High Quality Early Childhood Education: What is the real cost

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High Quality Early Childhood Education What is
the real cost?

• Presented at the DVAEYC Conference
• April 12, 2008

2
The Problem

• Child care is expensive the largest expense is
  personnel
• PAs quality initiatives are based on research
  that shows higher levels of education for staff
  make the largest difference in program quality
• Higher education levels higher salaries
  higher program costs

3

• STARS and Pre-K Counts link higher standards with
  financial supports
• Question do these programs provide enough
  additional revenue to programs to pay the cost of
  higher standards?
• QUEST developed sample budgets to answer this key
  question

4
Budget Assumptions

• Staff and benefits costs for the program
  represent 75 of the total budget for the center
• Salary and benefits rise commensurate with higher
  levels of education
• Revenue was calculated at the maximum ceiling
  rate of the subsidized child care system

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Budget Assumptions (cont.)

• Sample Budget developed for medium size center
  of 72 children
• 12 infants 2 classrooms, 4 teachers
• 20 toddlers 2 classrooms, 4 teachers
• 40 preschoolers 2 classrooms, 4 teachers
• Salaries range from minimum wage to a maximum of
  40,000 for teacher certification

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Findings
Current Levels of Funding available through CC
Subsidy and Keystone Stars STAR 1 STAR 2 STAR
3 STAR 4 PRE-K Total Expenses 545,947
601,867 709,973 755,733
880,880 Total Revenue including Merit Awards
and ERA 611,790  630,090
648,340  662,590 822,590 Difference
65,881 28,224 - 61,633
-121,006 -58,290
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• Current levels of Funding

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Recommendations

• A meaningful increase in the subsidy rate that is
  tied to STAR level. The state should consider
  adding at least 10 to the maximum reimbursement
  rate for STAR 4 providers, and at least 7-8 for
  STAR 3 providers. Increases should recognize that
  the largest cost and quality increase occurs
  between STAR 2 and STAR 3 and increases should
  be weighted appropriately.
• Increased Merit Awards for programs. The current
  level of Merit Awards is not calculated on the
  actual costs but serve primarily as an incentive
  to attract participation in the program. Keystone
  STARS should recognize that higher levels of
  quality cost significantly more than mediocre to
  poor child care, and should index the merit
  awards to more appropriately reflect these costs.

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Recommendations

• For Pre-K Counts classrooms, partially funded
  classrooms are causing providers to have SOME of
  the funding while meeting ALL of the
  requirements. As Pre-K Counts expands, it is
  important to fund classrooms in complete blocks
  ensuring an adequate level of resources to meet
  higher staff credentialing requirements.
• Providers need to improve their ability to blend
  funding and cost out services offering services
  only if they have adequate or able to raise
  sufficient supplemental funds

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Recommendations

• Proposed Merit Award Calculations
• Small Center
• STAR 2- 40 children x 100/child -- 4,000
• STAR 3 40 children x 400/child -- 16,000
• STAR 4 40 children x 500/child -- 20,000
• Medium Center
• STAR 2- 75 children x 100/child -- 7,500
• STAR 3 75 children x 400/child -- 30,000
• STAR 4 75 children x 500/child -- 37,500
• Large Center
• STAR 2- 120children x 100/child -- 12,000
• STAR 3 120 children x 400/child -- 48,000
• STAR 4 120 children x 500/child -- 60,000
• Very Large Center
• STAR 2- 180 children x 100/child -- 18,000
• STAR 3 180 children x 400/child -- 72,000
• STAR 4 180 children x 500/child -- 90,000

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Recommended Levels of Funding through Child Care
Subsidy and Keystone STARS

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Implications

• We cannot meet higher standards without increased
  resources
• Advocacy efforts must continue address the
  funding gap
• PA is almost to the end of a pro-early childhood
  administration pendulum effect in state with
  rural-urban split