Association for Public Policy Analysis & Management

In 2016, 1.37 million children received subsidies under the U.S. Department of Health and Human Services’ $8.7 billion Child Care Development Fund (CCDF). Though one of the goals of the CCDF is to provide high-quality early care, research has found that children receiving child care subsidies are often served by lower quality programs. Two ways a state can incentivize child care programs to improve their quality are (1) through supports available from a state’s Quality Rating and Improvement System (QRIS) and (2) by providing additional payments through a tiered reimbursement system to child care programs that are highly rated on their state’s QRIS. QRIS are accountability systems designed to improve the quality of child care by defining quality standards, providing supports for program improvement, and making quality transparent to programs and parents. While there is research on how QRIS improve program quality, I could not find any research on how tiered reimbursement systems improve program quality. Therefore, I conducted a mixed methods study to answer the research question, Does Maryland’s tiered reimbursement system incentivize child care programs to be highly rated on Maryland’s QRIS? Specifically, my research focused on Maryland’s QRIS—a 5-level system called EXCELS—and its tiered reimbursement system that provides additional payments—called EXCELS payments—to programs that are rated 3 or higher on EXCELS and receive reimbursements from Maryland’s Child Care Subsidy Program (CCSP). In the quantitative part of my research, I conducted multilevel analyses to determine the association between center-based and family-based programs’ reliance on CCSP payments and whether the program was rated highly enough to receive an EXCELS payment. The analyses used administrative data from the Maryland State Department of Education (MSDE) and demographic data from the U.S. Census. Reliance on CCSP payments was defined as (1) the percentage of licensed slots filled by children in the CCSP and (2) total CCSP payments (not including EXCELS payments). The analyses included all programs in Maryland that received CCSP payments in January 2018. In the qualitative part of my research, I interviewed 14 center-based child care program directors across five counties to understand how they made decisions about which EXCELS rating to attain and how tiered reimbursements factored into their decisions. The interviews included directors from three school-age child care programs with multiple locations, one corporate child care program with multiple locations, and 10 child care centers. To better understand the context of child care and EXCELS, I conducted descriptive analyses of program characteristics and EXCELS ratings (using MSDE administrative data from 2013–2018) and interviewed officials from the MSDE and technical assistance providers. Preliminary quantitative results suggest that Maryland’s tiered reimbursement system incentivized child care programs to be highly rated, though few interviewed program directors reported that EXCELS payments factored into their decisions on what EXCELS level to reach or how quickly to reach the level. Directors reported making numerous changes to their programs due to EXCELS, especially around curriculum and staffing, and spent their EXCELS payments on supplies, such as toys and books.