ASSEMBLY THIRD READING

ATR Bill Id:AB 452

Author:(Mullin and McCarty)

As Amended Ver:April 29, 2019

Majority vote

SUMMARY:

Establishes, upon appropriation by the Legislature, the "California Childcare Facilities Grant Fund" (CCFGF) to replace the Child Care Facilities Revolving Fund (CCFRF) and to supply grants to providers of publicly-funded child care for the improvement or construction of facilities to house programs for infants and toddlers.

Major Provisions

1. Deletes language in current law establishing and governing the CCFRF in the State Treasury, which funds loans to improve existing buildings for purposes of licensure for child care and development services and to purchase new relocatable child care facilities, as specified.
2. Establishes the CCFGF in the State Treasury and requires, upon appropriation by the Legislature, moneys in the fund to be used for purposes of the provisions of this bill.
3. Requires the California Department of Education (CDE) to develop and administer the California Childcare Facilities Grant Program (CCFGP) to support both of the following programs: the construction of new child care centers or the renovation, repair, or modernization of existing child care centers that serve children in subsidized child care and development programs; and the renovation, repair, and modernization of family child care homes that serve such children.
4. Establishes authorizations, requirements, and parameters regarding the development and administration of the CCFGP including the following, among others and as specified: authority for CDE to award grants of up to $1,000,000 for child care facilities and $50,000 for child care homes; the requirement for CDE to prioritize provider applicants that serve infants and toddlers or are recovering from a disaster; required recoupment of grant funds spent on projects that do not make at least 50% of their slots available for subsidized child care for at least 10 years (child care centers) or 5 years (family child care homes); and, reporting requirements for grantees and CDE.
5. Sunsets the provisions of this bill establishing the CCFGF and CCFGP as of July 1, 2030.

COMMENTS:

Availability of subsidized child care: The state's current capacity to provide adequate affordable child care services is far below what is required to meet families' needs across California. A January 2019 analysis by the California Budget and Policy Center found that, in 2017, only 1 in 9 children who were eligible for subsidized child care and development programs in California were actually enrolled in a program capable of meeting their family's needs for more than a couple hours per day and throughout the entirety of the year. Focusing on the supply of care for infants and toddlers, a June 2018 article in EdSource stated that, "Statewide, less than 14 percent of infants and toddlers who qualify for subsidized child care actually receive it. The shortage of child care for infants and toddlers is creating a crisis for working families, especially low-income families, advocates say."

Child Care Facilities Revolving Fund: AB 1578 (Alpert, et al.), Chapter 299, Statutes of 1997, established the CCFRF, which can be used for either: a) renovating, repairing, or improving an existing building so that it may be licensed to provide early education and support services; or, b) purchasing new relocatable facilities that school districts and contracting agencies can use for providing early education and support services. According to the CCFRF's 2017-18 Annual Report, "Due to the revolving nature of the CCFRF, the program is continuously replenished by loan repayments received from participating agencies in addition to the annual Budget Act appropriations. Over the past 20 years, the loan repayments have facilitated the CDE commitment of approximately $165.7 million in facilities funding to child care agencies through an application process." Since its implementation in FY 1997-98, CDE has received 1,177 applications to fund child care facilities projects. CDE currently has 122 executed contracts with participating agencies with the capacity to serve 12,598.

Need for this bill: This bill seeks to replace the California CCFRF, a loan program, with the CCFGF to invest in permanent structures to help increase the number and capacity of child care centers and family child care homes providing subsidized child care and development services to infants and toddlers.

According to the Author:

"One of the fundamental causes for the shortage of quality child care in California is the issue of facilities. Building a child care center that meets all state and local ordinances requires funding and technical expertise that most childcare providers are unable to access. As a state, it is in our best interest to provide safe facilities for programs that serve our children so administrators and teachers can focus on providing high-quality care that meets their developmental needs."

Arguments in Support:

Writing in support, the Los Angeles County Office of Education states that, "One of the fundamental causes for the shortage of quality childcare in California is the issue of facilities. Building a childcare center that meets all state and local ordinances requires funding and technical expertise that most childcare providers are unable to access. As a state, it is in our best interest to provide safe facilities for programs that serve our children so administrators and teachers can focus on providing high-quality care that meets their developmental needs."

Arguments in Opposition:

None on file

FISCAL COMMENTS:

According to the Assembly Appropriations Committee on May 8, 2019, this bill may result in: 1) ongoing General Fund (GF) costs, likely in mid hundreds of thousands of dollars annually, for CDE to administer the grant program (costs would include hiring additional staff at CDE to develop, oversee and report on the program, although staff likely could be redirected from the existing revolving loan program CDE also administers, and costs also would include potential contracts with community development institutions to provide technical assistance); and, 2) potential GF or Proposition 98 GF costs, to the extent the Legislature appropriates funding toward these grants (the initial fund transfer from the loan program could provide up to roughly $27 million to the grant program, with uncertain revenue from past loan repayments and fees for the next ten years; in the 2017-18 fiscal year, loan repayments and fees totaled $1.6 million).

VOTES:

ASM HUMAN SERVICES: 8-0-0

YES: Reyes, Mathis, Berman, Choi, Friedman, Gipson, Maienschein, Mark Stone

ASM EDUCATION: 7-0-0

YES: O'Donnell, Kiley, Kalra, McCarty, Smith, Voepel, Weber

ASM APPROPRIATIONS: 18-0-0

YES: Gonzalez, Bigelow, Bloom, Bonta, Brough, Calderon, Carrillo, Chau, Diep, Eggman, Fong, Gabriel, Eduardo Garcia, Maienschein, Obernolte, Petrie-Norris, Quirk, Robert Rivas

UPDATED:

VERSION: April 29, 2019

CONSULTANT: Daphne Hunt / HUM. S. / (916) 319-2089 FN: 0000583

Date of Hearing: May 8, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 452

Author:(Mullin) – As Amended Ver:April 29, 2019

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

SUMMARY:

This bill replaces the “child care facilities revolving loan fund” held by State Treasurer’s Office with the “childcare facilities grant fund” and directs the California Department of Education (CDE) to begin administering a grant program with the funds and cease providing new revolving loans.

