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Research Questions

  1. Based on data collected from a small sample of licensed non–Head Start ECCE providers in Oklahoma, what is the estimated per-child cost of ECCE for infants, toddlers, and preschool-age children?
  2. Based on a cost model tailored to the context of ECCE provision in Oklahoma, what are the fundamental ECCE cost drivers, such as provider scale, ages of children served, quality rating tier, geographic region, and key structural parameters often associated with quality (e.g., teacher-child ratio, teacher qualifications, and compensation)?

In December 2018, the Oklahoma Partnership for School Readiness (OPSR) was awarded a federal Preschool Development Grant (PDG) Birth through Five (B–5). The planning grant provided resources for a needs assessment of the state's B–5 system, particularly the system of early childhood care and education (ECCE). In recognition of the importance of understanding the cost of quality ECCE in the state, OPSR contracted with the RAND Corporation to conduct a cost study as part of the PDG's information-gathering activities.

Researchers collected data from 25 non–Head Start center- and home-based ECCE providers throughout Oklahoma in 2019 to understand their program structure and the associated expenditures for the most recently completed fiscal year. The information supported estimation of the per-child cost of care by child age, setting, and quality rating. The data collected from the sampled providers supported the development of a cost model that was used to examine the most important cost drivers and the implications for per-child cost of care.

The findings should be of interest to stakeholders in Oklahoma focused on the cost of quality ECCE in the state, with implications for the cost to providers of delivering ECCE, the prices that families would be expected to pay, and the system of subsidies targeted to lower-income families to support their access to child care and early learning experiences for their children prior to entering kindergarten.

Key Findings

Findings about the operating context of the small but illustrative sample of center- and home-based providers interviewed for the study

  • There is tremendous variation in program operations across our illustrative providers, which result in considerable differences in estimates of cost per child.
  • Low compensation is a common feature across our illustrative providers.
  • Revenue sources differed across the center- and home-based settings examined.
  • Licensed ECCE providers do not routinely have well-organized financial records, according to our illustrative providers.

Findings about the per-child costs for the providers sampled and the variation by provider type, quality rating, and other characteristics

  • The estimates of per-child cost for the sampled providers varied widely, even within the same Reaching for the Stars rating tier or provider type (e.g., centers, large family child care homes, and family child care homes).
  • When per-child costs are compared with the Child Care Subsidy program reimbursement rates across age groups, there is variation in the extent to which the illustrative providers in our sample would recover their costs.

Insights gained from the cost models developed for Oklahoma licensed center- and home-based ECCE programs

  • Teacher-child ratios and group sizes are key cost drivers.
  • Per-child costs are higher for higher-rated programs, but that reflects assumptions about resource use at higher-quality tiers.
  • Given the model assumptions, there are economies of scale, but they are somewhat modest.
  • Costs recovered based on the Child Care Subsidy program reimbursement rates show distinct patterns in terms of the share of estimated costs that are covered.

Recommendations

  • Use cost information collected directly from providers and/or through cost modeling to reconsider the current Child Care Subsidy program reimbursement schedule.
  • Consider options for tying increases in subsidy reimbursement rates to increased spending on resources that matter for the provision of high-quality care.
  • Encourage ECCE participation in Child and Adult Care Food Program subsidies.
  • Ensure that providers have access to supports to improve their financial literacy and business practices.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Study Approach

  • Chapter Three

    Cost Analysis Results

  • Chapter Four

    Key Findings, Policy Considerations, and Recommendations

  • Appendix A

    Oklahoma Child Care Licensing Requirements

  • Appendix B

    Additional Documentation of Methods for Data Collection and Cost Estimation for the Sampled Providers

  • Appendix C

    Cost Survey Data Collection Instrument

  • Appendix D

    Additional Documentation of Model-Based Estimates

This research was sponsored by the Oklahoma Partnership for School Readiness Foundation and conducted by RAND Education and Labor and the Social and Behavioral Policy Program within RAND Social and Economic Well-Being.

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