New Castle County, and lower for Kent County and Sussex County. Notably, prices in New Castle County tend to be significantly higher for all types of care. For center care, the 75th percentile prices in New Castle are at least 50% higher than the 75th percentile prices in Sussex for children below school age, and similarly the prices in New Castle are at least 50% higher than the prices in Kent for toddlers and school-age children.
The 75th percentile prices for full-time care in centers and family child care homes decreases as the age of the children increases. In centers and in family child care, infant care is the highest priced care and preschool care is the lowest priced full-time care in 17 out of the 18 full-time cells. (Note: For this study, school-age providers reported only part-day prices.)
In all, 515 family child care providers participated in this study and reported 1816 prices used to develop the 75th percentile prices for infant through school-age care. At the 75th percentile, full-time FCC daily prices range from $20 to $30.29 depending on the age category and the county. Part-day school-age care range from $10.25 to $14 for care for less than 4 hours per day.
In all, 159 child-care centers and school-age providers participated in the rate study interviews and reported 471 prices for private-paying children. These providers reported private prices for full-time care for infants, toddlers, and preschoolers and part-day care for school-age children. Full-time daily prices at the 75th percentile range from $23 to $44.98, depending on the age category and the county. Part-day school-age care range from $12 to $18 for care for less than 4 hours per day.
The Division requested that the researchers also calculate prices that reflect actual child care purchases being made by families in Delaware. Therefore, the researchers weighted the 75th percentile prices by the number of private-paying children reported for each age category. Thus, if a provider reported that they served a particular age category, such as toddlers, the price was also weighted by the number of private-paying toddlers in the provider’s program. These prices are referred to as “weighted” prices and reflect all market transactions.
For center care, these weighted prices tend to be somewhat higher than the “per provider” prices, especially in New Castle County. As an example, the daily price at the 75th percentile charged by New Castle center providers for preschool care is $35; weighted per private-paying children in care it is $38.60. For FCC providers, the weighted prices are very similar to the unweighted prices. The differences are always $1 or less. The weighted prices are higher than the unweighted prices in five of the twelve market segments, lower in one, and the same in six.
In all, 42 FCC providers reported prices for odd-hour care they had recently provided. The 75th percentile price for odd-hour care for New Castle County is $12/hour; for Kent/Sussex Counties it is $5/hour.
In all, 21% of providers interviewed indicated that they were serving a child/children with special-needs in their program. For centers, 50% of those interviewed reported that they were serving a child or children with special needs. For family child care providers, only 12% reported that they were currently providing services to a child with special needs.
In all, 72% of the providers in the study who were serving children with special needs reported that there were no additional costs incurred to serve these children. Thus, the majority of providers who were serving children with special needs reported that there were no additional costs for them to serve these children.
The Division requested that the researchers also conduct a differential analysis to determine if providers who were serving children with special needs charged higher prices than providers with no children enrolled with special needs. (Due to the ADA law, providers in general cannot charge higher prices for children with special needs. They can, however, charge higher prices to all of the children to off-set higher costs for serving the child or children with special needs.)
When the researchers compared the prices actually charged by providers that do and do not serve children with special needs, they generally found no statistically significant difference between them. Thus it is not the case that providers who serve children with special needs charge higher prices than other providers.
The 2007 75th percentile prices increased above the 2005 75th percentile prices for all 24 full time and part-time cells. In reviewing the 24 cells, there has been an increase ranging from 1% to 20% in the various market segments. Overall, there has been an 11 percent increase in prices since 2005 (averaging the increase of all 24 cells).
For center care, overall there has been an 11 percent average increase in price at the 75th percentile (averaging the increase of all 12 center cells). Kent County had an overall 13% average increase for center care (averaging the increase in infant, toddler, preschool and school age care), Sussex County had an overall 11% average increase, and New Castle County had an overall 9% average increase.
The largest increase in the 75th percentile price among the 12 center cells was for preschool care in Sussex (16% increase). The smallest increase was for infant care and preschool care in New Castle (5%). Toddlers had the largest overall average age category increase in the center market (13%), preschoolers had an overall average increase of 12%, and infants and school age had an overall average increase of 10%.
