(1)Existing law requires the State Department of Social Services and the State Department of Education, on or before June 30, 2022, to review the existing individualized county childcare pilot program and provide a report to the appropriate policy and fiscal committees of the Legislature. Existing law requires the report to include recommendations on what flexibilities currently available to individualized county childcare pilot programs should be adopted statewide, and what flexibilities available to individualized county childcare pilot programs are no longer justified given statewide policy changes. Existing law, until July 1, 2023, authorizes specified counties to develop and implement individualized county childcare subsidy plans.

This bill would extend the authorization for the specified counties to develop and implement individualized county childcare subsidy plans to July 1, 2025.

(2)This bill would declare that it is to take effect immediately as an urgency statute.

(1)Existing law requires the State Department of Social Services and the State Department of Education, on or before June 30, 2022, to review the existing individualized county childcare pilot program and provide a report to the appropriate policy and fiscal committees of the Legislature. Existing law requires the report to include recommendations on what flexibilities currently available to individualized county childcare pilot programs should be adopted statewide, and what flexibilities available to individualized county childcare pilot programs are no longer justified given statewide policy changes.

Existing law requires the Superintendent of Public Instruction to, in consultation with the Director of Social Services and the executive director of the State Board of Education, convene a statewide interest holder workgroup to provide recommendations on best practices for increasing access to high-quality universal preschool programs for 3- and 4-year-old children, as provided.

This bill would require the establishment of a statewide childcare pilot subcommittee of the workgroup and would specify the membership. The bill would require the subcommittee to propose, evaluate, and collect evidence to support the creation of statewide pilot policies for childcare and child development programs by the State Department of Education and the State Department of Social Service (the departments), as provided. The bill would require the subcommittee, or a consultant on their behalf, to submit proposals to create new statewide pilot policies to the departments. The bill would authorize the statewide pilot policies to supersede state law with respect to specified factors. The bill would establish a process for the departments to approve, respond, or deny the proposal, as provided.

Existing law provides for the establishment of local planning councils. Existing law provides that it is the intent of the Legislature that local childcare and development planning councils provide a forum for the identification of local priorities for childcare and the development of policies to meet the needs identified within those priorities.

This bill would authorize a local planning council to apply to the departments to participate in an approved statewide pilot policy, as provided. The bill would require the departments, in consultation with the subcommittee, to, among other things, establish instructions and timelines for the submission of, or modifications to, the application used by the local planning council.

The bill would require the departments to provide a report on the statewide pilot policies described above to the appropriate policy and fiscal committees of the Legislature on or before June 30, 2026, as provided.

The bill would require the departments to implement and administer the above provisions through the issuance of guidance or other written directives and would exempt these actions from the Administrative Procedure Act.

The bill would make these provisions inoperative on July 1, 2027.

(2)Existing law, until July 1, 2023, authorizes specified counties to develop and implement individualized county childcare subsidy plans.

This bill would extend the authorization for the specified counties to develop and implement individualized county childcare subsidy plans to July 1, 2025.

(3)This bill would declare that it is to take effect immediately as an urgency statute.

SENATE COMMITTEE ON EDUCATION

Senator Josh Newman, Chair

2023 - 2024 Regular

Bill No: Hearing Date: June 14, 2023

Subject: .

NOTE: This bill has been referred to the Committees on Education and Human Services. A "do pass" motion should include referral to the Committee on Human Services.

SUMMARY

This bill, an urgency measure, extends the sunset on provisions related to individualized county childcare subsidy plans for the counties of Alameda, Contra Costa, Fresno, Marin, Monterey, San Benito, San Diego, Santa Clara, Santa Cruz, Solano, and Sonoma by two years, from July 1, 2023, to July 1, 2025.

BACKGROUND

Existing law:

1. Requires families to meet certain criteria in order to be eligible for federal and state subsidized child development services or state preschool, 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 abused, or neglected. (Education Code (EC) § 8208 and Welfare & Institutions Code (WIC) § 10271)
   
2. Authorizes the Counties of Alameda, Contra Costa, Fresno, Marin, Monterey, San Benito, San Diego, Santa Clara, Santa Cruz, Solano, and Sonoma to, individually as a pilot project, develop and implement individualized county childcare subsidy plans. Existing law requires the plans to ensure that childcare subsidies received by the above-named counties are used to address local needs, conditions, and priorities of working families in their respective communities. Existing law sunsets these pilot projects on July 1, 2023. (EC § 8273 et seq. and WIC § 10340 et seq.)
   
3. Authorizes the City and County of San Francisco to develop and implement an individualized county childcare subsidy plan. Existing law requires the plan to ensure that childcare subsidies received by the city and county are used to address local needs, conditions, and priorities of working families in the community. Existing law no longer sunsets these provisions, thereby allowing the San Francisco individualized county childcare subsidy plan to exist into perpetuity. (EC § 8283 et seq. & WIC 10350 et seq.)
   
4. Authorizes the individualized county childcare subsidy plan for the County of San Mateo that was developed as a pilot project to continue in existence and may be implemented in accordance with the provisions of this article. Existing law requires the plan to ensure that childcare subsidies received by the County of San Mateo are used to address local needs, conditions, and priorities of working families in those communities. Existing law no longer sunsets these provisions, thereby allowing the San Mateo individualized county childcare subsidy plan to exist into perpetuity. (EC § 8289 et seq. & WIC § 10360 et seq.)
   
5. Requires the Department of Social Services (DSS) and the California Department of Education (CDE) to review the existing individualized county childcare pilot programs and provide a report to the appropriate policy and fiscal committees of the Legislature on or before June 30, 2022. Existing law requires the report to include recommendations on what flexibilities currently available to individualized county childcare pilot programs should be adopted statewide, and what flexibilities available to individualized county childcare pilot programs are no longer justified given statewide policy changes. (EC § 8282.6)

ANALYSIS

This bill, an urgency measure, extends the sunset on provisions related to individualized county childcare subsidy plans for the counties of Alameda, Contra Costa, Fresno, Marin, Monterey, San Benito, San Diego, Santa Clara, Santa Cruz, Solano, and Sonoma by two years, from July 1, 2023, to July 1, 2025.

STAFF COMMENTS

1. Need for the bill. According to the author, “This bill is critical as the state moves toward full implementation of universal pre-kindergarten. The childcare pilots create a space for ongoing collaboration and innovation between the counties and the state agencies who administer early learning and care programs. The pilots also give state agencies the authority to authorize regulatory flexibility when there is demonstrated need. Without childcare pilots, this collaborative space will disappear and the state agencies will no longer have the same discretion to explore innovative solutions to barriers that prevent children, families, and ELC providers from receiving and providing continuous high-quality early learning and care.”
   
2. What are county pilots and how do they help? Individualized county child care plans ensure that child care subsidies received by the specified counties are used to address local needs, conditions, and priorities of working families in their respective communities. Participating counties do not receive additional funding for the flexibilities allowed; rather, these counties are able to retain and use more of their funding for subsidized child care, which would otherwise revert to the state’s general fund.
   
   Participating counties are authorized to have local plans to address their child care needs in ways that supersede state law in specific areas, such as:
   
   1. Eligibility criteria (allowing eligibility for over-income families).
      
   2. Fees (allowing lower family fees).
      
   3. Reimbursement rates (higher rates and adjustment factors).
      

Counties using these flexibilities must be able to demonstrate their need and that they will increase access to care to reach a greater number of families served.

1. Report on individualized county childcare subsidy pilot program flexibilities. Existing law requires the CDE and the DSS to review the existing individualized county child care subsidy plans and submit a report to the Legislature on or before June 30, 2022. Existing law requires the report to include recommendations on what flexibilities currently available to individualized county childcare pilot programs should be adopted statewide, and what flexibilities available to individualized county childcare pilot programs are no longer justified given statewide policy changes. Committee staff understands that the report has been completed but not yet approved, and therefore the report is not available. As a result, the Legislature is hampered in making any programmatic changes, which warrants extension of the pilot programs.
2. Are individualized county plans the appropriate remedy? The Legislature has authorized 13 counties to have individualized county subsidized child care plans. While allowing counties to preserve funds for child care purposes is reasonable, the issues raised (single statewide income eligibility criteria, reimbursement and fund restrictions) with regard to the state’s child care subsidy system are not necessarily unique to those counties, but appear to impact counties statewide. Rather than adding and extending pilots on an individual county basis, the Legislature may wish to consider allowing such flexibility statewide or adjusting statutes more broadly to allow localities to account for high cost areas and unique needs of their communities.
   
3. Fiscal impact. According to the Assembly Appropriations Committee:
   
   1. This bill allows the counties of Alameda, Contra Costa, Fresno, Marin, Monterey, San Benito, San Diego, Santa Clara, Santa Cruz, Solano, and Sonoma to continue to retain potentially millions of dollars of otherwise unspent child care funds that would revert to the General Fund (GF). By allowing the pilots to continue, each county is able to spend a greater share of their existing funds on subsidized childcare, rather than returning the funds to the state. Such reversions are typically redistributed for other child care purposes in subsequent years.
      
   2. Estimated annual ongoing GF costs to CDE and DSS of approximately $150,000 each, until the pilot programs expire, for each to maintain a staff position associated with the various child care pilot programs.

SUPPORT

Santa Clara County Office of Education (Sponsor)
Alameda County Board of Supervisors
Alameda County Office of Education

OPPOSITION

None received

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1352

Author:(Bonta)

As Amended Ver:May 18, 2023

2/3 vote. Urgency

SUMMARY

Extends the pilot project for individualized county childcare subsidy plans in Alameda, Contra Costa, Fresno, Marin, Monterey, San Benito, San Diego, Santa Clara, Santa Cruz, Solano, and Sonoma from July 1, 2023 until July 1, 2025.

Major Provisions

COMMENTS

Subsidized childcare. Subsidized childcare in California seeks to support healthy child development and support children of parents who may be: working; in training; seeking employment; incapacitated; or, in need of respite. Subsidized childcare is available to families through a number of programs, including, among others:

1. California Work Opportunity and Responsibility to Kids (CalWORKs), which provides childcare in three "stages" to families receiving CalWORKs benefits, but also to families who are transitioning from or are no longer receiving CalWORKs aid;
2. APPs, which provide vouchers to families who may then obtain childcare in a center, family childcare home, or from a license-exempt provider;
3. CSPP, which provides culturally, developmentally, and linguistically appropriate curriculum to eligible three- and four-year olds; and,
4. General Child Care (CCTR), which includes contracted centers and family childcare homes.

