Cost Modeling — Alliance for Early Childhood Finance

Cost Modeling

Under the leadership of Anne Mitchell, the Alliance has engaged in several cost modeling projects, aimed at helping states to estimate the cost of various early care and education finance initiatives.  Articles, resources and tools from this work are included below:

The Provider Cost of Quality Calculator (PCQC) is a new, easy-to-use, dynamic Web-based tool that calculates the cost of quality-based on site-level provider data. The tools helps state policymakers understand the costs associated with delivering high-quality early care and education. The tool can demonstrate whether there is a gap between the cost of providing quality services and the revenue sources available to support a program. Knowing the size of the gap at different quality levels for various provider types can inform the design of financial support and incentive packages.

The PCQC is useful to States that have a Quality Rating and Improvement System (QRIS) and to States that want to understand the cost of operating a particular type of quality program, such as prekindergarten. The tool can model the cost of quality for any jurisdiction​ (state, county, city)​. A user can manage and share multiple scenarios and provider profiles, and store and print reports.

Two issue briefs were written to illustrate how the PCQC can be used to model and understand the impact of quality and program characteristics on the revenue and expenses of an early childhood center or family child care (FCC) home. This brief discusses the effects of 3 quality variables on provider financial health and viability: increased levels of quality; changing ratios and group sizes; and compensation increases.

This brief on program characteristics discusses the effects of 4 variables on provider financial health and viability: participation in the Child and Adult Care Food Program (CACFP); program size and ages of children served; enrollment efficiency; and bad debt or uncollected revenues.

Several states and districts, including WashingtonRhode IslandDelawareOhio, and the District of Columbia, have used the PCQC to develop a set of dynamic models to estimate the cost of operating early learning programs at various levels of quality consistent with the state’s QRIS.

This short paper describes the process and considerations for using the PCQC to develop cost of quality estimates for a state (or other jurisdiction).

“ECE Cost Modeling” (2014). This webinar, led by Libbie Poppick and Louise Stoney,  describes cost modeling, demonstrates how one version of cost modeling works, discusses how cost modeling can help the ECE sector, and explores a range of policy implications.  PresentationAudio recording.

To understand the costs of operating a program at different levels of quality in a quality rating and improvement system, Anne developed a generic cost modeling tool for center-based early care and learning programs in 2012.  A brief memo explains how to customize the spreadsheets for different jurisdictions.

PowerPoint Presentation Shared Services Financial Impact (2010). Anne Mitchell, Alliance for Early Childhood Finance. Powerpoint presentation for the National Shared Services Technical Assistance Conference, modeling the cost/benefit of shared services for centers.

Lessons from Cost Modeling: The Link Between ECE Business Management and Program Quality (2010) Mitchell and Stoney. This brief highlights key principles that have emerged from the Alliance cost modeling work.

QRIS Cost Modeling (2009) Anne Mitchell has developed interactive spreadsheets to understand the cost of implementing and expanding different QRIS designs.  These are now an online interactive tool – the QRIS Cost Estimation Model – that can be used to estimate the cost of any QRIS model from small pilot to full-scale multi-year implementation.  [Note: You will need to establish an account to use this tool.]

Costing Out Early Care and Education (2004) — a conference call sponsored by Smart Start’s National Technical Assistance Center, with Anne Mitchell and Stacie Golin. Resources from this call.