Senate Standing Committee on Budget and Fiscal Review

The Subcommittee because we do not have a quorum yet. And as we continue to take precautions for the COVID-19 risks, we have given the public access to both this hearing room and to our teleconference. And for those who want to provide us public comment by teleconference, you will see the number on our web website, the Senate Budget and Fiscal Review Committee website, but I will announce it also. It is 877-226-8163. The access code is 439-8318. I will maintain decorum during the hearing, as is customary. Any individual is disruptive may be removed from the remote meeting service or have their connections muted. So the folks who are providing testimony to our committee today are participating remotely. And I know our remote participants know the drill, that you will unmute yourself and then the it people will mute you back when you're finished speaking. Please indicate your name when you start. Let's see now, what else do we need to as I indicated before, for public access, it is both this hearing room and the call in number which I gave, and I will repeat it later. So today we are having our second oversight hearing. As I think most of us are quite familiar. We had funds that we were able to direct, appropriate in the last two budgets that were beyond what our usual annual allocations are. And one of the areas that we did significant investments in is our early care and education and that is for our zero to four children. And today's hearing is the oversight on our allocations there to give us a good understanding of just what's the state of early care and education in California, what its role is to families, to our economy, and then how our allocations have been distributed. We are still working on rescheduling the last panel from our February 6 hearing. So that panel was to be on affordable housing and we'll get that updated as soon as we have a time and a date. The other area that we will be covering, some folks don't always think of Tk in our early care and education ecosystem, but it is because it is for our four year olds. So our early care and education ecosystem is that zero to four. So that's what we will be covering today. So now, before we start our panels Vice-Chair, do you have any comments you would like to make?

I do not. Looking forward to the presentation.

Great. Okay, so we don't have a quorum yet, so we will, as I indicated, start. But we will be Subcommittee and we will begin with our first panel. And our first panel is Dr. Lea Austin, who is the Executive Cirector of the Center for the Study of Childcare Employment at the University of California, Berkeley. And she will be followed by Jackie Barocio, who is our principal Fiscal and Policy Analyst at the Legislative Analyst Office. And you do have a handout from the LAO and what they will be covering is the role of childcare in our economy in California and also our recent state investments. So, Dr. Austin, I hope yes, I see you so you can unmute yourself. Great. And you may begin. And thank you so much for joining us.

Okay, good morning. Thank you so much again. My name is Lea Austin. I'm the Executive Director of the Center for the Study of Childcare Employment at the University of California, Berkeley. Thank you, Chairwoman Skinner, and members of the Committee for the opportunity to speak with you today about the critical role of childcare to California's economy. And I would really be remiss if I didn't start with the early care and education workforce themselves. If our childcare system is not working for them, then the system as a whole is not working. Nearly all members of our ECE workforce in family childcare homes and childcare centers are women, 98% of them, and most are women of color. They are a highly experienced workforce. More than half of family childcare providers and lead teachers in childcare centers have ten or more years of experience. They are highly knowledgeable about their craft. Most have college degrees. Among center-based teachers, 56% have earned a bachelor's degree or higher and another 24% an associate's degree. 30% of family childcare providers have a bachelor's degree and another 23% have an associate's degree. Yet their median pay hovers in the range of $20 an hour and is even lower for our small family childcare operators. There's been many expansions and investments in quality improvement initiatives in childcare over the last 15-20 years, and certainly with pandemic relief, but little has been done to address wages for most of this workforce. For example, wages of center-based teachers in California with college degrees actually declined in actual wages between 2006 and 2022, despite a 35% increase in the state minimum wage over that same period. This really undermines the ability to recruit and retain a stable workforce, effectively meant letting many of our investments and quality spill away. The lack of stable quality childcare certainly has impacts on the development and learning of children, but also extends well beyond that nationally. For example, it's been estimated that businesses lose $12.7 billion a year due to childcare challenges among their employees. Parents, mostly mothers, lose about $37 billion in income each year because they have to reduce their work hours or drop out of the workforce entirely because of childcare issues. This translates into a loss of tax revenue from foregone wages to about $4.2 billion a year. And further, a rise in childcare price has been found to be correlated with reduced parental employment, again, especially for mothers. While expansions, not surprisingly, in publicly funded childcare have been found to have an increase on labor force participation among mothers in California. Based on the current price of childcare and the median income for a single parent family, that parent would spend nearly 35% of their income on childcare for one infant attending a family childcare or 52% if attending a childcare center. For a two parent household, they would spend about 11% of their income for one infant in family childcare or 17% in the center. And this is per child, not all children for whom they may need services. The price and limited availability of publicly funded early care and education means that many families pay more than they can reasonably afford, that they forego employment, or that they make less than their ideal choices. In a study that we have going on right now with parents and family friend and neighbor providers, our preliminary findings suggest that for most parents in our study, cost is a leading factor in their childcare decision. Further, only about 20% of our parent respondents reported that they were using their ideal childcare arrangements. And notably for Black parents of preschool age children, less than 10% reported that they had their ideal childcare arrangement in place. In addition to foreground wages because of childcare challenges and inadequate childcare means a loss of economic activity generated by the provision of those early care and education services. So, for example, shortly before the pandemic, my colleagues at the Labor Center reported on some of the economic benefits specifically to California. And they found that while 13 and a half billion dollars was paid for the delivery of childcare services in the state. These services generated $25.4 billion of economic activity across California through direct and indirect input with the largest share coming from the ECE workforce spending on housing, food and other goods and services, effectively yielding a dollar 88 of economic output for every dollar spent on childcare. Given the loss of childcare jobs and the shrinking of California's childcare system, we have lost about 4400 childcare jobs since March 2020, and the Resource and Referral Network has reported a loss of about 18,000 childcare spaces over a similar period. We can expect there to be a ripple effect on economic activity, maternal employment and loss of productivity to other businesses. And there are additional costs that may not be visible that are uniquely borne by the ECE workforce. Economic security is really rampant among the early current education workforce, and the consequences are especially harsh for our black and Latin women and immigrant women doing this work. Our ECE workforce in California is experiencing poverty at twice the rate of other California workers and 6.7 times that of K-8 teachers. And among our early current education workforce, black educators have been found to experience poverty or 50% more likely to experience poverty than their white peers. In our study of the California workforce, we found that food insecurity is relatively high across this workforce, but even higher for educators of color and those who are immigrants. Among our family childcare providers, 70% of whom are women of color and 40% of whom are immigrants, we find that most of them two-thirds report that the only way they could manage to cover an unexpected $400 expense was to take on debt. So if you know anything about emergencies in childcare operating a childcare business we can imagine that levels of debt that people are carrying is relatively high. And in fact, very early into the pandemic we did a study of providers and just a couple of months in we found that about a third of our family childcare operators had already taken on credit card debt to cover expenses and one in five had already missed a mortgage or rent payment. So we know that pandemic relief has been really critical to help people address the debt and these financial consequences of today have very long term impacts. We also found that in our study of the workforce in California only half of lead teachers and administrators in childcare centers and only 21% of family childcare providers have any retirement savings. And just by way of comparison, about 87% of kindergarten teachers have retirement savings. The health of our early care education system has really far reaching effects and the dependable long term investments that support the true cost of services. And you're going to be talking about the cost of care today. It's really important things that decouple what parents can afford from what workers are paid is key and really central to ensuring that our childcare programs can stay open and also be able to recruit and retain the staff who can meet our childcare needs. So I really appreciate the opportunity to appear before the committee and provide this information and I look forward to answering questions that you may have.

Thank you so much. I think we'll hold questions until we hear from our panelists, from the LAO and then we will see what questions members have. And we have nine. Do we have quorum? So we need one more. Okay, so as soon as somebody else arrives, a Committeemember, we'll do a roll call. However, right now we'll go to Jackie Barocio from and I'm probably pronouncing your name wrong, so correct me from the LAO.

Jackie Barocio with the Legislative Analyst Office. Thank you so much. We were asked to provide an overview of the state childcare and preschool programs. So in my comments I'll touch on the following one how these programs are funded. Two the different types of settings and program rules. Three, the total number of available slots or slots that are funded and then four provide just a snapshot of regional service levels. And then lastly, provide an overview of recent childcare and preschool changes. So before I get started with the handout, I first thought it would be helpful to provide just additional context of the broader childcare and preschool landscape. Specifically, there are various ways in which families go about arranging child care. For example, some families may choose to have one parent stay at home and provide care for their children. Other parents may seek out informal arrangements with family members, friends or neighbors to provide unpaid childcare. On the other hand, we do know that some parents do pay out of pocket for child care and at least as it relates to the state, for some low income families, the state does offer subsidized childcare across various settings either and they either fully or partially offset the cost of child care. So in my presentation I'll primarily focus on providing more detail specifically on the State's subsidized childcare and preschool programs within that broader landscape. So then on page one of the handout we include a list of all state subsidized childcare and preschool programs and their key eligibility roles. Childcare programs at the state level, they're overseen by the Department of Social Services, or DSS, while preschool programs are overseen by the Department of Education. Some of the key eligibility differences across these programs include the specific age ranges of children that are served in each of the programs, whether the programs are capped or they operate like an entitlement program, meaning all eligible families are guaranteed a spot in the program. Some of these programs may only serve certain families that are enrolled or participating in other state programs such as CalWorks. And then also another difference is the eligibility income eligibility thresholds. Specifically, in childcare programs, the income eligibility threshold typically is at or below 85% of the state median income, whereas for state preschool programs the income threshold is at or below 100% of the state median income. On page two, we provide an overview of how these programs are funded, their various funding models which vary specifically for voucher-based programs. The state gives a family a voucher and these families may send their children then to voucher-based centers or family child care homes or have families or friends provide care to them. And then the state relies on regional agencies to kind of verify the attendance but also manage the payment of the providers. For direct contract providers, the state directly contracts with childcare providers to serve a set number of children and then families may send their children to direct contract-based centers or also family childcare homes. And I'll describe specifically those particular settings later on in my presentation. But instead of relying on a regional agency to manage payment of providers, since these providers directly contract with the state, the state reimburses the providers for each filled childcare slot. And in the context of transitional kindergarten, that's specifically funded through the local control funding formula, which is more of a school-based funding formula. So families may choose to send their children to a nearby public school for Tk and then the school district tracks and reports attendance and then the state funds the school districts for each enrolled child. The payment rates, at least for the voucher-based and direct contract providers that they receive, is based on either the standard reimbursement rate or SRR, which is the same statewide, or the regional reimbursement rate or RMR, which varies by county and is based on a regional market survey of a sample of licensed childcare providers. And the current RMR reflects the 75th percentile of the 2018 market survey. And I'll just flag that in 2021, the state did make a change where it shifted some of the direct contract providers to the RMR in cases where the RMR was higher than the SRR. On page three, we provide an overview of the different rules, regulations and program structures of childcare providers across various settings. So when it comes to licensing requirements and regulations, all types of childcare providers must be licensed and comply with Title 2022 rules. Moreover, licensed care providers that directly contract with the state must also comply with title five rules, which require stricter staffing ratios and additional programming requirements. The only exception to licensing rules and regulations are family, friend and neighbor providers. Instead, these providers, they're fingerprinted and must pass a background check. So these types of providers tend to reflect childcare providers that either are related to the child or are a family friend or neighbor who only takes care of children of a single family. Moreover, as noted on page four, we provide a brief description of how each program type tends to have different programming structures. For example, title 22 and title Five childcare providers, they generally operate in commercial and non-residential buildings, whereas family care home providers, they tend to operate in their own residential homes. On page five of The Handout We Break.

