• A cost study involves collecting data from providers about their current costs of operating a program that meets licensing standards as well as other quality standards , reflecting point-intime data about provider costs .
• A cost estimation model involves building a tool that is informed by provider data and that can run multiple scenarios to estimate the impact of several variables on cost , such as program characteristics ( e . g ., size and age mix ), child populations served , program quality , and location in the state .
Whichever approach is used , an alternative methodology takes into account the actual costs incurred by providers to meet state standards or quality requirements , with variations by setting , geography , age of child served , and other program or child characteristics . As states across the country consider ways to stabilize and strengthen their early childhood systems , they are increasingly recognizing the importance of developing a deeper understanding of the true costs of operating high-quality programming and seeking alternative ways to set subsidy rates , such as through a cost estimation model .
Beyond subsidy rate setting , development of a cost estimation model can support states to develop policy solutions that increase access to affordable child care . By understanding the true cost of care , policymakers can see the limited impact the subsidy system will have when eligibility levels fail to provide support to middle-income families . Many families earn too much to qualify for child care subsidy assistance , but too little to be able to afford the true cost of care . A robust child care system where all providers have access to the resources they need to provide high-quality child care requires an honest assessment of what it costs to provide that care , and where the burden of paying for that care should land .
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