United States General Accounting Office

GAO Report to Congressional Requesters

October 1999 CHILD CARE

How Do Military and

Civilian Center Costs

Compare?

GAO/HEHS-00-7

GAO United States

General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-279806 

October 14, 1999

The Honorable Trent Lott

Majority Leader

United States Senate

The Honorable Larry E. Craig

United States Senate

The Honorable Paul D. Coverdell

United States Senate

The demand for child care has increased dramatically in the past several

decades as the number of mothers who work outside the home has grown.

About 39 percent of women with children under the age of 6 were in the

labor force in 1975; by March 1997, that figure had risen to 65 percent.

Recognizing the importance of child care arrangements to all working

families, the Congress streamlined federal programs in 1996 and increased

funding in fiscal year 1997. Proposals have been introduced in the 106th

Congress that address the affordability and quality of care. An important

question underlying these proposals is how much high-quality child care

costs.

Researchers and practitioners agree that high-quality child care settings

are those in which a sufficient number of well-trained caregivers have

positive interactions with children engaged in developmentally

appropriate activities in safe environments. Both the Congress and the

administration have praised the high quality of the child development

program operated by the Department of Defense (DOD) and identified it as

a model for the rest of the nation. Therefore, to provide a benchmark cost

estimate for the Congress as it addresses these child care issues, you

asked us to compare the cost of DOD’s high-quality child development

program with the cost of comparable care in the civilian market. As agreed

with your offices, our objectives were to (1) identify the objectives of the

military child development program and describe how it operates,

(2) determine the full cost of operating DOD’s U.S. child development

centers and the cost per child-hour for center-based care, and (3) compare

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the cost per child in DOD child development centers with the full cost of

comparable quality child care in the civilian market.1

The military child development centers in our review included only those

of the Air Force because it was the only service whose centers had all

demonstrated high quality by meeting the accreditation standards of the

National Association for the Education of Young Children (NAEYC).2

 Our

cost estimate data for the Air Force centers came primarily from that

service and other government sources. We also surveyed all Air Force

child development centers to collect cost information that these

government sources did not provide. Our cost estimates for civilian child

care centers came from information provided by a research study3

 of 150

child care centers identified as providing high-quality care out of a sample

of 401 centers in four states. Although not necessarily representative of all

high-quality child care centers, these data are the only source of cost

information available in an existing database. Appendix I provides

additional details about our methodology and its limitations. We

conducted our work between April 1998 and July 1999 in accordance with

generally accepted government auditing standards.

Results in Brief The primary objective of the military’s child development program is to

help military families balance the competing demands of family and

military responsibilities by providing high-quality child care at affordable

rates. DOD’s child development program is implemented in each service

1

The full cost estimate represents what it costs to operate a center when all costs are counted. This

estimate includes both expended costs (total cash costs for daily operations) as well as other costs

that the Air Force incurs but does not charge its centers. Expended costs include labor, staff education

and training, food, supplies, equipment, and utilities. Air Force occupancy cost (annual value of center

space) is imputed and counted only as a component of the full cost estimate. Also included in the full

cost estimate are legal services and donations. Donations include services that volunteers provide the

centers as well as donated goods and cash. Most of our full cost findings are expressed as the cost per

child-hour, a measure that standardizes the cost of care across all types of centers, regardless of the

number of children served or the hours of operation. Although we present our cost information in

dollars and cents, our findings are estimates and not as accurate as this level of measurement implies.

We refer to our cost findings as “complete” or “total” costs. We discuss data quality issues and other

study limitations in app. I.

2

NAEYC is the nation’s largest association of early childhood professionals. Its purpose is to improve

professional practice in early childhood care and education and increase public understanding of

high-quality early childhood programs. NAEYC administers, through a voluntary system, an early

childhood program accreditation process designed to set standards of excellence in early childhood

education.

3

Child care centers examined in Cost, Quality and Child Outcomes in Child Care Centers, ed. Suzanne

W. Helburn (Denver: Economics Department, University of Colorado at Denver, 1995) were selected

using a stratified random sample of 100 centers in each of four participating states with approximately

equal representation of for-profit and nonprofit centers. The four participating states were California,

Colorado, Connecticut, and North Carolina.

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and provides several child care options, including center care, family child

care, and before- and after-school programs. To promote a high-quality

child development program, DOD requires that caregiver salaries meet

certain prescribed minimum levels and that caregivers across all military

services complete comprehensive child development training. In addition,

DOD is required by law to maintain strict oversight of the safety standards

of its child development settings through inspections. For example, the

military’s child development facilities are subject to four unannounced

inspections a year. Funding for the program comes from parent fees as

well as federal funds. Center caregiver salaries are paid primarily with

parent fees. Federal funds go toward supplies, equipment, staff training

costs, and some staff salaries. About $315 million in federal funds was

obligated in fiscal year 1998 for DOD’s child development program. DOD

allocated approximately 80 percent of this amount to child development

centers, 10 percent to family child care, and 10 percent to school-age care.

We estimated that the cost to the Air Force of operating its U.S. child

development centers was approximately $81.4 million in fiscal year 1997,

and the estimated cost per child-hour in these centers was $3.86. Labor

costs—which include the salaries and benefits of child development

center caregivers, directors, and support staff—composed 75 percent of

the estimated cost, with the majority of labor costs representing the

salaries and benefits of caregivers. The estimated cost per child-hour

varied significantly for different age groups, from $5.41 for infants, to $4.28

for toddlers, to $3.24 for preschoolers. Child-hour costs are higher for

younger children because quality standards for young children require

more caregivers per child. Because almost half the children that the Air

Force centers serve are under the age of 3, the centers’ total costs and

costs per child-hour are higher than if they served a smaller proportion of

children under the age of 3.

When adjusted for age distribution of the children, the costs of high-quality

care in Air Force and civilian centers were not substantially different. The

adjustment reduced the Air Force cost per child-hour from $3.86 to $3.42,

which is about 7 percent higher than the cost of care in civilian centers.

Another factor that affects the overall cost per child-hour in Air Force

centers is the caregiver compensation rate. Air Force centers pay their

caregivers, on average, about $1.04 more per hour than comparable

civilian centers do.

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Background

Military and Civilian Child

Care Settings

Both military and civilian child care services are supplied by providers

operating in varied settings: with center care, a child is cared for in a

nonresidential setting; with family child care, a child is cared for in the

home of a provider; and with in-home care, a child is cared for in his or her

own home. Child care centers—also known as child development centers

in the military and nursery schools or preschools in the civilian

sector—are nonresidential facilities. Military centers are located on

military bases, while civilian centers are located in a variety of

establishments, including churches, schools, businesses, and public

agencies. Family child care is provided to a small number of unrelated

children—typically fewer than six—in a provider’s home. On military

bases, the provider’s home is military housing, and the provider is a

military spouse. Civilian in-home care, such as that provided by au pairs or

nannies, usually is provided for the children of the family that resides in

the home. Military families may make arrangements independently for

in-home care, but care by au pairs or nannies is not a service offered by

the military child development program. In addition, some military and

civilian centers and family child care homes also offer before- and

after-school care.

Child Care Quality and

Cost

Military and civilian child care providers are concerned about the quality

of the child care experience. Researchers and professional associations

have addressed the concern for quality by identifying two broad quality

dimensions that pertain to all child care programs: children’s daily

interactions with their caregivers and structural features of the child care

environment. Research has shown that child-caregiver interactions are

most closely linked with children’s development. Thus, child care is

considered high-quality when caregivers are sensitive in responding to

children’s social behavior, participate in their play and learning activities,

and guide their behavior in a positive manner. Structural features include

group size, the number of children assigned to a team of caregivers in a

classroom; child-to-staff ratio, the number of children per caregiver in a

classroom; caregiver training; and the amount of floor space per child.4

Along with adequate space, resilient playground surfaces and frequent

staff and child hand washing are important health and safety structural

features of high-quality child care. Another important structural feature,

4

The child-to-staff ratios for various group sizes that NAEYC recommends for high-quality care are

provided in app. II.

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particularly for infants and toddlers, is low staff turnover, which

researchers have tied to higher caregiver compensation. While structural

features are not directly associated with children’s development, they

support and facilitate positive child-caregiver interactions.5

Standards established by professional associations address both the

interactive and structural dimensions of child care quality. For example,

both NAEYC’s accreditation standards and the measures included in the

Early Childhood Environment Rating Scale—a widely recognized tool

used to assess the dimensions of quality in child care centers—address the

quality of child-caregiver interactions as well as structural features of the

child care environment.6

 A civilian center’s compliance with NAEYC and

other professional association standards is voluntary. For the military

child development program, the military services elected to meet NAEYC

standards as a supplement to DOD’s requirements for child development

and safety.7

 Thus, both DOD and NAEYC child care standards serve as a basis

for DOD’s child development program.

Using statistical measures for child-caregiver interactions and structural

features of centers, as well as for numerous other variables, the Cost,

Quality and Child Outcomes in Child Care Centers study examined the

relationship among the quality of care, the cost of care, and the

developmental progress of children in civilian center-based child care.

Conducted by a team of economists and developmental psychologists

from four universities, the study had as its fundamental objective

explaining the quality of care prevalent in child care centers by looking at

the operation of child care markets. Among a broad range of findings, the

study produced three that were pertinent to our analysis:

5

See Child Care: Use of Standards to Ensure High Quality Care (GAO/HEHS-98-223R, July 31, 1998) for

more information on structural features of the child care environment. State child care standards,

which are mandatory, primarily focus on the structural dimensions of care. The Maternal and Child

Health Bureau, Public Health Service, U.S. Department of Health and Human Services, has developed

guidelines for child health and safety, but compliance is voluntary.

6

Child development researchers at the University of North Carolina developed the Early Childhood

Environment Rating Scale for child care centers to use in self-assessment and for use in program

evaluations and other types of research. This rating scale was used in the Cost, Quality and Child

Outcomes in Child Care Centers study. See app. I for a more detailed discussion of the child care

quality measures used in our study.

7

Military child development centers are required to meet standards of operation necessary for

accreditation by an appropriate national early childhood programs accrediting body.

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• High-quality center-based child care costs more, but not a lot more, than

other center-based care.8

• The quality of care in child care centers is related to several components

of labor cost, including child-to-staff ratios, caregivers’ wages, and

caregivers’ education and training.

• Most center-based care, especially of infants and toddlers, is mediocre at

best.

The 401 centers in the study population were selected from lists of

licensed child care facilities in the four participating states. Although the

states were not selected randomly, the study team believed the child care

centers in the four states to be representative of early care and education

programs in the United States. Centers were selected for data collection

within each state using a stratified random sample, with approximately

equal representation of for-profit and nonprofit centers. Approximately

100 centers were selected in each state. Of the 401 centers, 25 were

accredited by NAEYC.

