KidsFirst Quality Counts

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KidsFirstQuality Counts

• Making Decisions
• About a
• Child Care
• Tiered Reimbursement System

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• Based primarily on material from
• Stepping Up to Quality An Overview of Child
  Care Tiered Reimbursement Systems
• Carol A. Johnson and Susan G. Tragesser, December
  2003

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Content

• Terms and Questions
• Example of Rates
• Gormleys Research
• Differential Schemes Examples
• Other Considerations
• Where to Start the Base Rate
• How Often to Recalculate
• Balancing the Money
• Recommendations

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Terms

• Base the tier considered the starting point for
  calculations
• Top Tier the tier considered the ending point
  for calculations
• Differential the percentage of difference or
  dollars between any two tiers

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Questions

• What does research show about differentials?
• What schemes are other states using?
• What other considerations might drive the scheme?

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More Questions

• Where to start the base rate?
• How often to recalculate?
• What happens to the money under differing
  assumptions?
• Recommendations?

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• Among various states, the dollars assigned to the
  highest base tier and to the highest top tier
  vary widely.

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InfantsHighest Base Rates andHighest Top Tier
Rates (rounded)
Maryland, Tennessee, and Milwaukee lt2
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Gormleys Research

• In 2000, William T. Gormley, Jr., and Jessica K.
  Lucas, of the Public Policy Institute, Georgetown
  University, published the results of a study
  titled Money, Accreditation, and Child Care
  Center Quality.

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Gormleys Research

• KidsFirst binder Tab 4, second section, page
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• This suggests a simple but important
  lessonHIGHER RATES HAVE HIGHER IMPACTS.

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Gormleys Research

• Also
• a state that wants to maximize its chances of
  having a positive impact should set its rates for
  accredited centers at least 15 percent higher
  than its regular rates.

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Gormleys Research

• In Differential Reimbursement Policies and Child
  Care Accreditation, (2002)
• In the five states where differential
  reimbursement has a statistically significant
  effect, , the average financial incentive is 17
  percent. In the five states where differential
  reimbursement has no statistically significant
  effect, the average financial incentive is 9
  percent.

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Differential SchemesApproaches

• There are two basic approaches to calculating the
  dollars for particular tiers
• Straight percentages
• More complex means

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Differential SchemesGeorgia
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Differential SchemesTennessee
The State will reimburse at any lower rate
offered by a provider to the general public. Star
Bonuses will be computed from a lower provider
rate.
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Differential SchemesMaryland
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Differential SchemesOklahoma
calculated from daily rates, rounded
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Differential SchemesNorth Carolina -
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Differential SchemesNorth Carolina -
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Differential SchemesNorth Carolina Highest
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Differential SchemesNorth Carolina

• 100 counties
• Five Star Levels
• Four Age Ranges
• Two Categories (Centers, Family Homes)
• 4000 Rates

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Differential SchemesNorth Carolina

• Private Market Survey, Rates by Age by Stars
• 75th Percentile
• If not a certain number of kids in care for a
  sector, use the state rate
• THEN
• The legislature tells them how much money they
  have to work with
• Funds are allocated on a county-by-county basis
• Factors are primarily
• Number of families with all parents working whose
  household income is at or below 75 of the State
  median income
• Last years cost of care

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Differential SchemesMinnesota

• Use the above table to multiply the following
  base costs x the service level of the program.
• Base Costs
• 9,000 - Infants
• 7,500 - Toddlers
• 6,500 - Preschoolers
• 6,500 - School ages

proposed
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Other ConsiderationsInstead of having a higher
differential,

• Money, stipend or bonus, could be passed directly
  to care-giving staff. (North Carolina WAGE
  Project)
• The highest tier could be exempt from property
  taxes and from state sales tax on supplies.
  (Florida)
• Providers could have access to a state-wide
  health insurance pool.

