This post highlights a policy recommendation from our new report, The Quest for Equity and Quality Examining Provider Experiences and Participation in Texas Rising Star. This report, released 4/4/22, explores data from a statewide survey and focus groups in which providers were asked about their experiences with Texas Rising Star.
In our focus groups conducted for our report, The Quest for Equity and Quality, child care providers mentioned the potential loss of income with enrollment into the program, given that there is a difference between subsidy and private pay. Reimbursement rates are currently calculated through the Market Rate Survey, which is commissioned by TWC every year. The market rate indicates the average prices child care providers are charging private pay families. Many times, this low rate does not even cover a fraction of the provider’s needed cost to maintain continuity of quality care. Because the market rate survey only collects data on what providers are charging, it does not accurately reflect how much money it takes to provide quality care. As previously stated, providers artificially deflate their prices to better reflect the amount that families in their community can pay. This puts a strain not only on providers but families that are receiving child care assistance. Disregarding this barrier can discourage providers from participating in the subsidy program or limit the number of children they are able to serve, resulting in a disproportionate lack of access to early childhood education for low-income children.
Note: Cost of Quality estimates come from costofchildcare.org.
It is important to note that the state raised the reimbursement rates in October 2019 and once more in September 2021. The changes to the TRS reimbursement rates provide evidence that Texas has chosen to prioritize and invest in quality ECE by encouraging more providers to become TRS certified and to inspire those who are rated 2- or 3-stars to increase to 4-stars. The new reimbursement rates allow Local Boards to reimburse TRS 4-star providers at the 85th and 80th percentile for infants and toddlers.
While this is an impressive increase, it is still a fraction of what it costs to provide quality care. As mentioned before, fewer than five LWDBs are reimbursing enough to cover quality costs. If the ultimate goal is for providers to provide quality subsidized child care, it is essential that Texas equip them with the financial resources they need to be successful. This includes allocating funds for providers to help them purchase additional equipment and classroom materials, as well as providing higher compensation for qualified staff to improve the quality of their programs. LWDBs have the ability to provide monies upfront; however, the amount and frequency varies across the state.
While the benefits of quality early childhood education are grounded in research, the real cost of providing high-quality care is less understood. Instead of determining reimbursement rates around the market, the state should base reimbursements on the price of providing high-quality care. Setting reimbursement rates based on a cost-of-quality study would ensure that providers receive the support and resources needed to cover high-quality operating costs. A few states have even implemented a hybrid methodology where market rate surveys are used in conjunction with the actual cost of care within their state. Higher reimbursement rates will help incentivize more providers to increase the number of children they are serving, resulting in equitable access for children from low-income backgrounds.
The CHILDREN AT RISK Early Childhood Education team will be discussing this report in depth throughout their virtual Texas Tour events in April 2022. They will also review strategies going into the 88th legislative session and present new Child Care Desert maps.