A February 2023 report from the Legislative Analyst's Office (LAO) states that, in Budget Year 2022-23, California is providing funding to serve approximately 713,000 children through the following childcare slot allocations: 127,800 slots for all three stages of CalWORKs; 161,300 slots allocated for APPs; 211,000 total slots for full- and part-time CSPP; and, 78,500 slots for CCTR.

While eligibility criteria varies based on program type, subsidized childcare in California serves primarily low-income families. To qualify for CalWORKs and therefore subsidized childcare, families must meet certain income criteria, and grant amounts are adjusted based on family size, income level, and region. Families are also eligible for subsidized care if the family has an income that is less than 85% of the state median income. For a family of three, this equates to $82,102, and for a family of four, this equates to $95,289, according to the February 2023 LAO report.

Paying for subsidized childcare. Childcare providers in California are paid through either vouchers or direct care contracts with the state. Providers that care for children in a voucher-based program, such as CalWORKs and APPs, are reimbursed using the RMR, which is based on a survey of licensed childcare providers, as well as the prices charged by providers that are paid by parents within a given market region. The RMR survey is administered every two to three years and reflects the prices that providers charge families for care, though it is worth noting that oftentimes, providers base tuition on what families in their communities can afford, rather than on the actual cost of care. AB 131 (Committee on Budget), Chapter 116, Statutes of 2021, increased the RMR, beginning January 1, 2022, to the 75th percentile of the 2018 RMR survey, or the new SRR as of December 31, 2021, whichever is higher.

For providers that contract directly with the state to serve a specified number of eligible children, such as CSPP and CCTR, rates are determined through the SRR, which is a flat rate set annually in the state budget. The SRR is adjusted by length of care and age of child, and providers receive a higher SRR for serving students with limited English proficiency and students with disabilities. Unlike the RMR, the SRR does not vary based on the geographic location in which the child is served and therefore does not account for geographic cost factors; however, the SRR receives a statutorily required annual cost-of-living adjustment. The February 2023 LAO report states that the SRR is currently $54.93 for childcare and $55.27 for state preschool.

Recommendations to improve California's subsidized childcare system. A number of working groups have examined subsidized childcare in California and made recommendations to reform and improve the system as it relates to equity, eligibility, and provider reimbursement rates. Most recently, the Rate and Quality Workgroup (RQWG), established by AB 131, Chapter 116, Statutes of 2021, and administered by CDSS, made recommendations to: work toward equity as an outcome and implement equity as a process; replace the current methodology for setting rates with an alternative methodology that would, among other things, set a living wage floor; create a single rate structure to address historical inequities; and, continuously reevaluate the rate-setting methodology to address equity and adjust for changing conditions and rising costs.

Prior to the RQWG, in 2020, the Master Plan on Early Learning and Care, established by Governor Newsom and administered by the California Health and Human Services Agency in consultation with stakeholders, made a number of recommendations aimed at ensuring all California children have access to high-quality early learning and care. These recommendations included, among others: incentivize, support, and fund career pathways; expand equitable treatment of all children and eliminate bias through practices and training; design a sliding scale for family contributions; and, remove barriers to service by providing streamlined eligibility.

Prior to the Master Plan on Early Learning and Care, in 2019, the Assembly Blue Ribbon Commission (BRC) on Early Childhood Education, in consultation with stakeholders, made a number of recommendations, including, among others: ensure that eligibility rules are aligned with the goal of making childcare available to families across the state; develop reimbursement rates sufficient to ensure competitive salaries and benefit packages, including health, paid time off, retirement, and other compensation; and, move towards a heavier emphasis on the true cost of providing quality childcare, preschool, and early learning experiences.

Individualized county childcare pilot plans were established in recognition of the challenges facing the childcare system, such as income eligibility thresholds for subsidized childcare services, as well as the inability of the SRR to take into account regional variances in cost of living. In 2003, AB 1326 (Simitian), Chapter 691, Statutes of 2003, established the San Mateo County individualized county childcare subsidy pilot plans. An additional pilot project was established in San Francisco in 2005 by SB 701 (Migden), Chapter 725, Statutes of 2005. Both the San Mateo and San Francisco County pilots were established to address two specific issues faced by counties with high costs of living:

1. Some low-income families living in high-cost counties earned just enough to afford housing in the area, and therefore were deemed to have too high of an income to qualify for childcare assistance based on the statewide eligibility standards; and,
2. The SRR rates paid to contracted childcare centers and family childcare homes were often insufficient to cover program costs and overhead.

Concerned that a portion of their childcare subsidy funds would go unused by low-income families deemed ineligible for subsidies due to uniform, statewide standards, coupled with the reality that low reimbursement rates made it untenable for some providers to operate in the area, San Mateo and San Francisco counties sought approval from the state to implement local flexibilities through the creation of an individualized county childcare subsidy pilot plan. Through flexibilities tailored to the unique needs of a region or community, these pilot projects enabled the counties to reinvest otherwise-unused funds through increased reimbursement rates to providers. Additionally, by permitting flexibilities in eligibility requirements, counties could increase the number of families eligible for subsidized care. Eventually, the San Mateo and San Francisco pilot projects were made permanent by SB 103 (Committee on Budget and Fiscal Review), Chapter 324, Statutes of 2015, and AB 104 (Committee on Budget), Chapter 13, Statutes of 2015, respectively.

Subsequent legislation established pilot projects in the following counties: Alameda County in 2015 [AB 833 (Bonta), Chapter 563, Statutes of 2015], Santa Clara County in 2016 [AB 2368 (Gordon), Chapter 574, Statutes of 2016]. The following counties did so in 2017: Fresno [AB 258 (Arambula), Chapter 697, Statutes of 2017]; Monterey, San Benito, and Santa Cruz [AB 300 (Caballero), Chapter 699, Statutes of 2017]; San Diego and Solano [AB 377 (Frazier), Chapter 701, Statutes of 2017]; and Contra Costa, Marin, and Sonoma [AB 435 (Thurmond), Chapter 703, Statutes of 2017]. AB 108 (Committee on Budget), Chapter 7, Statutes of 2018, was chaptered in March of 2018 and, among other things, consolidated the statute authorizing the 11 individualized county subsidy child care plans, and adopted administrative and clarifying changes for all 13 plans.

Universal PreKindergarten Mixed Delivery Quality and Access Workgroup. In September 2022, AB 185 (Committee on Budget), Chapter 571, Statutes of 2022, established the "UPK Mixed Delivery Quality and Access Workgroup" (UPK workgroup) in order to provide recommendations on best practices for increasing access to high-quality universal preschool programs for three- and four-year old children offered through a mixed-delivery model. The legislation required the workgroup to include key stakeholders, including: representatives from county offices of education; community-based organizations; TK programs; resource and referral programs; APPs; general childcare programs serving preschool-age children; and, private, center-based preschool providers, among others, as specified in current law. The provisions of AB 185 required the workgroup to be established no later than December 1, 2022, and required the Superintendent, in consultation with the Director of CDSS, to provide a report to the appropriate fiscal and policy committees of the Legislature and DOF no later than January 15, 2023. The provisions of this bill build upon the UPK work group.

Equity Implications: The provisions of this bill seek to address the geographic inequities in California's subsidized childcare system that stem from a rate reimbursement methodology that does not take into account the economic differences of various regions. Families living in higher cost areas that need subsidized rates are often families working in necessary jobs that do not meet the areas higher income earners threshold. In high-cost counties, such as San Mateo and San Francisco, families may not be eligible for subsidized childcare because they do not meet the statewide eligibility criteria necessary to qualify. These families, however, may have difficulty making ends meet due to the higher costs of living in the region. As a result, families in need of childcare who are unable to access the crucial support that is subsidized childcare. Holding families back from accessing childcare creates further income disparities by limiting potential job access.

Lack of childcare disproportionately impacts women. In a 2018 survey conducted by the Center for American Progress, mothers were 40% more likely than fathers to report that they had personally felt the negative impact of child care issues on their careers. In a 2022 research brief, "'The Forgotten Ones'--The Economic Well-Being of Early Educators during COVID-19: Findings from the 2020 California Early Care and Education Workforce Study" found that, "The vast majority [of early educators] are women of color.... Early educators working in programs with stable subsidized funding weathered the pandemic better." The flexibilities created through the pilot process allowed childcare businesses to better survive the pandemic, keep staff employed, and keep serving children.

Additionally, providers subject to the SRR struggle to operate in high-cost counties due to inadequate reimbursement rates; the inability for providers to operate can result in a lack availability for families who qualify to receive subsidized childcare.

According to the Author

"California established the Individualized County Childcare Pilot Plans in 2006 to test the benefits of amending state-imposed regulatory barriers that prevent early learning and care providers from maximizing services to children and families. They have proven to be successful. [This bill] seeks to build on the success of the original pilot programs by extending the sunset date of the 11 programs set to expire in 2023 and give authority to CDE and CDSS to include additional counties in this successful pilot. Without this bill, this collaborative space will disappear and the state agencies will no longer have the same discretion to explore innovative solutions to barriers that prevent children, families, and ELC providers from receiving and providing continuous high-quality early learning and care."

Arguments in Support

Supporters write that the Individualized County Childcare Pilot Plans in 2006 to test the benefits of amending state-imposed regulatory barriers that prevent early learning and care providers from maximizing services to children and families.

Arguments in Opposition

None on file

FISCAL COMMENTS

According to the Assembly Appropriations Committee on May 18, 2023:

1. This bill allows the counties of Alameda, Contra Costa, Fresno, Marin, Monterey, San Benito, San Diego, Santa Clara, Santa Cruz, Solano, and Sonoma to continue to retain potentially millions of dollars of otherwise unspent child care funds that would revert to the General Fund (GF). By allowing the pilots to continue, each county is able to spend a greater share of their existing funds on subsidized childcare, rather than returning the funds to the state. Such reversions are typically redistributed for other child care purposes in subsequent years.
2. Estimated annual ongoing GF costs to CDE and CDSS of approximately $150,000 each, until the pilot programs expire, for each to maintain a staff position associated with the various child care pilot programs.

