SB 1110: Early learning and care: rates.

Existing law establishes a system of childcare and development services, administered by the State Department of Social Services, for children from infancy 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 the reimbursement to those programs for the cost of childcare paid to childcare providers and the administrative and support services costs of the alternative program. Existing law prohibits the total cost for administration and support services from exceeding 17.5% of the total contract amount.

This bill would expand the authorization for reimbursement to include the direct program and support costs, as defined, of the alternative program. The bill would additionally define administrative and support services costs and prohibit the direct program and support costs and administrative and support services costs from each exceeding 15% of the maximum reimbursable amount of the contract, and further prohibit the combined costs from exceeding 25%. If 25% of the maximum reimbursable amount of the contract falls below $300,000, the bill would require the minimum reimbursement to be $300,000.

Existing law, the Early Education Act, among other things, requires the Superintendent of Public Instruction to administer all California state preschool programs. Existing law requires, for California state preschool programs and childcare and development programs, the State Department of Education and the State Department of Social Services to collaborate to implement a reimbursement system plan that establishes reasonable standards and assigned reimbursement rates. Existing law requires, commencing July 1, 2026, the contract reimbursement to be based on the lesser of the maximum reimbursable amount stated in the contract, the net reimbursable program costs, or the product of the adjusted child days of enrollment for certified children times the contract rate.

This bill would instead provide, commencing July 1, 2026, for California state preschool programs and center-based childcare and development programs, that if the program or center has maintained at least 85% of its certified daily enrollment, it will be reimbursed the maximum reimbursable amount stated in the contract. The bill would provide if the program or center has not maintained at least 85% of its certified daily enrollment, reimbursement would be based on the lesser of either the net reimbursable program costs or the product of the adjusted child days of enrollment for certified children times the contract rate. The bill would require, if a California state preschool program contractor has not maintained 85% of its certified daily enrollment for 3 consecutive years, and continues to have less than 100% of their certified daily enrollment, the State Department of Education to place the contractor on conditional contract status unless the contractor provides clear evidence of progress towards full enrollment.