9

Quality Initiatives in the

Military Child

Development Program

To address reports of poor program quality and greater demand from its

military personnel for child care services, DOD took steps to improve its

child development program beginning in the 1980s. In a 1982 report, we

highlighted several problems in the program, including unsafe child care

facilities, a lack of DOD-wide program standards, and inadequate training of

the program’s caregivers.10 In response to our report, DOD issued a Child

Care Action Plan in 1983 that focused on improving DOD child development

facilities by replacing or renovating them. It also addressed child-to-staff

ratios and group sizes and set minimum DOD-wide standards for the

operation of child development programs. The plan became the basis for

DOD’s child care policy for all its military services.

8

The mean cost per child-hour for all 401 centers in the study sample was $2.31 in 1992 dollars, using

the same cost components included in our cost estimate. When the 1992 dollars are adjusted for

inflation to 1997 dollars, this cost estimate becomes $2.64. However, in addition to representing the

total study sample of centers of varying quality, rather than a subsample of high-quality centers, this

cost estimate differs from our estimate of the cost per child-hour in civilian high-quality centers in two

important ways. First, this estimate was based on enrollment, rather than the number of children in

attendance, as the measure of children served; second, this estimate excluded three for-profit child

care centers operated at a place of business, which were considered outliers because they tend to have

high-quality care as well as high costs. See app. I for additional details about our methodology.

9

See table I.1 for a comparison of NAEYC standards and the measures used to select our subsample of

high-quality centers.

10Military Child Care Programs: Progress Made, More Needed (GAO/FPCD-82-30, June 1, 1982).

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In 1988, a series of congressional hearings on the military child

development program considered several allegations of child abuse at

military child development centers. The hearings led to the enactment of

the Military Child Care Act (MCCA) of 1989, which mandated further

changes in the military’s center program.11 Most of the provisions in the

act were designed to improve the quality of care, either by improving the

quality of the caregivers themselves or by ensuring that DOD standards are

enforced. While most of the provisions in MCCA pertained to the military’s

child development centers, DOD issued guidance in the 1990s extending key

provisions, such as inspections and training requirements, to family child

care and school-age programs. In 1996, DOD took another step toward

implementing servicewide quality standards by directing the military

services to work toward accreditation by a national accrediting body for

all child development centers.12 As of June 1999, 89 percent of all military

centers were accredited by NAEYC, while in the civilian sector, where

accreditation is voluntary, approximately 6 percent were NAEYC-accredited.

DOD’s Child

Development Program

Is Structured to

Promote High-Quality,

Affordable Care

According to DOD, its child development program has several objectives,

including helping families balance military and family responsibilities;

improving the family’s economic well-being; and promoting children’s

cognitive, social, emotional, and physical development in all DOD’s child

development program settings. The military’s program includes a range of

child care options to accommodate the needs of working military

personnel. While the Office of Family Policy (OFP) within the Office of the

Secretary of Defense is responsible for developing overall child care

policy, each military service issues its own regulations based on DOD policy

and is responsible for operating its own program. OFP’s child care policies

are designed to promote a qualified and stable workforce and effectively

enforce OFP’s health and safety standards. The military’s program is funded

from a combination of federal appropriations and parent fees.

DOD Provides a Range of

Child Care Options

To meet the needs of working military parents, who often work

nonstandard hours, including shift work, nights, and weekends, DOD offers

several child care arrangements. Specifically, the military services offer

three principal forms of child care: child development centers, family child

care, and before- and after-school programs (“school-age care”). Those

11The Military Child Care Act was revised and codified with the enactment of P.L. 104-106, section

568(a)(1), February 10, 1996. The provisions are currently found in sections 1791-1798 of title 10, USC.

12In addition, a 1998 White House memorandum directed all federal child care centers to be accredited

by 2000.

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eligible for the military’s child development program include active duty

military personnel, DOD civilian personnel, reservists on active duty or

during inactive duty personnel training, and DOD contractors. First priority

for DOD’s child development program is given to employed parents who are

active duty military and civilian personnel. The military assists families in

finding at least one affordable child care option located either on or off the

military base.

On-base centers were the original source of formalized child care on

military bases and still serve as the principal component of the military’s

child development program. DOD’s center-based care serves about

41 percent of all children participating in the military child development

program in about 800 centers worldwide. DOD’s child development centers

vary in size, with the largest serving about 300 children. Most of the

centers serve children aged 6 weeks to 5 years, with about 45 percent of

the children under the age of 3. These centers typically operate from 6:00

a.m. to 6:30 p.m., 5 days a week. Many centers also offer a part-day

preschool program and hourly care.

DOD’s family child care programs generally are provided by the spouses of

active duty military personnel living in government-owned or -leased

housing. The military services serve about 35 percent of the children in the

military’s program in approximately 10,000 family child care homes in the

United States and overseas. Family child care homes serve the same

population as centers and provide services for sick and special needs

children. In addition, they offer extended-hour and weekend care to

accommodate military shift work and provide long-term care during

military deployments. According to DOD officials, the flexible hours offered

by family child care homes play an important role in providing child care

during nontraditional hours and ensuring that parents are available for

military duties on short notice.

All military services operate before- and after-school care programs for

children aged 6 to 12. These programs, which offer care during holidays

and summer vacation, are housed in various facilities, including child

development centers, youth centers, and schools located on military

installations. While in the past the military services have focused more on

center and family child care, the services’ child development program

managers told us that they are now looking to either expand the

school-age program or improve its quality. According to one service

manager, one service is trying to do both.

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OFP develops overall child development policies that pertain to centers,

family child care, and school-age care. Each military service issues its own

child care regulations that are based on DOD’s policies, publishes

instructions that pertain to the specific operations of its program, and

administers its own program. While the services have the authority to

issue child care regulations that are more restrictive than OFP policies,

most military services’ child development program managers told us that,

generally, they do not make policies more restrictive because doing so

might increase the cost of program operations. Military base officials make

decisions about the operation and management of their particular child

development programs. For example, officials determine whether to offer

center-based care, family child care, or both and whether to expand

existing programs or facilities. Center directors are responsible for the

day-to-day operation of the centers, and a family child care director at

each base oversees the family child care providers.

Improved Wages,

Comprehensive Training

Requirements, and

Centralized Oversight

Promote High-Quality Care

DOD requires that caregiver salaries meet certain prescribed minimum

levels. In addition, OFP policies follow statutory requirements, which

mandate specific training requirements and strict oversight of DOD’s child

care standards to enhance the quality of its child development program.

While most if these requirements relate only to center-based care, DOD has

comparable training requirements for caregivers in its centers, family child

care homes, and school-age programs and carries out comparable

inspections and similar background checks on all its caregivers. The

services also offer resource and referral programs that provide parents

with information on and referrals to all program components.

Improved Wages In 1990, to provide military centers with a more qualified and stable

workforce, DOD began paying center caregivers wages equivalent to those

of other employees on the same military base with comparable training,

seniority, and experience. Before this policy change, most military

caregivers, like their civilian counterparts, were paid minimum wage and

received few benefits. According to DOD officials, improved wages for

center caregivers reduced turnover significantly and improved the quality

of care by providing a more stable workforce. Staff turnover in the military

program is now less than 40 percent annually, down from 300 percent on

some military bases during the 1980s. According to OFP, current turnover is

primarily the result of the “normal transfer” of military personnel, whose

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spouses work in child care, from one military base to another.13 Research

has shown that higher staff salaries are associated with better-quality child

development centers and that children who attend centers with lower staff

turnover develop better social and language skills.

Comprehensive Training

Requirements

DOD’s training program for its newly hired caregivers in centers, family

child care homes, and school-age programs requires that caregivers first

complete orientation training before they are allowed to work directly

with the children. Center and family child care providers must then

complete 15 competency-based training modules within 18 months of their

start date in order to be retained. OFP used nationally recognized

competency standards to develop these modules, which focus on areas

such as promoting a safe and healthy learning environment, advancing

physical and intellectual competency, and supporting the social and

emotional development of a child.14 Caregivers for the school-age program

must complete 36 hours of training based on these competency modules

within the first year of work. Finally, all center, family, and school-age

caregivers must attend 24 hours of training annually.15 DOD’s training

requirements apply uniformly across all military services.

To improve the quality of training for caregivers, DOD is also required by

law to ensure that each child development center employs a training and

curriculum specialist, and DOD policy requires that the specialist be a

professionally qualified early childhood educator. According to the

director of OFP, the training and curriculum specialist provides training for

center, family child care, and school-age providers. This person is

responsible for developing the program’s curriculum, promoting

developmentally appropriate practices, instructing caregiver staff, and

ensuring that the staff demonstrate skills as a result of the required

training.

13During 1997, 27 percent of child care teachers and 39 percent of assistant teachers left their jobs in

civilian centers. In that same year, one-fifth of civilian centers reported losing 50 percent or more of

their teaching staff. See M. Whitebook and others, Worthy Work, Unlivable Wages: The National Child

Care Staffing Study, 1988-1997 (Washington, D.C.: Center for the Child Care Workforce, 1998), p. 8.

14The Council for Early Childhood Professional Recognition operates the Child Development Associate

National Credentialing Program. Focusing on the skills of early childhood and educational

professionals, the program is designed to provide performance-based training and assessment of child

care staff and family child care providers. The program represents a national effort to provide child

development credentials to qualified caregivers who work with children from birth through age 5.

15In the civilian sector, fewer than half of the states require any training for newly hired center

caregivers before they can begin working, and only 11 require similar training for family child care

providers. Forty-four states require some kind of annual ongoing training for center caregivers, and 31

require annual ongoing training for family child care providers.

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DOD has also initiated an “up or out” policy that links its training program

to wages and promotion. DOD requires that center caregivers complete all

training modules to remain employed and to receive the highest hourly

wage available to DOD caregivers. Because family child care providers are

independent contractors and generally set their own fees, their wages are

not tied to training requirements. However, family child care providers can

lose their contract to provide care if they do not complete the required and

ongoing training.

Centralized Oversight DOD strictly enforces its child care standards, such as those pertaining to

safety issues. The law requires DOD to ensure that each center receives not

fewer than four unannounced inspections a year. DOD’s policy states that

base personnel must conduct three of the four unannounced inspections,

including at least one comprehensive health and sanitation inspection, one

comprehensive fire and safety inspection, and one inspection led by a

representative with authority to verify compliance with DOD child care

standards. By law, a fourth inspection is carried out by representatives

from a higher level of command, including a child development specialist.

This fourth inspection includes a review of the center’s curriculum, staff,

and training; interviews with parents; and an assessment of the safety and

appropriateness of indoor and outdoor equipment. In addition to these

quarterly inspections, base personnel conduct monthly fire and food

sanitation inspections at centers. If a center program is in compliance with

DOD standards, DOD issues a certificate to operate. If the center is not in

compliance and the violation is life-threatening, the base commander is

required by law to take immediate action to correct the problem. In

non-life-threatening cases, the violation must be corrected within 90 days

or the center is closed until the violation is remedied.