VOTES

ASM HUMAN SERVICES: 7-0-1

YES: Jackson, Sanchez, Arambula, Bonta, Bryan, Calderon, Garcia

ABS, ABST OR NV: Alanis

ASM EDUCATION: 7-0-0

YES: Muratsuchi, Megan Dahle, Juan Carrillo, Hoover, Lee, McCarty, Quirk-Silva

ASM APPROPRIATIONS: 11-0-5

YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Papan, Pellerin, Weber, Ortega

ABS, ABST OR NV: Megan Dahle, Dixon, Mathis, Robert Rivas, Sanchez

UPDATED

VERSION: May 18, 2023

CONSULTANT: Alexandria Smith / HUM. S. / (916) 319-2089 FN: 0000943

Date of Hearing: May 10, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

ABPCA Bill Id:AB 1352

Author:(Bonta) – As Introduced Ver:February 16, 2023

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

SUMMARY:

This bill creates a statewide childcare pilot subcommittee of the Universal PreKindergarten Mixed Delivery Quality and Access Workgroup (UPK workgroup) to support the creation of statewide pilot policies for childcare and child development programs. In addition, this bill delays the expiration of existing individualized county childcare pilot projects, from July 1, 2023, until July 1, 2025.

Among its provisions, this bill:

1. Establishes, until July 1, 2027, a statewide childcare pilot subcommittee of the existing UPK workgroup to propose, evaluate, and collect evidence to support the creation of statewide pilot policies for childcare and child development programs by the California Department of Education (CDE) and California Department of Social Services (CDSS).
2. Requires the subcommittee to include representatives from the individualized county childcare subsidy plans, and others, as specified.
3. Requires the subcommittee to develop, consider, evaluate, and discuss statewide pilot policies for consideration by CDE and CDSS to address state-imposed regulatory barriers to achieving the goals outlined in the Master Plan for Early Learning and Care.
4. Permits members of the subcommittee, or a consultant on their behalf, to submit proposals to create new statewide pilot policies to CDE and CDSS for their consideration and establishes a process for the CDE and CDSS to approve, respond, or deny the proposal, as provided.
5. Authorizes a local planning council to apply to CDE and CDSS to participate in an approved statewide pilot policy.
6. Requires CDE and CDSS, in consultation with the statewide childcare pilot subcommittee, to establish instructions and timelines for the submission of or modifications to the application used by the local planning council.
7. Requires CDE and CDSS, by June 30, 2026, to provide a report to the Legislature that includes a list of the approved statewide pilot policies and the counties that have applied and received approval to participate in each pilot policy, among other items.
8. Extends the sunset date, from July 1, 2023, to July 1, 2025 for the existing individualized childcare pilot counties of Alameda, Contra Costa, Fresno, Marin, Monterey, San Benito, San Diego, Santa Clara, Santa Cruz, Solano, and Sonoma.

FISCAL EFFECT:

1. The California Department of Education (CDE) estimates General Fund costs of $1.80 million in fiscal year (FY) 2023-24, and ongoing costs of $1.79 million annually in FYs 2024-25 through 2026-27, to the Early Education Division for personnel, operating expenses and equipment costs, and costs to contract with an external agency for facilitation of the statewide childcare pilot subcommittee.
2. This bill allows the counties of Alameda, Contra Costa, Fresno, Marin, Monterey, San Benito, San Diego, Santa Clara, Santa Cruz, Solano, and Sonoma to continue to retain potentially millions of dollars of otherwise unspent child care funds that would revert to the General Fund. By allowing the pilots to continue, each county is able to spend a greater share of their existing funds on subsidized childcare, rather than returning the funds to the state. Such reversions are typically redistributed for other child care purposes in subsequent years.
3. Estimated annual ongoing GF costs to CDE and CDSS of approximately $150,000 each, until the pilot programs expire, for each to maintain a staff position associated with the various child care pilot programs.

COMMENTS:

1. Purpose. According to the author:

California established the Individualized County Childcare Pilot Plans in 2006 to test the benefits of amending state-imposed regulatory barriers that prevent early learning and care providers from maximizing services to children and families. They have proven to be successful. [This bill] seeks to build on the success of the original pilot programs by extending the sunset date of the 11 programs set to expire in 2023 and give authority to CDE and CDSS to include additional counties in this successful pilot.

1. Background. California’s subsidized child care system provides assistance to parents and guardians who are working, in training, seeking employment, incapacitated, or in need of respite. This child care is available through a number of programs. Additionally, California offers state preschool programs to eligible three-and four-year-olds. According to a February 2023 Legislative Analyst’s Office (LAO) report, in 2022-23, California is providing funding to serve approximately 713,000 children through the various subsidized child care programs, not including state preschool programs.

Families are typically eligible for subsidized child care if their income is less than 85% of the state median income (about $82,100 per year for a family of three), the parents have a need related to work, training, or education, and the children are up to 12 years old (or 21 years old for youth with exceptional needs).

Individualized county childcare subsidy pilot plans. Because of the income eligibility and provider reimbursement rate challenges facing high-cost counties in the childcare system, the Legislature has allowed some counties to create individualized childcares subsidy plans. In 2003, San Mateo County, and in 2005, San Francisco each established a childcare subsidy pilot program, approved by CDE, that provided flexibility regarding eligibility standards, reimbursement rates to child care providers, and the allocation of funds among providers to maximize contract dollars. The pilot programs did not provide additional funding for subsidized child care, but instead provided flexibilities that made it easier for each county to each spend its existing funding allocation. As intended, the pilots resulted in more money being spent on subsidized child care in those counties, and less unused money reverting to the state. The Legislature has since made these pilots permanent.

Since 2015, 11 additional counties have established individualized county childcare subsidy pilots. AB 108 (Committee on Budget), Chapter 7, Statutes of 2018, among other things, consolidated the authorizing statutes for the 11 individualized plans and provided a sunset date of July 1, 2023.

AB 1294 (Quirk), Chapter 497, Statutes of 2021, required CDE and CDSS to review the existing individualized county child care subsidy plans and submit a report to the Legislature with recommendations on which plan features should be adopted statewide. The report, released by CDE in March of 2023, includes the required recommendations.

This bill extends the sunset dates for the individualized county pilots until July 1, 2025, to provide time for a statewide approach to childcare flexibilities to be considered and implemented.

UPK Workgroup. AB 185 (Committee on Budget), Chapter 571, Statutes of 2022, among other things, established the UPK workgroup to provide recommendations on best practices for increasing access to high-quality universal preschool programs for three- and four-year-old children. The legislation required the workgroup to include key stakeholders and required the Superintendent of Public Instruction, in consultation with the director of CDSS, to provide a report to the Legislature and DOF by January 15, 2023.

This bill establishes a subcommittee of the UPK workgroup to propose, evaluate, and collect evidence to support the CDE and CDSS’s creation of statewide pilot policies for childcare programs. Presumably the report recently released by the CDE, as noted above, would provide a starting point for the proposed subcommittee to consider relevant statewide policies, but would not limit the policies the group may consider.

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

Date of Hearing: April 12, 2023

ASSEMBLY COMMITTEE ON EDUCATION

Al Muratsuchi, Chair

ABPCA Bill Id:AB 1352 (

Author:Bonta) – As Introduced Ver:February 16, 2023

[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: statewide pilot policies: individualized county childcare subsidy plans

SUMMARY: Creates a statewide childcare pilot subcommittee of the Universal PreKindergarten (UPK) Mixed Delivery Quality and Access Workgroup to propose, evaluate, and collect evidence to support the creation of statewide pilot policies for childcare programs overseen by the California Department of Education (CDE) and the California Department of Social Services (DSS), permits a local planning council (LPC) to apply to CDE and CDSS to adopt an approved statewide pilot policy, delays the expiration of existing pilot projects from July 1, 2023, until July 1, 2025; and is an urgency measure. Specifically, this bill:

1. Establishes a statewide childcare pilot subcommittee of the Universal PreKindergarten (UPK) Mixed Delivery Quality and Access Workgroup, to collect evidence to support the CDE and the DSS’s creation of statewide pilot policies for childcare programs.
2. Requires the subcommittee to include representatives from the current individual childcare pilot counties, and authorizes the inclusion of representatives from LPCs, county offices of education (COEs), state preschool programs (CSPPs) operated by local educational agencies (LEAs) and community-based organizations, transitional kindergarten programs (TK), tribal preschool programs, educators, the Commission on Teacher Credentialing (CTC), First 5, resource and referral programs (R&Rs), alternative payment programs (APPs), general childcare programs (CCTRs) serving preschool-aged children, Head Start, private center-based preschool providers, licensed family childcare providers (FCC), researchers, and administrators of child development programs.
3. Requires the subcommittee to meet at least twice annually to develop, consider, evaluate, and discuss statewide pilot policies, for consideration by the CDE and the DSS, that would address state-imposed regulatory barriers to achieving the goals outlined in the Master Plan for Early Learning and Care, including all of the following:
4. Increased access to full-day early learning and care programs that meet the needs of parents;
5. Implementation of mixed-delivery models, including collaborations between LEAs and community-based organizations;
6. More equitable access to high-quality preschool and TK programs;
7. Streamlined enrollment for families and decreased administrative burdens on providers; and
8. Increased enrollment of children with exceptional needs in inclusive early learning and care settings.
9. Authorizes the subcommittee to submit proposals to create new statewide pilot policies to the CDE and the DSS for their consideration, and requires the proposals to include all of the following:
10. Evidence that the proposed pilot policy is aligned with, and would further the intent and goals, of the Master Plan;
11. The projected impact of the pilot policy, including any estimated change in capacity, access, enrollment, eligibility, continuity of care, increased ability to meet family needs, and cost of implementation; and
12. Any existing policies that would be affected by the pilot policy.
13. Requires the DSS and the CDE to review a proposal to create a statewide pilot policy within 60 days and to either approve, or respond to, the proposal with questions, requests for additional information, or requests for modifications. Requires the members of the subcommittee to respond to such requests within 60 days.
14. Requires that, if the CDE and the DSS deny the request to create a new statewide pilot policy, they provide a written response explaining the reasons for the denial, including any conflicts with federal law or regulations, costs of implementation, and data demonstrating that the proposed policy would not further the goals of the Master Plan or would have a negative impact on childcare capacity, access, enrollment, eligibility, continuity of care, or the ability to meet family needs.
15. Authorizes pilot policies to supersede state law on childcare subsidy programs only for the following factors:
16. Eligibility criteria, including but not limited to, age, family size, time limits, income level, and special needs considerations;
17. Fees, including but not limited to, family fees, sliding scale fees, and copayments for those families who are not income eligible;
18. Reimbursement rates, including adjustment factors;
19. Maximizing the efficient use of subsidy funds including, but not limited to, multiyear contracting and interagency agreements allowing for flexible and temporary transfer of funds among childcare agencies;
20. Regulations and notices governing childcare licensing; and
21. Facilities.
22. Prohibits statewide pilot policies from changing or superseding state laws governing enrollment priority or impact or reduce any element in the CalWORKs second and third stage childcare programs that provides a greater benefit to families than is provided in the statewide pilot policy.
23. Authorizes an LPC to apply to the CDE or the DSS to participate in an approved statewide pilot policy. Requires the CDE to oversee all applications relating to CSPP or TK, and requires the DSS to oversee applications related to all other childcare programs. Requires the relevant department to respond to the LPC within 30 days to approve the request, or request additional information or require modifications. Requires the LPC to respond to such requests within 30 days. Requires the relevant department to approve or deny the application within an additional 30 days. If the proposed policy would change rates, the application must be approved by the board of supervisors of the relevant county before final approval by the appropriate state department.
24. Requires the CDE and the DSS, in consultation with the subcommittee, to establish instructions and timelines for the submission of, or modifications to, the application template to be used by the LPCs, including the creation of an application template and guidance on involving childcare providers in the process.
25. Requires that a participating provider receive an increase or decrease in funding that they would have received if they had not participated in the application.
26. Requires the CDE and the DSS, in consultation with the subcommittee, to discuss and determine both of the following:
    1. Which, if any of the individualized pilot policies granted to the existing individualized county childcare subsidy plans have not yet been adopted statewide through legislation or regulation; and
    2. Whether any of the individualized pilot policies not yet adopted statewide should be approved as statewide pilot policies, as described.
27. Requires the CDE and the DSS to provide a report on the statewide pilot policies considered to the appropriate fiscal and policy committee of the Legislature by June 30, 2026, including all of the following:
28. A list of the approved statewide pilot policies and the counties that have applied and received approval to participate in each pilot policy;
29. A brief description of the impact of each pilot policy, including estimated increases in capacity, access, enrollment, eligibility, continuity of care, or ability to meet family needs;
30. A list of the statewide pilot policies that were denied and the written explanation for the denial; and
31. Recommendations on what statewide pilot policies should be implemented through statute or regulation.
32. Authorizes the CDE and the DSS to implement these provisions through the issue of guidance or other written directives.
33. Requires these provisions to become inoperative on July 1, 2027.
34. Extends the sunset date from July 1, 2023 to July 1, 2025 for the existing individualized childcare pilot counties of Alameda, Contra Costa, Fresno, Marin, Monterey, San Benito, San Diego, Santa Clara, Santa Cruz, Solano, and Sonoma, in both the Education Code as well as in the Welfare and Institutions Code.
35. States that, in order to ensure that current individualized county childcare subsidy plans remain in effect until a new statewide childcare pilot process is enacted, this bill has an urgency clause requiring it to go into effect immediately