Before you go to page five, I'm going to quickly do a roll call, okay? And establish a quorum. So, Secretary, will you call the roll?

Senators Skinner? Here. Niello? Here. Becker, Cabbalero, Dahle, Durazo Here. Eggman, Grove, Laird, Here. McGuire, Menjivar? Here. Min, Newman, Oachoa Bogh. Here. Padilla? Here. Roth? Here. Seyarto? Here. Smallwood-Cuavas We have established a quorum.

Great. We've now got a quorum. So we'll go back to your presentation, Ms. Barocio.

Thank you. So, page five of The Handout We break out how many childcare slots are available in each preschool and childcare program, or specifically, how many childcare and preschool slots are funded. And across all these programs, a total of 713,000 childcare and preschool slots are funded. Again, some of these programs operate like entitlement programs, while others are capped at a certain number of slots due to the fact that they receive a fixed amount of funding every year. And then, as we mentioned on the next page, the current number of childcare slots include the recent addition of 146,500 slots that were added since 21 22. And these slots were added as a part of a broader budget agreement to add a total of 200,000 childcare slots over multiple years. And it's our understanding that many of these new slots have not been filled yet. However, one of the biggest reasons for this is because of the natural amount of time that it takes the Department of Social Services to allocate new funding to providers. In the case of voucher based programs, DSS needs to modify existing program contracts to include and capture this additional money for new slots, and that typically takes at least three months to complete. On the other hand, in the case of direct contract programs, DSS awards these new slots through an application process, and that whole application process typically takes at least nine months to complete. And in the Handout too, we mentioned just other contributing factors as well as to why slots may be going unfilled that include the fact that we've heard from providers that they're still building up to pre pandemic levels, but then also workforce issues as well. On the next page, we hand out, in addition to being asked to provide a snapshot of the total number of slots currently funded, we were also asked to provide additional information on the regional distribution of either slots or service levels. And while we don't have information on how that full 713,000 slots are distributed across the state, what we do have is a regional count of the number of children that received subsidized child care through the programs administered by DSS as of October 2021. Now, across all those programs, again, this particular graph or figure only shows programs within the Department of Social Services. So across those programs in October 2021, there were about 185,000 childcare slots that were funded and available. These numbers reflect slot levels. Prior to that, additional 146,500 new slots that were added. So that's why these numbers may look smaller than that 700,000 number we were previously discussing. But again, out of the total 185,000 slots that were funded in October 2021, about 170,000 were filled, which is a little less than 90%. And of those slots that were filled, about 35% reflect children that receive childcare in the greater Los Angeles area. On page eight of the handout, we end with a summary of recent preschool and childcare changes. So just for the sake of time, I'll highlight two changes that will come up later in future panels. One is the authorization of state level collective bargaining, and this only impacted family, childcare home operators and license, except family friend and neighbor providers. And then the second change I'll highlight is the establishment of two childcare rate work groups that occurred as a part of the 2021-22 budget to explore a new single reimbursement rate model. And with that, I'll end my comments and happy to take any questions.

Thank you. I have a couple of questions, but let me see who on the dias also has any, so I can start a list. Okay? I did. Look. All right, 1 second. Was that Mr. Seyarto and Ms. Caballero? Okay, great. So my question first to LAO, there are a couple of things that maybe I just wasn't paying close enough attention, but it shows on page five that we provide funding. We the state for about 713,000 children. Now, I realize that's not all considered slots, correct correct.

Not all those are considered slots because some of these are entitlement programs. For. The CalWorks programs and T-K, it operates like an entitlement program. So the amount of funding will be dictated by the number of families that are guaranteed a slot and then choose to take up that child.

Okay, so I'm looking at that chart on page five. So the 713 is the collective number of all of these. So the state preschool alternative payment, CalWorks, general childcare and T-K, correct? Yes. All right, I guess my question would be, and maybe we need a little more detail, is that the T-K number, those children, since T-K in many most cases is a partial day, might also be in one of these other programs. So is this really 713,000 distinct children or not?

So for the T-K, I'll pass it to my colleague Sarah Cortez, who covers preschool programs, and she's also on the line.

Hi, Sarah Cortez LAO. And yes, you're absolutely correct. The student's children can be participating in a few of these programs, particularly as it relates to participating in the educational system such as T-K, and then potentially needing to participate in general childcare or in CalWorks childcare to take care of that before or after school type of type of care.

So we might want to qualify this then, that it's not 713,000 children, right? That it could be fewer, in other words, because a number of these 713 could be double counted because they may be in two of these programs.

Yeah, we certainly take your point. This is really intended to show kind of what the state is funding for kind of each of these programs.

I think it's important for those of us who are tracking how many children who are zero to four and how much we may be contributing to that care and how much we aren't. So I think I would appreciate at some point an update from Lao on kind of more accurate of that number. And it may be hard to get it exactly, but at least the qualifier. And then on page seven, we show October 21, 170,000 received subsidized. And I don't know if that means, again, subsidize that slot. So in other words, if we look at page five, which has a much larger number, those are all whether entitled permit programs or not, you could consider them subsidized. So I was confused by the drop to 170. So what do we really mean that's just very specific slots and not the other programs like not state preschool and not CalWorks?

So the page five only shows programs administered by the Department of Social Services. So it does not include the preschool programs or T-K.

Page five does, though. Page five does. That chart has

I'm sorry, page seven.For the regional distribution, page seven. All right. So that 170 would be in comparison to about 185,000 available slots as of October 2021.

Okay. So I think, again, clarification everything on page five is everybody we could quibble on the terminology, but is subsidized it's just through different types of programs. In other words, if the state is providing funding to it. So I think we should just clarify that the page seven is the very specific category of what we call slots compared to either state preschool or T-K or CalWorks. Is that correct? Am I correct? Okay. All right, so then my other question is to Dr. Austin. Dr. Austin, you gave us some figures on what the business loses due to childcare issues and I wasn't sure if that was I thought that was national, but it's okay. And then what women lose meaning what's the economic loss to the business sector due to childcare challenges? And then what's the loss to women personally? I wondered if you could describe what would it mean or what does it mean when children, families in the economy if there aren't enough childcare providers for the families who need childcare?

Yes, I think we see this play out all the time. So what it means when people don't have access to the child care that they need is people make choices and arrangements that are not ideal for the health and well being of their family. So again, with mothers in particular, we see the biggest strain on moms who end up often reducing work hours or dropping out of the workforce entirely. People often refer to this as the motherhood penalty. So you have less income coming into your family to meet your family needs and then you have a penalty that really follows you into later in your career. It could be harder to reenter the workforce. It decreases your earning potential over time because people as you're working and your career is moving, you're moving up in the career ladder. And so we see these consequences well into retirement where people, again, particularly mothers, end up with less income that follows them long term and then on an ongoing basis, when we think about employers and businesses and the loss of stable employment for them, it really undermines everybody's ability to be functioning, to be contributing. Parents have to end up making choices that are not ideal. Thinking about all of the subsidy programs and options that are available, those are often oversubscribed. People don't have access to those, so they're piecing together. People talk about early childhood as being a patchwork in many different ways. And so people have to end up piecing things together that are not ideal for their families, are not ideal for their children, and making choices that are driven by economics and not necessarily by well being and learning and development sometimes of their children and the health and economic well being of their families.

Thank you. I have a follow up question and for either you or the LAO, do we have an estimate of how many parents are staying out of the workforce due to child care? Well, either, I guess, child care challenges. Do we have an estimate?

I don't have it at my fingertips. I could get that an estimate and circle that back to the committee.

Great. And LAO probably not estimate either.

I don't have an estimate directly available right now.

All right, thank you. I'll tell you the list. I have it's. Senator Menjivar. Senator Laird. Senator Seyarto. Senator Caballero. Senator Roth.

Thank you, ma'am. Chair, a few questions here. Start with number one for Dr. Austin. I know you spoke a little bit about some of the studies that you conducted. You spoke about that one third took on some debt and the direct economic boost study. Can you speak a little bit more about we saw a lot of workforce changes throughout the pandemic. What lessons did we learn from the pandemic? And can you speak more about the impact the pandemic had on the system as a whole?

Yes, thank you for that question. I think the childcare system was in a bit of a crisis before the pandemic, and the pandemic really worsened it. And I think it did bring a lot of attention and shed a light on just how critical childcare is for many different reasons. And it's why we've seen all this attention and huge investments from the federal government in terms of pandemic relief. And as I said, we've lost 4,400 jobs. We're slowly creeping back up to pre pandemic levels.

But. People have other options, right? When we look at the wages and the well being of the people who do this work, again, mostly women who are also often moms and have their own families, the pandemic really just was kind of the breaking point for many. We've always seen turnover. It's always been a struggle, and it really has gotten worse and really been crippled by the pandemic. People can get jobs at Target, at Walmart, at many other places, at higher wages than our early care and education providers are paid with benefits and things being provided to them. And so I think this has really revealed how central the workforce is and how if we don't deal with compensation and stability of the early care and education workforce, we're going to continue to see this churn, and it really does undermine our ability to deliver quality services at our center. We've been tracking investments in compensation across the country with pandemic release dollars. And we've seen many states establish specific policies and directing funds to compensation programs, individual stipends or relief payments that they're trying to make to their workforce to address the undercompensation and severe under resourcing. We haven't done that yet in California. I think there are opportunities to still think about how to do that. But I think there really is this recognition that that's the linchpin of our early care and education system is figuring out how to get it right for this workforce. And we have a lot of models at this point now. That we can draw from in other communities.

