In 2023, the South Carolina Department of Social Services (SCDSS) contracted with the national nonprofit organization Prenatal to Five Fiscal Strategies (P5FS) to estimate the true cost of meeting state early care and education licensing and quality standards. The work included conducting a cost study and developing a cost estimation model to guide child care subsidy policy and rate-setting.
P5FS helped SCDSS get feedback and guidance from partners across the state, convening South Carolina Alternative Methodology Technical Workgroup that included child care providers and representatives from SCDSS, South Carolina Child Care Resource and Referral, the South Carolina Inclusion Collaborative, South Carolina Program for Infant/Toddler Care, the Early Childhood Advisory Committee, professional associations, higher education institutions, and South Carolina First Steps.
P5FS also helped SCDSS develop the cost model, set rates, and secure pre-approval from the federal Office of Child Care to use an alternative methodology. South Carolina received federal approval for its approach on January 8, 2024.
Shifting to a cost estimation model increased the weekly payment rate for family child care providers from $150 to $215, an increase of $65 per child per week.
Sources:
Amayun, C., Capito, J., Kenyon, K.F., Rhinehardt, K. & Workman, S. (2024). Understanding the true cost of child care in South Carolina: A cost estimation model to support alternative methodology for CCDF subsidy rate setting. Prenatal to Five Fiscal Strategies.
First Five Years Fund. (2025, December 9). Cost Estimation Models: Increasing Child Care Stability Through More Accurate Provider Payment Rates.
Connections to Key Early Learning Study at Harvard (ELS@H) Findings:
States and cities can and should use cost estimation models to better understand the true cost of providing high-quality, affordable early education and care. These models should, in turn, be used to set subsidy rates that support fair, living wages for educators and promote a sustainable business model for all types of early education settings. Research suggests there is a need for more accessible, affordable, and high-quality early education opportunities across the mixed-delivery system – and for better financial and professional supports for the educators who serve children and families each day; measuring and funding the true cost of care can help states and cities address these needs and achieve these goals.
Findings from the Early Learning Study at Harvard (ELS@H) show:
- Families rely on a range of formal (e.g., Head Start, center-based care, public pre-K) and more informal (e.g., home-based, relative care) early education settings; when choosing a setting for their child, families balance many logistical constraints and personal preferences.
- But for many families – and especially low- and middle-income families – early education choices remain tightly constrained due to issues of affordability and supply.
- Early educators play a critical role in supporting the well-being of young children and families across setting types.
- Yet their pay, benefits, and other professional supports are often inadequate in light of the job demands and their cost of living.HawMM