EXISTING LAW:

1. Establishes the “Child Care and Development Services Act” to provide childcare and development services as part of a comprehensive, coordinated, 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. (Welfare and Institutions Code (WIC) 10207 et seq.)
2. Defines “childcare 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 supervision, instructional activities, R&R programs, and AP arrangements. (WIC 10213.5)
3. Establishes the Early Education Act to provide an inclusive and cost-effective preschool program that provides high-quality learning experiences, coordinated services, and referrals for families to access health and social-emotional support services through full and part-day programs. (Education Code (EC) 8201)
4. Requires the Superintendent of Public Instruction (SPI), in consultation with the Director of the DSS and the executive director of the State Board of Education (SBE), to convene a statewide interest holder workgroup of various stakeholders, and requires the workgroup to provide recommendations on best practices for increasing access to high-quality universal preschool (UPK) programs for three- and four-year-old children offered through a mixed-delivery model that provides equitable learning experiences across a variety of settings. Further, requires the workgroup to provide recommendations to update preschool standards to support equitable access to high-quality preschool and TK programs through the mixed-delivery model and across all appropriate settings and funding sources. (EC 8202.6)
5. Requires the workgroup recommendations to be in alignment with the Master Plan for Early Learning and Care, without recommending new system changes that create increased state or local costs to offer preschool across the mixed-delivery system. (EC 8202.6)
6. Requires the SPI, in consultation with the Director of the DSS, to provide a report to the Legislature and the Department of Finance (DOF) with the workgroup recommendations by January 15, 2023. (EC 8202.6)
7. Permits the Counties of Alameda, Contra Costa, Fresno, Marin, Monterey, San Benito, San Diego, Santa Clara, Santa Cruz, Solano, and Sonoma to, individually as a pilot project, develop and implement individualized county childcare subsidy plans, and, further, requires the plans to ensure that childcare subsidies received by these counties are used to address local needs, conditions, and priorities of working families in their respective communities. (EC 8273)
8. Makes inoperative as of July 1, 2023, the provisions of current law permitting the aforementioned counties to establish individualized county childcare subsidy pilot plans. (EC 8281, WIC 10348)
9. Permits the City and County of San Francisco to develop and implement an individualized county childcare subsidy plan, and further, requires the plan to ensure that childcare subsidies received by the city and county are used to address local needs, conditions, and priorities of working families in the community. (EC 8283)
10. Permits, beginning July 1, 2014, the individualized county childcare subsidy plan for the County of San Mateo that was developed as a pilot project to continue in existence and in accordance with the provisions of current law, as specified. Further, requires the plan to ensure that childcare subsidies received by the County of San Mateo are used to address local needs, conditions, and priorities of working families in those communities. (EC 8289)
11. Defines “income eligible” for purposes of establishing initial income eligibility for the California State Preschool Program (CSPP) as meaning that a family’s adjusted monthly income is at or below 100% of the State Median Income (SMI), adjusted for family size, and for other childcare programs at 85% of the SMI. (EC 8213, WIC 10271.5)
12. Identifies adjustment factors by which reimbursement rates to certain CSPP and childcare providers may be adjusted, as specified. (EC 8244, WIC 10281.5)
13. Defines “local planning council” as a local child care and development planning council established with the intent of providing a forum for the identification of local priorities for childcare and the development of policies to meet the needs identified within those priorities. (WIC 10480 and 10485)
14. Establishes, beginning July 1, 2021, the Standard Reimbursement Rate (SRR) to be $12,888 and, further, requires, beginning with the 2022-23 fiscal year, that the SRR be increased by the cost-of-living adjustment (COLA) granted by the Legislature. (EC 42238.15 and WIC 10280)
15. Establishes the SRR beginning July 1, 2021 at $12,968 for full-day CSPP and $5,621 for part-day CSPP, and requires, beginning with the 2022-23 fiscal years, that the SRR be increased by a COLA, as specified. Requires that beginning January 1, 2022, contractors receiving the SRR be reimbursed for the greater of the 75^th percentile of the 2018 Regional Market Rate (RMR) survey or the contracted per child reimbursement rate as of December 31, 2021, as increased by the COLA. (EC 8242)
16. Establishes, beginning January 1, 2022, the RMR ceilings at the greater of the 75th percentile of the 2018 RMR survey for that region or the RMR ceiling that existed in that region on December 31, 2021. (WIC 10374.5)

FISCAL EFFECT: Unknown

COMMENTS:

Need for the bill. According to the author, “California established the Individualized County Childcare Pilot Plans in 2006 to test the benefits of amending state-imposed regulatory barriers that prevent early learning and care (ELC) providers from maximizing services to children and families. They have proven to be successful. AB 1352 seeks to build on the success of the original pilot programs by extending the sunset date of the 11 programs set to expire in 2023 and to give authority to the CDE and the DSS to include additional counties in this successful pilot. Without this bill, this collaborative space will disappear and the state agencies will no longer have the same discretion to explore innovative solutions to barriers that prevent children, families, and ELC providers from receiving and providing continuous high-quality early learning and care.”

California has a complex system of early childhood programs. California’s subsidized early care and education (ECE) is made up of a complex array 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 LEAs and community-based providers. The major ECE programs include, but are not limited to, the following:

Source: Legislative Analyst Office (LAO), 2023

According to the LAO, since 2021-22, the state has added 146,600 childcare slots, which has more than doubled the number of slots statewide. California had approximately 560,000 licensed center spaces for all children from birth to 6 years, and 268,000 licensed family childcare home spaces for all children from birth to 12 in 2021. According to the CDE, California still lacks the licensed capacity to meet the need for childcare and preschool services. In 2021-22 only 17% of all 3-year-old and 4-year-old children in California had access to a CSPP or TK space.

Reimbursement for childcare is complex. For voucher-based programs, including AP and CalWORKs, the state contracts with local APP agencies to enroll families and provide vouchers to arrange care services, and reimburses childcare providers selected by families to provide care. These programs are funded based upon the RMR which varies based on the county in which the child is served and is based on regional market surveys of a sample of licensed childcare providers (currently reflecting the 75th percentile of the 2018 market survey). RMR levels typically only increase when the state takes action to use a higher percentile of the most recent survey.

For direct contract programs, including CSPP and CCTR, the state directly reimburses providers based on a fixed number of childcare slots. These programs are funded based upon the SRR which is a fixed statewide rate (currently $54.93 per day for childcare and $55.27 for CSPP). The SRR receives a statutorily required annual cost-of-living adjustment. In 2021-22, the state shifted direct contract providers to the RMR to

the extent the RMR was higher than the SRR. The current weighted statewide average is $62.03 per child per day for full-day CSPP and $38.84 for part-day CSPP.

TK, as a part of the TK-12 education system is funded based upon the average daily attendance (ADA) of students. The state provides apportionments to LEAs for the ADA of all students, including TK.

Improving California’s subsidized childcare system. A number of working groups have examined subsidized childcare in California and made recommendations to reform and improve the system as it relates to equity, eligibility, and provider reimbursement rates.

In September 2022, AB 185 (Committee on Budget), Chapter 571, Statutes of 2022, established the “UPK Mixed Delivery Quality and Access Workgroup” (UPK workgroup) in order to provide recommendations on best practices for increasing access to high-quality universal preschool programs for three- and four-year old children offered through a mixed-delivery model. The legislation required the workgroup to include key stakeholders, including: representatives from COEs; community-based organizations; TK programs; R&Rs; APPs; CCTR programs serving preschool-age children; and, private, center-based preschool providers, among others, as specified in current law. The provisions of AB 185 required the workgroup to be established no later than December 1, 2022, and required the SPI, in consultation with the Director of the DSS, to provide a report to the appropriate fiscal and policy committees of the Legislature and DOF no later than January 15, 2023.

