Childcare Landscape Study - Flipbook - Page 112
Davidson County Child Care Landscape Study Results
3
Cost Estimation Models Calculate the True Cost of High-Quality Child Care
Given the limitations of using tuition prices to accurately measure the cost of operating a
child care business, cost estimation models provide an alternative framework. Rather than
relying on the constrained amount that families can pay, this model estimates costs from the
providers’ perspective.
Cost estimation models account for all expenses involved in delivering high-quality child care,
including educator wages that reflect a living wage and fair benefits, facility expenses, and
learning materials. These expenses are combined to generate a comprehensive estimate of the total
cost to sustain a high-quality child care program with a well-compensated, stable workforce.8
To estimate the cost of providing high-quality child care, the Policy Impact Center created a
child care cost estimation model for greater Davidson County. The Policy Impact Center
convened with local child care community partners and experts (the Child Care Workgroup) to
tailor the cost estimation model to the local realities of greater Davidson County.
The cost estimation model captures the full range of day-to-day resources needed to operate
safe, responsive, and enriching child care programs with a well-supported workforce that
earns a wage that meets the local ALICE Household Survival Budget Threshold ($22.50 per
hour) and receives fair benefits.a
The cost estimation model relies on local, state, and national cost data, including data from the
Davidson County Child Care Provider Experience Survey (Child Care Provider Survey), an
original survey developed and fielded by the Policy Impact Center in Summer 2025 (N=275,
including 246 centers and 29 homes; 47% response rate).b
To create the cost estimation model, we used estimates based on the average home-based child
care program size, staffing patterns, and educator credentials seen in the Child Care Provider
Survey to ensure cost estimates reflect programs in the area. Family and group home-based
child care programs differ in size and subsequent staffing needs, necessitating separate cost
estimation calculations for family and group home-based programs.
The cost estimation model estimates costs, including educator wages, specific to the cost of
living in the greater Davidson County area, which has a relatively high cost of living
compared to other areas in the state. Therefore, cost estimation models designed for most
other areas in Tennessee would likely generate lower cost estimates for the true cost of highquality child care. The following sections present results from the cost estimation modeling
process for home-based child care.
a ALICE is an acronym for Asset Limited, Income Constrained, Employed, and represents households with income above
the Federal Poverty Level (FPL), but below the basic cost of living. The Household Survival Budget reflects the minimum
cost of household necessities (housing, child care, food, transportation, health care, and technology) plus taxes, adjusted for
all US counties and various household compositions. The Davidson County ALICE Household Survival Budget income is
$22.50 per hour for a single adult living alone. See ALICE Budget and Income Status | UnitedForALICE.
b The Policy Impact Center child care cost estimation model is built on the framework developed by other cost estimation models
such as Prenatal to Five Fiscal Strategies (PN5FS) and informed by the Administration for Children & Families’ Office of Child
Care (ACF PCQC). To review our complete methodology and approach see our online Methods Appendix.
Prenatal-to-3 Policy Impact Center 2026
www.pn3policy.org
