Child Care State Reports . II. Affordability [6]

12/01/1999

  • Prices for child care vary considerably, by such factors as geographic area, type of provider and age of child. Figure 3 shows the average monthly prices for child care in Detroit and Lansing, Michigan. Given that these are average prices, it is clear that many families pay more or less than this amount.
  • Centers in Detroit, Michigan charge an average of $384 per month for preschool care and $513 per month for infant care, as shown in Figure 3. This means that a family with $15,000 in income and one preschool child in an average-priced center would spend close to one-third (31 percent) of its total monthly income on child care expenses. Average-priced infant care would represent an even higher share (41 percent) of monthly income for a family earning $15,000.
  • Centers in Lansing, Michigan charge even more per month for care. Average-priced preschool care costs $482 a month, or 39 percent of monthly income for a family earning $15,000. If this low-income family had an infant, rather than a preschooler, in average-priced care, the $619 per month price would consume 50 percent of the family’s total monthly income.
Figure 3. Child Care Prices and Co-Payments for Hypothetical Michigan Families of Three Earning $15,000 with One Child in Care
  WITHOUT SUBSIDY WITH SUBSIDY
Average Monthly Prices
(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)
FAMILY LIVING IN DETROIT, MICHIGAN
INFANT (1 year)
Center-based $513 41.1% $28 2.2%
Family child care home $395 31.6% $20 1.6%
PRESCHOOLER (4 years)
Center-based $384 30.7% $22 1.8%
Family child care home $345 27.6% $20 1.6%
FAMILY LIVING IN LANSING, MICHIGAN
INFANT (1 year)
Center-based $619 49.5% $29 1.7%
Family child care home $454 36.3% $24 1.5%
PRESCHOOLER (4 years)
Center-based $482 38.6% $24 1.5%
Family child care home $428 34.2% $24 1.5%

*  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.

Source:  Price data collected by the Urban Institute from the Office of Young Children and the Detroit-Wayne 4C, child care resource and referral agencies serving Lansing and Detroit, respectively, summer 1999. Co-payment data collected by the Urban Institute from the Michigan Family Independence Agency, the state child care agency, summer 1999.

  • Family child care homes in Detroit, Michigan charge an average of $345 per month for preschool children and $395 per month for infants. This means that a family with $15,000 in income and one child in an average-priced family child care home would spend 28 percent of its monthly income on care for a preschool child or 32 percent for an infant. A family in Lansing with the same annual income using average-priced care would spend 34 percent of its monthly income ($428 per month) for preschool care or 36 percent ($454 per month) for an infant in a family child care home.
  • 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 state maximum reimbursement rate for the type of care used. In Michigan, co-payments range from 5 to 70 percent of the maximum reimbursement rates for the type of care used. Maximum reimbursement rates vary by region.
    • For example, a family with $15,000 in income and one preschooler in an average-priced center in Lansing, Michigan would be charged a monthly co-payment of $24, or less than 2 percent of monthly income, as shown in Figure 3.
    • In Michigan, families participating in the welfare-to-work program (Family Independence Program), Food Stamp-only families, families in protective services, foster care families and child-only welfare cases are not required 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 infant center care in Lansing, Michigan is $575* per month7, which is $44 less than the $619 average price shown in Figure 3. If the $44 differential is paid by the family, the total cost to the family is $73 per month, or more than twice the official co-payment of $29 shown in Figure 3. If the fee is not charged to the family, the provider loses $44 per month for providing service to a subsidized child. The differential could be much larger than $44 for some child care centers, including accredited centers and other centers with higher than average rates.