Similarly, the Rate and Quality Workgroup (RQWG), established by AB 131, Chapter 116, Statutes of 2021, and administered by CDSS, made recommendations to:

• Work toward equity as an outcome and implement equity as a process;
• Replace the current methodology for setting rates with an alternative methodology that would, among other things, set a living wage floor;
• Create a single rate structure to address historical inequities; and,
• Continuously reevaluate the rate-setting methodology to address equity and adjust for changing conditions and rising costs.

Prior to the RQWG, in 2020, the Master Plan on Early Learning and Care, established by Governor Newsom and administered by the California Health and Human Services Agency in consultation with stakeholders, made a number of recommendations aimed at ensuring all California children have access to high-quality early learning and care. These recommendations included, among others: incentivize, support, and fund career pathways; expand equitable treatment of all children and eliminate bias through practices and training; design a sliding scale for family contributions; and remove barriers to service by providing streamlined eligibility.

Prior to the Master Plan on Early Learning and Care, in 2019, the Assembly Blue Ribbon Commission (BRC) on Early Childhood Education, in consultation with stakeholders, made a number of recommendations, including, among others: ensure that eligibility rules are aligned with the goal of making childcare available to families across the state; develop reimbursement rates sufficient to ensure competitive salaries and benefit packages, including health, paid time off, retirement, and other compensation; and, move towards a heavier emphasis on the true cost of providing quality childcare, preschool, and early learning experiences.

Individualized county childcare subsidy plans. Income eligibility thresholds for subsidized childcare services and SRR for providers, as established, apply statewide and do not account for any regional variance in cost of living. Over the years, this lack of programmatic sensitivity to the differing economic contexts that face working families and childcare providers across California, along with an overall need for greater supply of and access to subsidized childcare services, has led to a number of counties (now totaling 13) establishing their own individualized county childcare subsidy plans.

In 2003, San Mateo was the first county to establish an individualized county childcare subsidy plan pilot project, followed by San Francisco. Both of these pilots were developed, in large part, to address two significant issues facing subsidized childcare in high-cost counties. The first issue was that, by earning just enough to be able to afford housing in a high-cost area, some relatively low-income families were deemed to have too high of an income to qualify for assistance with childcare by statewide eligibility standards. The second issue was that the SRR paid to contracted childcare centers and family childcare homes was often not sufficient to cover program costs and overhead, particularly in high-cost areas. Both counties would see a portion of their childcare subsidy funds go unused as low-income families failed to qualify for eligibility by uniform statewide criteria, and as provider reimbursement rates made offering subsidized care untenable for some providers.

San Mateo and San Francisco Counties’ individualized county childcare subsidy plans are still in operation today, although neither operates as a pilot. These plans offer the counties limited local flexibility to revise eligibility rules and adjust provider rates and family fees within the context of local evaluation and assessment and heightened state oversight. Thus, the counties are able to reinvest otherwise-unused funds through increased reimbursement rates.

In recent years, beginning with Alameda County in 2015, 11 other counties established their own individualized county childcare subsidy plan pilot projects. Santa Clara County established its pilot project in 2016, and the following counties did so in 2017: Fresno, Monterey, San Benito, and Santa Cruz, San Diego, Solano, Contra Costa, Marin, and Sonoma.

The proliferation of individualized county childcare subsidy plans, each with its own set of flexibilities, has created significant administrative burdens at the state level, as well as potential inequities between counties. This bill would extend the sunset dates for the remaining 11 county pilots by two years, while a statewide solution to provide access to proven flexibilities to all counties is being considered.

Pilots allowed certain flexibilities for programs in participating counties. The intent of the pilot program was to allow authorized counties the ability to adopt pilot flexibilities that overcome statutory and regulatory barriers and address local needs. Pilot flexibilities are local policies that supersede state law with regard to eligibility criteria, fees, reimbursement rates, and methods of maximizing the efficient use of subsidy funds. In adopting certain pilot flexibilities, the county would be able to fill more childcare slots and reduce unearned funds, with the desired result of increasing access to care without requiring any additional funding from the state. Thus, the flexibilities allowed through the pilot program are designed to provide a benefit for the state and the authorized county by increasing access to care and maximizing the efficient use of funds. Pilot counties were required to report regularly to the state identifying measurable outcomes to evaluate the success of the pilot in meeting the program’s goals.

Report on individualized county childcare subsidy pilot program flexibilities. AB 1294, Chapter 497, Statutes of 2021, required the CDE and the DSS to review the existing individualized county child care subsidy plans and submit a report to the Legislature. The report, dated March 2023, includes recommendations on which pilot flexibilities should be adopted statewide and which are no longer justified given statewide policy changes. The tables below show both the non-active pilot flexibilities and the active flexibilities:

Table 1: Non-active pilot flexibilities

Source: CDE, March 2023

Table 2: Active Pilot Flexibilities by County

Source: CDE, March 2023

In determining which flexibilities warranted consideration as statewide policies, the departments identified common flexibilities as those being actively utilized by at least one-third of the pilot counties.

The report recommendations include the following as considerations for statewide policy actions:

• The CDE recommends the Legislature consider:
  • Increased service hours for families seeking employment from 30 hours to 32.5 hours to provide for full-time care; and
  • Increased service hours for families seeking permanent housing from 30 hours to 32.5 hours to provide for full-time care.
• Additionally, the report identified pilot flexibilities are no longer justified due to the following changes in state policy:
• An increase in the income eligibility threshold, a change in the definition of a three-year-old, and elimination of the enrollment quota for four-year-old children was codified by AB 2626 (Chapter 945, Statutes of 2018);
• Process of rate reform to create a unified reimbursement rate structure for all childcare programs was initiated by AB 131 (Chapter 116, Statutes of 2021); and
• 24-month eligibility for most childcare programs was codified by AB 210 (Chapter 62, Statutes of 2022) and SB 1047 (Chapter 923, Statutes of 2022).

This bill proposes to establish a sub-committee of the existing UPK working group to propose, evaluate, and collect evidence to support the CDE and the DSS’s creation of statewide pilot policies for childcare programs. The bill sets out a process and timelines for the departments to adopt statewide flexibilities and would authorize LPCs to apply to the departments to participate in the chosen statewide pilot flexibilities. The bill also extends the sunset date for the existing 11 county pilots to July 2025.

Presumably the report recently released by the CDE, as noted above, would provide a starting point for the proposed subcommittee to consider relevant statewide policies, but would not limit the policies the group may consider.

Arguments in support. The California County Superintendents state, “California established the Individualized County Childcare Pilot Plans (“childcare pilots”) starting in 2004 to test the benefits of amending state-imposed regulatory barriers that prevent ELC providers from efficiently serving children and families. Only 13 pilot counties were authorized to participate in pilot flexibilities such as: 24-month eligibility for care, increased reimbursement rates for ELC providers in high-cost counties, increased eligibility for families seeking housing, and the ability to transfer funds within the county to serve additional children.

The childcare pilots successfully demonstrated that these regulatory flexibilities created greater workforce stability, continuity of care for children, and supported working families. As a result, over the last several years California has expanded many of the pilot flexibilities statewide. However, there are still many regulatory and programmatic barriers in place that impede implementation of universal pre-kindergarten and discourage mixed-delivery collaborations.

AB 1352 would build upon the success of the childcare pilots by inviting all counties (in addition to the original 13) to collaborate with the state agencies on innovative solutions to barriers that prevent children, families, and ELC providers from receiving and providing continuous high-quality care. It would also ensure that the state agencies who administer ELC programs maintain their authority to authorize new pilot flexibilities when state-imposed barriers are preventing childcare providers from efficiently serving families. Finally, the bill would streamline and economize agency time by creating a single process and pilot subcommittee (under the existing UPK Mixed Delivery Quality and Access Workgroup) that would replace the existing 11 individualized pilot review processes.”

Related legislation. AB 185 (Committee on Budget), Chapter 571, Statutes of 2022, among other things, established the UPK workgroup in order to provide recommendations on best practices for increasing access to high-quality universal preschool programs for three- and four-year old children offered through a mixed-delivery model.

AB 1294 (Quirk), Chapter 497, Statutes of 2021, extended the sunset for the individualized county childcare subsidy plan pilot project for Santa Clara County.

AB 108 (Committee on Budget), Chapter 7, Statutes of 2018¸ among other things, consolidated statute authorizing child care pilot programs relating to the counties of Alameda, Contra Costa, Fresno, Marin, Monterey, San Benito, San Diego, Santa Clara, Santa Cruz, Solano, and Sonoma, and adopted administrative and clarifying changes for these 11 plans and those of San Mateo County and San Francisco City and County.

AB 99 (Committee on Budget), Chapter 15, Statutes of 2017, among a number of other things, established 12-month continuous eligibility for subsidized child care services, and required income thresholds for initial eligibility to be at or below 70% of the most recent SMI, adjusted for family size, and income thresholds for ongoing eligibility to be at or below 85% of the most recent SMI, adjusted for family size.

AB 258 (Arambula), Chapter 697, Statutes of 2017, authorized Fresno County to establish an individualized county child care subsidy plan pilot project, to sunset on January 1, 2023.

AB 300 (Caballero), Chapter 699, Statutes of 2017, among other things, authorized the counties of Monterey, San Benito, and Santa Cruz to each establish an individualized county child care subsidy plan pilot project, to sunset on January 1, 2023.

AB 377 (Frazier), Chapter 701, Statutes of 2017, authorized the counties of San Diego and Solano to each establish an individualized county child care subsidy plan pilot project, to sunset on January 1, 2023.

AB 435 (Thurmond), Chapter 703, Statutes of 2017, among other things, authorized the counties of Contra Costa, Marin, and Sonoma to each establish an individualized county child care subsidy plan pilot project, to sunset on January 1, 2023.

AB 2368 (Gordon), Chapter 574, Statutes of 2016, established the Santa Clara County individualized county child care subsidy plan pilot project, to sunset in 2022.

AB 104 (Committee on Budget), Chapter 13, Statutes of 2015, eliminated the sunset on the San Francisco individualized county child care subsidy pilot program and removed language referring to the San Francisco plan as a pilot project.

AB 833 (Bonta), Chapter 563, Statutes of 2015, established the Alameda County individualized county child care subsidy plan pilot project, to sunset in 2021.

SB 103 (Committee on Budget and Fiscal Review), Chapter 324, Statutes of 2015, eliminated the sunset of the San Mateo County child care subsidy plan and related reporting requirements and removed language referring to the San Mateo plan as a pilot project.

