Child Care Centers and the Quality Improvement Catch-22


October 23, 2014

This post was originally published on the Half in Ten Education Fund’s TalkPoverty blog on October 22.20120105-OC-AMW-0104
Quality, affordable child care is not only right and necessary to prepare children to learn; it’s also needed if low-income working parents are to have a shot at working their way out of poverty. Our nation’s funding source that is supposed to help low-income families in this regard is the Child Care and Development Fund (CCDF). Unfortunately, due to inadequate funding, only 1 out of every 6 eligible children nationwide is actually served by CCDF.

Most states operate CCDF as a voucher program. Eligible parents use vouchers to offset the cost of child care—the fee for each family is determined on a sliding scale basis set by each state. Child care centers that accept vouchers are paid through a combination of voucher reimbursements and family fees.

Many states are now attempting to improve quality in their CCDF child care programs through “quality rating and improvement systems” (QRIS). While QRIS guidelines vary among states, they often feature a rating system based on progressively higher quality standards. In many states, the higher a center is rated, the more money a center receives for each voucher. By tying voucher reimbursement rates to these ratings, the system is designed to incentivize and ultimately fund quality improvements for participating centers.

However, achieving a higher rating in order to receive more money requires a significant capital investment. We at the Mississippi Low Income Child Care Initiative (MLICCI) are concerned that many child care facilities serving low-income families—already struggling to offer desperately needed services to even a fraction of the eligible children—cannot afford the initial investment that is necessary to achieve higher QRIS ratings. It amounts to a Catch-22: for too many centers, the QRIS incentive system is in fact an insurmountable financial obstacle to receiving the financial assistance they need to serve vulnerable children.

To test this concern, we conducted Step-Up, a project designed to demonstrate what centers serving low-income families would have to do to achieve higher quality ratings and greater reimbursement rates in Mississippi. While QRIS systems vary by state, our findings are relevant for any state that finances quality improvements through boosted reimbursement rates—which is the vast majority of states.

Step-Up selected 16 representative centers from around the state, all serving low-income working families. We walked the centers through the QRIS requirements and documented what actions were necessary to attain higher quality ratings. Together, we developed comprehensive, detailed quality improvement plans; and the centers received significant financial resources—provided by MLICCI through a grant from the Kellogg Foundation—to fund the improvements.

The interventions worked. All participating centers achieved higher quality rankings. But it was also very clear—and hardly surprising—that low-income child care facilities with limited resources never would have been able to make these quality improvements without Step-Up funding. Average cost? $11,475 per classroom, which included monies to buy furniture and equipment, and renovate interior classroom spaces and exterior playground spaces.

In addition to requiring an initial investment that is often prohibitive, the QRIS system has a second serious flaw: its reimbursement rates for vouchers are significantly below what is needed to fund QRIS improvements. In Mississippi, the rates begin at just 62% of the state’s market rate for child care. When a center improves to a 2-star rating, it receives a reimbursement of 69% of the market rate; 3-stars merit a 79% reimbursement rate. Even at the highest 5-star rating—which only 11 out of 1,600 licensed centers in Mississippi have attained—a center receives only 87% of the state’s market rate for child care.

Finally, reimbursement rates are paid only for active child care subsidies. With only 1 in 6 eligible children receiving a voucher, the number of higher reimbursements is simply too small to finance the quality improvements. In fact, we estimate that it would have taken about 4 years for the child care centers in the Step-Up project to recoup their initial investment.

Quality improvements are indeed important—important enough to warrant the additional investment required.  But we cannot keep pretending that these improvements can be paid for out of the current pool of meager resources. If we do, then even fewer children will be served by CCDF. Child care centers serving low-income families will either opt-out if the quality improvements are voluntary, or be priced-out of existence if they are mandatory. Either of these outcomes will exacerbate the struggles of the working poor.

This nation needs to do more than just talk about the need for quality, affordable child care for all children—it needs to make a real commitment.


Photo Credited by Wikimedia Commons/U.S. Department of Agriculture

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