Child Care and Development Fund (CCDF) Lead Agencies are required to consider cost information when setting payment rates. Many Agencies meet this requirement by doing a narrow cost analysis. This report offers examples and expert advice on how to do a good narrow cost analysis through three widely used approaches:

• building a cost model;
• conducting a cost survey; and
• building a cost model informed by a limited cost survey.

It is the second in a three-part series. Defining Narrow Cost Analysis defines narrow cost analysis and discusses child care costs and prices. Using a Narrow Cost Analysis to Inform Payment Rates describes how to use cost data when setting payment rates.

Please see the Building Child Care Research Capacity project page for additional products aimed at helping CCDF Lead Agencies use data and research to make informed policy decisions.