AB 86 (Committee on Budget), Chapter 48, Statutes of 2013, extended the sunset date of the San Francisco individualized county child care subsidy plan to 2015.

AB 260 (Gordon), Chapter 731, Statutes of 2013, extended the sunset dates of the San Francisco and San Mateo County individualized county child care subsidy plans to 2016 and 2018, respectively.

SB 1016 (Committee on Budget and Fiscal Review), Chapter 38, Statutes of 2012, extended the sunset date of the San Francisco individualized county child care subsidy plan to 2014.

AB 1610 (Committee on Budget), Chapter 724, Statutes of 2010, extended the sunset date of the San Francisco individualized county child care subsidy plan to 2013.

SB 1225 (Yee) of the 2009-10 Session, would have extended the sunset date of the San Francisco individualized county child care subsidy plan to 2016. SB 1225 was held in the Senate Appropriations Committee.

AB 1304 (Simitian), Chapter 61, Statutes of 2008, extended the sunset data of the San Mateo County individualized county child care subsidy plan to 2014.

SB 701 (Migden), Chapter 725, Statutes of 2005, established the San Francisco individualized county child care subsidy plan pilot project, to sunset in 2011.

AB 1326 (Simitian), Chapter 691, Statutes of 2003, established the San Mateo County individualized county child care subsidy plan pilot project, to sunset in 2009.

REGISTERED SUPPORT / OPPOSITION:

Support

4Cs Sonoma County

Alameda County Early Care and Education Planning Council

Alameda County Office of Education

Alum Rock School District

Associated Students Early Childhood Education Center

California Catholic Conference

California Child Care Coordinators Association

California County Superintendents

Chicano Federation

Children's Council of San Francisco

Choices for Children

City and County of San Francisco

Compass Family Services

Davis Street Family Resource Center

FacesSF

First 5 San Diego

Frandelja

Fresno County Superintendent of Schools

Good Samaritan Family Resource Center

Hively

Holy Family Day Home

Kai Ming Head Start

Mission Child Care Consortium INC.

Mnc Inspiring Success

Saint Vincent's Day Home

San Bernardino County District Advocates for Better Schools

San Francisco Child Care Planning and Advisory Council

San Francisco Department of Early Childhood

San Mateo County Office of Education

Santa Clara County Office of Education

Santa Cruz County Office of Education

Sjb Child Development Centers

Sonoma County Office of Education

South of Market Child Care

Tel Hi Neighborhood Center

The Primary School

Think Together

True Sunshine Preschool Center

Wah Mei School

Wu Yee Children's Services

Opposition

None on file

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

Date of Hearing: March 28, 2023

ASSEMBLY COMMITTEE ON HUMAN SERVICES

Corey A. Jackson, Chair

ABPCA Bill Id:AB 1352 (

Author:Bonta) – As Introduced Ver:February 16, 2023

SUBJECT: Childcare: statewide pilot policies: individualized county childcare subsidy plans

SUMMARY: Creates a statewide childcare pilot subcommittee of the Universal PreKindergarten (UPK) Mixed Delivery Quality and Access Workgroup to propose, evaluate, and collect evidence to support the creation of statewide pilot policies for childcare and child development programs by the California Department of Education (CDE) and California Department of Social Services (CDSS), permits a local planning council to apply to CDE and CDSS to participate in an approved statewide pilot policy, delays the expiration of existing pilot projects from July 1, 2023, until July 1, 2025; and is an urgency measure. Specifically, this bill:

1. Defines “department” as it relates to certain provisions of this bill as meaning CDE.
2. Requires a statewide childcare pilot subcommittee of the statewide interest holder workgroup established in current law be established to propose, evaluate, and collect evidence to support the creation of statewide pilot policies for childcare and child development programs by CDE and CDSS.
3. Requires a subcommittee to include representatives from the individualized county childcare subsidy plans, as established by current law, and, further, permits the subcommittee to include representatives from:
   1. Local planning councils,
   2. County offices of education,
   3. Contracted state preschool programs, including those operated by school districts and by community-based organizations,
   4. First 5,
   5. Resource and referral agencies,
   6. Alternative payment programs (APPs),
   7. Contracted general childcare programs serving preschool-age children,
   8. Head Start,
   9. Private center-based preschool providers,
   10. Licensed family childcare providers,
   11. Researchers, and,
   12. Administrators of child development.
4. Requires the subcommittee meet at least twice annually to develop, consider, evaluate, and discuss statewide pilot policies for consideration by CDE and CDSS that would address state-imposed regulatory barriers to achieving the goals outlined in the Master Plan for Early Learning and Care, including all of the following goals:
   1. Increased access to full-day early learning and care programs that meet the needs of parents;
   2. Implementation of mixed-delivery models, including collaborations between local educational agencies and community-based organizations;
   3. More equitable access to high-quality preschool and transitional kindergarten (TK) programs;
   4. Streamlined enrollment for families and decreased administrative burdens on providers; and,
   5. Increased enrollment of children with exceptional needs in inclusive early learning and care settings.
5. Permits members of the subcommittee, or a consultant on their behalf, to submit proposals to create new statewide pilot policies to CDE and CDSS for their consideration. Further, requires proposals to include all of the following:
   1. Evidence that the proposed pilot agency is aligned with the intent of certain provisions of this bill and the Master Plan for Early Learning and Care;
   2. Data demonstrating that the pilot policy would further one or more of the goals enumerated in 4);
   3. The projected impact of the pilot policy, including any estimated change in capacity, access, enrollment, eligibility, continuity of care, increased ability to meet family needs, and cost implementation; and,
   4. Any existing policies that would be affected by the pilot policy.
6. Requires, within 60 days of receiving a proposal to create a statewide pilot policy, CDE and CDSS to review and either approve or respond to the proposal with questions, requests for additional information, or requests for modifications. Further, dictates that members of the subcommittee, or a consultant on their behalf, has 60 days to respond to questions and requests.
7. Requires, within 60 days of receiving responses to questions, additional information, or a modified proposal for a statewide pilot policy from members of the subcommittee, CDE and CDSS to review and either approve or deny the proposal.
8. Requires, if a proposal to create a new statewide pilot policy is denied, CDE and CDSS to provide a written explanation for the denial, including any conflicts with federal law or regulation, cost of implementation, data demonstrating that the pilot policy would not further one of the goals described by in 2), and evidence that the pilot policy would have a negative impact on capacity, access, enrollment, eligibility, continuity of care, or decreased ability to meet family needs.
9. Permit statewide pilot policies to supersede state law concerning childcare subsidy programs with regard to only the following factors:
   1. Eligibility criteria, including, but not limited to, age, family size, time limits, income level, and special needs considerations;
   2. Fees, including, but not limited to, family fees, sliding scale fees, and copayments for those families who are not income eligible, as applicable;
   3. Reimbursement rates, including adjustment factors;
   4. Methods of maximizing the efficient use of subsidy funds, including but not limited to, multiyear contracting with CDE for center-based childcare, and interagency agreements that allow for flexible and temporary transfer of funds among agencies;
   5. Regulations and notices governing childcare licensing; and,
   6. Facilities.
10. Prohibits statewide pilot policies from changing or superseding state laws governing enrollment priority, and, further, prohibits the policies from impacting or reducing any element in CalWORKs stages 2 and 3 that provides a greater benefit to participating families than is provided for in statewide pilot policy.
11. Permits a local planning council, as defined in current law, to apply to CDE and CDSS to participate in an approved statewide pilot policy, and, further requires components of an application relating to preschool or TK be overseen by CDE and the components of applications addressing all other childcare programs or requirements be overseen by CDSS.
12. Requires, within 30 days of receiving an application, the appropriate department to review and either approve or respond to the application with questions, requests for additional information, or requests for modifications. Further, allocates 30 days for the local planning council to respond to questions and requests.
13. Requires, within 30 days of receiving responses to questions, additional information, or a modified application, the appropriate department to review and either approve or deny the application. Further, requires modified applications be submitted by the local planning council for approval before final approval by the appropriate department.
14. Requires, if approval of an application would change rates, the application to be approved by the county board of supervisors before final approval by the appropriate department.
15. Requires CDE and CDSS, in consultation with the statewide childcare pilot subcommittee, to establish instructions and timelines for the submission of or modifications to the application used by the local planning council, including, but not limited to, application templates and guidance on inviting childcare and child development providers to participate. Further, requires a participating provider receive an increase or decrease in funding that the provider would have received if the provider had not participate in the application.
16. Requires CDE and CDSS, in consultation with the statewide childcare pilot subcommittee, to discuss and determine:
    1. Which, if any, of the individualized pilot policies granted to the individualized county childcare subsidy plans established in current law have not been adopted statewide through legislation or regulations; and,
    2. Whether any of the individualized pilot policies not adopted statewide through legislation or regulation should be approved as a statewide pilot policy pursuant to the process established by the provisions of this bill, as specified.
17. Directs, on or before June 30, 2026, CDE and CDSS to provide a report on the statewide pilot policies considered to the appropriate policy and fiscal committees of the Legislature, and, further, requires the report to include all of the following:
    1. A list of the approved statewide pilot policies and the counties that have applied and received approval to participate in each pilot policy;
    2. A brief description of the impact of each pilot policy, including estimated increases in capacity, access, enrollment, eligibility, continuity of care, or ability to meet family needs;
    3. A list of the statewide pilot policies that were denied and the written explanation for the denial; and,
    4. Recommendations on what statewide pilot policies should be implemented through statute or regulation.
18. Permits CDE and CDSS to implement and administer provisions of this bill through issuance of guidance or other written directions, which may include, but not be limited to, establishing timelines for submittal of plans and any modifications, plan templates, and processes for requesting additional participating contractors.
19. Makes inoperative on July 1, 2027, the provisions of this bill related to the statewide childcare pilot subcommittee.
20. Delays from July 1, 2023, to July 1, 2025, the inoperative date by which the Counties of Alameda, Contra Costa, Fresno, Marin, Monterey, San Benito, San Diego, Santa Clara, Santa Cruz, Solano, and Sonoma may, individually as a pilot project, develop and implement individualized county childcare subsidy plans.
21. States that, in order to ensure that current individualized county childcare subsidy plans remain in effect until a new statewide childcare pilot process is enacted, this bill has an urgency clause, as specified, thereby requiring it to go into effect immediately.