DOD policy also requires that family child care homes be inspected

quarterly. These unannounced inspections include fire, safety, health, and

program inspections and ensure that child-to-staff ratios are maintained.16

According to DOD and military service officials, these homes also are

monitored monthly by a family child care director who works at the base.

In addition, a multidisciplinary team that includes a child development

specialist randomly inspects a representative sample of family child care

homes. Because most family child care homes are located on military

bases, they are not subject to state licensing requirements. However, as is

the case with centers, they may be closed if the provider fails to promptly

correct a violation.

16The size of the housing and age of the children determine the maximum number of children a

provider may care for. Most providers may care for no more than six children, including their own,

under the age of 8.

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School-age programs, which are housed in child development centers,

youth centers, schools, or other base facilities, are subject to at least one

comprehensive and one unannounced inspection annually. These

programs follow the same certification and remedy process for violations

that centers do.

Federal Funds Help Pay for

DOD’s Program and

Reduce Cost to Families

DOD’s child development program is funded with a mix of federal funds

and parent fees. Federal funds are provided directly to DOD’s center, family

child care, and school-age programs in the form of program subsidies.

These funds are used to reduce the cost of child care for military families

while improving the quality and availability of care. Increased demand for

child care in the military over the last 2 decades has influenced how the

military services spend their federal child care funding.

Federal funds pay for supplies, equipment, training, and some salaries for

program staff, as well as for construction of new centers and maintenance

of existing centers. These funds also pay for some specific costs

associated with family child care. For example, DOD pays the cost of

administering the program, which includes the salaries of the family child

care directors. In addition, DOD provides indirect financial support through

its resource lending libraries, which loan equipment such as cribs, high

chairs, toys, books, and other supplies to these providers. These libraries,

which also are paid for with federal funds, are located on most military

bases with child development programs. A total of approximately

$315 million in federal funds was obligated in fiscal year 1998 for military

child development program operations, including $253 million for

center-based care, $31 million for family child care, and $31 million for

school-age programs (see table 1).

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Table 1: Funding Obligated for DOD

Child Development Program, Fiscal

Year 1998

Dollars in millions

Appropriation type Centers

Family

child care

Schoolage care Total

Air Force

O&Ma $78.8 $6.4 $13.1 $98.3

MilConb 17.0 b b 17.0

Army

O&M 68.6 10.1 8.4 87.1

MilCon 0 b b 0

Navy/Navy Reserve

O&M 62.6 11.5 7.3 81.4

MilCon 5.0 b b 5.0

US Marine Corps

O&M 13.8 2.5 2.6c 18.9

MilCon 7.0 b b 7.0

Total $252.8 $30.5 $31.4 $314.7

aOperation and maintenance (O&M) funds pay for child development program expenses such as

the salaries and benefits of administrative and management personnel, supplies, equipment, and

utilities.

bMilitary construction (MilCon) funds are appropriated for construction of new centers. Family

child care providers reside in military housing, which is built with funds provided through

congressional appropriations for government housing. School-age programs not located in child

development centers can be located in youth centers, chapels, or dependent schools. Funding

for these facilities is provided through different accounts.

cIncludes funding for resource and referral services and oversight requirements.

Source: DOD Budget Exhibit, Child Development, School-Age Care, Family Centers, and Family

Advocacy Program (PB-50), Jan. 1999.

Parent fees for center and school-age care pay for most caregiver wages in

these two programs. These fees are based on a sliding scale that is

determined according to family income in order to ensure that military

personnel with the lowest incomes can afford child care. For example,

military families in the lowest two income categories ($0 to $23,000 and

$23,001 to $34,000) paid $38 to $62 per child per week for center care

during the 1998-99 school year. Families with annual incomes over $55,000

paid $86 to $97 per child. (See table 2.) In addition, to help ensure

adequate funding for military child care, federal law requires that DOD

estimate total parent fees each year and provide at least as much in federal

funds to child development centers. Because family child care providers

Page 13 GAO/HEHS-00-7 Child Care Costs
B-279806 

are considered independent contractors by military bases, these providers

negotiate their fees directly with their customers.

Table 2: Parent Fees for Military Child

Development Centers, School Year

1998-99

Total family income

Range of weekly

fees authorized

per childa

Optional

high-cost rangeb

$0-23,000 $38-51 $43-54

23,001-34,000 48-62 53-66

34,001-44,000 59-74 65-79

44,001-55,000 72-84 78-90

55,000+ 86-97 89-101

aBase commanders may authorize up to a 20-percent reduction of fees charged for each

additional child from the same family.

bAn optional high-cost range may be used in areas where it is necessary to pay higher wages to

caregivers to compete in the local labor market.

Demand for child care has increased as a result of the increase in the

number of military personnel with families, women in the military, and

families with both parents in the military. In addition, the number of

military spouses working outside the home increased from 30 percent in

1970 to 62 percent in 1997. In the early 1990s, DOD established a formula

for estimating the need of its military families for child care services that

was based on the number of children up to age 12 in military families

whose parents worked outside the home and needed some type of child

care. According to DOD, as of 1998, the military services were meeting

about 56 percent of the projected need for child care. DOD’s goal is to meet

80 percent by 2005. The director of OFP stated that DOD believes that the

remaining 20 percent of military families with young children will not

request child care either because the parents have alternating work

schedules or because relatives care for their children.

During fiscal years 1985 through 1998, the military services built about 208

new centers to accommodate the child care needs of their military

families. Military personnel generally show a preference for placing their

children in centers, in part because center fees are generally lower than

those charged by family child care providers. OFP’s director told us that

because of the high cost of constructing and operating child development

centers, the high cost of caring for young children in these centers, and

military parents’ need for child care, most military services are trying to

encourage the use of more family child care providers. For example, in the

Page 14 GAO/HEHS-00-7 Child Care Costs
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1990s, the Army, Navy, and Marine Corps began offering subsidies in the

form of direct cash payments to family child care providers so that they

could charge fees comparable to center fees.17 While the Marine Corps

primarily target providers caring for infants and toddlers for subsidies, the

Army and Navy offer subsidies to providers caring for children up to 5

years of age. The Army targets some of its subsidies to providers that are

caring for special needs children and to those that are open extended

hours. The Navy program manager told us that about half of Navy base

commanders are offering family child care providers some amount of

subsidy.

The High Proportion

of Young Children in

Air Force Centers

Results in Higher

Costs

Air Force child development centers are similar to centers in the other

military services. They serve children in various age groups and are

required to follow servicewide regulations designed to promote

high-quality care. The estimated cost to the Air Force of operating its U.S.

center program was about $81.4 million in fiscal year 1997, and the

estimated cost per child-hour in Air Force centers was $3.86. Labor costs

constituted three-fourths of this cost and differed depending on the age of

the child, with significantly higher labor costs per child-hour for young

children. In addition, a large proportion of the children at Air Force

centers are in the youngest age groups, increasing the centers’ total child

care costs and cost per child-hour.

Centers’ Labor Costs

Constitute Majority of Air

Force Estimated Cost

We estimated that the Air Force’s total cost for operating its child

development centers in the United States was approximately $81.4 million

in fiscal year 1997, the most recent year for which data were available.

Labor costs accounted for 75 percent of the total estimated cost. The cost

of labor in Air Force centers includes costs for direct labor (caregivers)

and indirect labor (all other staff). Salaries and benefits of caregivers

accounted for about 52 percent of the total cost and 70 percent of labor

costs. The Air Force employs about 1,800 caregivers in its U.S. centers and

about 600 other employees, including directors, administrative staff, and

cooks. Many of the centers have an assistant director as well as a director,

and 19 percent also have annex directors that serve children in additional

space outside the main center building. In addition, almost all centers have

a training and curriculum specialist who provides services for center

17According to the chief of the Air Force Family Member Program, the Air Force’s primary child care

goal is to ensure that all parents that need child care have a child care option available to them. She

said the Air Force does not have sufficient resources to increase the amount of care available and to

reduce the cost of care. She believes that as more Air Force centers are built and, consequently, more

center care is available, family child care providers will be forced to bring their fees more in line with

center fees.

Page 15 GAO/HEHS-00-7 Child Care Costs
B-279806 

caregivers and management staff, and most centers have their own cooks

who prepare breakfast and lunch for the children.18

About 64 percent of Air Force centers (93) are located in the United States,

with the remaining located on military bases overseas.19 U.S. centers are

housed on military bases, in either newly constructed facilities built

specifically for use as child development centers or buildings that were

renovated to conform to DOD child care standards. We estimated that the

cost of providing this space constitutes the second largest component of

center cost—about 10 percent of the total cost. Supplies used by the

center, such as classroom and administrative materials, were the third

largest component, accounting for about 7 percent. (See table 3.)

Table 3: Estimated Full Cost of Air

Force Child Development Centers,

Fiscal Year 1997 Cost component Total cost

Percentage of

total cost

Labor (wages and benefits)

Direct labor $42,655,050 52.40

Indirect labor 18,763,938 23.05

Supplies 5,710,243 7.01

Food 3,939,678 4.84

Utilities 1,537,571 1.89

Equipment 582,165 0.72

Total expended costs $73,188,645 89.91

Occupancy 7,936,879 9.75

Donations 237,281 0.29

Legal services 46,295 0.06

Noncash costs $8,220,455 10.10

Full cost $81,409,100 100a

aPercentages do not equal 100 because of rounding.

Source: GAO analysis of Air Force center data.

18Training and curriculum specialists in the Air Force also serve family child care providers and

caregivers in the school-age program.

19The number of Air Force child development centers reported is based on the response to our survey.

Page 16 GAO/HEHS-00-7 Child Care Costs
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Caring for Younger

Children Increases Air

Force Labor Costs per

Child-Hour

The overall estimated cost per child-hour in Air Force centers was $3.86 in

fiscal year 1997.20 However, the cost varied for different age groups, with

younger children costing more. For example, our estimated cost for

children aged 6 to 12 months was about $5.40 per child-hour, compared

with about $3.96 for toddlers aged 24 to 36 months and $3.23 for full-day

preschoolers aged 3 to 5 years. (See fig. 1.)

Figure 1: Estimated Cost per Child-Hour at Air Force Centers, by Age Group, Fiscal Year 1997

Source: GAO analysis of Air Force center data.

The higher cost per child-hour is associated with the younger age groups

because the child-to-staff ratios are lower for younger children, which

20The annual cost per child in an Air Force child development center in the United States was about

$8,028 in fiscal year 1997.

Page 17 GAO/HEHS-00-7 Child Care Costs
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results in fewer children per caregiver.21 Because centers have to hire

more caregivers for younger children, the overall cost of labor per

child-hour increases. Our analysis shows that in U.S. Air Force centers

there are about three infants per caregiver, about four and one-half

toddlers per caregiver, and about eight preschoolers per caregiver.

Consequently, direct labor costs are higher per child-hour for the youngest

children. (See app. III.) While more staff are assigned to the groups of

younger children, the average caregiver compensation rate, about $11.20

per hour (including salaries and benefits), did not differ substantially

across the various age groups.