Specifically, this bill requires all funds be transferred from the loan fund into the new grant fund, effective December 31, 2019. The bill directs CDE, until July 1, 2030, and upon appropriation by the Legislature, to use money from the fund to provide grants for the construction of new childcare centers or the renovation, repair or modernization of existing childcare centers and certain family childcare homes. The bill allows CDE to contract with community development institutions with expertise in childcare facilities to provide technical assistance to grantees. The bill requires CDE to annually perform data collection and report to the Legislature annually. It also requires the CDE to provide a final report on the impact of the program to the Legislation by December 31, 2029.

The bill requires an entity that purchased facilities with funds from the revolving loan fund before December 31, 2019, be charged either leasing fees or the repay the loans in the next ten years, with all fees and repayments to be deposited in the new grant fund.

FISCAL EFFECT:

1. Ongoing General Fund costs, likely in mid hundreds of thousands of dollars annually, for CDE to administer the grant program. Costs would include hiring additional staff at CDE to develop, oversee and report on the program, although staff likely could be redirected from the existing revolving loan program the CDE also administers. Costs also would include potential contracts with community development institutions to provide technical assistance.
2. Potential General Fund or Proposition 98 General Fund costs, to the extent the Legislature appropriates funding toward these grants. The initial fund transfer from the loan program could provide up to roughly $27 million to the grant program, with uncertain revenue from past loan repayments and fees for the next ten years. (In the 2017-18 fiscal year, loan repayments and fees totaled $1.6 million.)

COMMENTS:

1. Purpose and Background. According to the author, “One of the fundamental causes for the shortage of quality childcare in California is the issue of facilities.”

Although the state has long provided a revolving loan program for childcare facilities, the program is consistently underutilized for various reasons. For example, because (a) reimbursement rates for providing child care are low such that providers may be unable to repay loan funding, (b) the cost of commercial space may be lower than constructing facilities and (c) the various administrative hurdles to constructing or renovating facilities may be too high for childcare providers to surmount.

Analysis Prepared by: Natasha Collins / APPR. / (916) 319-2081

Date of Hearing: April 24, 2019

ASSEMBLY COMMITTEE ON EDUCATION

Patrick O'Donnell, Chair

ABPCA Bill Id:AB 452 (

Author:Mullin) – As Amended Ver:April 11, 2019

[Note: This bill was double referred to the Assembly Human Services Committee and was heard by that Committee as it relates to issues under its jurisdiction.]

SUBJECT: Childcare: facilities: grants

SUMMARY: Establishes the California Childcare Facilities Grant Fund and requires the California Department of Education to provide grants, subject to available funding, for the construction of new childcare centers that serve children in subsidized childcare programs, as well as the renovation, repair and modernization of family childcare homes. Specifically, this bill:

1. Expresses findings and declarations related to infant and toddler child care, including: that it can be prohibitively expensive for families; that there is a scarcity of publicly funded care in California; the positive impacts that child care can have on a young child’s learning, development, and health; the positive impacts that such care can have on parents’ job stability and earnings and, in turn, on the economy in general; and that providing funding for facilities that house infant and toddler child care programs will leverage federal and state funds and promote expansion and greater access to high-quality programs for California families.
2. Deletes language in current law which establishes the Child Care Facilities Revolving Fund in the State Treasury to provide funding for loans for improving existing buildings for purposes of licensure for child care and development services and for the purchase of new relocatable child care facilities for lease to local educational agencies (LEAs) and contracting agencies that provide child care and development services and, further, deletes language in current law establishing requirements and authorizations related to administration, uses, and oversight of the fund, as specified.
3. Establishes the California Childcare Facilities Grant Fund in the State Treasury and requires, upon an appropriation for these purposes, the moneys in the fund to be used for the purposes specified.
4. Requires the California Department of Education (CDE) to develop and administer the California Childcare Facilities Grant Fund to support both of the following programs:
5. The construction of new childcare centers that serve children in state-subsidized childcare and development programs.
6. The renovation, repair, and modernization of family childcare homes that serve children in state-subsidized childcare and development programs.
7. Requires the CDE to ensure that the grant program does all of the following:
8. Awards grants of up to one million dollars for the construction of licensed childcare facilities that make at least 50 percent of their slots available for subsidized childcare for a period of no less than 10 years. Grants shall be targeted towards communities with the most need, as defined by the CDE in consultation with local childcare and development planning councils (LPCs).
9. Uses a simple application process.
10. Prioritizes provider applicants that are either of the following:
11. Serving infants and toddlers.
12. Recovering from a disaster.
13. Allows, in order to avoid disadvantaging providers who prefer to rent, nonprovider entities, such as developers, to partner with providers to apply for grants.
14. Includes a mechanism for recouping grant moneys spent on projects that do not make at least 50 percent of their slots available for subsidized childcare for at least 10 years.
15. Offers technical assistance to applicants prior to being awarded a grant that includes, but is not limited to, project development support and financial expertise, including assistance with coordinating financing from multiple sources.
16. Requires grantees to report to the CDE, on an annual basis for the first 10 years of operation in the newly constructed facility, all of the following:
17. The total number of children served, by age.
18. The total number of children served who received subsidized childcare, by age.
19. The total number of children served with exceptional needs.
20. Requires the CDE to ensure that the grant program developed does all of the following:
21. Awards grants of up to fifty thousand dollars for the renovation, repair, or modernization of licensed family childcare homes that make at least 50 percent of their slots available for subsidized childcare for a period of no less than five years. Grants shall be targeted towards communities with the most need, as defined by the CDE in consultation with LPCs.
22. Uses a simple application process.
23. Prioritizes provider applicants that are either of the following:
24. Serving infants and toddlers.
25. Recovering from a disaster.
26. Includes a mechanism for recouping grant moneys spent on projects that do not make at least 50 percent of their slots available for subsidized childcare for at least five years, and provides for hardship waivers to recoupment requirements.
27. Offers technical assistance to applicants prior to being awarded a grant that includes, but is not limited to, project development support and financial expertise, including assistance with coordinating financing from multiple sources.
28. Requires grantees to report to the CDE, on an annual basis for the first five years of operation after completion of renovation, repair, or modernization, all of the following:
29. The total number of children served, by age.
30. The total number of children served who received subsidized childcare, by age.
31. The total number of children served with exceptional needs.
32. Requires the CDE to annually collect and aggregate the data required to be reported by grant recipients, as specified, and to report this information to the Legislature by December 31 of each year. Requires the report submitted to be in compliance with Section 9795 of the Government Code.
33. Defines, for the purposes of this section, “state-subsidized childcare and development programs” and “subsidized childcare” as provided by all of the following:
    1. An LEA that provides childcare pursuant to the California School Age Families Education program.
    2. A Head Start or Early Head Start grantee that will use grant funds for projects that serve infants and toddlers.
    3. A state-subsidized childcare program provider.
    4. A family childcare home education network provider.

