Existing law requires the Superintendent of Public Instruction to implement a plan that establishes reasonable child care standards and assigned reimbursement rates, as provided. Existing law requires the standard reimbursement rate to be increased annually by a cost-of-living adjustment, as provided.

Existing law requires the Superintendent of Public Instruction to implement a plan that establishes reasonable child care standards and assigned reimbursement rates, as provided. Existing law requires the standard reimbursement rate to be increased annually by a cost-of-living adjustment, as provided.

This bill would make nonsubstantive changes to these provisions.

Date of Hearing: May 27, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

ABPCA Bill Id:AB 765

Author:(Ridley-Thomas) – As Amended Ver:March 26, 2015

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill raises the standard reimbursement rate (SSR) for subsidized child care as necessary to provide a living wage and specified benefits, and redefines "cost-of-living adjustment" for purposes of this bill. Specifically, this bill:

1. Requires the SRR to be raised as needed to provide a living wage, reasonable health insurance, and retirement benefits for employees in order to support the recruitment and retention of skilled and trained teachers, to support the financial stability of programs and educational quality, and to achieve gender pay equity.

2. Defines “cost-of-living adjustment” to mean an annual increase in funding and the SRR to maintain buying power as a result of inflation, and requires the COLA as currently calculated to at least be equal to the amount of the inflation adjustment applied to K-12 school district revenue limits, as specified.

FISCAL EFFECT:

1. Living wage calculations will vary by county, but CDE estimates that every 1% increase in the SSR equates to additional costs of $11.5 million (GF).

2. Minor and absorbable costs to CDE to revise contracts and to issue guidance documents.

COMMENTS:

1. Purpose. According to the author, “This bill would help to build a strong and professional early care and education workforce that is defined by high-quality, reasonable compensation, and job retention and security. The bill would clarify that it is the intent of the Legislature to provide child development programs with annual cost of living adjustments equal to the inflation adjustments given to K-12 education, as well as to rebuild wages, benefits and financial stability in these programs – including the elimination of gender pay inequity. Furthermore, the bill would help to ensure and enhance the ability of these programs for young children to meet the high educational standards required by state and federal law, and to retain skilled and highly-trained teachers by increasing the SSR.”

2. SSR. CDE-administered subsidized child care can be provided through contracted providers which are funded through the receipt of the SRR based on the number of children enrolled and the hours of care provided. Families may also be required to pay a family fee if they earn above a certain threshold income for their family size. Care is provided in child care centers and family child care homes.

The SRR is set in statute and is supposed to be increased using a COLA each year. However, this adjustment has been suspended for a number of years, leaving the SSR at $34.38 for a full day of care, from fiscal year 2007-08 through 2013-14. The SRR was increased by five percent in the Budget Act of 2014, and is now $36.10 for fiscal year 2014-15. Adjustment factors are applied to the SRR in some instances to reflect the increased cost of care for the different ages and needs of children.

3. Living wage. A “living wage” often refers to the amount of income necessary for workers to meet the basic needs of themselves and their families, typically including housing, food, health care, child care, transportation, taxes, and miscellaneous costs. Methodologies for determining living wages vary, but they tend to involve calculations at the regional (city or county) level in order to account for variance in housing costs. Living wage estimates tend to vary by family size, given the differing child care needs associated with the number and ages of children.

Living wages tend to be significantly higher than the minimum wage. For example, the Insight Center for Community Economic Development has developed the family economic self-sufficiency standard. The 2014 hourly living wages per this standard for one adult with two preschool-age children, ranged from $29 per hour in Riverside County to $40 per hour in Santa Clara County.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: April 28, 2015

ASSEMBLY COMMITTEE ON HUMAN SERVICES

Kansen Chu, Chair

ABPCA Bill Id:AB 765

Author:(Ridley-Thomas) – As Amended Ver:March 26, 2015

SUBJECT: Child care and development: reimbursement rates

SUMMARY: Raises the standard reimbursement rate for subsidized child care.

Specifically, this bill:

1. States a number of legislative findings and declarations related to teachers in state-funded child development programs and the low wages and lack of benefits they often receive.

2. States that the standard reimbursement rate (SRR) is not intended to fund mandated costs imposed upon child development programs due to actions of law relating to minimum wage requirements, health insurance requirements, new or increased fees, new or expanded program requirements, or other cost increases due to legislative action.

3. Requires, in addition to application of the specified cost-of-living adjustment (COLA), the SRR to be raised as needed to provide a living wage, reasonable health insurance, and retirement benefits for employees in order to support the recruitment and retention of skilled and trained teachers, to support the financial stability of programs and educational quality, and to achieve gender pay equity.