Thank you. Two sub-questions to that same question for LAO or you, Dr. Austin. There were two specific programs that were implemented during the pandemic. We waived the family fee and then we had the split childcare voucher that allowed parents to secure stable childcare regardless of their work schedule. Both are going to be sunsetting this year. Did we see an increase of enrollment because of the family fee waiver and because of this split voucher? And is there conversations or thought about from this lesson learned to make this permanent programs or portions of childcare?

I'm sure the LAO has specific numbers, but two things I just want to say to that, if I can. In our studies of providers that change on the hold harmless, allowing people to continue to receive payment if a family was sick or for whatever reason they couldn't show was continually coming up from our survey respondents and just how incredibly important that stability was for programs. And we also have seen in our findings that programs with contracts which have traditionally offered more stability were able to have more stability, more able to pay their facilities, all their expenses and their workforce, particularly during periods of closure or when children were not regularly attending. So we do see those policies having a real meaningful impact on providers.

This is Jackie from the LAO as well. Well, we don't have specific numbers. We did flag in our initial comments of the Governor's Budget that for family fees the Legislature may want to consider ways to mitigate potential or the access barriers resulting from family fees no longer being waived, especially as what we're hearing from providers. Some families enrolled in these programs during the pandemic. So family fees, they weren't even tracking that that was a thing. So a lot of them may be caught off guard or surprised by the reinstitution of family fees. We would flag, though, in the context of family fees that we are required by the federal government to have a family fee schedule in place. So whatever options the legislature may want to explore, just ensuring that they align with the federal requirement for the reimbursement flexibility, as we call it, I assume it's the split voucher that came up. We did find that for the voucher based program, these reimbursement flexibilities considering a way to maintain some form of them does have merit because we have heard that for providers, the instability or the lack of predictability of when a child will come in may be a disincentive for some providers to enroll those families. So we did hear from providers during the pandemic just having that predictability of payment made them more comfortable and likely to accept voucher-based families.

Thank you.

Madam Chairman. I also ask one more question.

Sure. Okay.

LAO. I saw some investments regarding workforce 100 million is provided to increase the number of highly qualified teachers and administrators to serve the state preschool programs and T-K. Recognizing that workforce shortage is really severe across the California, did we see our invest months returned? Do we have any numbers how many we were able to bring on? Or is this something that is still out there and we still haven't been able to or providers haven't been able to take advantage because the workforce isn't there?

I'll pass that question on to my colleague Sarah Cortez for T-K.

Hi, Sarah. Cortez LAO I'm so sorry. Could you please repeat the question?

Yeah, absolutely. I thought that there was an investment for workforce. 100 million was provided to increase the number of highly qualified teachers and administrators available to serve California state preschool programs and T-K recognizing if we're going to have more kids in T-K and preschool, we need the workforce for it. I wanted to see if that money was if you're seeing that being utilized if we were able to increase the amount of teachers, administrators or that money or pot and excuse me, as a fresh Senator is sitting somewhere not being utilized.

Thank you for repeating that question. And again, apologies for that. I don't have an update specifically on that pot of funding and how those funds were used. I do know our colleagues from the Department of Education are on another panel and are here today that they might be able to provide an update on those funds if they're the ones who are administering that specific pot of money.

Thank you.

On that issue, I think we all are going to be interested in that panel and also in looking at whether the shortages are higher, whether the expansion of T-K is causing shortages either amongst workforce, in childcare or amongst children. So there's a lot of issues here that we'll want to get into. But we do have two panels following this. But we'll continue with our list. Senator Laird.

Thank you, Madam Chair. And I wanted to ask two follow up questions to the chair's questions and she talked about unmet need. And on page one you list all the many this is for the Lao. You list all the many childcare and preschool programs and four of them have the phrase slots are limited based on an annual budget appropriation. Do we know that there's an unmet need? Do we know that there's people applying and being turned away? How do we know that each of those that are limited by the budget appropriation are actually meeting who's out there.

For these programs? Yes, many providers have waitlists for these programs. I know there's a provider panel later on in this hearing and I think the providers will be able to provide better context of the waitlist that they currently have, especially in the context of the new slots that have been added and to the extent that that will help fill unmet demand that they have been tracking. But yes.

I appreciate that and expect to hear that from the providers. But I also, when we're preparing the budget, always hear from you about the numbers and what it is. And that's where I would hope it would be on your radar screen in case we wish to address it in the budget process. And that leads to my second question, which is also sort of a follow up to the chairs. She talked about the numbers being covered and whether they were unduplicated. The 700,000 plus number. And in visiting some school sites in the fall, I had school officials describe how a kid would be in pre-K or T-K or something. And then when that program ended they would walk across the playground and go into after school or another thing. So it's a practical exhibition of what the chair was trying to get at. My question is their concern was that these didn't mesh very well. That when they're trying to meet the need of an individual kid and match the programs in the same location, there was duplicated paperwork and other things. Do we have any idea about a way to get at the issue of how the unduplicated are being served by multiples and making it easier for them to navigate the system.

For the unduplicated counter even getting a sense of how many children are being served on the T-K and DSS childcare side? That may be a question for the later panelists for the Department of Education and Department of Social Services because that type of exercise would require some cross-system matching that I'm not necessarily familiar with on the technical aspect of what would need to happen in order for those numbers to occur. But then also if there are any technical issues in the...

I appreciate that because we used to have everything for Childcare and the Education Budget Subcommittee and when Social Services, some of it moved there. Now we're trying to look at one half of it and other budget sub is trying to look at the other half of it and we can't get an answer to the question about whether these are meshing in the right way. And so I think that's something we'd like then. My last question is just similarly raised by the chair. But page six of the LAO's Report talks about the agreement to increase childcare slots by 200,000 over multiple years and that we're at 146,500 now. How is this against what we were expected to do and some of the things we'll hear about in the later panels? Are you aware of the barriers that are either expediting or not expediting meeting these goals? And I'd start with the LAO.

In terms of if I'm understanding your question correctly, the question is the 146,500 slots that were added in the last two years was that meeting the ramp-up schedule or the intended ramp-up schedule?

Yes.

So our understanding is at least those two years. Yes. And then in the future years, it was supposed to be an additional 20,000 every year until we reached the goal by 25-26.

So three more years to ramp up and meet the full goal?

Yes. That was under the initial 21-22 planned ramp-up schedule. However, I would flag that the Governor is proposing to delay that ramp up schedule by a year meaning not provide an additional 20,000 new slots in 23-24. Primarily given the fact that providers, for the most part are barely receiving funding associated with these new slots to start to fill them or in some cases have not received the funding for these new slots to start to build them. So allowing them time to build up their capacity and fully fill the current slots that have been added, that 146,500. And then commence adding slots beginning 24-25, which would just push out the overall goal of reaching that 200,000 mark out a year to 25 or to 26-27.

I appreciate your response. Thank you. And I'm confident it is seeding a rather robust discussion that will come up in one of the next panels. Thank you, Madam Chair.

Great. And we have Department of Education on the line for the next panel. It will only hear specifically from DSS, but we can direct these questions also to Department of Education. But let's keep going down our list. And just reminder, obviously we want to get your questions out. We do have the LAO on the following panel. We only have Dr. Austin on this one, but we still have two panels past this. So Senator Seyarto, then Senator Caballero and then Senator Roth.

All right, thank you very much. This for LAO on page one of the California subsidizes many childcare and preschool programs. If we go down to the care for children with severe disabilities and this program has those requirements, including the slots are limited based on annual budget appropriation. But it also says it's located in San Francisco Bay area. What other programs throughout the state are being funded in this manner? Because I don't think San Francisco is the only area that has children with severe disabilities that need care and also development at young ages, such as teaching a two year old how to sign or a three year old how to start signing if they can't communicate verbally. So that's my question. This program that's located in San Francisco Bay Area, are there other ones throughout the state that we're also doing, or is this the one that gets all the funding?

I'll pass that to my colleague, Edgar Cabral.

Good morning. Edgar Cabral with the Legislative Analyst Office. So I think that's a program that's been around for many years now and we're not familiar with exactly the history for why or how it ended up being the case that the program, the providers that are serving children are specifically in the Bay Area. But we can get back to you. Provided some additional information.

Because it would seem to me that the Bay Area, with the cost of living there and the cost of rents and stuff, would be the last place people would have to try to move to to get their child into a program that can help them with if they have severe disabilities. And then this question would be for the doctor. The T-K program you're talking about the and it seems that Berkeley specialty is actually looking at the pay parity and things like that. In early childhood care. The T-K program is taking the four-year-olds that used to be part of in a preschool program. They're the ones that would be transitioning out the next year but they're also the ones that help the economic, I guess the financials for the preschool to be successful because of the Title Five and Title 22 staffing requirements. If we're transitioning all those kids out earlier, how are we going and we already have a staffing shortage for our younger kids that need the three to one staffing as opposed to the ten-to-one or nine-to-one staffing, how is that going to affect and how are we going to prepare for that? To get more of the just early care providers to be able to have enough for the young children and then the higher paid well, hopefully higher paid teachers and teachers aides and directors are all kind of moved out into the space of T-K. How are we going to reconcile getting the workforce we need for that the early three to one ratio kids?

That's a very good question. I think that we have to look at T-K and the rest of the childcare system as a whole in California policy making and investments because there is real potential to destabilize the rest of the early education system or I would say further destabilize because it's really on shaky foundation to begin with. And I think it's important for California to make investments in that part of the system that is going to be primarily and is primarily serving zero to three. And again, part of that includes the workforce. We know that T-K teachers and Tk jobs are really the best jobs in early childhood now, which is great, right? That's what we want. And so how do we bridge that and ensure that teaching and caring for young children regardless of whether you're working with an infant or a toddler or in pre-K or T-K is a good job that people want and people will participate in and really that means more robust. From my perspective and I think much analysis we've seen across many communities more public investment parents cannot shoulder the cost of services alone. The programs we have now are oversubscribed and even beyond those who are income eligible currently we know many families still can't afford the cost. So I think our solutions have to look toward more holistic public investment in the system starting with infants.

Great. Thank you Dr. Austin. And just one last thing for LAO and making sure I got this right here. For the next two years we had about one and a half billion dollars in this past year's budget that is federally funded to add all these slots and then we have another 900,000 or 900 million this year from the federal government and those are one-time monies. And so going into the future not only are we going to have to fund those and find the funding for that, but any of the other increases in costs that we're going to have to. So do we have any idea what those costs are looking like in the three to five-year range?