EXISTING LAW:

1. Establishes the Child Care Facilities Revolving Fund in the State Treasury to provide funding for loans for improving existing buildings for purposes of licensure for child and development services and for the purchase of new relocatable child care facilities for lease to LEAs and contracting agencies that provide child care and development services, and establishes requirements and authorizations related to administration, uses, and oversight of the Child Care Facilities Revolving Fund, as specified. (EC 8278.3)

FISCAL EFFECT: Unknown

COMMENTS:

Need for the bill. According to the author, “One of the fundamental causes for the shortage of quality childcare in California is the issue of facilities. Building a childcare center that meets all state and local ordinances requires funding and technical expertise that most childcare providers are unable to access. As a state, it is in our best interest to provide safe facilities for programs that serve our children so administrators and teachers can focus on providing high-quality care that meets their developmental needs.”

California has a complex system of early childhood programs. California’s system of subsidized early care and education (ECE) is made up of a complex system of programs serving children from birth through 13 years, funded through a mix of federal and state dollars, and administered through a mixed delivery system by local education agencies, and community-based providers. The major direct service ECE programs include, but are not limited to, the following:

*Based upon 2018-19 Governor’s Budget

Less than 10 percent of eligible children from birth through 2 years of age are currently served in California’s subsidized childcare programs. A 2017 report by the Learning Policy Institute, “Understanding California’s Early Care and Education System,” examined the need for child care and the capacity of the system to meet that need. They note that is difficult to gain an accurate count of the number of unique children served in each program for a number of reasons. Children enter and leave programs throughout the year, and due to a lack of a unique child identifier these children may be counted multiple times. Many children receive service from multiple programs simultaneously for different parts of the day and thus may again be counted more than once.

In addition, due to a lack of a statewide eligibility database, it is difficult to identify the total number of children and families eligible for care or the number of children and families currently waiting for care. Based upon data from the American Institute of Research, the California Child Care Resource Center provides information on the share of children eligible for subsidized child care programs who are currently being served in California. Statewide, approximately 67 to 69 percent of eligible four-year old children are served, while less than 10 percent of eligible children from 0-2 years are currently being served. These figures vary significantly from one county to another. The lack of adequate childcare facilities is one key factor hampering the ability of providers to meet the needs of children and families.

State of ECE facilities infrastructure. According to a 2019 policy brief by the Advancement Project, Building California’s Future: Tackling the Facilities Challenge for our Youngest Learners, California has nearly three million children under the age of six, yet the current ECE facilities infrastructure has the capacity to serve less than a quarter of these children. They report that California has 522,462 licensed childcare center seats for children ages two through five, plus 90,707 TK seats, leaving 1,401,331 children ages two through five without an available licensed childcare center or TK seat. The situation is more dire for children under the age of two, as the state only has 47,443 licensed childcare center seats for children ages birth through two, leaving 921,525 babies and toddlers without access. They suggest that 94 percent of infants and toddlers from income-eligible families do not currently have access to subsidized childcare.

The Advancement Project brief states that licensed family child care homes have seats for 283,544 children from birth through twelve and are a critical piece of the facilities puzzle in meeting the needs of children and families. These facilities tend to provide more affordable and flexible care options for families as 41 percent offer evening, weekend, or overnight care.

Research conducted by the Advancement Project further identifies significant geographic disparities in the availability of childcare throughout the state. Further, they note that there are striking racial disparities in access as there is an increase of Asian, Black, Latin, and Native Hawaiian and Pacific Islander children in neighborhoods with the highest need for facilities and access to publicly funded programs.

Challenges to building the necessary ECE infrastructure. There are significant challenges to addressing the ECE infrastructure shortage in California including the following:

• Available land to construct childcare centers or homes to operate family childcare programs may be in short supply in certain areas of the state.
• The cost of constructing facilities designed specifically for young children is relatively high compared to standard commercial space.
• Low reimbursement rates limit the ability of many childcare providers to be able to repay facilities loan funding.
• Land use and regulatory barriers provide challenges to childcare providers, including zoning requirements, permitting approval processes, land use regulations, and the costs of application and permit fees.
• Most childcare providers lack the necessary knowledge of business, finances, local government processes, facility design, as well as development and construction management.
• The difficulty associated with navigating multiple funding sources with different requirements as no single financial source is likely to provide all of the capital needs of a given project, therefore providers may be required to leverage public and private funding sources to cover the cost of development.

Child Care Facilities Revolving Fund (CCFRF) is one current source of funding. In 1997, AB 1578 (Migden) established the CCFRF, which can be used for renovating, repairing, or improving an existing building so that it may be licensed to provide early education and support services; or purchasing new relocatable facilities that school districts and contracting agencies can use for providing early education and support services. Childcare agencies can apply for up to $420,000 for up to three relocatable buildings. Typically, such a building consists of three 12-foot by 40-foot modules or 480 square feet. Loan funds are able to support building costs, architect and inspection fees, site development, and site improvement costs. Loans are interest free and agencies have 10 years for repayment.

When the Fund was first established in 1997, $179 million was appropriated for this purpose. This amount has been reduced over time; by 2013, the allocation for the Fund was under $20 million. However, there was an addition of $20.6 million in 2014 for the California Renovation and Repair Loan program in the Budget Act of 2014, to be used for renovation or repair of existing facilities or new relocatable child care facilities that provided state preschool programs.

