The Institute of State and Regional Affairs at Penn State Harrisburg, in partnership with Pennsylvania’s Office of Child Development and Early Learning and the Pennsylvania Key, has released a new study on the Cost of Child Care in Pennsylvania. The economic cost of care in was estimated via the ingredients method using detailed site-level resource data from a large, representative sample of providers. The ingredients method focuses on the characteristics and quantities of resources – including people, services, and supplies – used to deliver a program.
The principle finding of the study is an estimated weekly cost of child care of $290 per child, which is generally higher than in prior studies. Costs were related to several provider characteristics including quality, type, and location.
The range of per-child cost across providers in the study was large. Examination of differences in cost estimates between small subgroups explored variation and the cost drivers that may explain differences statewide. Subgroup analyses suggests smaller providers, such as family and group child care homes, trend toward higher cost and greater variation. Facility and personnel median costs per child were lower at child care centers, as they reported operating closer to ratios established in regulation.
As with provider type, variation in cost was observed across Keystone STAR levels. STAR 3 and 4 providers generally had higher costs compared to STAR 1 and 2 providers. Finally, a comparison of providers by locale reveal a large difference between the local per-child cost between providers in metropolitan and rural areas. Since personnel costs account for approximately 80 percent of total cost of child care, much of the estimated cost difference by locale results from variation in wages across the commonwealth.
Recommendations are provided to reassess the subsidy rate structure and explore viable alternatives.