You are correct that those are one time money. And in our conversations with the administration, it's our understanding that any one time federal relief dollars that were used for ongoing slot or rate increases, those will be backfilled with general fund. Moving forward. We're still working with the Department of Social Services and the Department of Finance to get a specific accounting of the backfill that is included in the budget year, but also in future years. However, to your second question of do we have a sense of just the magnitude of total cost associated with the slot increases? Based off of information we received from the Administration, the total cost of the increasing slots by 200,000 is around a little less than $3 billion.

Okay, thank you so much.

Thank you, Madam Chair. I want to make sure we have time for the rest of the panel. So I'm just going to make a statement in their very quick question, but what is really hard looking at all of these numbers and as Senator Laird has said, some which are now funded through different budget subs is what is the need? What's the total number of children if in a perfect world we could fund it all? How far are we off number one? Number two is that we've made it so complicated to figure out how to get into the system that we spend more time trying to figure out that you don't fit this slot and so you're going to have to go somewhere else than really just providing care to the child. And early childhood education is the key for future success academically. And so the more that it just occurs to me that we should just get rid of some of these categories, put it all in one pot and figure out how many students we could provide service for. But what I'm concerned about is the regional market rate that is utilized to determine how much of a subsidy the childcare providers will get. And it occurs to me that if you live in a wealthy community, that the market rate for childcare providers in that community is going to be higher than if you live in a poor. And my interest is in rural communities where a lot of the childcare providers are more informal and are home-based childcare providers. I've visited their homes many, many times and they run incredible programs, but they're always struggling to find kids that fit the criteria for them to be able to take care of them. And they're the ones that will show up at 05:00 in the morning because farm workers go to work early. And we'll be there until 06:00 at night to make sure those kids have care. So my question is, are poor neighborhoods or counties in this regional market rate ending up getting less for the childcare that they're providing than the wealthier counties?

This is Jackie Boracio. I don't have that specific information at my fingertips, so we can definitely get back to you. But I do would second your point about the regional market rate does vary by region. So to the extent that there are some counties that the care of childcare cost is slightly lower, then that would be reflective in the rate that they would receive. But in particular, I can get back to you on how the regional market rates compare to traditionally high-cost counties versus low-cost counties.

Thank you. That would be excellent.

If I may just respond very briefly.

Go ahead.

Just in terms of need, one thing we do know is that about two-thirds of young children in California have all of their available parents. So that means if they're a single-parent household, a single-parent or a two-parent household, both parents who are working. So just in terms of generally people needing to access some type of care outside of the home, we can imagine that number is relatively high given the status of working parents in California. And we also know that for our subsidized and means-tested programs, those income levels are still relatively low. So many parents well through middle-class incomes really struggle. If we again think about the cost, I know I ran through that very quickly earlier, but essentially a family needing to spend between 30 and 50% of their household income for care for an infant I think gives a sense of the need and really how wide that is for families and children in California.

Thank you very much for that. That's really helpful. Great. Senator Roth.

Thank you, Madam Chair. We've been talking about childcare and preschool workforce issues for a long time around here. I remember dealing with it during the 2018 2020 time frame when I chaired a budget subcommittee that touched the issue. And I'm just curious, have either of you seen a written action plan from the administration or otherwise to address this childcare workforce issue? I see we appropriate money in the budget and have over several years, both for trying to increase the reimbursement rates, trying to directly impact workforce, trying to deal with collective bargaining and the like. But has a specific plan been prepared to deal with the various issues specifically to address this ongoing workforce issue?

This is Jackie. I'm not familiar with a specific workforce plan, but I did recently just start the assignment. So I will confer with my colleagues and provide any links moving forward. But I'm personally not familiar with it unless Edgar Cabral would like to chime in.

I guess it's a bit Edgar Cabral with the Legislative Analysts Office. So the Administration did put out a master plan for a master plan a few years ago. That has kind of a very broad roadmap in terms of ways to improve the system, but in terms of, is there concrete specific costs associated with implementing very specific measures to improve the workforce? That's not something that we think the Master plan covers necessarily. It's a broad roadmap, but in terms of, like, what are we going to do in this budget in specific out years so that we can address these issues, there's not that level of detail.

Must be pretty general because nobody references it's not referenced in this agenda. I don't typically see it referenced in the budget materials, at least that I have access to now. So that would be an interesting question, Doctor. Have you seen one?

I have not, and I think that's right. In the Master Plan, it's very broad, and as it relates to compensation for the workforce, it's generally attached to increases if people do more, do something else, if they participate in professional development or learning. And I think really, what's missing for the state is a strategy that says, what are we going to do now to address wages based on the work that people are doing, not necessarily for doing something more. I think that's a separate conversation. I'm hoping in the later panels, I know you're going to talk about cost of quality. I was on the Rate Reform and Quality Work Group, and there was some really good work in that plan and in that document that centers the workforce, that talks about the wages and pay and how that figures into cost. And there is a concurrent study that was done for the cost of quality in California that makes some assumptions and recommendations when you combine what's coming out of that report with the Rate Reform Work Group report that makes recommendations for pay and benefits, really, to make sure people's own well being as workers are addressed. So I do think there are some really good recommendations, and I hope that that is on the agenda for later or at a later hearing to dig into those recommendations.

Well, I'm sure we'll try to ask those of the next panelists, and I'll stop, but I will say this, it's awfully difficult to measure outcomes and give yourself or others a grade if you don't know where you're going and why you're going there. So we'll ask the next panel. Thank you, Madam Chair.

Thank you, Senator. And be indulgent, I'm going to move on to the next panel. But first, I want to thank Dr. Austin for your presentation, really appreciated it. I'm sure some of us will be following up with you on some questions related to what you presented to us. I think that issue of what it costs to business on the child care issues, that isn't always thought about when we confront this. And clearly, as we are facing workforce shortages, we know we're facing a workforce shortage in childcare, but how many of our workforce shortages are due to the fact that we perhaps don't have adequate childcare. So not perhaps, we know we don't. But how much is it affecting then these workforce challenges in other sectors of the economy? So, appreciate your presentation and I know Jackie Barocio, you will be presenting again at the third panel. But let's now move to our second panel, which is Access to Childcare. And we will start with Mary Ignatius. So it's little change on your agenda still from Parent Voices. But we'll start with Mary Ignatius from Parent Voices. Then we will hear from Miren Algorri, from the Childcare Providers Union. Then we will hear from Farooq Azhar, who's the executive director of the BJ Jordan Childcare Programs. And then we will get questions. So let us go to Access to Childcare and we have Mary Ignatius ready to go. Let's go.

Hi. Yeah. Our member LaShay had ironically childcare challenges that were just way too stressful for her to figure out. So we are here to jump in for her and I'm going to speak from her voice. My name is LeShay Burks. I have two kids. My daughter June is five and my son Matthew is five months. I live in Antioch and I am with Parent Voices. To understand my childcare journey, you first have to understand what it was like for me when I was in childcare. As a kid, in order to work, my mom had to take whatever childcare she could afford. She would pack food for us every day and drop us off. The person who watched us would take the food that was for us and make sandwiches that they would eat. We would only get fed the butts of the bread. To this day, I cannot eat the butts of the bread. Because of that experience. I think my mom chose to pretend that everything was okay even though she didn't want to, because she couldn't afford to lose her job. She just did what she could to make ends meet. That experience stays with me. When I had my daughter, I knew I couldn't just leave her with anyone. The idea of leaving her with someone I didn't fully trust makes me really scared. I don't want what happened to me to happen to her. And I know that most childcare providers do the best they can with the resources they have, but I can't just get past the trauma of my own experience. The first thing I noticed when looking for Childcare is that it is expensive. The types of places I was looking at cost thousands of dollars a month. I was able to get on the alternative payment program two years ago and I thought that would help me get my daughter into a place I chose. But the subsidy I get through that program is not enough to pay the full cost of the program I want. I'm still on waiting lists in those places, even though my daughter is five now. And starts kindergarten in the fall. I've been on the waitlist there for over two years. Meanwhile, one of my friends took her kids there and paid cash out of pocket and they got right in. So my subsidy doesn't allow me to choose the type of care that I want for my kids. I'm still left with a copayment that is too expensive for me to afford. I feel like Childcare in California is still you get to choose if you have money, and if you don't, you just have to take what's given to you, and that's not good enough. I tried putting June in transitional kindergarten at two separate schools, and the experience has just not been good. My daughter would come home and tell me so many different things that happened that just made me uncomfortable. On her first day of Tk, she got kicked in the stomach by another kid, then pushed. And at first I tried to understand because I know sometimes kids hit each other. I get it, but I wasn't happy about it. Then she came home talking about body parts, words that she definitely did not learn from home. I couldn't believe four year olds were using some of these words. I talked to the teacher about this many times, eventually the principal, many times it kept happening. This class is one teacher to twelve students, and I think they need more teachers to supervise these younger kids. 24 four-year-olds for two teachers sounds impossible. So it was clear to me that Tk was not a good option for me. I was not comfortable with that environment for my daughter. Right now, my kids stay with my mom during the day, but even though I'm grateful for my mom stepping up and taking care of them, that's not the option I would choose. In a perfect world, they would be in a place where they have trained teachers who could teach them the basics of the Ready for kindergarten. They'd be in a clean, safe environment, getting nutritious and healthy meals every day. And they'd have teachers who really cared for them and took care of their well being and made them feel safe. I'm self employed. I sell fitness products for women. I'm really good at it. I love what I do. And my dream is to eventually collaborate with the gym so that when people come into the gym, they could buy my products before they work out. So I'd like to have my business grow. Fortunately, because of the current situation, we don't have to pay family fees in California. But learning about the fees, it's frustrating that if my business does take off and I start making more money, the state will just take that money from my income away from me in the form of a family fee. It's unbelievable that some families have to pay almost $600 a month for subsidized childcare. That doesn't sound like a subsidy to me. I'm here today for two reasons. One, the subsidy amount should increase. Childcare providers do important work. They should not be punished for taking families with the subsidy. The low subsidy amount makes it harder for providers to take the subsidies, harder for them to serve families like mine, and harder to keep their doors open. I'm not the only family in California with a subsidy who cannot find a provider. There are many more people in my exact situation, and we need as many options as possible in order to find the best fit for our individual children. And two, we need to continue suspending the family fee in California. I shouldn't have to put my hopes and dreams for my business on hold in order to avoid paying a high family fee. It keeps families like mine trapped in poverty. So let's include a new reimbursement system for providers and a suspension of the family fees in the final budget. Thank you for listening to my story.