According to the CCFRF’s 2017-18 Annual Report, “Due to the revolving nature of the CCFRF, the program is continuously replenished by loan repayments received from participating agencies in addition to the annual Budget Act appropriations. Over the past 20 years, the loan repayments have facilitated the CDE commitment of approximately $165.7 million in facilities funding to child care agencies through an application process.”

Since its implementation in FY 1997-98, CDE has received 1,177 applications to fund child care facilities projects. CDE currently has 122 executed contracts with participating agencies with the capacity to serve 12,598.

The CCFRF began fiscal year 2017-18 with an available fund balance of $26.8 million, of which $10 million has been earmarked by the Legislature for CSPP facilities. In that year, the CDE only received two new applications for funding. The CDE points to factors contributing to a low level of interest in the program, including low reimbursement rates such that contractors cannot afford to repay a loan, and the lack of available land to place relocatable facilities.

The CCFRF also includes a renovation and repair loan program under which Title 5 providers can apply for no-interest loan funds for renovation, repair, or improvement of existing facilities to ensure compliance with applicable health and safety standards for licensing and ADA compliance. During the 2015-16 and 2017-18 fiscal years the CDE received a total of 20 applications for renovation and repair loans with a total request of $2.4 million. Prior to 2015, CDE notes that there was a much higher utilization of these funds as they were offered in the form of grants rather than loans.

The Early Education Expansion Program offers additional facilities funding. The 2018-19 Budget included $167 million for grants to support one-time infrastructure costs with the goal of increasing access to subsidized inclusive early education programs for children from birth to five. Allowable expenses include adaptive and universal design facility renovations, adaptive equipment, and professional development to support inclusion. The CDE is in the process of reviewing applications for these grants.

Assembly Blue Ribbon Commission on Early Childhood Education (BRC) included recommendations on facilities. The BRC was established with the intent to “plan an early learning system that works for and meets the needs of children, families, and providers.” The BRC, consisting of members appointed from the Assembly and stakeholders, began its work in early 2017, holding quarterly hearings and establishing subcommittees. Quarterly hearings and subcommittee meetings continued during 2018, and work was done to develop BRC recommendations. On March 11, 2019, draft recommendations were released, including the following, relevant to this bill:

• Map state facilities needs to ensure equity in spending new funds including needs for infants and toddlers, isolated rural areas, and other special populations and match facility needs with available space that can be converted, such as unused schools as well as funding new construction.
• The state should establish a targeted facilities grant program directed to communities and families with greatest need with multi-year investment priorities. The targeted facility grant program should provide appropriate funding and support for all aspects of our mixed delivery system.
• For subsidized child care centers, provide the facility, equipment, and staff recruitment start-up costs necessary to open new classrooms or to convert existing child care spaces to serve different age groups.
• For licensed family child care, provide funds to meet licensing and quality standards to serve subsidized children and those with greatest need. Determine criteria for grants to private businesses based on receipt of public funds and meeting identified needs of targeted communities and families/children.
• Create a fund for friend, family, and neighbor (unlicensed) providers, who wish to be licensed, to pay for licensing fees, zoning processes, and facility alterations.
• Include Head Start in all mapping analysis and provide opportunities to participate in state and locally-funded facility programs including those for one-time grants for building or renovating early childhood facilities.
• Simplify the process to build new facilities and to expand existing facilities including zoning, building codes and permit processes; streamline state and local licensing and other requirements.
• Establish statewide program learning from successful models to share best practices and provide materials, technical assistance on facility planning, development and financing, and facility quality assessment and improvement. Include appropriate services for family childcare home and family friend and neighbor providers.

Support for childcare providers in navigating facility expansion and construction. The Advancement Project brief suggests that the CDE establish an ECE facilities technical assistance office to support providers by providing in-depth technical assistance and regulatory coordination. They recommend the creation of a centralized technical assistance office within the CDE to offer providers support for ECE facility construction, repair, architectural design, permitting, financing, and scaling best practices for ECE facility development for both childcare centers and family childcare homes.

Another option is to utilize an intermediary such as a Community Development Financial Institution (CDFI) to provide financing and technical assistance to childcare centers and family child care homes on facilities development and capacity building. According to the U.S. Department of the Treasury, “Community Development (CD) banks are depository institutions with a stated mission to primarily benefit the underserved communities in which they are chartered to conduct business. A CD bank pursues this specialized mission by providing financial services to low-and moderate-income individuals or communities or benefiting other areas targeted for redevelopment by local, state, tribal, or federal government. CD banks must meet the same safety and soundness, statutory, regulatory, business planning, and procedural requirements as all other national banks.”

A CDFI is able to increase access for low income children to high quality licensed childcare centers and family childcare homes by administering facility grants, leveraging innovative financing, program monitoring of public funds, and improving economic stability for ECE providers through intensive training. Funding sources accessible to a CDFI may include federal, state and local facility funds; local development impact fees; commercial debt; and philanthropic contributions.

An example of a CDFI operating in California is the Low Income Investment Fund (LIIF), a national CDFI, with an early education program which provides financing and technical assistance to childcare centers and family childcare homes on facilities development and capacity building. They partner with public agencies, philanthropic organizations, community stakeholders, Quality Rating and Improvement System (QRIS) consortia, and other CDFI’s. They provide technical assistance support and program monitoring for public funds in the following ways:

• Pre-project support including upfront technical assistance, training and resources to ensure projects are fully financed and shovel ready.
• Post-project technical assistance to ensure projects are completed and sustainable for the term of the grant and beyond.
• Long term lease or ownership required to ensure ECE services are provided over the entire term of the grant (e.g. three years for family childcare home grants of up to $15,000; five years for renovation and repair grants of up to $100,000 for centers; and up to 30 years for capital grants of up to $1 million for centers).

The financial and technical assistance support provided by intermediaries such as a CDFI protects public funds by ensuring that projects are completed in a timely manner and that the provider has the support and capacity to continue to provide childcare services over time, thus ensuring that pubic funds continue to serve their intended purpose of providing childcare services to eligible children.

