Functional Cost Analyses of State CCR&Rs

Functional Cost Analyses of State Child Care Resource and Referral Systems A Look at Six States: Kansas, Maine, Missouri, New York, Utah, and Vermont Analyses by Patrick E. Gannon, CPA and Colleen Ann Smith Compiled by Debra Al-Salam

Introduction

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he child care resource and referral (CCR&R) field provides a range of services and programs to parents, caregivers, and communities. All of these services are driven by the CCR&R field’s mission to help make child care work for children and families. As with any business, there are many costs and labor hours associated with administering CCR&R services and programs. These costs include, but are not limited to: ■ ■ ■ ■ ■ ■

Staff and other personnel; Operational expenses; Overhead expenses; Resource development; Education and marketing; Community outreach and collaboration activities; and ■ Training and technical assistance.

Six geographically diverse states participated in independent functional cost analyses to determine their unit costs of providing core CCR&R services: Kansas, Maine, Missouri, New York, Utah, and Vermont. With two small rural states, two midwestern states, one western rural state, and one eastern large state, they are diverse not only by location, but also by populations served by child care resource and referral programs.

For New York state, seven of the 42 CCR&R agencies were selected to take part in the study to represent the entire New York state network. These seven agencies were chosen based on their size, structure, and location to be accurate sample representatives of the various geographic regions of the state. The seven agencies chosen serve 14 of the 62 New York

state counties and include a portion of New York City.

It is noted that when referring specifically to data from Maine, their services are provided under Resource Development Centers (RDCs—they do not call themselves CCR&Rs). However, for the purposes of this report, the term CCR&R is used when referring to all the states’ resource and referral systems.

A functional cost analysis is a technique for collecting, organizing, and analyzing CCR&R program expenditures. The analysis tool used, and the intent for which it was designed, was not meant to assess the “quality” or effectiveness of a service or program, only the costs for carrying out those services or programs under the prescribed category and subcategories.

Each state used an analysis tool based upon Understanding Resource and Referral Costs: A Functional Cost Analysis Handbook. This standard business analysis tool was written for and distributed by the National Association of Child Care Resource and Referral Agencies (NACCRRA) and is authored by Gwen Morgan and Anne Ryder.

Although the original research tool had been designed for use within one CCR&R, it was modified so that it could be effectively implemented in multiple sites without the benefit of on-site supervision by a consultant. Patrick Gannon created step-by-step instructions for the data collection. Detailed illustrative samples were developed to ensure uniformity of data collection statewide. The project methodology also included check-ins with CCR&R programs at critical junctions in the process.

Functional Cost Analyses of State Child Care Resource and Referral Systems

Costs of Providing Resource and Referral Services

T

he goal in conducting these independent functional cost analyses was to determine the unit costs of providing core CCR&R services in these states. In carrying out the analyses, components of a CCR&R program were first clearly defined and categorized according to their function in the organization.

The standardized functional categories or areas used with this analysis tool were:

Cost to Provide CCR&R Core Services Kansas (1999)

$2.2 million

Maine (2003)

$3.9 million

Missouri (2000)

$4.4 million $22.4 million*

New York (2002)

$2.6 million

Utah (2002)

$3.3 million

Vermont (2001)

*This figure is for the entire state.

For sample sites, total cost was $7.6 million

1) Management; 2) Information Gathering/Database Management; 3) Community Outreach and Collaboration Activities; 4) Provider Services; 5) Parent Services; 6) Employer Services; and 7) Child Care Subsidy/Voucher Management Services (for Maine and Vermont only).

It is hoped that this report and the tool used to collect and analyze costs will be useful to other CCR&Rs to more effectively manage their operations. This information can be useful for CCR&R operational programming and for state government planners and decisionmakers. In addition, accurate cost data simplifies budget projections, budget making and revision, and proposal writing.

Ratio of Cost of Provider Services to Cost of Parent Services Kansas Maine

3:2 7:1

Missouri

3:1

New York

5:1

Utah

7:1

Vermont

4:1 *It would be interesting to revisit the percentages of resources allocated in the states that were studied in 1999 (Missouri, Kansas) and 2001 (Vermont) to see if their ratios of provider services to parent services in 2003 would be closer to the states more recently studied.

