Study of the Costs of High Quality Childcare in Michigan

little girl holding up a toy camera in a classroom

The tuition charged by child care providers does not always cover the true cost of child care, resulting in unpaid wages, donated materials, and an unsustainable child care system. In Michigan, AIR conducted a cost study to help the state better understand both the features and true costs of high-quality early childhood care and education (ECCE). 

In 2020, The Michigan Department of Education (MDE) Office of Great Start was awarded the Preschool Development Grant Birth through Five (PDG B-5) renewal grant. As part of the initial Michigan PDG needs assessment conducted by AIR, families reported high out-of-pocket costs and providers reported difficulty covering their costs to provide high-quality care. 

Key Findings from the Cost Study

Using multiple data sources from a sample of 45 licensed high-quality ECCE programs, AIR estimated the per child cost of providing high-quality ECCE by age, setting, and region. The analysis shows that the average per-child cost of high-quality care ranged between $11,000 and $21,000 per child per year, depending on age, setting, and location. 

Costs were higher in family child care/group child care than in child care centers, and higher for infants and toddlers than preschoolers in both settings. Current subsidy rates may not be adequate to cover the estimated true cost of high-quality ECCE, especially for home-based providers, and the current rates may be inadequate to cover all costs for center-based care as well. 

Although these costs vary, having a mixed-delivery system with diverse types of care options is important for families in Michigan; additional support for high-quality ECCE throughout the system is important. 

This information can be used to inform future state ECCE policy and subsidy reimbursement rates.