Defining “recovering from a disaster”. This bill includes a priority for providers “recovering from a disaster”. State and federal statute detail several processes for the proclamation or declaration of an emergency. Each proclamation and declaration type provides a different level of disaster assistance from local, state and federal agencies which primarily serve to support cities and counties. For context, the Governor requested and on November 12, 2018, California was granted a Presidential Declaration of a Major Disaster for Butte, Los Angeles and Ventura Counties related to the impacts of the Camp, Hill and Woolsey Fires. For example:

• Presidential Declaration of an Emergency: The Governor, on behalf of the impacted local government, may request this declaration which supports response activities of the federal, state and local government. It also authorizes federal agencies to provide “essential” assistance including debris removal, temporary housing and the distribution of medicine, food and other consumable supplies.
• Presidential Declaration of a Major Disaster: The Governor, on behalf of the impacted local government, may request this declaration which supports response activities of the federal, state and local government. The Presidential Declaration of a Major Disaster goes beyond the Presidential Declaration of an Emergency and authorizes the implementation of some or all federal recovery programs including individual assistance and hazard mitigation. It helps people in the impacted areas through eligibility for support including crisis counseling, housing and unemployment assistance and legal services. It also provides public assistance to help state, tribal and local governments with ongoing emergency response and recovery, including the repair and replacement of disaster-damaged facilities and infrastructure, including roads, bridges and utilities.

Arguments in support. Children NOW states “Recent reports to the legislature have clearly outlined the underutilization of the Child Care Facilities Revolving Fund, at a time when less than three percent of infants and toddlers in California are served in childcare facilities. An extreme shortage of facilities and quality licensed care is detrimental to the health and safety of California’s working families as well as an obstacle to economic development. Child Care Facilities Grant Fund grants will be utilized for facilities serving children whose care is subsidized by the state or federal government. Providing sufficient funding in high-need areas will have the most immediate impact on the state’s childcare infrastructure that has been neglected for too long.”

Recommended amendments. Staff recommends that the bill be amended as follows:

1. Remove reference to “state-subsidized childcare and development programs”, and instead define “subsidized childcare and development programs” as those programs that offer a full range of services for children from infancy to 13 years of age, for any part of a day, by a public or private agency, in centers and family child care homes.
2. Define what is meant by recovering from a disaster by referencing federal code regarding Presidential Declaration of an Emergency, or Presidential Declaration of a Major Disaster.
3. Authorize the department to determine the level of grants under this program, within the caps specified, and to consider scope of project, regional costs, and needs to meet licensing requirements, health and safety standards, or other requirements necessary to serve infants and toddlers.
4. Specify that childcare centers may apply for funds for renovation, repair and modernization, as well as new construction.
5. Add language prioritizing facilities that utilize universal design to ensure newly constructed or renovated facilities are able to serve children with special needs in an inclusive environment.
6. Authorize CDE to contract with one or more Community Development Finance Institutions to serve as an intermediary, including the provision of technical assistance and training for providers participating in this program.
7. Require the reports to be provided to the Legislature to be made available to the appropriate policy and fiscal committees of the Legislature.
8. Add a ten year sunset date to allow the Legislature to evaluate the impact of the program, including the degree to which additional childcare facilities were made available, and if any changes should be made prior to reauthorizing the program.

Prior and relevant legislation. AB 123 (McCarty) of this Session, establishes the Pre-K for All Act; expands the eligibility for CSPP; increases the reimbursement rate for the CSPP and requires a portion of the increase to be used to increase teacher pay; requires CSPP lead teachers to hold a bachelor’s degree by a specified date; and establishes a program to provide financial support to childcare workers pursuing a bachelor’s degree. This bill is pending before this Committee.

AB 194 (Reyes) of this Session requires, upon appropriation, $1 billion to be invested in improving eligible children’s and families’ access to subsidized child care services. AB 194 is pending before the Assembly Appropriations Committee.

AB 2398 (Mullin) of the 2017-18 Session would have increased from 10 to 20 years the amount of time after which a CCFRF loan would have to be repaid, and would have clarified that the report the Superintendent is required to submit to the Department of Finance and the Legislative Analyst’s Office regarding the Fund and loans must include information regarding loans provided for renovation or repair. AB 2398 was held in the Assembly Human Services Committee.

AB 2302 (Mullin) of the 2013-14 Session would have authorized the term of a loan provided under the CCFRF to be 10 years or a different term as established by regulations. AB 2302 was held in the Assembly Appropriations Committee.

SB 858 (Senate Committee on Budget and Fiscal Review), Chapter 32, Statutes of 2014, established that augmentations to the CCFRF made in the Budget Act of 2014 be used for renovation or repair of existing facilities or new relocatable child care facilities that provide state preschool programs.

AB 932 (Torlakson) of the 2009-10 Session would have expanded the purposes of the CCFRF to authorize funds to be used for purchase, site development, construction, and expansion of licensed child care facilities and would have specified that one of the Fund's purposes is loan administration. AB 932 was held in the Assembly Appropriations Committee.

AB 1578 (Migden), Chapter 299, Statutes of 1997, established the Child Care Facilities Revolving Fund.

REGISTERED SUPPORT / OPPOSITION:

Support

4 Cs

Build Up For San Mateo County's Children
California Coalition For Early Learning
California Head Start Association
Child360
Children And Families Commission of Los Angeles County
Children Now

Chinatown Community Children’s Center
Disability Rights California
Early Edge California
Educational Enrichment Systems

EveryChild California

FacesSF
First 5 California

FranDeija Enrichment Center

JVS
Mission Neighborhood Centers, Inc.
Office of The Riverside County Superintendent Of Schools
Peninsula Family Service