Just as the other military services do, the Air Force employs a high

percentage of young people with young children.22 Because many of these

families prefer center-based care, a high proportion of children served in

Air Force centers are young children. Nearly half are under 3 years of age:

38 percent are toddlers and 10 percent are infants. Moreover, the cost of

toddler care and the cost of preschooler care represent about the same

proportion of the total cost of child care—about 42 percent—even though

preschoolers constitute half the children. In addition, even though infants

account for only 10 percent of all the children in Air Force centers, the

cost of their care accounts for about 14 percent of the overall cost of child

care. (See table 4.) Thus, the centers’ total cost and their cost per

child-hour are higher than if they served a smaller proportion of children

under the age of 3.

21DOD’s standards for child-to-staff ratios generally follow the NAEYC standards (see app. II). The

child-to-staff ratios that we estimated are based on actual attendance reported by the centers in fiscal

year 1997. According to the Air Force Child and Youth Services manager, the observed ratios exceed

the DOD standards (fewer children per staff) because of the child absentee rate in the centers. She

noted that, on average, about 12 percent of children are absent each day from Air Force centers

because of Air Force personnel work schedules, illness, and family vacations. For example, many Air

Force personnel often fly an average of 3 days a week and are home the rest of the week. In addition,

military personnel receive regular “home leave” and may keep their children home during these days.

22Thirty-three percent of Air Force personnel are under the age of 26. In addition, 38 percent of

employed Air Force spouses have children under the age of 2.

Page 18 GAO/HEHS-00-7 Child Care Costs
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Table 4: Age Group Distribution and

Cost of Care at Air Force Centers,

Fiscal Year 1997 Children’s age

Percentage of

children

Percentage of

total cost

Infants

6 weeks-6 months 3.38 4.76

6-12 months 6.80 9.52

Subtotal 10.18 14.28

Toddlers

12-24 months 16.20 19.81

24-36 months 22.05 22.67

Subtotal 38.25 42.48

Preschoolers

3-5 years 46.62 39.07

Part-day preschoolers

3-5 years 3.77 3.26

Subtotal 50.39 42.33

School-aged children

6 years and over 1.19 .90

Total 100 100

Note: Percentages do not equal 100 because of rounding.

Source: GAO analysis of Air Force center data.

Cost per Child-Hour Is

Similar in Air Force

and Civilian Centers

When Adjusted for

Age Distribution

The hourly cost for care is about 20 percent higher in Air Force centers

than in civilian centers of comparable quality because the Air Force’s labor

costs are higher. To a great extent, differences in the age distribution of

the children served explained the difference in the centers’ labor costs: a

higher proportion of Air Force center children than of civilian center

children are under the age of 3. When we adjusted the Air Force estimated

cost to account for the difference in the children’s age, the overall Air

Force cost per child-hour decreased $3.86 to $3.42, which is about

7 percent higher than civilian centers’ cost per child-hour. Air Force

centers also compensate their caregivers more per hour than civilian

centers.

The civilian centers’ overall cost per child-hour was $3.19.23 Table 5 breaks

down the per-child-hour cost components—overall and for each age

group—showing that the most costly component in both Air Force and

civilian centers’ overall cost per child-hour was the cost of labor. Labor

23The annual cost per child for the civilian child care centers was about $6,635 in fiscal year 1997.

Page 19 GAO/HEHS-00-7 Child Care Costs
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represented 75 percent of the cost per child-hour in Air Force centers and

67 percent in civilian centers. The greatest difference between the

individual cost components of the Air Force and civilian centers was also

in the cost of labor—a difference of 78 cents per child-hour. The other cost

components differed by less than half that amount.24

Table 5: Unadjusted Components of Costs per Child-Hour, by Age Group, Fiscal Year 1997

Air Force Civilian

Cost

component Infants Toddlers Preschoolers

Schoolaged

children Overall Infants Toddlers Preschoolers

Schoolaged

children Overall

Labor

Salaries,

wages, and

benefits $4.63 $3.32 $2.27 $2.04 $2.91 $3.95 $3.33 $1.88 $1.74 $2.12

Training costs a a a a a 0.02 0.02 0.01 0.01 0.01

Subtotal $4.63 $3.32 $2.27 $2.04 $2.91 $3.97 $3.35 $1.89 $1.75 $2.13

Occupancyb 0.38 0.37 0.38 0.42 0.38 0.46 0.46 0.36 0.38 0.38

Food 0 0.21 0.21 0.18 0.19 0 0.13 0.12 0.09 0.12

Otherc 0.39 0.37 0.37 0.29 0.37 0.35 0.32 0.28 0.26 0.28

Total

expended costs $5.40 $4.27 $3.23 $2.93 $3.85 $4.78 $4.26 $2.65 $2.48 $2.91

Donationsd 0.01 0.01 0.01 0.01 0.01 0.37 0.26 0.30 0.18 0.28

Total cost $5.41 $4.28 $3.24 $2.94 $3.86 $5.15 $4.52 $2.95 $2.66 $3.19

aAir Force training costs include compensation of the training and curriculum specialist employed

by each child development center. This cost was not broken out separately but is included in the

Air Force cost of labor.

bThis is the estimated cost of space. For Air Force child development centers, occupancy cost is

imputed because centers are not actually charged for the cost of space. The cost of construction

is assumed by Air Force bases and paid out of military construction funds. For civilian centers,

occupancy cost may include the cost of utilities and repair and maintenance services.

cIncludes cost of utilities, legal services, liability insurance, taxes, supplies, equipment, and

payments to a parent company, if incurred.

dDonations include services that volunteers provide the child development centers, as well as

donated goods and cash.

Source: GAO analysis of Air Force and civilian center data. The fiscal year 1992 civilian center

data were escalated to fiscal year 1997 using the Consumer Price Index.

24The 27-cent difference in the dollar value of donations the centers received was the second greatest

component cost difference. Air Force centers received comparatively fewer donations, representing

less than 1 percent of their overall cost per child-hour. However, donations constituted 9 percent of

civilian centers’ cost per child-hour and consisted mostly of center space and volunteers’ services.

Page 20 GAO/HEHS-00-7 Child Care Costs
B-279806 

The difference in Air Force and civilian centers’ labor costs is explained in

large part by the difference in the age distributions of the children they

serve. Most of a child care center’s labor cost is determined by the number

of caregivers employed. When centers follow professional standards that

require fewer children per caregiver for young children, centers employ

more staff to provide care for younger children than for older children.

Thus, the higher the proportion of young children in the centers’ care, the

higher their overall labor costs per child-hour. As noted, the Air Force

centers served a high proportion of young children. In fact, as table 6

shows, a higher percentage of Air Force center children (48 percent) than

of civilian center children (15 percent) were under 3 years of age. Because

Air Force centers served a higher proportion of young children than

civilian centers did, their overall labor costs per child-hour were higher.

Table 6: Centers’ Proportion of

Children, by Age Group, Fiscal Year

1997

Numbers in percent

Children’s agea Air Force Civilian

Infants

6 weeks-6 months 3.38 b

6-12 months 6.80 b

Subtotal 10.18 4.99

Toddlers

12-24 months 16.20 b

24-36 months 22.05 b

Subtotal 38.25 10.39

Preschoolers

3-5 years 46.62 72.95

Part-day preschoolers

3-5 years 3.77 b

School-aged children

6 years and over 1.19 11.68

Total 100 100

Note: Percentages do not equal 100 because of rounding.

aCategories for this column apply only to Air Force center data. See note in app. I concerning age

group assignment and measurement of children’s ages in the civilian center data.

bData for civilian centers were not broken down into this subcategory.

Source: GAO analysis of Air Force and civilian center data.

Page 21 GAO/HEHS-00-7 Child Care Costs
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In view of the importance of children’s age as a factor in the overall cost

per child-hour, we adjusted the Air Force cost estimate to take account of

the age distribution differences between the Air Force and civilian centers’

child populations. To do so, we calculated what the Air Force centers’

costs would have been had the age distribution of the children they served

been the same as that of the civilian centers. The result was that the

difference in the centers’ overall cost of labor per child-hour was reduced

from 78 cents to 35 cents. Much of the 35-cent difference in the cost of

labor that is left can be attributed to the higher compensation that Air

Force centers pay caregivers—an average hourly compensation rate of

$11.20 (salaries and benefits), which is $1.04 higher than the rate paid at

civilian centers.

Finally, substituting the age distribution of the civilian centers’ children for

that of the Air Force centers’ children reduced the overall cost per

child-hour from $3.86 to $3.42, a decline from about 20 percent to about

7 percent. Thus, when we adjusted for age distribution, the cost of

high-quality child care in Air Force and civilian centers was not

substantially different.

Agency Comments DOD commented on a draft of this report and generally concurred with our

findings. However, DOD raised three issues about our research methods

and how they might have affected the difference we found in Air Force

and civilian centers’ overall cost per child-hour. While the issues DOD

raised are important study design considerations, the magnitude and

direction of any cost differences that would result cannot be estimated.

Moreover, as we concluded, the cost difference between Air Force and

civilian centers is not substantial, and any shift in cost differences

resulting from the issues DOD raised is unlikely to change that conclusion.

First, DOD considered the measure we used for the number of children

served by Air Force centers dissimilar from the one we used for civilian

centers and suggested that the Air Force center cost per child-hour was

somewhat high in comparison to the civilian center cost because of that

dissimilarity. However, we used the same measure—attendance—for the

number of children served in both Air Force and civilian centers. For Air

Force centers, attendance was based on counts conducted every hour of

every day at each center; for each civilian center, attendance was based on

a 1-year extrapolation of attendance reported for the day on which the

Cost, Quality and Child Outcomes in Child Care Centers study team visited

to collect data. Presumably, the Air Force center attendance data were

Page 22 GAO/HEHS-00-7 Child Care Costs
B-279806 

more precise than the extrapolations we used for the civilian centers. But

we have no basis for determining whether more precise civilian center

attendance data, if they had been available, would have been higher or

lower than the extrapolated data. Thus, there is no basis for concluding

whether more precise civilian center data would have decreased or

increased the difference between estimated Air Force center costs and

estimated civilian center costs.

Second, DOD argued that the Air Force and high-quality civilian centers

were not comparable in terms of quality because of the method we used to

select the civilian centers. DOD suggested that a difference in the centers’

quality of care resulting from the sample selection procedure might

explain the cost difference that we found. We selected civilian centers for

our study from the Cost, Quality and Child Outcomes in Child Care

Centers study sample on the basis of a score of 4.5 or higher on either an

overall index of quality or a second index.25 DOD pointed out correctly that

a score of 4.5 to 5 on an overall index of quality was considered mediocre

in the Cost, Quality and Child Outcomes in Child Care Centers study of

April 1995. However, the goal in identifying civilian centers for our

comparative cost analysis was to select civilian centers of a quality

comparable to the Air Force centers. To achieve that goal, we had to find a

way of measuring child care quality in both sets of centers. The only

readily available information on the quality of care in the Air Force centers

was the fact that all of those centers had been accredited by NAEYC.