For FCC care, overall there was also an 11 percent average increase in prices at the 75th percentile since 2005 (averaging the increase of all 12 FCC cells). Sussex County had the largest overall increase for family child care among the three counties (15%). Kent had an overall average increase of 13%, and New Castle had an overall average increase of 6%.
The largest increase in the 75th percentile price among the 12 FCC cells was for Kent toddlers and preschoolers, and Sussex school-age care (20%). The cell with the smallest increase was New Castle infants (1%). Toddlers had the largest overall average age category increase in the FCC market (14%), and infants the smallest (9%). Preschool and school age had an 11% overall average increase.
Tables A, B and C below provide detailed information regarding full-time infant, toddler and preschool daily prices and part-day prices for school-age care. The tables contain, for each cell: 1.) cell definition; 2.) population size N, estimated population of providers of this type of care; 3.) n, number of providers reporting private prices utilized to develop the percentiles; 4.) the maximum price reported for the cell; 5.) the minimum price reported for the cell; 5.) the 75th percentile prices (75% ile).
| County | N | n | Max | Min | 75%ile |
|---|---|---|---|---|---|
| K, ITP | ** | 219 | 37.50 | 13.60 | 24.00 |
| NC, ITP | ** | 437 | 50.00 | 15.00 | 30.00 |
| S, ITP | ** | 226 | 30.00 | 10.00 | 20.00 |
| Region | Type | N | n | Max | Min | 75%ile |
|---|---|---|---|---|---|---|
| Kent | INF | ** | 48 | 36.00 | 15.00 | 25.00 |
| Kent | TOD | ** | 60 | 37.50 | 15.00 | 24.00 |
| Kent | PS | ** | 111 | 34.00 | 13.60 | 24.00 |
| Kent | SA | ** | 43 | 20.00 | 4.00 | 10.25 |
| New Castle | INF | ** | 99 | 50.00 | 18.48 | 30.29 |
| New Castle | TOD | ** | 133 | 50.00 | 16.00 | 30.00 |
| New Castle | PS | ** | 205 | 45.00 | 15.00 | 28.00 |
| New Castle | SA | ** | 94 | 29.00 | 2.50 | 14.00 |
| Sussex | INF | ** | 39 | 30.00 | 10.00 | 23.19 |
| Sussex | TOD | ** | 58 | 27.00 | 12.00 | 23.88 |
| Sussex | PS | ** | 105 | 27.00 | 10.00 | 20.00 |
| Sussex | SA | ** | 63 | 17.50 | 5.00 | 12.00 |
| Region | Type | N | n | Max | Min | 75%ile |
|---|---|---|---|---|---|---|
| Kent | INF | 28 | 20 | 39.00 | 19.00 | 30.00 |
| Kent | TOD | 35 | 24 | 37.00 | 17.00 | 26.00 |
| Kent | PS | 58 | 30 | 33.00 | 16.00 | 25.00 |
| Kent | SA | 49 | 13 | 15.00 | 6.00 | 12.00 |
| New Castle | INF | 106 | 66 | 53.80 | 25.00 | 44.98 |
| New Castle | TOD | 140 | 72 | 48.73 | 24.30 | 42.00 |
| New Castle | PS | 220 | 88 | 44.00 | 16.60 | 35.00 |
| New Castle | SA | 209 | 57 | 31.00 | 6.00 | 18.00 |
| Sussex | INF | 30 | 22 | 33.00 | 22.00 | 28.50 |
| Sussex | TOD | 35 | 27 | 31.00 | 18.00 | 26.25 |
| Sussex | PS | 55 | 31 | 30.00 | 15.00 | 23.00 |
| Sussex | SA | 54 | 21 | 15.00 | 7.00 | 13.00 |
Prices are daily, full time private-paying rates except for School Age (SA), which is part day (less than 4 hours per day.) ITP = Infant, Toddler and Preschool Child Care. INF = Infant Child Care, TOD = Toddler Child Care, PS = Preschool Child Care, SA = School-age Child Care.
** Population size treated as unknown.
N = estimated population of providers of this type of care.
n = number of prices obtained from survey respondents.
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