Child Care State Reports . II. Affordability [5]

12/01/1999

  • Prices for child care vary considerably, by such factors as geographic area, type of provider and age of child. Figure 2 shows the average monthly prices for child care in New Orleans, Louisiana. Given that these are average prices, it is clear that many families pay more or less than this amount.
  • Centers in New Orleans, Louisiana charge an average of $303 per month for preschool care and $325 per month for infant care, as shown in Figure 2. This means that a family with $15,000 in income and one preschool child in an average-priced center would spend close to one-quarter (24 percent) of its total monthly income on child care expenses. Average-priced infant care would represent a slightly higher share (26 percent) of monthly income for a family earning $15,000.
    • Accredited care costs even more, $390 per month for a preschooler in center-based care, or about 31 percent of family income for families with $15,000 in income.*  Families with an infant in an accredited center would pay $412, or about 33 percent of family income for families earning $15,000.
  • Family child care homes in New Orleans, Louisiana charge an average of $217 for both preschool-age children and infants. This means that a family with $15,000 in income and one child in an average-priced family child care home would spend 17 percent of its monthly income on care for either a preschool-age child or for an infant.
  • Families who receive child care subsidies usually pay much smaller monthly co-payments rather than the full market rate. Such co-payments are established under a sliding fee schedule, and are based on family size, income and the cost of care. The official fee in Louisiana ranges from 10 to 70 percent of the cost of care up to certain state-set maximum rates.
    • For example, a family with $15,000 in income and one preschooler or infant in an average-priced center in Louisiana would be charged a monthly co-payment of $29, or 2.3 percent of monthly income, as shown in Figure 2.
    • Louisiana does not require families with monthly incomes at or below $1,100 to make co-payments.
  • State policy does not prevent providers from charging parents additional amounts, above the co-payment, if the providers’ rates exceed the state reimbursement level. For example, the maximum CCDF rate for preschool center care in New Orleans Louisiana is $286 per month,6 which is $17 less than the $303 average price shown in Figure 2. If the $17 differential is paid by the family, the total cost to the family is $46 per month, more than the official co-payment of $29 shown in Figure 2. If the fee is not charged to the family, the provider loses $17 per month for providing service to a subsidized child. The differential could be much larger than $17 for some child care centers, including accredited centers and other centers with higher than average rates.
Figure 2. Child Care Prices and Co-Payments for a Hypothetical New Orleans, Louisiana Family of Three Earning $15,000 with One Child in Care
  WITHOUT SUBSIDY WITH SUBSIDY
Average Monthly Rates
(Full Time Care)
% of Income
(Family Income of $15,000 Annually)
Monthly Co-Payments*
(If receive subsidy)
% of Income**
(Family Income of $15,000 Annually)
INFANT (1 year)
Center-based $325 26.0% $29 2.3%
Accredited center-based $412 32.9% $29 2.3%
Family child care home $217 17.3% $22 1.7%
PRESCHOOLER (4 years)
Center-based $303 24.3% $29 2.3%
Accredited center-based $390 31.2% $29 2.3%
Family child care home $217 17.3% $22 1.7%

*  State policy does not prevent providers from charging parents additional amounts, above the co-payment, if the providers’ rates exceed the state reimbursement level. Figures in this table represent the minimum co-payment.

**  Co-payments in Louisiana are based on a percentage of the cost of care, which was assumed equal to average monthly prices (shown in column 1) or maximum CCDF reimbursement rates, whichever was lower.

Source:  Data collected by the Urban Institute from the Agenda for Children-Child Care Resources, a child care resource and referral agency serving the area in and around New Orleans, summer 1999.