Thank you very much. And apologies that we didn't have your correct name. So would you repeat it for me again so when I call on you, if we have questions, I have your correct name?

My name is Mary Ignatius.

Oh, you are Mary Ignatius. Okay?

I'm Mary? Yes.

Okay, great. I just heard a different I was.

Speaking on behalf of LaShay.

I understand now. I understand. Okay, great. Thank you so much. All right, we will now go to Mirren algorith who is from the childcare providers union. Miren.

Good morning. Hello. My name is Miren Algorri and I'm a family childcare provider in San Diego County and a proud member of my union childcare Providers United. I'm here today because we're still failing as a state to meet the needs not only of family childcare providers, but of the families who are in need of our services. Almost every single day, before I even get the children in my care their lunch, I have taken six or more calls from families looking for care. My heartbreak for these parents and these children who need stable, available, quality childcare and they cannot find it. This is because despite the claim that slots are going unused, that is not true everywhere. Because of so many childcare deserts around the state, many families cannot find the care they need. And because of the low rates for children on the subsidy care program and the lack of adequate benefits, providers cannot afford to remain open and we're not able to attract enough new providers. We saw this increase during the height of the pandemic when we lost more than 5,000 providers as they closed their doors for good. We don't need to be waiting on expanding these lots, rather, we need to be increasing them while at the same time increasing rates and ensuring providers can afford to keep their doors open. Housing slots because there's not enough taken up is not reflective of a lack of need, but rather it highlights that the. State took too long to act to make these funds available. Childcare is the backbone of the economy and the longer we wait to expand it and pay better, the more we hold back our great state of recognizing its full potential. Therefore, we ask that the legislature reject the governor's proposal to push back the new spots to the following year and restore those lots and the funding in the budget year. There are thousands of families on waiting list who cannot return to work without assistance from the state. And honestly, we can do better for providers and we can do better for California's children and families. Thank you.

Thank you. Now we will go to Farooq Azhar. Who's the executive director of the BJ Jordan Child Care Program.

Good morning everybody, and thank you for allowing me to attend the hearing. This is the first time I'm doing this, so I'm excited. So, BJ Jordan Child Care Programs is a nonprofit organization that has been serving the greater Sacramento communities for 50 years. So this year is our 50th anniversary. We have RDP schools, we have party preschools. We also have general child care and development programs under Cctr 85 licensed Family Childcare Home providers where we are serving around 500 children. We also have USDA's Child and Adult Care food program. We have 500 childcare home providers in our network with 4000 children in five counties, Sacramento, Placer, Sutter, Yuba and Yolo counties. We recently we've been awarded with the largest expansion grant in our 50 years history. That was over 13.6 million. So with that, we will be serving additional six to 700 families. We are adding over 100 more family childcare home providers in our network. We'll be hiring more staff. Now, there are some challenges, as you all mentioned, you are aware of this, that there is a continuous struggle in hiring and retaining qualified staff, especially permitted teachers and supervisors, adding new providers to our network that are willing to provide quality care in a safe home and follow Title Five and Title 22 regulations. We make a couple of visits to the home before we can enroll them in our program just to make sure that their environment is safe for the children. And this is different from those voucher program. You must have read the handout that was given to you and it mentioned and how we are different from those watcher program because we have that development piece in there. And also we have to follow Title Five where we have to do extra work with our providers. It takes long time to enroll a family. We have around 4700 families in our waiting list from 2018. So we select the families by their income rankings, send them enrollment packets, some don't respond, some don't follow through, and some take a long time to complete the required paperwork and submit the documents. So it's a long process really, but we work on that. So there are some suggestions. Now, I don't know if our committee, they want to hear this too. So if they're involved in making these policies and then you are probably also wondering how come it takes long time to fill the slots. So this is what happened to our expansion grant. We filed the application in January 2022 and we were sent the score letter in March 2022 where we were told that okay, you qualify for this grant. But at this point we did not know how much money we will be getting. And then after that we had to send the fiscal forms to the state including the providers. Now here is the catch, they were asking us to send them the list of providers with their addresses, with their license numbers, where we will be serving those children. Now, keep in mind, it's not like watcher program, we have to make sure that the providers that are enrolled in our program, they provide quality services and we work for the parents for their peace of mind. We monitor the homes and make sure that those services are provided to the parents. So that is the difference between voucher program and our programs where we have qualified staff, they work on drdps, fakers, everything our staff, they do that, they work with providers to train them to make sure they are providing quality services to these children with that development piece included. So we cannot just enroll providers and then send the state that list, okay, these are the providers where we'll be serving the children when we don't even know how much money we are going to get at this point, we don't know how much money we will be receiving. So anyway, we sent them the list because we have food program and we have like 500 providers in a food program. So we picked 200 providers from that list from Sacramento County and sent them the list, but they were not actually in our childcare program side enrolled like I mentioned that we have to make sure they are willing to follow the guidelines from title five and our policies and everything to make sure their home is safe. And we work with them. We provide materials, supplies, everything at no cost. We work with our providers, spend time with them. So our first award letter we received was in June, so from January to June and that was for like only 1.3 million and then we received revised award letter in September 2022 and that money was increased to 13.6 million. So we thank CDSs for considering us and giving us that money because we were already enrolled, over enrolled in our programs and we could not enroll any more children until we have the executed contract in our hands. And that was the letter says when we received the award letter, it says that don't do anything until you receive the contract in your hand. So the contract we received in January 2023, so one year later so it took one year to get that contract signed, contract from the state. So that's a long process and we could not do anything during that time. So once we receive that contract, now it's our turn to enroll more providers. And now we are calling all these providers to see if they're willing to be in our program. We are explaining what they need to do extra to be in our programs. Some are saying that, okay, we are not interested, we don't want to do this extra stuff. It's a hard battle, really. And then now we are kind of confused because the list we received from the state, they picked from that list, provider list, and they told us, okay, this much money was approved for this provider. So for each provider, they listed that money. Now what if they don't want to be in our program? Or secondly, if they don't want to be improved, then we cannot take them in our program. Because we run quality programs here. We make sure our children are safe there and receiving quality care. We focus on these things. So now we are kind of concerned about that, okay, what if we add another provider instead of that provider? What's going to happen? State may come back later and they say, okay, this money is disallowed. And we are kind of wondering about these things. And these things have to be clear. Maybe I think ... here, we can talk to her more about this so she can address this. And also, as you know about the voucher program, they don't do much with the providers. They just give the parents vouchers and they can pick any provider go there.

If you could wrap up Mr.

Okay, their administrative cost is 17.5%. And for us who do lot of work with providers, provide material and everything, we have 15% admin cost. So I would request to look into this too. Teacher permits, you all talked about the shortage of workforce, especially teachers. So I request that somebody needs to look into this, like see if somebody's qualified. They have all the qualification paperwork when they submit it for their permit. It can take like five to six months to get the actual permit. There should be some kind of waiver, like, okay, if they qualify, they can start serving, they can be in the classroom. So please look into that also. Thank you so much.

Thank you. I'm sure you will get some questions that will allow you to elaborate on some of the items that you are raising. So I have Senator Becker, Senator Eggman. Okay. Senator Min and Senator Menjivar. All right, Senator Becker, go ahead.

Sure, thank you. I had one general question. If we have Lao still in line, which is run when we approve 200,000 slots, how many slots? This gets to Senator Caballero's question, I think too, how many slots are we saying are needed? How many more slots are needed? Number one. Number two, thank you for the testimony. For all and I know in my region we increased salaries of the regional cost adjustment from $17 an hour to $23.50 an hour for many workers, which is nice improvement, but still for the area it's very hard to live under those conditions. For the gentleman that just spoke, Mr. Azhar, I can imagine how frustrating that is trying to run your programs. And since this is an oversight hearing, I guess the question is what can we do to make this take less time? I mean for a year? You can't do anything for a year while you're trying to hear back from the state and also the time of sign ups for providers. Are there any suggestions, how can we speed up that time frame?

I think there should be more collaboration with the CDE and CDSs, whoever is giving that grant. So when they're at the point they know, okay, how much funding is coming to that agency, then they should let them know okay, you are getting this much money so start the process. Like we had to add more providers, we had to start the enrollment. Now it's going to take long time really to fill those slots. So if they tell us a little bit earlier instead of waiting for one year then we could be working hand in hand in hand. They are doing their stuff, whatever they need to take care of. That took them one year and then they could have told us okay, go ahead, start hiring more people or add more providers. This is the money you are getting. So that's my suggestion.

Well, thank you. It sounds like a helpful suggestion. Is LAO still on the line on the general question on number of spots that are needed?

This is Jackie Boracio with the Legislative Analyst Office. A few years ago we did do a census data run where we tried to estimate out of all children in the state how many were eligible or not eligible for state-subsidized child care and within that bucket of eligible kids how many were actually receiving services. We hope to update that estimate and when we do we're more than happy to share it with the committee. But also I would also flag that we can also try to work with the Department of Social Services to see if there are any other information sources such as again, as I referenced earlier, we know that providers do have waitlists. So that could also be another way in which we can try to get a sense of the magnitude of unmet need and then compare that with the broader 200,000 childcare slots.

Okay. Thank you Senator Egman.

Thank you. And I think my question is just for our budget staff, elise, where does that policy live that we all just heard about that you have basically making people fudge a little bit when we have for Title Five, when they have to turn something in before they even know how much funding they have to have to identify the provider. Is that in the DSS? Is that where that lives? Okay, DSS, are you on the line?

Good morning. Kim Johnson, Director of the Department of Social Services. I'm glad to be here to answer questions. I also have some colleagues joining me. Again, we're happy to follow up on. The specifics related to this particular contractor's experience. It sounds, again, that the contractor is. Supporting a family childcare home education network.

To the examples provided of connecting other providers to the standards and what's happening. So again, there could have been some conversation to understand kind of the qualifications. Of all of those who would be providing services under that contract and understanding kind of what their capacity is as. We were negotiating that contract. But happy to follow up on specific details.

Okay, thank you. Because all of us who were just trying to get a handle on how many slots are needed, how many slots are available, and being fully aware of the workforce issue and the constant reporting on parents not being able to find childcare. You can understand us hearing something, a story like that, where it sounds like it takes a year through roadblocks that we put up because it's part of the system. That doesn't make sense. So I think I would and I'm sure we would all appreciate you getting back to us and helping us understand that a little bit better.