Functional Categories and Subcategories To make the analysis accurate and useful, basic functional categories were established for each of the participating state CCR&R systems. Having uniform and consistent definitions was necessary in establishing basic categories and subcategories. All systems in this report had the same basic functional categories. Vermont had the additional basic category of Child Care Subsidy added to their categories, and Maine had Child Care Voucher Management Administration Services added to theirs.

The basic functional categories (and the duties and costs associated with them) used in these analyses were:

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■ Management: includes staffing and personnel development; planning and budgeting; general office functions; fundraising; marketing; public education; general travel; reporting; and overhead.

■ Information Gathering/Database Management: involves maintaining a database for the many kinds of information relevant to child care resource and referral.

These files need to be updated on a regular basis.

■ Community Outreach and Collaboration Activities: incorporates all levels of statewide partnerships and collaborations that CCR&R directors and staff are involved with on an ongoing basis. It also includes work with other programs; state and local initiatives; community needs assessments; and related travel.

■ Provider Services: includes recruitment of new providers; training of new and existing providers; planning and implementing training courses; technical assistance by phone, newsletters, and other materials; maintenance of resource lending libraries; on-site and walk-in provider technical assistance (observations, meetings, feedback); and related travel.

■ Parent Services: involves referral intake; counseling and consulting; consumer education/parent technical assistance calls (calls that do not result in a referral), referrals to subsidy programs and other agencies, follow-up calls, follow-up surveys; implementing complaint policy; parent newsletters; developing and distributing parent education materials; and related travel.

■ Employer Services (only for a CCR&R that has employer contracts for enhanced services): includes contracted services for parent counseling/consultant; referral and on-site visits; managing employer contracts; client specific publications for parents and other materials; follow-up calls to employers; employer communications; needs assessment funded by employer;

A Look at Six States: Kansas, Maine, Missouri, New York, Utah, and Vermont typing, filing, clerical, billing, and data entry specific to employer contracts; parent/employee groups, parent/employee workshops; and travel for employer contracts.

■ Child Care Subsidy/Voucher Management Services (for those that participate in subsidy/voucher management services): includes case/file management services—phone, face-to-face meetings, and data entry; meetings in the community; printing and mailing of certificates; payment justifications; and complaints and fair hearings.

These categories were slightly different or accounted for differently in some states.

Because of the nature of child care resource and referral, the first three basic categories, 1) management; 2) information gathering/database management; and 3) community outreach and collaboration activities, comprise the basic costs for these CCR&R programs.

These basic functions are more costly than those of many other organizations because of the unique database that child care resource and referral agencies must maintain and because of the need for CCR&R staff to participate in and collaborate with various groups and agencies on a variety of issues.

How the Study Was Carried Out

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ach state used an analysis tool that was based upon the one in Understanding Resource and Referral Costs: A Functional Cost Analysis Handbook. However, many modifications to the original tool were made to reflect the actual functional categories, subcategories, and costs within each CCR&R system. It was also modified so that the agencies could implement it without on-site supervision by the consultant. All agencies had off-site consultant supervision to respond to any inquiries or challenges that arose and to ensure that the data collection process was being followed as it was designed. Patrick Gannon was the consultant for each state, with the exception of New York, in which Colleen Smith was a coconsultant.

There was not a standard timeline for the length of the analysis process. For each state that participated in the analysis, the time it took to go through the entire process—from signing the contract agreement to beginning the study to the writing of the final report— depended upon many variables and in no way impacted the outcome. The entire process for one state network was as short as three months, and for another state as long as seven months.

The functional cost analysis for each CCR&R in this report was based on documented work hours (using assigned function codes) by CCR&R employees for a 14-day time period (done in two separate seven-day periods).

Each functional category has several subcategories and each item had a specific code assigned to that function (for example, the Functional Category for Management is the code letter “A.” The subcategory, program planning and budgeting, under Management, has the code “A5”).

For all of the states, these two separate sevenday work periods occurred within 30 days of each other. Each hour of work time during the 14 days is accounted for and recorded in 15-minute segments under one of the six (or seven) main functional categories as identified previously. CCR&R managers were instructed to review the 14-day time logs of each of the employees for any “out of the ordinary” work.

If the employee’s hours recorded were not reasonably representative of how the employee usually spent their time, in the opinion of the employee and the manager, the manager was instructed to work with the employee to write an addendum to the consultant that explained the situation. The manager then had to provide to the consultant both the original 14day time log and the addendum that reflected a more representative distribution of that employee’s hours.