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Other ConsiderationsInstead of having a higher
differential,

• One-time bonus (200 - 1,000) on completion of
  tier requirements (Maryland)
• Quality-enhancement grants (1,000 to 20,000) to
  move to higher tier (Tennessee)
• First year income tax credits (5,000) for
  quality approved facility (Arkansas)

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Other Considerations

• Can tiered rates exceed private pay rates?
  (Oklahoma)
• Can tiered rates be below private pay rates?
  (North Carolina)
• If so, under what circumstances and to what
  extent?

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Where to Start the Base Rate?

• In an ideal world
• At the private pay rate
• In the real world
• What can the state afford?
• OR
• What does basic care cost the provider?

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Where to Start the Base Rate?

• What should count as basic care?
• Licensed or certified WITH numerous, repeated
  and serious violations or enforcement actions
• Licensed or certified WITHOUT numerous, repeated
  and serious violations or enforcement actions

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How Often to Recalculate?

• Because the rate survey process is so
  labor-intensive, consider setting rates every two
  years.
• In Tennessee, agencies with two-star or
  three-star rating are eligible for consideration
  of a biennial or triennial license, respectively

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Balancing the MoneyUnknowns

• How many providers are currently at what tier
• How many children are currently subsidized at
  providers at what tier
• How much money is currently expended for how many
  children are currently subsidized at providers at
  what tier

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Balancing the MoneyAssumptions for Illustrations

• Wisconsin had 236 NAEYC-accredited and 28
  NAFCC-accredited providers as of 7-23-04, about
  5 of the 5,592 licensed providers
• Wisconsin had 395 enforcement actions in 2003,
  about 7 of the 5,592 licensed providers,
  assuming one per provider

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Balancing the MoneyAssumptions for Illustration
- Group

• Assume 5 tiers
• Number of children at Tier 1 25
• Number of children at Tier 2 30
• Number of children at Tier 3 30
• Number of children at Tier 4 10
• Number of children at Tier 5 5
• Dollars expended per child currently the MCR

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Balancing the MoneyIllustrations - Group

• Using Milwaukee Countys 2004 Center Infant MCR -
  220
• Illustration 1 - Tiers evenly separated by 4
• Illustration 2 - Tiers evenly separated by 7
• Illustration 3 - Tiers evenly separated by 10
• Illustration 4 - Tiers evenly separated by 15

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Balancing the MoneyGroup Illustration 1 4
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Balancing the MoneyGroup Illustration 2 7
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Balancing the MoneyGroup Illustration 3 10
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Balancing the MoneyGroup Illustration 4 15
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Balancing the MoneyAssumptions for Illustration
- Family

• Assume 5 tiers
• Number of children at Tier 1 40
• Number of children at Tier 2 30
• Number of children at Tier 3 15
• Number of children at Tier 4 10
• Number of children at Tier 5 5
• Dollars expended per child currently the MCR

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Balancing the MoneyFamily Illustration 1 4
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Balancing the MoneyFamily Illustration 2 7
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Balancing the MoneyFamily Illustration 3 10
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Balancing the MoneyFamily Illustration 4 15
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Balancing the MoneyCertified Illustration 1 4
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Balancing the MoneyCertified Illustration 2 7
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Balancing the MoneyCertified Illustration 3 10
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Balancing the MoneyCertified Illustration 4 15
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RecommendationsQuestion

• Where is reasonable for Wisconsin between
  Gormleys 15-17 and North Carolinas 212?

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RecommendationsReasonable?

• Difference between Base and Top Tier
• Tennessee 20
• Maryland 44
• Georgia 50
• Oklahoma 93
• North Carolina 212

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RecommendationsGroup Illustration 5 Uneven
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RecommendationsFamily Illustration 5 Uneven
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RecommendationsCertified Illustration 5 Uneven
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RecommendationsResults

• Givens
• 3 categories of care (Licensed Family, Licensed
  Group, Regularly Certified)
• 4 age groups (Under 2, 2-3, 4-5, 6 and over)
• 5 tiers

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RecommendationsResults

• Decisions
• Percent to Top Tier
• Intervals Tier 1 to Tier 2, etc.