EXISTING LAW:

1. Establishes the “Child Care and Development Services Act” to provide childcare and development services as part of a comprehensive, coordinated, 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. (Welfare and Institutions Code Section [WIC] 10207 et seq.)
2. Defines “childcare 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 reSuperintendentte and states that these services may include direct care supervision, instructional activities, resource and referral programs, and alternative payment arrangements. (WIC 10213.5(j))
3. Requires the Superintendent of Public Instruction (Superintendent), in consultation with the Director of CDSS and the executive director of the State Board of Education, to convene a statewide interest holder workgroup of various stakeholders. (Education Code Section [EDC] 8202.6(a)(1))
4. Requires the workgroup to provide recommendations on best practices for increasing access to high-quality universal preschool programs for three- and four-year-old children offered through a mixed-delivery model that provides equitable learning experiences across a variety of settings. Further, requires the workgroup to provide recommendations to update preschool standards, as specified in EDC 8203, to support equitable access to high-quality preschool and TK programs through the mixed-delivery model and across all appropriate settings and funding sources. (EDC 8202.6(a)(2))
5. Requires the workgroup recommendations to be in alignment with the Master Plan for Early Learning and Care, without recommending new system changes that create increased state or local costs to offer preschool across the mixed-delivery system. (EDC 8202.6(a)(3))
6. Requires the Superintendent, in consultation with the Director of CDSS, to provide a report to the Legislature and the Department of Finance (DOF) with the workgroup recommendations by January 15, 2023. (EDC 8202.6(c))
7. Permits the Counties of Alameda, Contra Costa, Fresno, Marin, San Benito, San Diego, Santa Clara, Santa Crus, Solano, and Sonoma to, individually as a pilot project, develop and implement individualized county childcare subsidy plans, and, further, requires the plans to ensure that childcare subsidies received by these counties are used to address local needs, conditions, and priorities of working families in their respective communities. (EDC 8273)
8. Makes inoperative as of July 1, 2023, the provisions of current law permitting the aforementioned counties to establish individualized county childcare subsidy pilot plans. (EDC 8281, WIC 10348)
9. Permits the City and County of San Francisco to develop and implement an individualized county childcare subsidy plan, and further, requires the plan to ensure that childcare subsidies received by the city and county are used to address local needs, conditions, and priorities of working families in the community. (EDC 8283)
10. Permits, beginning July 1, 2014, the individualized county childcare subsidy plan for the County of San Mateo that was developed as a pilot project to continue in existence and in accordance with the provisions of current law, as specified. Further, requires the plan to ensure that childcare subsidies received by the County of San Mateo are used to address local needs, conditions, and priorities of working families in those communities. (EDC 8289)
11. Defines “income eligible” for purposes of establishing initial income eligibility for the California State Preschool Program (CSPP) and childcare and development services as meaning that a family’s adjusted monthly income is at or below 100% of the state median income, adjusted for family size, (EDC 8213(a), WIC 10271.5(a))
12. Identifies adjustment factors by which reimbursement rates to certain CSPP and childcare providers may be adjusted, as specified. (EDC 8244, WIC 10281.5)
13. Defines “local planning council” as a local child care and development planning council established with the intent of providing a forum for the identification of local priorities for childcare and the development of policies to meet the needs identified within those priorities. (WIC 10480 and 10485)
14. Establishes, beginning July 1, 2021, the Standard Reimbursement Rate (SRR) to be $12,888 and, further, requires, beginning with the 2022-23 fiscal year, that the SRR be increased by the cost-of-living adjustment granted by the Legislature as enumerated in EDC 42238.15. (WIC 10280(b))
15. Establishes, beginning January 1, 2022, the Regional Market Rate (RMR) ceilings at the greater of: the 75th percentile of the 2018 RMR survey for that region; or, the RMR ceiling that existed in that region on December 31, 2021. (WIC 10374.5(b)(2))

FISCAL EFFECT: Unknown, this bill has not been analyzed by a fiscal committee.

COMMENTS:

Subsidized childcare. Subsidized childcare in California seeks to support healthy child development and support children of parents who may be: working; in training; seeking employment; incapacitated; or, in need of respite. Subsidized childcare is available to families through a number of programs, including, among others:

• California Work Opportunity and Responsibility to Kids (CalWORKs), which provides childcare in three “stages” to families receiving CalWORKs benefits, but also to families who are transitioning from or are no longer receiving CalWORKs aid;
• APPs, which provide vouchers to families who may then obtain childcare in a center, family childcare home, or from a license-exempt provider;
• CSPP, which provides culturally, developmentally, and linguistically appropriate curriculum to eligible three- and four-year olds; and,
• General Child Care (CCTR), which includes contracted centers and family childcare homes.

A February 2023 report from the Legislative Analyst’s Office (LAO) states that, in Budget Year 2022-23, California is providing funding to serve approximately 713,000 children through the following childcare slot allocations: 127,800 slots for all three stages of CalWORKs; 161,300 slots allocated for APPs; 211,000 total slots for full- and part-time CSPP; and, 78,500 slots for CCTR.

While eligibility criteria varies based on program type, subsidized childcare in California serves primarily low-income families. To qualify for CalWORKs and therefore subsidized childcare, families must meet certain income criteria, and grant amounts are adjusted based on family size, income level, and region. Families are also eligible for subsidized care if the family has an income that is less than 85% of the state median income. For a family of three, this equates to $82,102, and for a family of four, this equates to $95,289, according to the February 2023 LAO report.

Paying for subsidized childcare. Childcare providers in California are paid through either vouchers or direct care contracts with the state. Providers that care for children in a voucher-based program, such as CalWORKs and APPs, are reimbursed using the RMR, which is based on a survey of licensed childcare providers, as well as the prices charged by providers that are paid by parents within a given market region. The RMR survey is administered every two to three years and reflects the prices that providers charge families for care, though it is worth noting that oftentimes, providers base tuition on what families in their communities can afford, rather than on the actual cost of care. AB 131 (Committee on Budget), Chapter 116, Statutes of 2021, increased the RMR, beginning January 1, 2022, to the 75th percentile of the 2018 RMR survey, or the new SRR as of December 31, 2021, whichever is higher.

For providers that contract directly with the state to serve a specified number of eligible children, such as CSPP and CCTR, rates are determined through the SRR, which is a flat rate set annually in the state budget. The SRR is adjusted by length of care and age of child, and providers receive a higher SRR for serving students with limited English proficiency and students with disabilities. Unlike the RMR, the SRR does not vary based on the geographic location in which the child is served and therefore does not account for geographic cost factors; however, the SRR receives a statutorily required annual cost-of-living adjustment. The February 2023 LAO report states that the SRR is currently $54.93 for childcare and $55.27 for state preschool.

Recommendations to improve California’s subsidized childcare system. A number of working groups have examined subsidized childcare in California and made recommendations to reform and improve the system as it relates to equity, eligibility, and provider reimbursement rates. Most recently, the Rate and Quality Workgroup (RQWG), established by AB 131, Chapter 116, Statutes of 2021, and administered by CDSS, made recommendations to: work toward equity as an outcome and implement equity as a process; replace the current methodology for setting rates with an alternative methodology that would, among other things, set a living wage floor; create a single rate structure to address historical inequities; and, continuously reevaluate the rate-setting methodology to address equity and adjust for changing conditions and rising costs.

Prior to the RQWG, in 2020, the Master Plan on Early Learning and Care, established by Governor Newsom and administered by the California Health and Human Services Agency in consultation with stakeholders, made a number of recommendations aimed at ensuring all California children have access to high-quality early learning and care. These recommendations included, among others: incentivize, support, and fund career pathways; expand equitable treatment of all children and eliminate bias through practices and training; design a sliding scale for family contributions; and, remove barriers to service by providing streamlined eligibility.

Prior to the Master Plan on Early Learning and Care, in 2019, the Assembly Blue Ribbon Commission (BRC) on Early Childhood Education, in consultation with stakeholders, made a number of recommendations, including, among others: ensure that eligibility rules are aligned with the goal of making childcare available to families across the state; develop reimbursement rates sufficient to ensure competitive salaries and benefit packages, including health, paid time off, retirement, and other compensation; and, move towards a heavier emphasis on the true cost of providing quality childcare, preschool, and early learning experiences.

Individualized county childcare pilot plans were established in recognition of the challenges facing the childcare system, such as income eligibility thresholds for subsidized childcare services, as well as the inability of the SRR to take into account regional variances in cost of living. In 2003, AB 1326 (Simitian), Chapter 691, Statutes of 2003, established the San Mateo County individualized county childcare subsidy pilot plans. An additional pilot project was established in San Francisco in 2005 by SB 701 (Migden), Chapter 725, Statutes of 2005. Both the San Mateo and San Francisco County pilots were established to address two specific issues faced by counties with high costs of living:

1. Some low-income families living in high-cost counties earned just enough to afford housing in the area, and therefore were deemed to have too high of an income to qualify for childcare assistance based on the statewide eligibility standards; and,
2. The SRR rates paid to contracted childcare centers and family childcare homes were often insufficient to cover program costs and overhead.

Concerned that a portion of their childcare subsidy funds would go unused by low-income families deemed ineligible for subsidies due to uniform, statewide standards, coupled with the reality that low reimbursement rates made it untenable for some providers to operate in the area, San Mateo and San Francisco counties sought approval from the state to implement local flexibilities through the creation of an individualized county childcare subsidy pilot plan. Through flexibilities tailored to the unique needs of a region or community, these pilot projects enabled the counties to reinvest otherwise-unused funds through increased reimbursement rates to providers. Additionally, by permitting flexibilities in eligibility requirements, counties could increase the number of families eligible for subsidized care. Eventually, the San Mateo and San Francisco pilot projects were made permanent by SB 103 (Committee on Budget and Fiscal Review), Chapter 324, Statutes of 2015, and AB 104 (Committee on Budget), Chapter 13, Statutes of 2015, respectively.

Subsequent legislation established pilot projects in the following counties: Alameda County in 2015 [AB 833 (Bonta), Chapter 563, Statutes of 2015], Santa Clara County in 2016 [AB 2368 (Gordon), Chapter 574, Statutes of 2016]. The following counties did so in 2017: Fresno [AB 258 (Arambula), Chapter 697, Statutes of 2017]; Monterey, San Benito, and Santa Cruz [AB 300 (Caballero), Chapter 699, Statutes of 2017]; San Diego and Solano [AB 377 (Frazier), Chapter 701, Statutes of 2017]; and Contra Costa, Marin, and Sonoma [AB 435 (Thurmond), Chapter 703, Statutes of 2017]. AB 108 (Committee on Budget), Chapter 7, Statutes of 2018, was chaptered in March of 2018 and, among other things, consolidated the statute authorizing the 11 individualized county subsidy child care plans, and adopted administrative and clarifying changes for all 13 plans.