The raw data (time plus other costs) was reviewed by the consultant. The consultant’s ten years of experience working with CCR&R agencies acted as a “check and balance” for the process to ensure that the data used for the unit cost analysis were as complete and reasonably representative as possible. If there were any clarifications needed, the consultant

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Functional Cost Analyses of State Child Care Resource and Referral Systems worked with the CCR&R manager to resolve any issues.

Each functional category has multiple subcategories that identify particular tasks within each functional category. In addition to the time or hours recorded, the analysis also captures direct and indirect costs of the CCR&R as well as in-kind donations and volunteer hours.

Process Steps 1. Prior to starting the data collection process there were numerous planning meetings to formulate appropriate measurable units for the functional cost analysis specifically for each state and to revise the analysis tool and materials to reflect needed changes.

Training sessions (by phone and in-person) were also held to explain the data collection instructions, forms to use, and analysis process.

2. All CCR&R staff to be involved were trained on the process and methods to be used. Feedback to questions and concerns was given and modifications to instructions and forms were completed as a result.

3. Staff began first seven-day period of work hour documentation using the assigned codes.

4. Staff recorded work time in 15-minute segments according to functional categories (and subcategories) as outlined for the CCR&R system.

5. Samples from ‘week one’ of analysis were sent to consultant for review.

6. Consultant answered questions and provided feedback on samples received and provided further clarification as needed.

7. Staff carried out second seven-day period of documentation.

8. Data was received and reviewed by the consultant.

9. Consultant called CCR&R for clarification on data summaries and reviewed each issue with the appropriate CCR&R manager.

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10. All clarifications were received by the consultant and the consultant completed compilation of data.

11. The consultant analyzed the data.

12. Analysis and findings were completed and the report was finalized.

Defining Units of Measure and Unit Costs In order to determine the cost of basic core services, it was necessary to establish unit costs for services that CCR&Rs provide. In child care resource and referral, it was difficult to decide what the unit of measure is, because their services address the needs of parents, providers, and the community. However, because the mission of CCR&R is to “. . . make child care work for families and communities,” it was decided that the primary unit of measurement is “the family.”

Since the primary unit of measurement is the family, the first unit cost is the “child care referral.” The “child care provider” was identified as the second unit of measure. Services for families and child care providers were the key areas of measurement for these analyses.

In Maine and Vermont, there was a clear third unit of measure for their CCR&R system, “the family receiving child care subsidy/voucher management services.”

Clearly other constituencies - state and local governments, and other early childhood groups for example - benefit from the work of CCR&R. However, distinctly measurable units of service were not available for these constituencies.

CCR&R costs break out into either two or three main groupings: 1. Basics costs (or fixed costs) = [costs that CCR&Rs always have and are part of being in business]; 2. Direct service costs = [costs for providing a service]; and 3. Enhanced direct service costs = [costs incurred depending on whether the state had enhanced direct service costs, such as those under employer contracts].

A Look at Six States: Kansas, Maine, Missouri, New York, Utah, and Vermont The unit cost is the total direct service cost plus a portion of basic costs (fixed costs) divided by the number of units of services delivered. Since families and providers are the key recipients of CCR&R services, a large proportion of basic costs were allocated between these two service categories, and in the case of Maine and Vermont, basic costs were allocated to a third category— Subsidy/Voucher Management Services.

other state’s CCR&R systems. These analyses are very particular to each state’s system and are not meant to compare to other states on a dollar-by-dollar or cost-by-function basis.

However, it can be helpful to see how other systems work and what kinds of things they are doing that may reflect upon costs (such as number of provider trainings per year, types of training — standardized training versus individualized recruitment training, number of hours invested in doing community activities, and so on).

Each CCR&R system had its own set of unique factors that were taken into consideration when determining unit costs and functional categories. Some systems offered subsidy/voucher management services, others did not. It was very important for the consultant to work with the managers of each system to understand how each system operated and how to accurately document the CCR&Rs’ processes and the associated costs.

The subsequent charts and tables show the cost findings for providing CCR&R core services in the states that participated in this study. Again, because this analysis tool was not designed to analyze or measure quality of services, care must be taken when making cost comparisons between different CCR&R programs and services.