However, data on the quality of care in all 401 civilian centers in the Cost,

Quality and Child Outcomes in Child Care Centers study sample had been

collected using the two indexes noted above—an overall index of quality

and a second index. A small number of these civilian centers (25) also

were accredited by NAEYC. We looked at the NAEYC-accredited civilian

centers’ scores on the two indexes of quality as surrogate measures for the

Air Force centers’ scores on these indexes. We found that only 11 of the 25

had scored 5 or higher, while 4 had scored below 4.5. Rather than use the

lowest score as our cutoff point for identifying high-quality centers, we

selected the more conservative score of 4.5 or higher as the range in which

NAEYC-accredited centers’ scores likely would fall on the two indexes of

child care quality. Thus, we were satisfied that using a score of 4.5 or

higher on either of the two indexes to select high-quality civilian centers

for our analysis provided a subsample of centers comparable in quality to

the Air Force centers.

25See app. I for a discussion of our sample selection procedures.

Page 23 GAO/HEHS-00-7 Child Care Costs
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Finally, DOD asserted that the cost per child-hour for the entire military

child development system—child development centers, family child care,

and school-age care—might have been less than the cost per child-hour for

the Air Force child development center program. Unfortunately, the

detailed cost data for all military services and all types of care that we

needed in order to estimate the cost per child for the entire system were

not available for either the military or the civilian child development

systems.

DOD also had several technical comments, which we incorporated in the

report where appropriate. DOD’s comments are included in appendix IV.

As agreed with your offices, unless you publicly release its contents

earlier, we will make no further distribution of this report until 30 days

after its issue date. At that time, we will send copies to the Honorable

William S. Cohen, Secretary of Defense, and congressional committees

with an interest in this matter. We also will make copies available to others

on request.

If you or your staff have any questions about this report, please contact me

on (202) 512-7215 or Karen Whiten, Assistant Director, on (202) 512-7291.

Other GAO contacts and staff acknowledgments are listed in appendix V.

Cynthia M. Fagnoni

Director, Education, Workforce, and

 Income Security Issues

Page 24 GAO/HEHS-00-7 Child Care Costs
Page 25 GAO/HEHS-00-7 Child Care Costs
Contents

Letter 1

Appendix I 

Scope and

Methodology

28

Study Scope 28

Limitations of the Cost Analysis 32

Procedures Used to Estimate Air Force Child Development

Center Costs

34

Procedures Used to Estimate Civilian Child Care Costs 42

Factors Affecting Air Force Costs 45

Appendix II 

Child-to-Staff Ratios

Within Group Size

Recommended by

NAEYC

46

Appendix III 

Fiscal Year 1997

per-Child-Hour Cost

Components for Air

Force Child

Development Centers,

by Age Group

48

Appendix IV 

Comments From the

Department of

Defense

50

Appendix V 

GAO Contacts and

Staff

Acknowledgments

52

Page 26 GAO/HEHS-00-7 Child Care Costs
Contents

Tables Table 1: Funding Obligated for DOD Child Development Program,

Fiscal Year 1998

13

Table 2: Parent Fees for Military Child Development Centers,

School Year 1998-99

14

Table 3: Estimated Full Cost of Air Force Child Development

Centers, Fiscal Year 1997

16

Table 4: Age Group Distribution and Cost of Care at Air Force

Centers, Fiscal Year 1997

19

Table 5: Unadjusted Components of Costs per Child-Hour, by Age

Group, Fiscal Year 1997

20

Table 6: Centers’ Proportion of Children, by Age Group, Fiscal

Year 1997

21

Table I.1: Comparison of NAEYC Standards and the Overall Index

of Quality Developed for the Cost, Quality and Child Outcomes

Study

31

Figure Figure 1: Estimated Cost per Child-Hour at Air Force Centers, by

Age Group, Fiscal Year 1997

17

Abbreviations

CIS Caregiver Interaction Scale

CPI Consumer Price Index

DOD Department of Defense

ECERS Early Childhood Environment Rating Scale

FTE full-time equivalent

GS general schedule

ITERS Infant/Toddler Environment Rating Scale

MCCA Military Child Care Act

NAEYC National Association for the Education of Young Children

OFP Office of Family Policy

TIS Teacher Involvement Scale

Page 27 GAO/HEHS-00-7 Child Care Costs
Appendix I 

Scope and Methodology

This appendix discusses in more detail the scope and methodology for

determining the cost per child of Air Force and civilian center-based child

care.

Study Scope Our cost analysis did not cover the entire military child development

program because we could not find detailed cost data for all services or

for all types of care. The military child development program is

implemented throughout the Department of Defense (DOD), but the

military services conduct program cost accounting and reporting

independently for the child development programs they operate. Each of

the military services’ child development program managers has some

discretion over the cost data collected and maintained by the program. So,

when we searched for sources of program cost data at DOD, we found only

two reports about child development program funding that all four

services submitted in comparable format: (1) the Appropriated and

Nonappropriated Fund Expense Summary for 1997 (the “7000.12 report”)

and (2) DOD’s Program Budget Exhibit (known as the PB-50) for its child

development program. However, neither of these reports contained

information at the level of detail needed to estimate and analyze the full

cost of child development program operations in all four military services,

particularly for those cost components we expected to be the most

important: the cost of labor and space. Moreover, none of the services

collected information on the salaries and benefits of family child care

providers.

To design the comparative cost analysis, we also had to identify sources of

total cost information for civilian child care. After an extensive literature

review, we found that only the Cost, Quality and Child Outcomes in Child

Care Centers study collected complete cost information for civilian child

care programs, and that this study was limited to child care centers.

Although a study of civilian family child care was under way, that study’s

data file was not released in time to use it in our study. Thus, we narrowed

the study scope to child care centers, the child care type for which the

most complete cost data for both military and civilian child care were

available. Because the study focus was the cost of high-quality child care,

we limited the scope of the military cost analysis to the Air Force child

development center program, the only one of the four military programs in

which all centers had achieved National Association for the Education of

Young Children (NAEYC) accreditation. We treated NAEYC accreditation as

the measure of quality attained by the Air Force centers and selected a

subsample of high-quality civilian centers from the Cost, Quality and Child

Page 28 GAO/HEHS-00-7 Child Care Costs
Appendix I 

Scope and Methodology

Outcomes in Child Care Centers study population for our comparative

cost analysis, using an overall index of quality for infant, toddler, and

preschool learning environments that the Cost, Quality and Child

Outcomes study team had developed for their work.

We did not attempt to independently assess the quality of the DOD or

civilian centers included in our study. However, to determine whether the

Air Force child development centers were comparable to the subsample of

high-quality civilian centers, we examined the similarity of the NAEYC

accreditation standards and the Cost, Quality and Child Outcomes study

team’s overall index of quality. To compare the accreditation standards

and the index of quality, we adapted 15 indicators of child care quality

specified by the National Research Council’s Panel on Child Care Policy.26

The Panel developed these indicators to compare the provisions of six sets

of professional standards on child care quality, including the NAEYC

standards and the Early Childhood Environment Rating Scale (ECERS) used

in this study.

While not identical, the standards NAEYC uses to assess centers for

accreditation and the dimensions of quality measured by the overall index

are analogous. Both NAEYC standards and the overall quality index measure

child-caregiver interactions and structural features of the child care

environment. NAEYC’s National Academy of Early Childhood Programs

developed the accreditation standards by reviewing child development

research, child development program standards in localities, and the

judgments of 175 specialists in the early childhood field. The accreditation

standards address the quality of interactions between children and

caregivers as well as structural features such as child-to-staff ratios and

group size.

The Cost, Quality and Child Outcomes study team’s overall index of quality

integrates measures from four scales for early childhood learning

environments: (1) ECERS, (2) the Infant/Toddler Environment Rating Scale

(ITERS), (3) the Caregiver Interaction Scale (CIS), and (4) the Teacher

Involvement Scale (TIS). ECERS is designed to assess the surroundings

created for children and adults in an early childhood setting. It is used in

one classroom at a time for groups of children 2 to 6 years old. Ratings are

based on the situation observed in the classroom or reported by the

teacher, rather than on plans for the future. ITERS is an adaptation of ECERS

by its authors especially for use with infants and toddlers. The CIS

26See National Research Council, Panel on Child Care Quality, Who Cares for America’s Children?

(Washington, D.C: National Research Council, 1990), app. B, “Professional Standards for Early

Childhood Programs,” pp. 324-39.

Page 29 GAO/HEHS-00-7 Child Care Costs
Appendix I 

Scope and Methodology

measures teacher involvement and teacher style, producing scores for

“sensitivity,” “harshness,” “detachment,” and “permissiveness.” The TIS also

measures child-caregiver interactions, focusing on how a caregiver

interacts with children during periods of observation. The caregiver’s

degree of involvement is scored on a 6-point scale, ranging from “ignore”

to “simple” to “intense.”

The NAEYC standards incorporate all 15 of the indicators of quality

developed by the Panel on Child Care Quality. ECERS and ITERS together

account for 11 of the indicators among their scales and 2 more, “staff/child

ratio” and “group size,” could be calculated from the study team’s data file.

The indicator “potential for forming an affectionate relationship with a

familiar caregiver,” which ECERS and ITERS do not measure directly, is

captured by the CIS and the TIS. One indicator, which pertained to a

requirement for caregiver training, was not measured by the scales in the

Cost, Quality and Child Outcomes study team’s overall index of quality or

by other data collection instruments used in their study. However, because

all but 1 of the 15 quality indicators are represented in the accreditation

standards and index of quality, we considered the definition of child care

quality used in both assessment tools consistent and the quality of care in

the two sets of centers comparable. See table I.1 for the results of the

comparison.

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Scope and Methodology

Table I.1: Comparison of NAEYC Standards and the Overall Index of Quality Developed for the Cost, Quality and Child

Outcomes Study

Scales in the overall index of quality

Indicatorsa

NAEYC

standards ECERS ITERS CIS TIS

Fosters potential for forming an affectionate

relationship with a familiar caregiver. x x x x

Encourages frequent positive interaction

between caregiver and children. Caregivers

are responsive, positive, accepting, and

comforting. x x x x x

Requires caregiver training related to child

development. x

Provides opportunities for caregiver training. x x x

Specifies a maximum group size. x b b b b

Specifies a child-to-staff ratio. x b b b b

Provides curriculum that encompasses both

socioemotional and cognitive development. x x x

Provides children opportunities to select

activities. x x x

Values experience with cooperative group

process. x x

Provides structured but not overly rigid

curriculum. x x x

Encourages recognition and appreciation of

children’s culture. x x x

Provides child-oriented physical environment. x x x

Provides orderly and differentiated physical

setting. x x x

Provides for parental involvement. x x x

Encourages parent/staff conferences and

communication. x x x

aAdapted from indicators developed by the National Research Council’s Panel on Child Care

Quality.

bMeasured by other Cost, Quality and Child Outcomes study team data collection instruments.

