AB 2258: Early childhood education and childcare: alternative payment support program.

Existing law, the Child Care and Development Services Act, administered by the State Department of Social Services, establishes a system of childcare and development services for children up to 13 years of age. Existing law authorizes, upon departmental approval, the use of appropriated funds for alternative payment programs to allow for maximum parental choice. Existing law authorizes those programs to include, among other things, a subsidy that follows the family from one provider to another, or choices among hours of service.

This bill would establish the California Alternative Payment Support Program (CAPSP) for the purpose of augmenting the current funding for alternative payment programs. The bill would require the California Alternative Payment Support Program Board, which the bill would create in state government, consisting of specified members, to administer the CAPSP. The bill would require the board to manage and invest revenue deposited in the California Alternative Payment Support Program Trust Fund, which the bill would create in the State Treasury, with moneys in that fund available, upon appropriation, to finance alternative payment programs. Commencing July 1, 2027, the bill would require each employer and each worker to pay contributions to the trust fund through a payroll deduction at an unspecified rate with respect to wages, thereby imposing a tax.

Existing law establishes a threshold for initial or ongoing income eligibility for purposes of services under the act, with the threshold set as a familys adjusted monthly income that is at or below 85% of the state median income, adjusted for family size, as specified.

This bill would, beginning January 1, 2028, increase the above-described threshold to 90% of the state median income for services provided through alternative payment programs.

Existing law requires the State Department of Social Services, in collaboration with the State Department of Education, to implement a reimbursement system plan that establishes reasonable standards and assigned reimbursement rates for subsidized childcare and development services, and to develop and conduct an alternative methodology for ratesetting, as specified. Existing law requires the Governor and the Legislature to, by no later than July 1, 2025, establish reimbursement rates based on the alternative methodology, as specified.

This bill would require, upon the establishment of those reimbursement rates, alternative payment programs to reimburse providers at 100% of the cost of care and would require, beginning one year after the establishment of those rates, alternative payment programs to reimburse providers at 110% of the cost of care.