4. Defines “cost-of-living adjustment” to mean an annual increase in funding and the SRR to maintain buying power as a result of inflation, and requires the COLA as currently calculated to at least be equal to the amount of the inflation adjustment applied to K-12 school district revenue limits, as specified.

EXISTING LAW:

1. Establishes the Child Care and Development Services Act to provide child care and development services as part of a coordinated, comprehensive, and cost-effective system serving children from birth to 13 years old and their parents including a full range of supervision, health, and support services through full- and part-time programs. (EDC 8200 et seq.)

2. Defines “child care and development services” to mean services designed to meet a wide variety of children’s and families’ needs while parents and guardians are working, in training, seeking employment, incapacitated, or in need of respite. (EDC 8208)

3. States the intent of the Legislature that all families have access to child care and development services, through resource and referral where appropriate, and regardless of demographic background or special needs, and that families are provided the opportunity to attain financial stability through employment, while maximizing growth and development of their children, and enhancing their parenting skills through participation in child care and development programs. (EDC 8202)

4. Requires the Superintendent of Public Instruction to administer general child care and development programs to include, among other things as specified, age- and developmentally-appropriate activities, supervision, parenting education and involvement, and nutrition. Further allows such programs to be designed to meet child-related needs identified by parents or guardians, as specified. (EDC 8240 and 8241)

5. Requires the Superintendent to implement a plan that establishes reasonable standards and reimbursement rates for subsidized child care, as specified. Sets the amount of the SRR. (EDC 8265)

6. Requires the Superintendent to establish a family fee schedule for subsidized child care, as specified, contingent on income and subject to a cap. (EDC 8273)

FISCAL EFFECT: Unknown

COMMENTS:

Subsidized child care and the Standard Reimbursement Rate: Families are typically eligible for subsidized child care if their income is less than 70% of the 2007-08 State Median Income (about $42,000 per year for a family of 3), if the parents have a need related to work, training, or education, and if the children are up to 12 years old (or 21 years old for youth with exceptional needs). The state’s subsidized child development programs, with the exception of CalWORKs Stage 1 child care, are overseen by the California Department of Education (CDE). The Department of Social Services (DSS) administers CalWORKs Stage 1 child care and is also responsible for the licensing and regulation of child day care centers and family child care homes.

CDE-administered subsidized child care can be provided through contracts; contracted providers are funded through the receipt of the Standard Reimbursement Rate (SRR) based on the number of children enrolled and the hours of care provided. Families may also be required to pay a family fee if they earn above a certain threshold income for their family size. Care is provided in child care centers and family child care homes.

The SRR is set in statute and is supposed to be increased using a COLA each year. However, this adjustment has been suspended in years past, remaining the same, at $34.38 for a full day of care, from fiscal year 2007-08 through 2013-14. The SRR was increased by five percent in the Budget Act of 2014, and is therefore $36.10 for fiscal year 2014-15. Adjustment factors are applied to the SRR in some instances to reflect the increased cost of care for the different ages and needs of children.

The SRR COLA is set in statute, as is the elementary and secondary school district revenue limit COLA. However, they are calculated differently. Also, as previously stated, the SRR COLA has been suspended repeatedly in recent years.

Gender pay inequity: The continued persistence of a gender pay gap in the state and country is well-recognized. According to 2014 data from the American Association of University Women (AAUW), in the United States, women made 78 cents for every dollar men did. This ratio was slightly better in California, where median earnings for women were $42,199, equaling 84% of men’s median earnings of $50,268.

However, simply looking at the difference in pay between men and women can miss other dynamics, particularly those pertaining to race and ethnicity. A report from the National Women’s Law Center looking at 2012 census data for the United States found that, while women overall were paid 77 cents per every dollar earned by their male counterparts, parsing these data showed how women fared differently by race and ethnicity. White, non-Hispanic women earned 78% of what white, non-Hispanic men did. Asian women earned 87% of what these same (white, non-Hispanic) men did. Black women earned 64% compared to white, non-Hispanic men, and Hispanic women earned 54% compared to them.

The gender pay gap may, in certain industry sectors, be both cause and effect of “typically male” and “typically female” jobs. Evidence indicates that the child care workforce in California is predominantly female. For example, a 2006 study by The California Child Care Resource and Referral Network and the Center for the Study of Child Care Employment, housed in the Institute of Industrial Relations at the University of California at Berkeley, looked at a random sample of 1,800 family child care providers in the state and found that 96% of the study sample was female.