We also examined the scores that the 25 accredited centers in the Cost,

Quality and Child Outcomes study population received on the overall

index of quality and a second index that combined scores on the ECERS and

ITERS indexes. Of the 25 accredited centers in the entire study sample, 21

met the criteria for inclusion in the high-quality subsample and were

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Scope and Methodology

included among the 150 selected.27 That is, 21 accredited centers had

scores on the overall index of quality or the ECER/ITER index of 4.5 or

higher. Four accredited centers whose scores were less than 4.5 on both

indexes were not selected for the high-quality subsample, suggesting that

the measures of child care center quality employed by the overall index of

quality and the ECER/ITER index are slightly more stringent than NAEYC

standards.

Limitations of the

Cost Analysis

Because there was no single data set for our analysis, we used multiple

sources of existing data and a questionnaire we developed. The fact that

most data had been collected for purposes other than our study resulted in

some limitations. Therefore, although we present our cost information in

dollars and cents, our findings are estimates and are not as accurate as this

level of measurement implies. The following measurement and analysis

issues should be considered in reviewing our findings.

DOD and Air Force Cost

Data Required

Supplementation

The Air Force Semiannual Child Development Center Report and the

Appropriated and Nonappropriated Fund Expense Summary for 1997 are

administrative cost reports developed for routine Air Force planning and

budgeting. Therefore, several of the data items of interest for our study

had to be supplemented with data from other sources or imputed. For

example, the semiannual report provided the salary grade of child

development center civil service employees paid under the Civil Service

general schedule (GS) but not the step or locality.28 The expense summary

reported the cost of supplies purchased by the child development centers,

but the cost item included bulk supplies for the family child care and

school-age programs as well. One-half of the Air Force installations did not

report food costs on a more detailed expense summary provided by the

Services Directorate of the Air Force Family Member Program. For these

and other items, we supplemented the data provided by DOD with data

from our survey or additional sources. The Air Force data used in our cost

estimate have not been audited by the Air Force audit service.

27For purposes of our analysis, we considered centers that scored 4.5 or more on the 7-point index to

be high-quality.

28The U.S. Civil Service System’s general schedule designates positions by salary grade, from 1 to 15.

Salary increments between grades are designated by steps. Pay adjustments, known as locality pay,

also are made to compensate for disparities in Civil Service and private sector salaries and wages for

comparable positions.

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Scope and Methodology

Selecting a Measure for the

Cost-per-Child Analysis

Required Balancing

Accuracy Against

Availability

Air Force and civilian child development centers counted the number of

children served in several ways, and only some of the information was

available by the age groups of the children served. The Air Force’s

semiannual report had information on hourly attendance; the total number

of hours children spent in the child development center classrooms during

the year; and the total number of children the center had the physical

space to house, also called the number of “child care spaces.” However, in

the semiannual report, only the information on the number of hours

children spent in the child development center classrooms was reported

by age group. The Cost, Quality and Child Outcomes in Child Care Centers

study data file had information on the number of children enrolled and on

the number of children in attendance on the date of data collection. Both

measures were available by the age groups of the children served. Both

measures also were expressed as the number of full-time-equivalent (FTE)

children served—that is, the total number of children who attended for the

full day as well as children who attended for only part of the day.

However, information on actual hourly attendance and on the number of

child care spaces in civilian centers was not available in the Cost, Quality

and Child Outcomes in Child Care Centers study data file.

Because the Air Force data on hourly attendance and the civilian data on

daily attendance were the most similar measures, and both were available

by age group, we selected them as measures for the number of children

served. However, because the Cost, Quality and Child Outcomes in Child

Care Centers study’s daily attendance measure was counted only 1 day in

the year, we converted it to a measure of the total number of hours

children in high-quality civilian centers spent in the classroom during a

year by assuming that the number of children in attendance in civilian

centers was the same on every day of the year. This assumption may have

yielded a total that was slightly more or slightly less than the actual

number of children served in civilian centers.

Current Total Cost Data on

Civilian Child Care Centers

Were Not Available

Because the most recent data available on the full cost of civilian child

care centers and on the wages of child care providers were collected in

1992, we had to approximate the Cost, Quality and Child Outcomes in

Child Care Centers cost data, adjusted for inflation as indicated by the

Consumer Price Index (CPI). While the Employment Cost Index in the

Economic Report of the President shows that workforce wages increased

at about the same rate as the CPI, this measure would be less precise than

the actual wage information available for the Air Force child development

center staff.

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Scope and Methodology

Our Air Force and Civilian

Cost Analyses Did Not

Include the Costs of

Oversight, Inspections, or

Resource and Referral

Services

In the Air Force child development program, the Air Force administers

and incurs the cost for all program operations, including oversight,

inspection, resource and referral services for parents seeking child care,

and centers. In the civilian child care center market, however, entities

other than child care centers pay for and perform the regulatory and

referral functions. State governments monitor and inspect child care

centers, and both public and for-profit organizations provide resource and

referral services. Civilian resource and referral agencies provide a range of

services—consumer education, databases of services, child care supply

studies, and training for providers—but do not care for children.

Therefore, to ensure comparability, we excluded the cost of regulatory

and referral activities from our analysis.

Labor Cost Information in

the Cost, Quality and Child

Outcomes Data File Was

Not as Detailed as That in

the Semiannual Report

Center directors provided wage and benefit information on all caregiver

staff but were given the option of providing either the same level of detail

for all additional staff positions or total annual wages and benefits. Some

centers provided the detailed wage and benefit information, but most

centers did not. It was not possible, therefore, to separate the civilian

center labor cost information into direct and indirect labor costs for

comparison with the Air Force center labor cost data.

We describe the measurement and analysis procedures that underlie all of

these issues in greater detail in the sections that follow.

Procedures Used to

Estimate Air Force

Child Development

Center Costs

To develop estimates of the cost of child care at Air Force child

development centers, we used fiscal year 1997 data from the Air Force

Semiannual Child Development Center Report concerning the number of

hours of child care provided at each center and wage rates for center staff,

as well as other data we obtained from a number of sources. In estimating

the cost of providing care to specific age groups of children at each center,

we allocated costs other than direct labor costs to each age group on the

basis of that age group’s share of the total hours of care provided at the

center.

Data Sources Used to

Estimate Air Force Cost

Components

The two Air Force Semiannual Child Development Center Reports filed for

each Air Force child development center in fiscal year 1997 were the

primary sources of the data used in our estimates of the cost of care. From

these reports, we obtained information on the number of hours of care for

each age group of children during the 6-month period covered by the

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Scope and Methodology

report, the number of staff-hours devoted to the care of each age group,

the number of caregivers and other staff at the center, the wage rates of

those staff paid from nonappropriated funds, and the grade levels of staff

paid from appropriated funds.

A second data source was the questionnaire responses we received from

each Air Force child development center. In October 1998, we sent

questionnaires to the directors of all child development centers

(93) located on the 67 Air Force bases in the United States. By

February 1999, all questionnaires had been returned. The questionnaire

provided information on the distribution of caregiver staff by grade level

across the various age groups of children, the estimated number of hours

of volunteer help and the value of any donated items received by the

center during that fiscal year, the indoor square footage of space occupied

by the center, and the dollar amount of expenditures made by the center

during fiscal year 1997 for supplies.

We collected the survey data to supplement the cost information available

in the child development centers’ semiannual reports. Because some Air

Force child development program coordinators submitted a single

semiannual report for two or more centers located on their bases, we had

only 75 semiannual reports. Therefore, when we entered the survey and

semiannual report data into a single data file, we combined the survey

responses of bases that had submitted one semiannual report but two or

more survey questionnaires. Thus, for analysis purposes, the total number

of Air Force child development centers was 75.

To determine the hourly wage rates to be used in estimating the cost of

labor performed at a center by employees paid by appropriated funds, we

referred to the 1997 GS pay schedule applicable to the geographic location

of the center. To determine the per-square-foot rental cost of indoor space,

we used the General Services Administration publication, Summary

Report of Real Property Leased by the United States Throughout the

World as of September 30, 1996. As discussed below, we also used a few

other data sources for specific items of information in developing our cost

estimates.

Estimating Procedures Because the Air Force semiannual reports and our survey of child

development centers did not furnish information about the costs of

utilities, food, major equipment, occupancy, legal services, or donations,

we used supplementary data sources and estimating procedures to

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Scope and Methodology

develop cost estimates for these components. In general, we estimated

direct labor costs for caring for each age group of children from

information contained in the semiannual report that directly related

caregiver staff-hours of work to each age group.

For all cost items other than direct labor, we had to make assumptions

regarding what portion of each should be considered attributable to each

of the various age groups of children served by the center. For almost

every such cost item, we allocated the cost proportionally according to

each age group’s share of the total number of hours of child care provided

by the center during fiscal year 1997. Thus, for example, if care for 3- to

5-year-olds constituted 20 percent of a center’s total child care hours, we

allocated 20 percent of that center’s estimated annual cost of utilities to

the 3- to 5-year-old age group. In three instances, we varied this allocation

procedure slightly. In the cases of the costs of cribs and playground

equipment, it did not seem reasonable to follow this procedure. Only the

youngest children would likely make use of cribs, and, conversely, the

youngest children would not make use of playground equipment.

Therefore, we allocated the costs of cribs to children 2 years of age or

younger, and within that category to each of these groups—6 weeks to 6

months, 6 to 12 months, and 12 to 24 months—on the basis of each group’s

total number of child-hours. In allocating the cost of playground

equipment, we excluded the 12-month-old and younger group and

allocated the cost to the remaining age groups according to each group’s

total number of child-hours. Similarly, when allocating food costs, we

excluded the 12-month-old and younger group, since we believe that their

parents provide that group’s food.

The following paragraphs describe in more detail the cost components

included in our estimates and the method we used to estimate the

magnitude of each of them.

Direct Labor The term “direct labor” refers to the work of caregiver staff in classrooms.

To estimate the cost of direct labor for each age group of children at each

center, we multiplied the total number of staff-hours shown on the two

fiscal year 1997 semiannual reports as having been spent providing care to

that age group by the relevant hourly wage. To determine the relevant

hourly wage for each age group’s care, we needed three items of

information: the grade levels of the staff members providing the care, the

number of child-hours of care provided by each grade level, and the hourly

wage of each grade level. Since the semiannual reports did not associate

grade levels with the staff-hours shown, we used information from our

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Scope and Methodology

center questionnaire to estimate the grade level distribution of the

staff-hours.

On our questionnaire, center directors were asked to indicate, for a typical

day, which grade levels of staff were assigned to each age group of

children and how many staff-hours of each grade level were devoted to

each age group of children. We applied the staffing pattern indicated in

response to that question to the total number of staff-hours shown in the

semiannual reports for each age group. For example, if a center director’s

response indicated that on a typical day one-half of the staff time devoted

to the 3- to 5-year-old age group was the time of a GS-4 staff person, we

assumed that half of the staff-hours shown on that center’s semiannual

report as devoted to the 3- to 5-year-old age group were GS-4 staff-hours. In

those instances in which a center questionnaire did not indicate which

grade levels of caregiver staff served a particular age group, we applied to

that age group the median wage rate among caregivers for that age group

at centers that did provide caregiver grade level information for that age

group.