Senator Min. Senator. Menjivar.

Thank you, Vice Chair. I brought these questions up in the first panel, but I'd like to hear from the providers and from Ms. Burke's fill in. I think her name is Mary Ignacias about the return of family fees, how our families are being notified, if they are some anecdotes. If you're able to share that you're hearing from these families regarding the sunset of that.

Excuse me, this is Mary. At some point, the agencies who administer the subsidy programs will have to send a letter to parents regarding the fees. But for many families who received a childcare subsidy during the pandemic when a lot of slots came out, they don't know that a fee will come starting July 1. Those families have been saving an average of $250 a month. And when you are working paycheck to paycheck, those $250 mean everything. Even if it's as low as $60 a month, it means everything. And so we are trying to inform families to get them involved in the effort to continue to suspend them. But it will be a hard pill to swallow and it will really affect a lot of families ability to continue to keep their subsidy.

Thank you.

We will move on to the next panel. Senator Min had questions from that panel, so perhaps at the end of the next panel, he could pose his questions. Third panel costs of providing childcare. First is Kim Johnson with the Department of Social Services.

Thank you and good morning, Chair. Committee members. Kim Johnson, Department of Social Services. The administration and legislature have made major strides to expand services supports for young children and their families as was referenced. Guided by the Master Plan for Early Learning and Care, the state has made historic multiyear investments totaling $4.1 billion.

Within the multiyear budget, the Administration and Legislature committed to rate and quality reform. Rate reform is key to both stabilizing. And growing the ECE workforce, which we've heard is just critical in our earlier panelists mentioned to meet the needs of children and families.

Historically, California has had two different and unaligned systems for reimbursing early learning and care programs, one being the Standard Reimbursement Rate, or SRR, and the Regional Market Rate, or RMR. Some state subsidy programs reimbursed early learning and care programs using that Regional Market Rate that varied by county and was determined based on a periodic price survey.

And to the earlier question of the Senator, it is related that to the survey, the price that the providers in that particular region charge. Other state subsidy programs reimbursed early learning and care programs using a flat standard. Reimbursement rate, and page five of your agenda outlines which of the programs have historically fallen under the regional market rate and the standard reimbursement rate.

For the past year, the California Department of Social Services, in consultation with the California Department of Education, facilitated the rate and quality stakeholder workgroup meetings. We want to express our gratitude to sll the stakeholders who participated in these meetings and provided valuable input, especially to fellow panelists that are here this morning. The rate and quality workgroup was established under Assembly Bill 131 to assess the methodology for establishing reimbursement rates and the existing quality standards for childcare and development and preschool programs, and to make those related recommendations. The rate and quality workgroup included early learning and care providers, the workforce, alternative payment providers, childcare experts, families and state agency representatives.

I'll note that the recommendations of this report, which I'm about to share with you all, reflect those of the workgroup. Members and not necessarily of the participating state departments. Again, as I mentioned, the Rate and Quality Workgroup convened over a dozen times between January and August of last year. Members reviewed extensive materials and provided comments as recommendations were developed.

The full recommendations are available from the workgroup and were published on August 15 of 2022. These recommendations include the following ensuring equity is foundational to all change, work toward equity as an outcome and implement equity as a process. This was a core value of the work group.

They applied a racial equity lens to much of their recommendations, looking back historically and moving forward. They also provided a recommendation to replace the current methodology of using a market price survey to set rates with an alternative methodology, again, that's allowable under federal requirements, which uses cost estimates in models to set the base rates to compensate early learning and care programs. The cost of care for meeting current state requirements would become the basis of the reimbursement rate, including wage scales that set a living wage floor. Another recommendation they had was to create a single rate structure that specifies base rates and that is designed to address historical inequities. The structure should separate base rates for family, friend and neighbor care, and home.

Based care and center based care and should differentiate base rates for meeting different sets of state standards. The workgroup outlined variables that should be included in the base rate, such as ratios, group size, compensation, professional development, family engagement and more. They also recommended to continuously evaluate the rate setting methodology to address equity and.

Adjust for changing conditions and rising costs. The workgroup also made several other recommendations related to the broader system child and family outcomes, early educator outcomes, accessibility, alignment and also recommendations related to early educator skills and abilities. The workgroup proposed that its recommendations be implemented in three stages, the first being increasing reimbursement rates immediately even before the alternative methodology can be implemented and also requesting simultaneous approval from the federal government. The second stage implementing a federally approved. alternative methodology to set base rates that are informed by the cost of providing early learning, early learning and care services and do not increase requirements on early learning and care programs until the new base rate using the alternative methodology is fully funded.

The third stage continuously evaluate the new alternative methodology and base rate and make appropriate changes in broader system investments based in part on this evaluation, building on the work of this workgroup and the recommendations that they put forward, a Joint Labor Management Committee, or JLMC, with the child care provider United. CCPU published and submitted a report on November of 2022 to the Department of Finance and the Governor's Office. This report adopts several components of the. Workgroup's recommendations and supports a single rate structure that includes an alternative methodology that considers a cost estimation model, base rates incentives enhancement, rate setting metrics, evaluation of the rate structure, and again having these similar principles around equity and requirements.

The Governor's January budget proposes that the State would rely on this approach presented by the JLBC as it continues to develop a single rate structure. The next steps will be taken in collaboration with the Legislature, the Department of Education, Childcare Providers United, and stakeholders. Additionally, the state will continue to work with CCPU to negotiate a successor agreement to the current agreement expiring June 30, 2023. I'm glad at whatever point to the preference of the Committee to also answer some of the additional questions that have been raised this morning. Thank you.

Thank you. We will do those questions after we hear from the other panelists, especially given that we have one that has a hard stop. So we're going to move next to Dr. Elanna Yalow, who is the Vice Chair and Senior Advisor at KinderCare Learning. Dr. Yalow. Go ahead.

Good morning and thank you for the opportunity to speak to this esteemed group today. I'm Dr. Elanna Yalow. I've been with Kinder Care Learning companies for 33 years, most recently as Chief Academic Officer and currently as Vice Chair and Senior Advisor. I hold both a PhD in education and an MBA from Stanford University. For background KinderCare is the largest private early care and education provider in the United States. In California, we operate 245 early childhood centers and before and after school sites. 98% of our centers meet the highest standards of quality through national accreditation. We serve over 22,000 children in California, and 40% of our students depend on financial support to attend our centers through subsidy programs. Thus, my comments today reflect the voices of the over 7,000 children that we currently serve through subsidy. Every child enrolled in KinderCare receives the same developmentally appropriate educational program where children of all backgrounds learn and grow side by side. KinderCare, like countless other providers across our diverse mixed delivery child care system, are trusted community members. Trusted to support a young child's development, trusted by working families who need full-day, full-year care, and trusted by employers increasingly report they face workforce shortages because of a lack of quality child care. We were asked to discuss the shortcomings of California subsidy reimbursement system. I'd like to start by highlighting why it is important to discuss that rates matter. Childcare subsidy programs open the door for low-income working families who have access to array of early childhood programs. But currently, our reimbursement rates in California average 20% lower than the tuition paid by non subsidy families, placing a strain on our ability to offer the quality of care that all children deserve and need. This problem is exacerbated. If reimbursement rates do not keep pace with rising costs for families, this has immediate consequences. The cost of care increases, subsidies lose value, extra financial pressure on the families, and for families who earn just too much to qualify for subsidy but cannot afford tuition increases, sadly, care becomes unaffordable. Rates are directly tied to compensation for our talented and dedicated educators. Adequate subsidy rates are essential to support competitive wages, educational assistance, health care, childcare assistance and retirement benefits. Rates also support essential components of our programs, including safe indoor and outdoor learning environments, educational programs, healthy meals, the professional development of our teachers insurance, and so on. In addition, KinderCare is committed to serving children with special needs ranging from diagnosed disabilities, children with developmental delays, or simply children who experience disruptive or challenging behaviors in our classrooms. To support the growing numbers of children who need extra assistance, our Inclusion Services team provides personalized consultation to our teachers and distributes classroom resources to ensure that we are meeting the unique needs of every child in our care. What are some of the challenges with California's reimbursement rates? You've heard some other panelists speak to that. The first issue is that rates have lagged. When the state updates rates in accordance with Market Rate survey, they are almost immediately out of date and do not keep pace with increasing costs. Second, rates do not adequately reflect cost or quality. There were promising recommendations that we've heard that came from last summer's rate and quality workgroup, but California has few incentives to encourage continuous quality improvement across all care settings. And as was discussed in an earlier panel, transitional kindergarten has changed the face of childcare in California and poses a significant threat to community based programs, both large and small, that serve the majority of young children in our state. The appropriately smaller Adult Child Ratios for Infants and Toddlers makes care for this group far more costly. Tuition for the four-year-olds helps cover the cost for infants and toddlers. And as our centers serve fewer four-year-olds due to transitional kindergarten, it creates increasing pressure to raise the tuition on the younger age groups, pricing many families out of the system and even widening the gap between subsidy and the true cost of care. Simply put, California's reimbursement rate system was not designed for childcare settings without four-year-olds. I'd like to now speak to some of the budget changes that would help stabilize and sustain childcare providers. And first, note that Kindred Care is firmly committed to partnering with the legislature to help support stabilization of the childcare field. Our recommendations include first, investing in a mixed delivery system. As other states increasingly make investments in programs for four year olds, most are doing so through a mixed delivery model colorado, New Mexico, Pennsylvania, Michigan, New York City, Georgia, among many others. A state's ability to serve all families can be achieved faster, more efficiently and even better by leveraging the expertise and existing infrastructure of community-based providers, large and small. Second, significantly increased reimbursement rates to ensure that families currently serve through subsidy are not priced out of care. Third, as you've heard already, continue the pandemic policies of reimbursing based on enrollment and waiving family fees. And fourth, continue to increase eligibility for families as the cost of care increases. The state needs to consider the missing middle who will increasingly struggle to find affordable care. Kinder Care's mission is to serve all children, and especially children furthest from opportunity who we know will benefit the most from high quality, comprehensive care. Families across California rely on the strong leaders in this budget committee and beyond to make the needed investments to stabilize childcare and increase access for our most vulnerable citizens. I thank you so much for your time today and your support of children and families throughout California.