Universal PreKindergarten Mixed Delivery Quality and Access Workgroup. In September 2022, AB 185 (Committee on Budget), Chapter 571, Statutes of 2022, established the “UPK Mixed Delivery Quality and Access Workgroup” (UPK workgroup) in order to provide recommendations on best practices for increasing access to high-quality universal preschool programs for three- and four-year old children offered through a mixed-delivery model. The legislation required the workgroup to include key stakeholders, including: representatives from county offices of education; community-based organizations; TK programs; resource and referral programs; APPs; general childcare programs serving preschool-age children; and, private, center-based preschool providers, among others, as specified in current law. The provisions of AB 185 required the workgroup to be established no later than December 1, 2022, and required the Superintendent, in consultation with the Director of CDSS, to provide a report to the appropriate fiscal and policy committees of the Legislature and DOF no later than January 15, 2023. The provisions of this bill build upon the UPK work group.

Author’s Statement: According to the author, “California established the Individualized County Childcare Pilot Plans in 2006 to test the benefits of amending state-imposed regulatory barriers that prevent early learning and care providers from maximizing services to children and families. They have proven to be successful. [This bill] seeks to build on the success of the original pilot programs by extending the sunset date of the 11 programs set to expire in 2023 and give authority to CDE and CDSS to include additional counties in this successful pilot. Without this bill, this collaborative space will disappear and the state agencies will no longer have the same discretion to explore innovative solutions to barriers that prevent children, families, and ELC providers from receiving and providing continuous high-quality early learning and care.”

Need for this bill: The provisions of this bill seek to continue past efforts to create flexibilities for high-cost counties to provide adequate rates to childcare providers and increase eligibility for families who would not otherwise qualify for subsidized care under statewide eligibility criteria. Specifically, this bill establishes a statewide childcare pilot subcommittee of the UPK workgroup in order to propose, evaluate, and collect evidence to support the creation of statewide pilot policies for childcare and child development programs. This bill extends the sunset date of the existing pilot projects from July 1, 2023, to July 1, 2025. The provisions of this bill also expand individualized county pilot projects beyond the 11 counties currently operating pilot projects, and instead permit the remaining 45 counties to apply to CDE and CDSS to implement an approved statewide pilot policy. Finally, the provisions of this bill permit the statewide pilot project to operate until July 1, 2027.

Equity Implications: The provisions of this bill seek to address the geographic inequities in California’s subsidized childcare system that stem from a rate reimbursement methodology that does not take into account the economic differences of various regions. Families living in higher cost areas that need subsidized rates are often families working in necessary jobs that do not meet the areas higher income earners threshold. In high-cost counties, such as San Mateo and San Francisco, families may not be eligible for subsidized childcare because they do not meet the statewide eligibility criteria necessary to qualify. These families, however, may have difficulty making ends meet due to the higher costs of living in the region. As a result, families in need of childcare who are unable to access the crucial support that is subsidized childcare. Holding families back from accessing childcare creates further income disparities by limiting potential job access.

Lack of childcare disproportionately impacts women. In a 2018 survey conducted by the Center for American Progress, mothers were 40% more likely than fathers to report that they had personally felt the negative impact of child care issues on their careers. In a 2022 research brief, “‘The Forgotten Ones’--The Economic Well-Being of Early Educators during COVID-19: Findings from the 2020 California Early Care and Education Workforce Study” found that, “The vast majority [of early educators] are women of color.... Early educators working in programs with stable subsidized funding weathered the pandemic better.” The flexibilities created through the pilot process allowed childcare businesses to better survive the pandemic, keep staff employed, and keep serving children.

Additionally, providers subject to the SRR struggle to operate in high-cost counties due to inadequate reimbursement rates; the inability for providers to operate can result in a lack availability for families who qualify to receive subsidized childcare.

The provisions of this bill seek to address these geographic inequities by permitting all California counties to apply for and implement flexibilities previously reserved for a few specific counties. By permitting all counties to implement these flexibilities, the provisions of this bill seek to increase availability of and access to subsidized childcare throughout the state.

Policy Considerations: Access to childcare is crucial for working families. This bill’s goal of enabling all counties in California to better serve their low-income working families in obtaining and maintaining subsidized childcare is laudable and important. However, it is unclear how the provisions of this bill would interact with the ongoing conversations regarding larger, systemic reforms for California’s subsidized childcare system. It has long been acknowledged that California’s subsidized childcare system is in need of improvement, particularly as it relates to equity, eligibility, and provider rates, and a number of workgroups, including the RQWG, the Master Plan on Early Learning and Care, and the Assembly BRC, have all made various recommendations to address these issues on a statewide basis.

Originally, the creation of regional pilot projects sought to address the fact that the cost of living in certain counties was disproportionately high compared to other counties in the state; the provisions of this bill, seemingly, are less about addressing county-to-county disparities as they are about addressing the need for statewide reform to adequately meet the childcare needs of children and families. Additionally, the provisions of this bill, due to the temporary nature of the statewide pilot project, could increase eligibility for subsidized childcare for a short period of time, and upon expiration of the pilot in 2027, leave many families without childcare by reverting to stricter eligibility standards. So too could this bill potentially create temporary increases in provider rates that would expire along with the pilot project in 2027.

While it is certainly necessary to ensure low-income families have access to quality care and providers in high-cost areas are not precluded from operating in those regions, it is unclear how the provisions of this bill would create the lasting, reformative change that has been long called for.

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

RELATED AND PRIOR LEGISLATION:

AB 185 (Committee on Budget), Chapter 571, Statutes of 2022, among other things, established the UPK workgroup in order to provide recommendations on best practices for increasing access to high-quality universal preschool programs for three- and four-year old children offered through a mixed-delivery model.

AB 1249 (Quirk), Chapter 497, Statutes of 2021, extended the sunset for the individualized county childcare subsidy plan pilot project for Santa Clara County.

AB 108 (Committee on Budget), Chapter 7, Statutes of 2018¸ among other things, consolidated statute authorizing child care pilot programs relating to the counties of Alameda, Contra Costa, Fresno, Marin, Monterey, San Benito, San Diego, Santa Clara, Santa Cruz, Solano, and Sonoma, and adopted administrative and clarifying changes for these 11 plans and those of San Mateo County and San Francisco City and County.

AB 99 (Committee on Budget), Chapter 15, Statutes of 2017, among a number of other things, established 12-month continuous eligibility for subsidized child care services, and required income thresholds for initial eligibility to be at or below 70% of the most recent SMI, adjusted for family size, and income thresholds for ongoing eligibility to be at or below 85% of the most recent SMI, adjusted for family size.

AB 258 (Arambula), Chapter 697, Statutes of 2017, authorized Fresno County to establish an individualized county child care subsidy plan pilot project, to sunset on January 1, 2023.

AB 300 (Caballero), Chapter 699, Statutes of 2017, among other things, authorized the counties of Monterey, San Benito, and Santa Cruz to each establish an individualized county child care subsidy plan pilot project, to sunset on January 1, 2023.

AB 377 (Frazier), Chapter 701, Statutes of 2017, authorized the counties of San Diego and Solano to each establish an individualized county child care subsidy plan pilot project, to sunset on January 1, 2023.

AB 435 (Thurmond), Chapter 703, Statutes of 2017, among other things, authorized the counties of Contra Costa, Marin, and Sonoma to each establish an individualized county child care subsidy plan pilot project, to sunset on January 1, 2023.

AB 2368 (Gordon), Chapter 574, Statutes of 2016, established the Santa Clara County individualized county child care subsidy plan pilot project, to sunset in 2022.

AB 104 (Committee on Budget), Chapter 13, Statutes of 2015, eliminated the sunset on the San Francisco individualized county child care subsidy pilot program and removed language referring to the San Francisco plan as a pilot project.

AB 833 (Bonta), Chapter 563, Statutes of 2015, established the Alameda County individualized county child care subsidy plan pilot project, to sunset in 2021.

SB 103 (Committee on Budget and Fiscal Review), Chapter 324, Statutes of 2015, eliminated the sunset of the San Mateo County child care subsidy plan and related reporting requirements and removed language referring to the San Mateo plan as a pilot project.

AB 86 (Committee on Budget), Chapter 48, Statutes of 2013, extended the sunset date of the San Francisco individualized county child care subsidy plan to 2015.

AB 260 (Gordon), Chapter 731, Statutes of 2013, extended the sunset dates of the San Francisco and San Mateo County individualized county child care subsidy plans to 2016 and 2018, respectively.

SB 1016 (Committee on Budget and Fiscal Review), Chapter 38, Statutes of 2012, extended the sunset date of the San Francisco individualized county child care subsidy plan to 2014.

AB 1610 (Committee on Budget), Chapter 724, Statutes of 2010, extended the sunset date of the San Francisco individualized county child care subsidy plan to 2013.

SB 1225 (Yee) of 2010, would have extended the sunset date of the San Francisco individualized county child care subsidy plan to 2016. SB 1225 was held on the Senate Appropriations Committee suspense file.

AB 1304 (Simitian), Chapter 61, Statutes of 2008, extended the sunset data of the San Mateo County individualized county child care subsidy plan to 2014.

SB 701 (Migden), Chapter 725, Statutes of 2005, established the San Francisco individualized county child care subsidy plan pilot project, to sunset in 2011.

AB 1326 (Simitian), Chapter 691, Statutes of 2003, established the San Mateo County individualized county child care subsidy plan pilot project, to sunset in 2009.

REGISTERED SUPPORT / OPPOSITION:

Support

California Child Care Coordinators Association (Co-Sponsor)

4Cs Sonoma County

Alameda County Early Care and Education Planning Council

Alameda County Office of Education

Alum Rock School District

California Catholic Conference

California County Superintendents

Chicano Federation

Choices for Children

Davis Street Family Resource Center

First 5 San Diego

Fresno County Superintendent of Schools

Hively

Mission Child Care Consortium INC.

Saint Vincent's Day Home

San Bernardino County District Advocates for Better Schools (SANDABS)

San Francisco Department of Early Childhood

San Mateo County Office of Education (UNREG)

Santa Clara County Office of Education

Santa Cruz County Office of Education

SJB Child Development Centers

Sonoma County Office of Education

South of Market Child Care

The Primary School

Think Together

Wu Yee Children's Services

Opposition

None on file

Analysis Prepared by: Alexandria Smith / HUM. S. / (916) 319-2089