For caregiver staff paid from nonappropriated funds, we obtained the

hourly wage information for each grade level directly from the semiannual

report for the second half of fiscal year 1997. For those paid from

appropriated funds, the GS employees, we used the GS hourly wage rates

for the employees’ grade level shown in the 1997 GS pay schedule for the

locality pay area in which the center is located. By reviewing the Office of

Personnel Management’s Central Personnel Data File, we determined for

the job series in which most caregiver staff are employed—Job Series

1702, Education and Training Technician—and for each grade level in that

series, the average step of all employees at that grade level. In our cost

estimating procedure, we assumed, for each GS-graded employee, that the

employee was at whatever the average step was for all employees at that

grade level. Thus, for every GS-graded employee, we assumed that the

employee’s hourly wage rate in fiscal year 1997 was the rate in the center’s

geographic location applicable to the nationwide average step for Job

Series 1702 employees at the grade level of the employee in question.

To each hourly wage rate we added a factor to cover the cost of fringe

benefits. Air Force officials informed us that for GS-graded employees,

fringe benefits equal 25 percent of salary, and for employees paid from

nonappropriated funds, fringe benefits equal 22 percent of wages.

Therefore, to account for benefit costs, we multiplied all GS hourly wage

rates by 1.25 and all nonappropriated funds employees’ wage rates by 1.22.

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By applying the appropriate estimated hourly wage (and benefit) rate to

the number of staff-hours reported for each age group of children, we

arrived at an estimated total direct labor cost for each age group.

Indirect Labor We considered as indirect labor all work performed by center employees

other than the direct caregivers. Included in this category is the work of

salaried employees, such as the center director, assistant directors, and

training and curriculum specialists, as well as hourly employees, such as

administrative staff and food service personnel, among others. From the

semiannual reports for the second half of fiscal year 1997, we obtained the

number and pay grades of these salaried employees, and for the

nonsalaried employees, we obtained the number of hours worked each

week. We then multiplied the number of hours per week worked by each

hourly employee, or estimated hours per week worked, by the employee’s

reported, or assumed, hourly wage rate; we then multiplied the resulting

number by 52 (number of weeks) and added that total to the annual salary

of the salaried employees (including for both categories of employees the

cost of fringe benefits) to arrive at an estimate of the center’s total cost of

indirect labor. (Since training and curriculum specialists also work with

the family child care providers and school-age caregivers, we allocated

only one-third of their salaries to Air Force center costs.) We then

allocated a portion of that total cost to each age group of children, on the

basis of its proportion of total child-care hours, to estimate the indirect

labor cost of providing care to each age group.

Supplies We obtained estimates of the cost of supplies directly from the centers in

their questionnaires. We asked each center director to estimate the cost of

supplies purchased during fiscal year 1997. Questionnaires from a few

centers did not provide an estimate of the cost of supplies, so for each of

those centers, we estimated supply cost on the basis of the center’s

number of child-hours for the year. We developed the quantitative

relationship between child-hours and supply cost by examining the

relationship between those two quantities among the many centers that

did provide estimates of the cost of supplies.

Food We estimated the centers’ food costs on the basis of information reported

by each Air Force base’s Appropriated Fund Expense Summary for 1997

(7000.12 report). As with other cost elements, we then allocated this total

cost across the various age groups of children, with the exception of the

6-week to 12-month age group. We excluded this group because such

young children do not consume the kind of food purchased by the centers.

For a large number of centers, the 7000.12 report did not show the cost of

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Scope and Methodology

food. For those centers for which food cost data were missing, we

estimated food costs on the basis of the number of meals served by the

center. We developed the quantitative relationship between the number of

meals served and food cost by examining the relationship among centers

that did provide estimates of the cost of food.

Utilities From the Air Force’s Appropriated and Nonappropriated Fund Expense

Summary for 1997 we determined the total amount of utilities costs

incurred by all centers worldwide in fiscal year 1997. We then calculated

the percentage of centers located outside the United States and reduced

the total amount of worldwide utilities costs by that percentage, assuming

that the remaining amount was attributable to centers in the United States.

We then allocated that remaining amount across all U.S. centers on the

basis of the total indoor square footage of space used by each center.

Thus, for example, if the indoor square footage of a given center

constituted 5 percent of the total indoor square footage of all domestic

centers, that center would be allocated 5 percent of the total estimated

utilities costs of all U.S. centers.

Major Equipment We defined the cost of using major equipment as the 1-year allocation of

the acquisition cost of all capital equipment (equipment whose purchase

price exceeds $300).29 Thus, the use of equipment cost would be equal to

the straight-line depreciation charge on equipment that the center could

take if it were a private sector firm. Therefore, it was necessary for us to

determine, or assume, three items of information: the kinds and quantities

of equipment a center would use, the purchase price of each item of

equipment, and the expected useful life of each item of equipment. To

estimate the kinds and quantities of equipment a center would use, we

interviewed the directors of two large centers, a medium-sized center, and

a small center who had reasonably complete information available on the

types of equipment that their centers used.30 With a few exceptions, we

used the average of the two large centers’ purchase costs for each item of

equipment as our estimate of the purchase cost for that same item for all

centers.

29Major equipment included items in a child development center’s kitchen, office, classroom, and

playground, such as refrigerators, freezers, television cameras and monitoring systems, swings, and

outdoor playhouses.

30We contacted centers on Air Force bases that reported having only one child development center. A

center was considered small if, on the semiannual report submitted for fiscal year 1997, the director

reported 89 or fewer full-day children in attendance, medium if the director reported 90 to 124 full-day

children in attendance, and large if the director reported 125 or more full-day children in attendance.

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To estimate the quantities of each item of equipment that a center would

use, we began by assuming that each center would use only one of each

item of kitchen, playground, classroom, and office equipment. For three

items—cribs, coat racks, and shelving units—we assumed that the

quantity used by a center would vary according to the number of children

served by the center. To estimate the quantity of each of these items that

each center would use, we began by setting as a standard the equipment

configuration used by one of the two large centers from which we had

obtained cost information. We then compared the total number of

child-hours of care provided by each center during fiscal year 1997 to the

total for the center we were using as our standard and calculated the

percentage relationship between the two. We used this relationship as the

basis for estimating the quantity of each of the four items of equipment

that each center would use. For example, if a given center had as its total

number of child care hours 10,000 hours and the “standard” center had a

total of 15,000 hours, we would assign to the center two-thirds of the

quantity of each item that the “standard” center used. If the standard

center used 300 shelving units, we would assume that the other center

would use 200 shelving units. The two exceptions to this method involved

cribs and outdoor playground equipment. Because we assumed that cribs

would be used by only the youngest children, we “assigned” cribs to

centers on the basis of total child-hours for only children 2 years of age or

younger. We also assumed that outdoor playground equipment would not

be used by children under the age of 1.

After estimating the quantity of each item of equipment a center would

use, we multiplied that quantity by the estimated unit purchase cost of that

item to arrive at an estimate of the total purchase cost of that item. We

then divided that cost by the number of years of expected useful life of the

item to obtain an estimated annual usage cost. The measures of expected

useful life we used for the various items of equipment ranged from 5 to 15

years and were based on the experience reported to us by the center

directors we had interviewed regarding the kinds of equipment used at

their centers. Finally, since the purchase prices we used in our analysis

were 1998 prices and the centers acquired much of the equipment in

previous years, we converted our 1998 usage costs to costs expressed in

an earlier year’s dollars in order to replicate as closely as possible the

purchase costs the centers had incurred when they acquired the

equipment. For purposes of this conversion, we made an assumption that

each item of equipment being used at centers in fiscal year 1997 had at that

time been in use for half its useful life. Thus, for example, if a category of

equipment has a useful life of 10 years, we assumed that each such item of

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Scope and Methodology

equipment had been purchased 5 years earlier, or in fiscal year 1993. We

thus deflated the 1998 purchase price of all such items to their 1993 price.

We added the estimated annual usage costs of all items of equipment in

each center to estimate that center’s total annual equipment usage cost.

The total cost of each center’s use of equipment was then allocated across

the center’s age groups of children.

Occupancy The cost element that we refer to as occupancy represents the annual cost

of using the space occupied by each center. We defined occupancy cost as

the annual rent that a center would be required to pay if it were to lease its

space on the commercial rental market. In the center questionnaire, we

asked the center director to indicate the total square footage of indoor

space used for center activities, including administrative activities. We

multiplied that number by $5.93 to arrive at an estimated annual

occupancy cost. We chose the $5.93-per-square-foot rate on the basis of

the average cost per square foot of space leased by the Air Force in 1996,

as stated in the 1999 General Services Administration’s report on real

property. That cost was $5.80. Using the CPI to determine the inflation

factor, we raised the $5.80 cost to the $5.93 figure.

Legal Services We based our estimate of the annual cost of legal services provided to

each center on the opinion of officials of the Office of the Air Force Judge

Advocate General regarding the extent of provision of such services.

Those officials estimated that, on average, about 1-1/2 hours per month of

the time of a lieutenant colonel or a colonel would be spent in providing

such services. We therefore determined the midpoint between the lowest

annual pay rate of the lieutenant colonel and highest pay rate of the

colonel and divided that amount by the 2,080 hours in a federal work year

to arrive at an hourly rate. We multiplied that figure by 1.5 to estimate a

monthly cost and then multiplied that cost by 12 to estimate the annual

cost of the legal services provided to each center. We then allocated that

cost across the age groups of children receiving care at each center.

Donations In the center questionnaire we asked each center director to estimate the

number of hours of volunteer help the center received during a typical

week in fiscal year 1997. For each center, we multiplied the number of

reported hours of such help by 52 to estimate the total number of hours of

such work for the year. We then multiplied that total by the minimum

wage rate of $5.15 an hour in effect in 1997 to estimate the total value of

volunteer labor donated to the center in fiscal year 1997. We then allocated

that total figure across the various age groups of children served by the

center.

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In the center questionnaire we also asked each center director to estimate

the total value of donations of such items as toys and supplies received by

the center during fiscal year 1997. We allocated that total value across the

various age groups of children.

Other Costs We did not attempt to estimate an imputed value for insurance or taxes for

the Air Force child development centers.

Procedures Used to

Estimate Civilian

Child Care Costs

The Cost, Quality and Child Outcomes in Child Care Centers study data

file was the only source of data we used to develop estimates of the cost of

care at civilian child care centers. The Cost, Quality and Child Outcomes

study team was an interdisciplinary group composed of economists and

child development psychologists from universities in four states, led by the

University of Colorado at Denver. The team selected the child care centers

examined in the study using a stratified random sample of approximately

100 centers in subregions of each of four participating states, with

approximately equal representation of for-profit and nonprofit centers.