Findings and Implications for These CCR&Rs

Functional cost analysis is a useful documentation tool for CCR&Rs. By objectively and critically looking at how their own programs operate and the costs for delivering services, CCR&Rs will be able to use the results to better plan, develop budgets, make programmatic changes, and more effectively raise funds.

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ach state system had unique organizational and operational features that were accounted for when the data was analyzed.

The costs documented under each functional category and other data, although similar in some respects, do not always make a perfect transfer when trying to compare them to

Unit Costs by State PARENT SERVICES

PROVIDER SERVICES

Referral

Consumer Ed/Technical Assistance Call

Kansas

$60

N/A

N/A

Maine

$56

$11

$5742 $3483

Missouri

$69

$24

New York

$484 $675 $426 $597

Utah Vermont

State

Family Subsidy Services

Standardized Career Ladder Training

Other Training

GRANTS Technical Assistance Call

Grants Admin.

N/A

1

$31

$26

N/A

$308 (1 hour)

$336 (1 hour)

$12

N/A

N/A

N/A

$671

$33

N/A

N/A

N/A

N/A

$432 (1 hour)

$46

$3178 $2779

$47

N/A

N/A

$327 (1 hour)

$413 (1 hour)

$7

N/A

$6610 $13011

N/A

$342

N/A

$401

$35

N/A

Notes: Family Day Care Start UP Grant Family Day Care Health and Safety Grant 10 Full service basic referral 11 Full service enhanced

1

8

2

9

Cost per provider of attending a two hour training Unit cost per year per family based on average number of families receiving child care vouchers services at any given time 3 Unit cost per year per family based on the total number of families receiving child care voucher services 4 Low income child care referral per child 5 Low income child care referral per family/call 6 Non-subsidy eligible child care referral per child 7 Non-subsidy eligible child care referral per family/call

[New York — referrals are counted by child in this state. Note: New York’s functional cost analysis is still a work in progress. Some unit costs may change slightly as a result of further review.]

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Functional Cost Analyses of State Child Care Resource and Referral Systems A Comparison of States: Size and Services Number of:

Kansas

Maine

Missouri

New York*

Utah

Vermont

CCR&Rs

16

11

8

42 7*

6

12

Counties served

105

16

115

62 14*

29

14

Parent referrals

20,559

5,028

20,965

24,814*

7,109

4,530

Parent TA calls

N/A

3,737

7,560

N/A

N/A

N/A

Employer referrals

835

N/A

854

N/A

N/A

692

Provider trainings—per 1 hour of training delivered

N/A

4,110 (1 hour training)

N/A

4,701* (1 hour)

2,089—career ladder (1 hour)

N/A

Providers participating in a 2 hour training

11,623

N/A

13,564

N/A

N/A

15,307

Provider TA calls

18,385

11,661

46,122

14,536*

20,430

6,195

Child care entities

9,500—regulated providers

444—licensed centers

4,865—regulated providers

289—licensed centers

608—licensed centers

1,772—certified homes

13,000—registered vendors

2,514*—licensed child care centers

1,093—licensed homes

1,308—licensed homes

827—retention/ recruiting (1 hr)

202—nursery school programs 143—school-age programs

14,367*—registered FCC homes & licensed group family day care homes

744—residential certificates

1,548*—registered school-age programs

55—small facilities 92—Head Start programs 346—legal exempt homes

* Note for New York: Seven agencies participated as a representative sample of the 42 agencies, the totals under the parent, employer, provider services, and child care entities given are for these seven agencies only.

A Comparison of States: Summary of Findings Kansas

Maine

Missouri

New York*

Utah

Vermont

Yearly cost of providing CCR&R services

1999:

2003:

1999-2000:

2002:

2002:

2001:

$2.2 million

$3.9 million

$4.4 million

$22.4 million ($7.6M for 7 sites in study)

$2.6 million

$3.3 million

Unit cost per child care referral

$60

$56

$69

Low-income $48—per child; $67-per family

$47

$66 (basic) $130 (enhanced)

Non-subsidy eligible $42—per child $59—per family Unit cost per parent consumer ed/technical assistance call

N/A

$11

$24

N/A

N/A

N/A

Unit cost of provider trainings per 1 hour of training delivered

N/A

$308 (Maine Roads of Quality Training)

N/A

$432

$327—(career ladder)