Riverside County Public K-12 School District Superintendents

San Francisco Child Care Providers’ Association

San Francisco Office of Early Care and Education

Wu Yee Children’s Services

Opposition

None on file

Analysis Prepared by: Debbie Look / ED. / (916) 319-2087

Date of Hearing: April 9, 2019

ASSEMBLY COMMITTEE ON HUMAN SERVICES

Eloise Gómez Reyes, Chair

ABPCA Bill Id:AB 452 (

Author:Mullin) – As Amended Ver:March 21, 2019

SUBJECT: Childcare: facilities: grants

SUMMARY: Establishes the “California Childcare Facilities Grant Fund” to replace the Child Care Facilities Revolving Fund and to supply grants to providers of publicly-funded child care for the improvement, acquisition, or construction of facilities to house programs for infants and toddlers. Specifically, this bill:

1. Makes a number of Legislative findings and declarations related to infant and toddler child care, including: that it can be prohibitively expensive for families; that there is a scarcity of publicly funded care in California; the positive impacts that child care can have on a young child’s learning, development, and health; the positive impacts that such care can have on parents’ job stability and earnings and, in turn, on the economy in general; and that providing funding for facilities that house infant and toddler child care programs will leverage federal and state funds and promote expansion and greater access to high-quality programs for California families.
2. Deletes language in current law which establishes the Child Care Facilities Revolving Fund (CCFRF) in the State Treasury to provide funding for loans for improving existing buildings for purposes of licensure for child care and development services and for the purchase of new relocatable child care facilities for lease to local educational agencies and contracting agencies that provide child care and development services and, further, deletes language in current law establishing requirements and authorizations related to administration, uses, and oversight of the Child Care Facilities Revolving Fund, as specified.
3. Establishes the “California Childcare Facilities Grant Fund” in the State Treasury and requires, upon appropriation by the Legislature, the California Department of Education (CDE) to administer the California Childcare Facilities Grant Program for the purpose of awarding grants of up to $1 million to local educational agencies that provide child care pursuant to the California School Age Families Education Program, Head Start or Early Head Start grantees that will serve infants and toddlers, or state-subsidized child care program providers to fund any of the following in order to meet licensing, health, and safety standards required to serve infants and toddlers in a child care setting:
   1. Renovation, repair, or modernization of facilities and spaces;
   2. Purchase of portable classrooms that meet, or will be renovated to meet, licensing, health, and safety standards; and
   3. Construction of new buildings that meet licensing, health, and safety standards.
4. Authorizes family child care home education networks to be eligible for the grants made available pursuant to provisions of this bill, but limits the use of those grants to child care facility expansions and safety repairs, as prescribed by CDE.
5. Requires CDE to ensure that the process to apply for a grant is simple, and requires an application for a grant to at least include a description of the project for which grant funds will be expended.
6. Requires priority for a grant to be given for the support of programs that serve infants and toddlers.
7. Authorizes a grantee to fund a project completely from grant funds or in combination with other state, federal, or private funding sources.
8. Prohibits a grantee from being required to contract with CDE in order to be eligible for funding pursuant to provisions of this bill, but requires the grantee to be a recipient of public funds.
9. Requires funds in the California Childcare Facilities Grant Fund to be used only for grants established pursuant to the provisions of this bill, and prohibits such funds from being diverted to fund other programs.
10. States Legislative intent that annual allocations to the California Childcare Facilities Grant Program take into consideration unmet need from the previous fiscal year’s qualifying applications, alongside estimated need for the coming fiscal year.
11. Requires the Superintendent, by August 1st of each fiscal year, to submit a report with specified information on applicants for, grantees awarded, uses of, and outcomes seen as a result of California Childcare Facilities Grant Fund moneys to CDE and the Legislative Analyst’s Office.
12. Requires all moneys in the Child Care Facilities Revolving Fund as of December 31, 2019, to be transferred to the California Childcare Facilities Grant Fund, and requires local educational agencies and contracting agencies using facilities purchased with Child Care Facilities Revolving Fund moneys prior to December 31, 2019, to continue to be charged a leasing fee per current law, as specified, and further, requires the Superintendent to deposit all revenue derived from lease payments or renovation or repair loan payments into the California Childcare Facilities Grant Fund.

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. (Education Code [EDC] Section 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 and states that these services may include direct care and supervision, instructional activities, resource and referral programs, and alternative payment arrangements. (EDC 8208 (j))
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 families to meet certain criteria in order to be eligible for federal and state subsidized child development services, including that a family must be either a current aid recipient, income eligible, homeless, or one whose children are recipients of protective services or have been identified as being, or at risk of being, abused, or neglected, as specified. (EDC 8263)
5. 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)
6. Authorizes, in order to provide for maximum parental choice, alternative payment programs to serve identifiable geographic areas and to include: a subsidy (voucher) that follows the family from one provider to another within a given alternative payment program; choices, whenever possible, among hours of service, as specified; and, child care and development services according to parental choice, including use of family day care homes, general center based programs, and other state-funded programs, as specified. (EDC 8220 et seq.)
7. Requires the Superintendent of Public Instruction to implement a plan that establishes reasonable standards and assigned reimbursement rates for child care and development services, to vary by length of program year and hours of service, and establishes amounts for, and provides for an annual cost-of-living adjustment to, the standard reimbursement rate for contracted providers. (EDC 8265)
8. Provides for the establishment of regional market rate ceilings for voucher-based child care and states Legislative intent that child care providers be reimbursed at the 85th percentile of the most recent regional market rate survey. (EDC 8222, 8357)
9. Establishes the Child Care Facilities Revolving Fund in the State Treasury to provide funding for loans for improving existing buildings for purposes of licensure for child and development services and for the purchase of new relocatable child care facilities for lease to local educational agencies and contracting agencies that provide child care and development services, and establishes requirements and authorizations related to administration, uses, and oversight of the Child Care Facilities Revolving Fund, as specified. (EDC 8278.3)

FISCAL EFFECT: Unknown

COMMENTS:

Subsidized child care and development: Paying for child care can place significant financial stress on many families, particularly those with lower incomes. The average cost in California of child care in a family child care home for an infant in 2014 was $8,462 ($705 per month). The average annual cost for an infant in child care centers in 2014 was $13,327 ($1,111 per month). The state’s subsidized child care system offers services to families with parents or guardians who are working, in training, seeking employment, experiencing homelessness, incapacitated, or in need of respite. Generally, families are eligible for subsidized child care if they meet income-related and other requirements, such as having a need related to work, training, or education, and having children who are under 13 years old (or under 22 years old if they have exceptional needs). Parents are currently income-eligible if they earn incomes less than 70% of the most recent state median income (SMI) when first applying – up to $54,027 per year for a family of 3, and less than 85% of the most recent SMI – up to $65,604 per year for a family of 3 – when renewing eligibility. Beginning on July 1 of this year, as a result of the adoption of AB 2626 (Mullin), Chapter 945, Statutes of 2018, all families – whether applying for or renewing their eligibility for subsidized child care – can have incomes less than 85% of the SMI to qualify.