The four participating states were California, Colorado, Connecticut, and

North Carolina.

The data we used most extensively were from an interview with the

director of each child care center in the subsample. The interview was

quite extensive and included all of the cost items.

Selection of the Subsample

of High-Quality Civilian

Centers

An important aspect of the Cost, Quality and Child Outcomes in Child Care

Centers study that made the data suitable for comparison with the Air

Force child development centers was a measure of the quality of each

civilian child care center. Because DOD child development centers are

acknowledged to be of high quality, it was important to compare the Air

Force centers selected for the cost analysis only with high-quality civilian

centers.

The study employed several measures of center quality, but two in

particular for centers with infants, toddlers, and preschoolers. These

measures were obtained by direct observation. Two members of the study

team randomly picked two rooms in the center and observed the

interaction in the rooms for 6 hours. The first measure was the ECER/ITER

scale, a combined measure of the ECERS and ITERS. The studies’ authors

used these because they are well established global measures of child care

processes. The second measure the authors computed was a scale called

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INDEXECW, which is a weighted process index scaled to ECERS and

includes measures from the CIS and TIS. We selected our high-quality

subsample by choosing centers that scored 4.5 or higher on either of these

two 7-point scales. The resulting subsample included 150 centers or

37 percent of the Cost, Quality and Child Outcomes study population.

Estimating Procedures The Cost, Quality and Child Outcomes study team collected extensive

information on the costs of operating a civilian child care center. This

information allowed us to compare costs with those of Air Force child

development centers. Information on the following components of cost

was obtained during the interview of the director. Directors were asked to

provide records of the last fiscal year’s expenses for review by the study

team. The following cost components were collected as total annual costs

for the center, per year: (1) wages, (2) nonwage benefits, (3) staff

education/training costs, (4) subcontractor costs, (5) occupancy cash

costs, (6) food service costs, (7) insurance costs, (8) other operating costs,

(9) overhead costs, and (10) the subsidy supplied. The subsidy is the

estimated value of donated goods and services, such as volunteer labor,

donated food, building space, and utilities. We used these cost

components to estimate the overall cost per child and cost per child by age

group for the high-quality civilian centers. Regarding labor costs, although

a few centers provided separate direct and indirect labor costs, most

centers in the Cost, Quality and Child Outcomes in Child Care Centers

study did not. Therefore, we developed our own estimates of the portion

of total labor costs that should be considered direct labor and the portion

that should be considered indirect labor. For those few centers that

provided separate amounts for direct and indirect labor costs, we

calculated the overall proportions of total labor costs attributable to direct

and indirect labor costs, which were about 82 percent and 18 percent,

respectively. We then applied these proportions to total labor costs for all

centers.

The cost data were collected in the spring of 1993 but were requested for

the latest fiscal year. We assumed the latest fiscal year would be 1992 and

adjusted the civilian costs from 1992 to 1997 by using the CPI.

Allocating Costs by

Child-Hours

As noted, the study provided annual costs for the entire center, not costs

by age group. Because we needed to compare the civilian with the military

child care costs by age group, we needed to allocate center costs by the

proportion that each age group’s child-hours constituted of the center

Page 43 GAO/HEHS-00-7 Child Care Costs
Appendix I 

Scope and Methodology

total. Once we calculated the number of child-hours in each age group, we

knew the proportion each age group represented of the whole.

Child-Hours During the director’s interview, the director was asked what age group

each room in the center contained and how many FTE children were there

on that particular day. These responses were used to determine whether

each room had infants (0 to 18 months), toddlers (19 to 30 months),

preschool-aged children (2 to 5 years), kindergarten-aged children (5

years), or school-aged children (6 years and older).31 We used the reported

age group in each room to add up the FTE children for different age groups

across the 150 high quality-centers. The total number of FTE children for

the center for the year is calculated from the number there on the day of

the interview. First, we multiplied the number of children present on the

day of the interview by eight, resulting in the number of child-hours per

day. We then multiplied the daily number of hours by five (the number of

days in a week that most centers were open) to get weekly hours. Next, we

multiplied the weekly hours by 52 (weeks per year). If a center closed for

the summer, we subtracted the number of months the center was closed

times 4.3 (average number of weeks in a month) from the total for a yearly

figure. We then allocated the costs on the basis of the percentage of total

child-hours each age group had.

Caregiver Compensation

Rate

The Cost, Quality and Child Outcomes in Child Care Centers study

included the hourly wage rate for many of the caregivers and aides, but

not all. The rest of the compensation information consisted of annual

salaries. We divided the annual salary by 52 weeks times the number of

hours worked per week (minus the number weeks the center was closed)

to achieve an hourly rate. We then calculated total compensation by

adding employee benefits, which were equivalent to 19.73 percent of the

wage rate, to the wage.

Child-To-Staff Ratios The Cost, Quality and Child Outcomes in Child Care Centers study data

file had information that allowed us to compute ratios of the number of

children per caregiver in the centers’ classrooms, known as the

31The ages of children in the age group categories are approximate. The Cost, Quality and Child

Outcomes study team learned during data collection that children in many centers were assigned to

groups on the basis of their developmental level, rather than their chronological age. Therefore,

because very young children develop at different rates, it was possible that children as old as 18

months were placed in infant rooms, and children as young as 2-1/2 might be placed in preschool

rooms.

Page 44 GAO/HEHS-00-7 Child Care Costs
Appendix I 

Scope and Methodology

“child-to-staff ratio.” One segment of the data file contained information

on the number of hours a week that each caregiver and aide worked. First,

we divided the total number of hours worked by all of the caregivers in

our subsample by the total number of FTE caregivers. This gave us the

average number of hours worked. We then multiplied that figure by 52,

and subtracted the time the center was closed. Because we already had

child-hours, this additional information on caregiver-hours allowed us to

calculate a ratio of child-hours to caregiver-hours for each age group.

Factors Affecting Air

Force Costs

To further understand how much the age distribution of the centers’

children affected the overall Air Force cost per child-hour, we estimated

what the Air Force centers’ cost would be using the age distribution of the

civilian centers’ children. We reestimated the Air Force overall cost per

child-hour, substituting the age distribution of the civilian centers’ children

for the age distribution of Air Force children in the total cost estimate.

This estimate allowed us to calculate the dollar value of the difference that

the age distribution of the children contributed to the overall cost per

child-hour.

Page 45 GAO/HEHS-00-7 Child Care Costs
Appendix II 

Child-to-Staff Ratios Within Group Size

Recommended by NAEYC

Group size

Age of children 6 8 10 12 14 16 18 20 22 24 28

Infants (birth-12 months) 3:1 4:1

Toddlers (12-24 months) 3:1 4:1 5:1 4:1

2-year-olds (24-30 months) 4:1 5:1 6:1

2-1/2-year-olds (30-36 months) 5:1 6:1 7:1

3-year-olds 7:1 8:1 9:1 10:1

4-year-olds 8:1 9:1 10:1

5-year-olds 8:1 9:1 10:1

6- to 8-year-olds 10:1 11:1 12:1

9- to 12-year-olds 12:1 14:1

Notes: Smaller group sizes and lower child-to-staff ratios have been found to be strong predictors

of compliance with indicators of quality, such as positive interactions among staff and children

and developmentally appropriate curriculum. Variations in group sizes and ratios are acceptable

in cases in which programs demonstrate a very high level of compliance with criteria for

interactions, curriculum, staff qualifications, health and safety, and physical environment.

Source: NAEYC.

Page 46 GAO/HEHS-00-7 Child Care Costs
Page 47 GAO/HEHS-00-7 Child Care Costs
Appendix III 

Fiscal Year 1997 per-Child-Hour Cost

Components for Air Force Child

Development Centers, by Age Group

0-6 months

Cost components Cost per hour % of total

Direct labor $3.73 68.8

Indirect labor 0.90 16.6

Supplies 0.28 5.2

Utilities 0.07 1.4

Food 0 0

Equipment 0.04 0.7

Space 0.38 7.1

Legal services 0 0

Volunteers 0.01 .2

Donations 0 0

Total $5.43 100

Page 48 GAO/HEHS-00-7 Child Care Costs
Appendix III 

Fiscal Year 1997 per-Child-Hour Cost

Components for Air Force Child

Development Centers, by Age Group

6-12 months 12-24 months 24-36 months 3-5 years Part-day preschool 6 and over

Cost per

hour

% of

total

Cost per

hour

% of

total

Cost per

hour

% of

total

Cost per

hour

% of

total

Cost per

hour % of total

Cost per

hour

% of

total

$3.75 69.5 $2.84 60.2 $2.12 53.3 $1.38 42.7 $1.41 42.4 $1.34 45.6

0.87 16.2 0.91 19.4 0.90 22.7 0.88 27.3 0.94 28.3 0.70 24.0

0.27 5.1 0.27 5.8 0.27 6.8 0.27 8.5 0.23 7.0 0.19 6.4

0.07 1.4 0.07 1.5 0.07 1.8 0.07 2.3 0.08 2.3 0.08 2.8

0 0 0.21 4.5 0.21 5.3 0.21 6.3 0.21 6.3 0.18 6.1

0.04 0.8 0.02 0.4 0.03 0.7 0.03 0.9 0.03 1.0 0.02 0.7

0.38 7.0 0.37 7.9 0.37 9.2 0.38 11.7 0.39 11.8 0.42 14.2

0 0 0 0 0 .1 0 .1 0 .1 0 .1

0.01 0.2 0.01 0.2 0.01 0.2 0.01 0.3 0.03 0.8 0.01 0.2

0 0 0 0 0 .1 0 .1 0 0 0 0

$5.40 100 $4.72 100 $3.97 100 $3.23 100 $3.33 100 $2.94 100

Note: Because of rounding, individual percentages in a column do not always equal 100 percent

and cost components do not always equal totals.

Source: GAO analysis of Air Force center data.

Page 49 GAO/HEHS-00-7 Child Care Costs
Appendix IV 

Comments From the Department of Defense

Page 50 GAO/HEHS-00-7 Child Care Costs
Appendix IV 

Comments From the Department of Defense

Page 51 GAO/HEHS-00-7 Child Care Costs
Appendix V 

GAO Contacts and Staff Acknowledgments

GAO Contacts Karen Whiten, Assistant Director, (202) 512-7291

Sara Edmondson, Evaluator-in-Charge, (202) 512-8516

Staff

Acknowledgments

In addition to those named above, the following individuals made

important contributions to this report: Elizabeth Morrison was responsible

for determining the Air Force cost estimates and analyzing DOD’s child

development program; James Wright provided guidance on study design,

measurement, and data analysis; John Smale, Jr., provided survey and data

analysis support; Joan Vogel created the data files and provided the

computer programming for estimating the Air Force and civilian costs; and

Janet Mascia and Alicia Cackley provided technical guidance on child care

quality and cost measurement issues.

(116016) Page 52 GAO/HEHS-00-7 Child Care Costs
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