Understanding the Cost of Quality Child Care in New Mexico: A Cost Estimation Model to Inform Subsidy Rate Setting

With support from the Pritzker Children's Initiative, Prenatal to Five Fiscal Strategies - through the NCIT Capacity Building Hub - worked with the New Mexico Early Childhood Education and Care Department and Growing Up New Mexico to conduct a cost study and develop a cost estimation model to inform subsidy rate setting. New Mexico, along with every other state, currently relies on the market-rate survey approach to set rates paid by public funding for child care subsidies under federal Child Care Development Block Grants. Under a market survey approach, child care rates paid by public funding are based on what parents can afford to pay for child care, not necessarily related to the actual cost of delivering quality care. This paper outlines the cost-estimation model that allows New Mexico’s early childhood leaders to better understand the actual cost of providing early care and education services in New Mexico.