Subsidized child care can be obtained through three main types of providers, depending on which program is being used. These types of providers include licensed child care centers, licensed family child care homes, and license-exempt providers (for example, family members, neighbors, or friends).

The three main subsidized child care programs are:

• California Work Opportunity and Responsibility to Kids (CalWORKs) child care, for parents who receive or have received CalWORKs. CalWORKs child care can be provided in either centers, family child care homes, or license-exempt settings and is paid for using vouchers;
• Alternative Payment Programs (APPs), which offers families vouchers that allow them to choose their own child care in either centers, family child care homes, or license-exempt settings; and,
• General Child Care, which is provided through contracted centers and family child care home networks that are administered through private or public agencies and offer child care, education, and development services.

For eligible three-and four-year-olds, the state also offers California state preschool programs (CSPPs), which provide services that include developmentally appropriate curriculum, parent education, meals and snacks, and referral to social and health services for families. CSPPs operate on either a part-day or full-day basis and can be offered in a number of different settings, including child care centers, family child care network homes, school districts, or county offices of education. Teachers in CSPPs must have a Child Development Teacher Permit, including 24 units in early childhood education and/or child development and 16 general education units.

Access to subsidized child care: In Fiscal Year (FY) 2018-19, there are approximately 210,000 subsidized child care slots offered across the various programs, including:

• 137,000 CalWORKs slots;
• 45,000 Alternative Payment slots; and,
• 28,000 General Child Care slots.

Additionally, for FY 2018-19, there are approximately:

• 170,000 CSPP (103,000 part-day and 67,000 full-day) slots; and,
• 90,000 Transitional Kindergarten slots.

The state’s current capacity to provide adequate affordable child care services is far below what is required to meet families’ needs across California. A January 2019 analysis by the California Budget and Policy Center found that, in 2017, only 1 in 9 children who were eligible for subsidized child care and development programs in California were actually enrolled in a program capable of meeting their family’s needs for more than a couple hours per day and throughout the entirety of the year. Analyzing federal survey data, the California Budget and Policy Center determined that approximately 2 million California children from birth through 12 years of age were eligible for subsidized child care in 2017, yet only 228,100 were able to participate in full-day, year-round programs. The California Budget and Policy Center concluded that, along with wage stagnation and its impacts on families’ incomes, “This mismatch between eligibility for care and available spaces largely reflects inadequate state and federal funding.”

Focusing on the supply of care of infants and toddlers, a June 2018 article in EdSource stated that, “Statewide, less than 14 percent of infants and toddlers who qualify for subsidized child care actually receive it. The shortage of child care for infants and toddlers is creating a crisis for working families, especially low-income families, advocates say. Despite economic gains in recent years, California has the highest number of children living in poverty among all states.”

Child Care Facilities Revolving Fund: AB 1578 (Migden), Chapter 299, Statutes of 1997, established the CCFRF, which can be used for either: a) renovating, repairing, or improving an existing building so that it may be licensed to provide early education and support services; or, b) purchasing new relocatable facilities that school districts and contracting agencies can use for providing early education and support services. Child care agencies can apply for up to $420,000 per relocatable building; typically, such a building consists of three 12-foot by 40-foot modules.

When the Fund was first established in 1997, it was appropriated almost $179 million. This amount has been reduced over time; by 2013, the allocation for the Fund was under $20 million. However, there was an addition of $20.6 million in 2014 for the California Renovation and Repair Loan program – SB 858 (Senate Committee on Budget and Fiscal Review), Chapter 32, Statutes of 2014, established that augmentations to the Child Care Facilities Revolving Fund made in the Budget Act of 2014 be used for renovation or repair of existing facilities or new relocatable child care facilities that provided state preschool programs.

According to the CCFRF’s 2017-18 Annual Report, “Due to the revolving nature of the CCFRF, the program is continuously replenished by loan repayments received from participating agencies in addition to the annual Budget Act appropriations. Over the past 20 years, the loan repayments have facilitated the CDE commitment of approximately $165.7 million in facilities funding to child care agencies through an application process.”

Since its implementation in FY 1997-98, CDE has received 1,177 applications to fund child care facilities projects. CDE currently has 122 executed contracts with participating agencies with the capacity to serve 12,598.

Need for this bill: This bill seeks to replace the California Child Care Facilities Revolving Fund, a loan program, with the California Child Care Facilities Grant Fund to invest in permanent structures to help increase the number and capacity of child care centers and family child care homes providing subsidized child care and development services to infants and toddlers.

According to the author, “One of the fundamental causes for the shortage of quality child care in California is the issue of facilities. Building a child care center that meets all state and local ordinances requires funding and technical expertise that most childcare providers are unable to access. As a state, it is in our best interest to provide safe facilities for programs that serve our children so administrators and teachers can focus on providing high-quality care that meets their developmental needs.”

Recommended amendments: The goal of this bill is an important one: to increase the state’s capacity to provide subsidized child care and development services to infants and toddlers through increasing and improving child care center and family day care home inventory. However, as currently written, this bill leaves some concerning questions unaddressed – namely: How can the Legislature be assured that this investment in the supply of subsidized spaces for infants and toddlers will be upheld by the grantee through a continued commitment to offer subsidized slots? Also, how will providers of center-based care who lease, versus own, the buildings in which they operate be able to benefit from this program? Lastly, what access will the Legislature have to data on outcomes of this investment for purposes of oversight, expansion, and, if necessary, adoption of adjustments to the program? To address these questions, committee staff recommends the following amendments:

Delete lines 28 through 39 on page 6, and delete pages 7 and 8 of the bill.

