Cost Of Care Analysis
The True Cost Of Care
Funding the true Cost of Care in Michigan requires a total of: $3.5 billion*
Cost of Care
As childcare educators and providers, we know that the Michigan childcare system and programs are underfunded and disconnected, making it difficult for families to navigate the system and afford high-quality child care.
Hope Starts Here and Think Babies Michigan, in partnership with the Michigan Department of Education (MDE), commissioned Prenatal to Five Fiscal Strategies (P5FS), nationally recognized experts, to conduct a Comprehensive Fiscal Analysis. P5FS developed cost estimation models for center-based child care, family child care, and home-visiting direct services to determine the true cost of care. We can advocate for more funding, improve the disconnected system and provide families access to affordable child care. Click on the links below to learn more.
- Multiple services and elements of financing the prenatal to five systems including
- Shared fiscal vision
- Available service capacity
- Current funding (fiscal mapping)
- Modeling the true cost of services and infrastructure
- Projecting revenue needed to achieve the vision established for Michigan’s young children and their families
- The current child care system and programs are underfunded.
- The complexity of multiple funding streams, with separate requirements, results in an uncoordinated system that is difficult for families and programs to navigate.
- Policies remain disconnected and siloed, focused too narrowly on only one aspect of the system.
- Focused on investments that are insufficient to meet the true needs of children and families.
- Perpetuates existing inequities.
- Approximately one-third of eligible four-year-olds are not served by state-funded pre-K (GSRP) or Head Start.
- 62,000 children are eligible or approved for CDC subsidies.
- Only 36,306 children are using CDC subsidies for care.
- The average salary of childcare providers in 2019 was $23,0202 or about $11 per hour - barely above Michigan’s minimum wage despite many providers’ experience and qualifications in the field.
- Home visiting services reach about 18,000 Michigan children, out of more than 660,000 children who could benefit from home visiting services.
- Challenges in hiring and retaining qualified staff.
- Paying competitive salaries and benefits.
- Dynamic tools that estimate the true cost of services on a per-program and per-child basis, accounting for different quality or intensity levels of programs and decisions about compensation.
- Demonstrate the true cost of care in this labor-intensive sector, highlighting the interrelated nature of workforce compensation and the cost of the service.
- The methodology was developed by P5FS, and has been implemented successfully in numerous states and communities across the country.
- Incorporates feedback and insights from childcare educators and, providers, and home visitors.
- The cost to provide prenatal to five services across Michigan, and how this varies by program type, location, and type of service.
- The extent to which current revenues are sufficient to cover the estimated costs of providing services.
- Current child care subsidy rates in Michigan are insufficient to cover providers’ costs for a licensed program, even at current (BLS) wages.
- The annual cost of center-based care for an infant under this scenario is $20,152, which is $5,592 more than the annual subsidy rate for full-time care.
- The gap is slightly smaller for older children, but there is still a gap of $3,491 for four-year-olds between the current cost of care and the subsidy rate.
- In a family child care home, the cost of providing licensed care for a child under five with current salaries is estimated to be $14,579, which is $2,879 more than the subsidy rate for an infant or toddler and $4,569 more than the subsidy rate for a three- or four-year-old.
- The true cost of care - including a living wage for the ECE workforce - in a child care center meeting the minimum state licensing standards is over $26,000 for an infant, which is $11,500 more than current subsidy rates.
- For a four-year-old, center-based care is estimated to cost $16,805 annually, which is $6,405 more than the subsidy.
- In a family child care home, including a living wage for the provider/owner and any staff increases the cost of care to $18,613 per child, which is nearly $7,000 more than the subsidy rate for an infant or toddler and $8,603 more than the subsidy for a three- or four-year-old.
- These gaps are much larger when the cost of care is estimated to include a living wage, which is the goal.