Living wage: A “living wage” is often used to refer to the amount of income necessary for workers to meet the basic needs of themselves and their families, typically including housing, food, health care, child care, transportation, taxes, and miscellaneous costs. Methodologies for determining living wages vary, but they tend to involve calculations at the regional (city or county) level in order to account for variance in housing costs. Additionally, living wage estimates also tend to vary by family size, given the differing child care needs associated with the number and ages of children.

Living wages tend to be significantly higher than the minimum wage. For example, the Insight Center for Community Economic Development has developed the family economic self-sufficiency standard. The following are the 2014 hourly living wages per this standard, by county, for one adult with two preschool-age children:

Alameda County = $36.28/hour

Los Angeles County = $35.48/hour

Riverside County = $29.09/hour

Sacramento County = $27.28/hour

San Diego County = $33.96/hour

Santa Clara County = $40.26/hour

Santa Cruz County = $38.99/hour

Need for this bill: According to the author, “This bill would help to build a strong and professional early care and education workforce that is defined by high-quality, reasonable compensation, and job retention and security. The bill would clarify that it is the intent of the Legislature to provide child development programs with annual cost of living adjustments equal to the inflation adjustments given to K-12 education, as well as to rebuild wages, benefits and financial stability in these programs – including the elimination of gender pay inequity. Furthermore, the bill would help to ensure and enhance the ability of these programs for young children to meet the high educational standards required by state and federal law, and to retain skilled and highly-trained teachers by increasing the Standard Reimbursement Rate.”

Staff comments: Child care and development programs are a crucial support for working families: they enable parents to go to work to and earn an income for their families, and at the same time, they can provide children with the care and education that will help form the strong developmental foundation that is known to contribute to a number of positive outcomes later in life. The providers of this care play a vital role in the success of early care and education programs, and it is widely recognized that all too often, the wages associated with this important work are low.

This bill’s goals of addressing gender pay inequity, the recruitment and retention of quality care providers, and the financial stability and educational quality of subsidized child care programs are laudable. Furthermore, its efforts to increase the SRR to better fund early care and education providers point to the need for a well-supported subsidized child care system. In particular, this bill’s proposal to keep the SRR COLA on par with the K-12 school district revenue limit COLA may be one way to better support this system. However, other components of this bill may unintentionally conflict with, or at least complicate, this approach. Should this bill move forward, the author may wish to consider the following:

1. The intent language stating that, “The standard reimbursement rate is not intended to fund mandated costs imposed upon child development programs due to actions of law relating to minimum wage requirements, health insurance requirements, new or increased fees, new or expanded program requirements, or other cost increases due to legislative action,” may be interpreted to mean that the SRR should not be used to pay for any of the specified increases and that other funds, such as additional state General Fund, must instead be used for these purposes. If the intent of this language is to encourage an attendant increase in the SRR per any increases in the items listed, rewording of this provision with added detail may be helpful.

2. This bill requires the adjustment of the SRR according to a wide variety of factors, a number of which are not clearly defined in order to operationalize easily. For example, “reasonable health insurance” and “living wage” are not defined, and are left open to interpretation. Additionally, the type of retirement benefits required are not specified. Furthermore, no timeframe is offered for the adjustment of the SRR outside of “as needed.” In order to offer clear direction to the Superintendent and CDE, it may be useful to better define terms and timelines. At the same time, it may also be useful to specify these factors – living wage, reasonable health insurance, and retirement benefits – as ultimate goals, and the adjusted COLA as an important first step.

3. Requiring the SRR to be indexed to a living wage can entail numerous complicated calculations, given that living wages are typically responsive to regional costs (including housing costs) and family size (including ages of children). The SRR is a statewide rate, and it is unclear how a uniform statewide rate would be adjusted by a regionally-responsive living wage. Additionally, it is unclear how a change based on a living wage, which is an hourly wage for an individual worker, would translate into a change in the SRR, which is a per-child, per-day amount. That is, the language in this bill doesn’t make clear if this is a percent-for-percent increase, or if some other method may be used for adjusting the SRR per the living wage, as well as per reasonable health insurance and retirement benefits.

Clarifying language may be useful to ensure this bill can help to achieve the author’s goals of rightfully elevating the wage profile of child care workers, whose work is essential in promoting successful outcomes for children.

REGISTERED SUPPORT / OPPOSITION:

Support

California Child Development Administrators Association (CCDAA)

Cal-SAFE Program at Redwood High School

Coalition of California Welfare Rights Organization, Inc.

Community Action Marin Child Development Program

Extended Child Care Coalition of Sonoma County

Go Kids

Professional Association for childhood Education

Quality Children’s Services

The Advancement Project

5 individuals

Opposition

None on file.

Analysis Prepared by: Daphne Hunt / HUM. S. / (916) 319-2089