After line 27 on page 6 of the bill, insert the following:

(a) The California Child Care Facilities Grant Fund is hereby established in the State Treasury to be used for the purposes described in this section.

(b) The department shall develop and administer the California Child Care Facilities Grant Program to, upon appropriation from the Legislature for this purpose, use moneys from the fund described in subdivision (a) to support both of the following:

(1) The construction of new child care centers that serve children in state-subsidized child care and development programs.

(2) The renovation, repair, and modernization of family child care homes that serve children in state-subsidized child care and development programs.

(c) The department shall ensure that the program developed pursuant to paragraph (1) subdivision (b) does all of the following:

(1) Awards grants of up to $1,000,000 for the construction of licensed child care facilities that make at least fifty percent of their slots available for subsidized child care for a period of no less than ten years. Grants shall be targeted towards communities with the most need, as defined by the department in consultation with local child care and development planning councils.

(2) Uses a simple application process.

(3) Prioritizes provider applicants that either:

(A) Serve infants and toddlers.

(B)Are recovering from disasters.

(4) Allows, in order to avoid disadvantaging providers who prefer to rent, non-provider entities such as developers to partner with providers to apply for grants.

(5) Includes a mechanism for recouping grant moneys spent on projects that do not make at least fifty percent of their slots available for subsidized child care for at least ten years.

(6) Offers technical assistance to applicants prior to being awarded a grant that incudes, but is not limited to, project development support and financial expertise, including assistance with coordinating financing from multiple sources.

(7) Requires grantees to report, on an annual basis for the first ten years of operation in the newly constructed facility, the following:

(i) The total number of children served, by age.

(ii) The total number of children served who received subsidized child care, by age.

(iii) The total number of children with exceptional needs served.

(d) The department shall ensure that the program developed pursuant to paragraph (2) subdivision (b) does all of the following:

(1) Awards grants of up to $50,000 for the renovation, repair, or modernization of licensed family child care homes that make at least fifty percent of their slots available for subsidized child care for a period of no less than five years. Grants shall be targeted towards communities with the most need, as defined by the department in consultation with local child care and development planning councils.

(2) Uses a simple application process.

(3) Prioritizes provider applicants that either:

(A) Serve infants and toddlers.

(B)Are recovering from disasters.

(4) Includes a mechanism for recouping grant moneys spent on projects that do not make at least fifty percent of their slots available for subsidized child care for at least five years, and provides for hardship waivers to recoupment requirements.

(5) Offers technical assistance to applicants prior to being awarded a grant that incudes, but is not limited to, project development support and financial expertise, including assistance with coordinating financing from multiple sources.

(6) Requires grantees to report, on an annual basis for the first five years of operation after completion of renovation, repair, or modernization, the following:

(i) The total number of children served, by age.

(ii) The total number of children served who received subsidized child care, by age.

(iii) The total number of children with exceptional needs served.

(e) The department shall annually collect and aggregate the data required in paragraph (7) of subdivision (c) and paragraph (6) of subdivision (d) and report this information to the Legislature by December 31^st of each year.

(f) For purposes of this section, “state-subsidized child care development programs” and “subsidized child care” includes all of the following:

(1) A local educational agency that provides childcare pursuant to the California School Age Families Education Program (Article 7.1 (commencing with Section 54740) of Chapter 9 of Part 29 of Division 4 of Title 2).

(2) A Head Start or Early Head Start grantee that will use grant funds for projects that serve infants and toddlers.

(3) A state-subsidized childcare program provider.

(4) A family childcare home education network provider.

Staff comments: Should this bill move forward, the author may wish to include a sunset date for the grant program in order to evaluate the efficacy and impacts of the program, and to consider adoption of any needed changes.

Double referral: This bill will be referred to the Assembly Education Committee should it pass out of this committee.

RELATED AND PRIOR LEGISLATION:

AB 167 (Rubio) of 2019 establishes the “California Partnership for Infants and Toddlers” to provide grants to child care and development programs and family child care home education networks that meet federal Head Start standards, and states Legislative intent to provide funds to serve an additional 20,000 infants and toddlers from birth to three years of age with high-quality child care. AB 167 is set to be heard in the Assembly Human Services Committee on April 9, 2019.

AB 194 (Reyes) of 2019 requires, upon appropriation, $1 billion to be put towards improving eligible children’s and families’ access to subsidized child care services. AB 194 is set to be heard in the Assembly Human Services Committee on April 9, 2019.

AB 2398 (Mullin) of 2018 would have increased from 10 to 20 years the amount of time after which a Child Care Facilities Revolving Fund loan would have to be repaid, and would have clarified that the report the Superintendent is required to submit to the Department of Finance and the Legislative Analyst’s Office regarding the Fund and loans must include information regarding loans provided for renovation or repair. AB 2398 was held in the Assembly Human Services Committee.

AB 2302 (Mullin) of 2014 would have authorized the term of a loan provided under the Child Care Facilities Revolving Fund to be 10 years or a different term as established by regulations. AB 2302 was held on the Assembly Appropriations Committee’s suspense file.

SB 858 (Senate Committee on Budget and Fiscal Review), Chapter 32, Statutes of 2014, established that augmentations to the Child Care Facilities Revolving Fund made in the Budget Act of 2014 be used for renovation or repair of existing facilities or new relocatable child care facilities that provide state preschool programs.

AB 932 (Torlakson) of 2009 would have expanded the purposes of the Child Care Facilities Revolving Loan Fund to authorize funds to be used for purchase, site development, construction, and expansion of licensed child care facilities and would have specified that one of the Fund's purposes is loan administration. AB 932 was held on the Assembly Appropriations Committee’s suspense file.

AB 1578 (Migden), Chapter 299, Statutes of 1997, established the Child Care Facilities Revolving Fund.

REGISTERED SUPPORT / OPPOSITION:

Support

California Coalition for Early Learning
California Head Start
Disability Rights California
Early Edge California
EveryChild California
First 5 California
Office of the Riverside County Superintendent of Schools
Riverside County Public K-12 School District Superintendents

Opposition

None on file

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