Thank you. I'm going to go to the other panelists and hopefully we will get to the questions before you have to depart. But if not, I think we have your contact information so we can direct colleagues to that or we can direct the questions to you directly and then provide them to our colleagues. But let us go next. Actually, we had the LAO's office next, but if LAO, if you don't mind, I think we're going to hear from the other two providers and then go to you, because then you could wrap up some in effect. So let's go now to Deborah Corley-Marzett from the Childcare Providers Union. Deborah.

Thank you so much. Good morning. My name is Deborah Corley Marzette. I own and operate a large capacity family daycare in Kern County. I am a graduate of Cal State University, Bakersfield. For more than 22 years, I've been providing care for children in my community newborn enough. It is truly a privilege and an honor to be a part of my daycare family live creating dreams, watching dreams come true, educating, motivating, stimulating the minds of our next generation of educators, doctors, scientists, entrepreneurs, CEOs, military officers, senators, governors and presidents. I want to thank you for inviting me to speak on behalf of childcare providers united at this budget hearing. During the Pandemic, America's eyes were open to the fact that family daycare providers are an integral part of this country's fabric. We've always been actively involved in the economy's foundation, but yet never respected, supported or considered valuable. While the Pandemic shut down and slowed down so many industries, there was an industry in the background that fought tooth and nail to survive. And we are family daycare providers. Our industry was deemed essential and allowed to remain open and support other essential workers so that California's economy would not crumble. Family childcare providers put their lives on the line while supporting other essential workers who put their lives on the line. We did our best not to miss a beat while continuing provide quality care. We moved mountains to remain open for California. We stepped up and opened credit lines to purchase extra tables, extra chairs, laptops, food, PPE supplies and much more. We stood in long lines for Lysol, toilet paper, disinfectant, hand sanitizers, not just for us, but also for our daycare families. And all of this added cost to providers with no rate increase. When schools shut down and parents went back to work, family daycare providers became the school. We were the principals, the teachers, the janitors, the lunch staff, bus drivers, school secretaries and school nurses. We were everything. And all of this them being underpaid. Through our union's efforts, providers received stipends and supplemental pay to help with the cost of supplies and other safety modifications. And the Union helped with providers being paid based on enrollment and not attendance due to the Pandemic, which was a lifeline for us. But these efforts were only a Band-Aid solution for long-standing problems. And unfortunately, family childcare providers in California are still being paid, still being paid between 25 and 30% of the true cost of care. In recognition to this startling fact, Legislature called for a Joint Labor Management Committee to focus on rate reform with the purpose of getting to a single rate structure. Along with the Stakeholder Work Group, recommendations have been forwarded to the Department of Finance and Legislature to review and hopefully and prayerfully to begin an effort to compensate childcare providers on the true cost of care, whether you're home based or center based. The Governor's office also invited a national company to work with the JNC and stakeholder group. And through their work, it was very clear that family childcare providers are being underpaid for the work we do. The regional markets weight were not created with the true cost of childcare in mind. Providers can no longer stand on one leg trying to support themselves. Providers can no longer turn their back on creditors when trying to pay their bills. Providers can no longer look into the eyes of the families we serve and say, let me help you with your stuff that I can't see, because I know you can't afford it.

Excuse me. I have to apologize. We can no longer afford to continue to use this flawed rate structure. The federal government allows states to choose an alternative methodology based on actual cost of care. And they told our union Ctpu to they support a move to such an alternative. If low reimbursement rates continue, fewer people will become family childcare providers and more will leave this industry. How can we expect new and old providers to stay in when we can't even get a fair rate structure? I hope you will support our efforts to adopt an alternative methodology based on the true cost of care. I ask that you move at the speed of light to make this reality a reality, because providers and families can no longer wait any longer. And for every family childcare provider who's listening to this hearing, I'm asking you to stand up in unity, speak out with pride, use your voices to make a difference and join us for change now. Thank you. And I would love to take questions.

Thank you. We will get there. We're going to hear from Donna Sneeringer from Childcare Resource Center. Donna, go ahead.

Good morning. And it's always fun to go after Deborah because she gets everybody fired up. Good morning, I'm Donna Sneeringer. I'm the Vice President and Chief Strategy Officer for the Childcare Resource Center. CCRC is a large nonprofit organization. We're based in Southern California and our service area covers northern Los Angeles County, the San Fernando Valley, Burbank, Glendale, Santa Clarita Valley and Antelope Valley. For those not familiar with that area and all of San Bernardino County except for the city of Pomona. We provide a wide array of child and family services including resource and referral, alternative payment, Head Start, state preschool, family Childcare Networks, the Emergency Childcare Bridge, family Resource Services and Family Well being programs. We try to be a one stop shop for all things families need. We are the largest alternative payment program in California, and we're currently serving about 15,000 children. The Alternative Payment program is a flexible program, often referred to as voucher based, where families can choose the type of care that their family needs. That can be center based care, it could be family child care, it could be license exempt, family friend or neighbor care, or it could be multiple providers at one time if you have extended hours, need evenings and weekends, and need to piece together different age groups of children. So we are offering a lot of flexibility to do this work. We maintain a very large eligibility list, which is thousands of families long and for the first time, and this is where I might get emotional the recent investments by the administration and the legislature have allowed us to really enroll. And since January of 2022, we have enrolled 9000 children and we have about another 10,000 to go. And I never thought we would be here. And I am truly grateful for the opportunity to serve so many new kids. So agencies like ours are in every county in California, some counties like Los Angeles. There are more than one of us, and we really are a backbone and the infrastructure of your childcare delivery system, and we work to make sure that the pieces fit together across the different types of contracts. I know some questions came up about all the different types. We really aren't working in that space to try to make things come together. I appreciate the opportunity to address what we're experiencing in our work with childcare providers related to reimbursement rates. It's been something I've been working on for over a decade, and I'm hoping I can lift up some of the main issues and also some opportunities to move forward. In the fall of 2022, my colleagues and I also worked to put together a paper with every child California in Head Start, California called The Perfect Storm, focusing on the current crisis in the childcare system. So I'm going to share with you some findings from that as well. And I think from hearing from all the providers who've gone ahead of me, you know that this is industry, a field that has been underresourced and not prioritized for decades. And as Deborah said, our childcare providers became the essential workers who supported other essential workers. So what we found in our white paper was that really the childcare industry, which was very fragile prior to the pandemic, survived the pandemic on one time funding of the programs we surveyed across the state of California, 100% of the programs used their temporary funds for PPE and enhanced sanitization of their facility. They purchased air purifiers equipment, moved things outside so they could maintain social distancing, and 85% of the programs used those one time funds for payroll and staff retention activities. These included salary increases, bonuses, and then others were used to help pay for mortgage, rent, and bills during all the volatility of the pandemic. They were open, but sometimes serving fewer kids. And there was a lot of up and down in income for our provider community. So we understand that our providers are still in a difficult place. They're open. They're taking care of kids today. As we speak, children are in childcare. And I was very fortunate to be part of the work group that Kim and Deborah spoke about that looked at the rate and quality work. And I did want to lift up some of the findings specifically because I think it's so important to hear the actual numbers. And I will say I have always known that we were not paying enough. But when I saw the actual figures in the cost study that was done by P-5 Fiscal strategy, I was taken aback. Their findings were truly sobering for infants in childcare centers, which is the most expensive type of care. When they did the cost study, they were able to identify the gap between what we're currently paying in the regional market rate and what the cost is for providing services. So, for infants in childcare centers in the Bay Area, we are currently paying about $1,863 per month per child. The cost of providing that service is about $3,563 per child. That's 48% of the cost that the state is currently covering. This is the same in Los Angeles. The RMR pays 1688 per month. The cost is $3366. And it's the same in rural Northern California, where the RMR pays $1344, and the cost to do the care is $2035. As Deborah mentioned that with center based care, it's the same for family child care. In the Bay Area, the RMR is paying $1,107 per month for an infant in care. And the cost study showed the cost of providing that care was $4,564 a month. The La comparisons are similar as they were with the centers. You still see that tremendous gap between what we're currently paying in our market based survey and what it really costs to provide the service. To give you a sense of what was included in the cost study, they looked at the compensation of the workforce and actually estimated what we should be paying people. And they also looked at the cost of rent or the mortgage or the facility or the insurance they have to pay for employees, the taxes they have to pay as a business. So that is why you have this tremendous gap. And you may be asking, so how are they able to stay open? And I will tell you, the way they do so is on the backs of the women, largely women of color, who are taking care of our children. They are paid severely low wages, and we have really got a problem on our hands. I want to read a quote from a childcare center operator in San Bernardino. She says that this is the first time she's had staff leave for better pay. Some leave for other programs in the school district, but many leave the field entirely because in the long run, this industry does not pay a livable wage. That's from Jennifer Carter, the CEO of Oaktree Learning Center in San Bernardino. When we did the study on the Perfect Storm, we found 88% of the programs describing staff leaving the field for better wages and benefits, not going to another program leaving the field. They also saw a huge decline in the availability of hiring people and 20% to 50% decline in staffing. So they had closed classrooms, what we've been calling dark classrooms throughout the state. The reasons cited for exit are low compensation, lack of benefits, increased mental health challenges for themselves and for serving children, and increasingly difficult behaviors and delayed development in the children they're serving.

And Donna, if you could start to wrap up.

I will. I'm going to try to go quick here. We've reached a tipping point. Working women we've relied on have other options. I do want to talk to you a little bit about what some other states have done. In the 2014 reauthorization of CCDBG, the states were offered an opportunity to move away from just using a market survey into an alternative methodology. We know eleven states have shifted to a new methodology. Twelve are working to adopt costs in addition to their market survey, as California is proposing at our workgroup recommendations. We know Virginia has now set their payment rates based on cost, and New Mexico has as well. And it's critical for us to take action. Time is of the essence. We're losing members of our workforce every day. Investments need to be made to stabilize our system and maintain our workforce. And I appreciate your time, and I'm happy to answer questions.

Thank you so much. Now we'll go to the LAO, and then we will get the questions, which I'm sure many of us have. Go ahead.

Jackie Barocio with the LAO. We were asked specifically to look into the potential cost of the specific rate model that came up in the work groups. As people mentioned, this rate model was based on how much it would cost to provide sufficient pay or, I guess, a living wage for employees at childcare provider sites. And these rates continue to vary based off of certain factors, such as provider setting, age group and region. So we are still in the process of refining our estimate, but our initial back of the envelope rough calculation is that that particular cost model based off of the default rate scenarios that were included in the rate report, would cost anywhere around the low tens of billions of dollars. At full implementation, there's a question of what that ramp up could look like. And that would impact the cost. But at full implementation, roughly low tens of billions of dollars. And that's the end of my comment.