N/A

Unit cost of a provider participating in a 2 hour training

$31

N/A

$67

N/A

N/A

$40

Unit cost per provider technical assistance call

$26

$12

$33

$46

$7

$35

Total cash funding

$1,761,824

$3,828,825

$3,940,616

$22,374,599 (statewide)

$2,297,694

$2,981,984

$413—(recruitment/retention)

$336 (one hour elective)

$7,285,136 (for 7 sites in study)

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A Look at Six States: Kansas, Maine, Missouri, New York, Utah, and Vermont Cost Percentages By Functional Categories Management

Information Gathering/Database Management

Community Outreach and Collaboration Activities

Parent Services

Kansas

44%

Kansas

Kansas

8%

Kansas

Maine

18%

Maine

3%

Maine

7%

Maine

Missouri

36%

Missouri

6%

Missouri

11%

Missouri

11%

New York

24%

New York

4%

New York

12%

New York

10%

Utah

22%

Utah

6%

Utah

8%

Utah

8%

Vermont

24%

Vermont

2%

Vermont

8%

Vermont

6%

Provider Services

Kansas

24%

10%

4%

5%

Subsidy/Voucher Management Services

Enhanced Employer Services

Kansas

10%

Kansas

Maine

34%

Maine

1%

Maine

Missouri

33%

Missouri

3%

Missouri

New York

50%

New York

1%

New York

Utah

55%

Utah

2%

Utah

Vermont

25%

Vermont

2%

Vermont

32%

33%

Example: Partial Daily Log Worksheet for Functional Categories and Subcategories Agency: ________________________________ Position Title: ______________________________ Staff Name: ____________________________ Date: ______________________________________ Check one: ❑ Paid staff

❑ Volunteer

(Use list of attached functional categories/functional subcategory codes and description.

Record all CCR&R time. Be accurate to nearest 1/4 hour (record partial hours as .25, .50, or .75 hrs).

Time

Work With Functional Category Codes

8:00—9:00 a.m.

Get messages from voicemail from providers and make three return phone TA calls to providers (D5 .75 hrs) Edit provider newsletter article (D7 .25 hrs)

9:00—10:00 a.m.

Edit provider newsletter article (D7 .5 hrs) Phoning for Career Ladder Class (D3 .5 hrs)

10:00—11:00 a.m.

Phoning for CL Class (D3 .75 hrs) Catalog new books for lending library (D6 .25 hrs)

11:00—12:00 a.m.

Catalog books for lending library (D6 1 hr)

12:00—1:00 p.m.

Lunch .5 hrs (not work time) Phoning for CL Class (D3 .5 hrs)

Category Codes - Partial listing (to go with above sample) Code D

Description Provider Services (licensed, residentially certified, and legally exempt providers)

D1 D2 D3 D4 D5 D6 D7

Recruitment of new providers Recruitment of existing providers Plan and implement provider Career Ladder training courses Plan and implement provider Recruitment/Retention training courses Provider technical assistance on the phone only Maintenance of resource lending library/technical assistance materials Newsletter to providers 7

1319 F Street NW, Suite 500 Washington, DC 20004 (202) 393-5501 www.naccrra.org

For more information, contact: Patrick E. Gannon Phone: (507) 287-2020 x232 Email: gannonpk@charter.net

For additional copies: Call: 202-393-5501 or Visit: http://www.naccrra.org/pubs

Permission granted from the following organizations and state agencies to publish data contained within this report: Kansas Association of Child Care Resource and Referral Agencies 112 W. Iron Salina, KS 67401

New York State Office of Children and Family Services 52 Washington Street, Room 139 North Rensselaer, NY 12144

Maine Department of Human Services Office of Child Care and Head Start 221 State Street 11 State House Station Augusta, Maine 04333

[For New York State: This data analysis is a work in progress. Some unit costs may change slightly as a result of further review.]

Missouri Child Care Resource and Referral Network 4236 Lindell Boulevard Suite 202 St. Louis, MO 63108 New York State Child Care Coordinating Council 230 Washington Avenue Extension Albany, NY 12203

Utah Department of Workforce Services Office of Child Care 140 East 300 South Salt Lake City, UT 84111 Child Care Services Division Department of Social and Rehabilitation Services State of Vermont 103 South Main Street, 2-North Waterbury, VT 05671

Š Copyright 2004 NACCRRA, The Nation’s Network of Child Care Resource and Referral.

All rights reserved.

No parts of this report or data associated with it may be reproduced without prior written permission.