Okay, low tens of billions. Are you saying under 20 billion, above 20 billion?

That's the best that we can do right now. But we're still refining our estimates to hopefully shorten that range to provide you a better sense of are we talking about 20 to 40? Like, what does that mean? But low tens of billions, and that traditionally, it could capture a number higher than 20 billion.

Okay. All right, so I have senator Roth, Senator Durazzo, Senator Becker, Senator Menjivar.

Thank you, Madam Chair. We've had heard a lot of conversation this morning about reimbursement rates, and we've also been talking about that issue for a very long time. Obviously, we need to fix the reimbursement rate issue, and we need to do it now. You heard me ask a question earlier about workforce in the childcare and preschool area. And perhaps the reimbursement rate fix will address and take care of that workforce issue as well, but maybe not. The term provider, to me is not necessarily synonymous with worker. So let me just re ask my question to this panel. Do we have a specific written plan to address the workforce issues in this area? And if not, why not?

Thank you. Senator Roth. Kim Johnson, the Department of Social Services. So I do again want to lift up the Master Plan for Early Learning that was published in December of 2020. It builds on planning that had been done prior to that effort, including the Assembly Blue Ribbon Commission's Report on Early Learning and others. So again, want to lift those things up. Some of the recommendations, in fact, a unified reimbursement rate structure is also a recommendation in that plan. And some of the information from the Master Plan was utilized in the work groups that we referenced. In terms of the development of a rate and quality work, there is a whole goal section focused on the workforce, inclusive of looking at skills and abilities of the workforce. Developing a framework also references competencies as a recommendation to go forward. There are recommendations then on how the training and professional development offerings and opportunities for the workforce could then translate into a tiered reimbursement rate structure. So these are all specific recommendations laid out in the Master Plan. I'll also note that the Master Plan identified implementing these recommendations over the course of ten years and estimated the cost to be between two and $12 billion. The Master Plan, as I mentioned, was published prior to the work groups that we've been talking about today and the cost estimation models that was also referenced by other panelists in this conversation.

Well, I think the Master Plan is always a good idea. We have one in higher education too, but we typically have more specific planning that goes on tied to the budget and otherwise in the higher education area. And I'm sort of surprised that we don't have it going on in this area as well. I'm coming out of the military. I'm familiar with setting goals and objectives, and you have a plan of action that's published, and then you have a timeline, and then you grade yourself at the end of the process, or unfortunately, others typically grade you whether you like the grade or not. It would seem to me that here, when we're appropriating money, whether it's for workforce training programs or generally, as described here and was referenced by my colleague earlier, $100 million provided to increase the number of highly qualified teachers and administrators, et cetera, that we would have these budget appropriations tied to specific processes. In other words, does that mean that the individuals or the providers who get this money have specific requirements in terms of workforce, in terms of pay and benefits, in terms of hiring, recruiting, training? Do we have specific plans that identify training shortfalls in our community colleges or perhaps our institutions of higher learning or other types of training programs and specify specific targets with respect to training to put more childcare workers, preschool workers in these sites to try to eliminate this or mitigate this shortfall that apparently continues to exist and has existed for some period of time. I don't know if that's not my usual question, that's more a statement, but I don't know if you can address any of that. I understand we have a master plan, but do we move beyond the master plan to specific planning with goals and objectives to fix apparently a workforce issue that everyone around here seems to be talking about?

Thank you, Senator, for the question and comment. And the only addition I'll make to what I stated earlier is a couple of things. One, the Early Childhood Policy Council, which is comprised of both Governor appointees and appointees from this body the Legislature. Part of its statutory responsibilities are to look at progress over time of the master plan. I actually have the great privilege to Chair that Committee currently. So glad to ensure that this Committee is up to date on the work of that council and updates related to the Master Plan that are being provided in that space. I'll also just note that the Department of Education excuse me, the Department of Social Services, as the lead entity with the Administration for Children and Families in the federal government, establishes and outlines a state plan for expenditure of quality improvement funds for the State of California, which does, again outline some of these professional development opportunities, et cetera. Inclusive of the agreement that Ms. Corley mentioned earlier with Childcare Providers United related to their own training fund that we've also resourced together between the administration and the legislature. So glad to make sure we're intentional about tying these things together and that the committee has updates on the progress made over time.

Well, thank you very much for that response. Thank you, Madam Chair.

Certainly. Senator Roth. Senator Durazo.

With my colleague, just question and comment that he just made. What you provide for us is the guidance to then be able to apply to the decisions we have to make in this budget. So that's what I've been looking for. And there's so many issues, of course, that have to be dealt with that we can become completely overwhelmed by everything that's so deeply needed. So I guess need your help. And you may not be able to answer that right now, but need your help as far as what our current sort of budget situation is and how to keep moving forward with the master plan and with other particulars that you might have, and guide us on what we could or should be doing now. The kind of funding that it would take, but it would still keep us on track. I guess that's what I'm looking for. How do we stay on track and not get thrown off? We're not in a deep recession. We're not in that kind of situation. And so something like delaying funding is an option that's been presented to us. But I don't know that. How does that make sense? If we're moving along, we're moving along and then, bam, that would throw us off, what would we face next year and how do we stay on course? So, just looking for your guidance on that so that we could make, of course, the best decisions based on your expertise. Again, you may or may not have a response, anybody? But that's what I was looking for.

This is Donna Sneeringer with the Childcare Resource Center. Senator, I appreciate the question, and one thing I would say is the reimbursement rates and the need to increase what we pay is foundational to the rest of this. And whether you're looking at building a workforce or retaining your workforce and making sure you have access for families, if we don't address the compensation issues, it is very difficult for us to maintain the existing supply of care, let alone expand it, and we will continue to lose workforce and be unable to attract new workers. So that would just be my comment.

Thank you.

This is Deborah. I just want to add and say that when we talk about the workforce, we want to make sure that we're including Family Daycare providers in that workforce. Because the truth of it is that how can we expect a Family Daycare provider to have two staff, two part-time staff, paying them at least $1,500 a month each, which is $3,000, but yet at the same time to be reimbursed under rate structure, that the rates are just so low? And we have to also remember that an investment into the children that we make today, that we're working with today, is the same type of investment we have to make into the Family Daycare providers. We need to invest in the daycare providers because that investment is valuable, because that investment is going to help and support the children, our California children, our most vulnerable children. So that is so important. And when I hear about the slots, I think about to myself, well, what are the slots designated solely for family Daycare providers versus the centers? Because that's important to family daycare providers. Then when I think about Family Daycare providers, I think about that mixed delivery system that's come up, because Cde has yet to include Family Daycare providers, only networks are included. If we're going to serve the children of today, the children of California, we have to include everyone into that mixed delivery system. And that mixed delivery system is missing family Daycare providers that are not in networks. I don't want that fantasy to be out there that includes all providers, because it doesn't. But the voices of providers have got to be heard and seen, and we are here and our actions have got to be real. And we're asking, we're begging, and we're pleading that these Band AIDS that were used and support providers during this pandemic that hold harmless, that was a lifeline, as I said, for providers that was real and listened to providers. That was a financial system, financial support for providers to keep their heads above water for our parents that we serve the parent seeds. Do you really know how much more food by deleting that, how much more food you put on the table of our families? It made a difference. Please. I'm sorry, but my passion is real. I want our voices to be heard and seen here at this theory. Family Daycare providers, we kept this economy going for California and we're still here keeping it going. So I'm asking for the support when I said by the speed of light, I know it doesn't happen, but I just wanted you to understand how important it is for Family Daycare providers out here struggling.

Thank you, Senator Becker.

Thank you. And I do appreciate this Oversight Hearing, a chance to hear directly from providers. Thank you for that. I had two questions and then two thoughts. One is, is there a regional adjustment for income that we're using? So I heard about at the beginning, about eligibility. We talked about state median income. Is there any regional cost adjustment for that?

Senator Becker, are you referring to the income eligibility threshold? If that varies by region? My understanding is that it's based off of the state median income.

So there is no regional no. Okay. That seems like a huge issue for high cost areas like one that I represent. To not have any regional cost adjustment is a real issue in terms of qualification. So that's just one issue that I'll raise. Second, I just wanted to talk about meals and child care is the largest setting we have to support nutritious food for young children. We tried last year at a bill, SB 1481, to bring healthy nutritious meals to children in daycare and childcare and remove what they call the kind of food penalty, essentially. I'm wondering, what are we doing as a state to address this and support daycare centers trying to provide nutritious meals? And I don't know if any of the providers have any comment on that.

I'm glad to start, Senator. Kim Johnson, Department of Social Services. We, as part of the transition of programs from the Department of Education to the Department of Social Services, also are now administering the Child and Adult Care food program. Of course, the State provides a supplement to the rates that the federal government provides to be able to administer that program. So we are continuing to look at additional program improvements to ensure that that option of being part of that reimbursement system is available to more providers and programs across the state.

That sounds good because we heard is that base providers are getting reimbursed only for about two thirds save the money they're paying out of their pocket for meals.

Yes. The state supplemental rate, I know, has changed over time, but glad to continue to explore that issue in terms of the need as well.

So I don't know if any one of the providers want to comment on that quickly. And then I'll wrap up. How long are we going to do public comment? Okay, no one's going to jump in.

I was just going to add that we do provide, using the federal food program dollars and the supplemental income, we absolutely support a significant number of children through it. However, we're constantly upgrading our menus, ensuring that our meals are healthier and there are incremental costs associated with that. And it's critical to ensure that the reimbursement rates keep up with the growing costs. We certainly know that food costs have risen dramatically over the past year, and this creates an incredible incremental burden on providers to ensure that our children have access to healthy meals. We know from the pandemic completely dependent ability for early childhood centers to provide that support for families and children.

Great. Well, thank you. Just to wrap up, two final thoughts. One is we heard a lot about mixed delivery and sounds like that's some unfinished business that we have. And lastly, on the rates, we keep hearing big numbers of tens of billions of dollars to do what sounds like needs to be done, but we also hear that other states are doing it. And so if Virginia is doing it, New Mexico is doing it. I'd be curious to know, why can't we do it here in California? We have the highest taxes of any state. Why can't we also provide, um, a proper rate for childcare for childcare providers?

Any either? I think that's a rhetorical I want to just before Senator Menjivar apologies, I just want since Senator Becker referenced the mixed delivery system, I just wanted to follow up on that. I think Dr. Yalow, you referenced Colorado, a couple of people referenced and my question is first to DSS and perhaps to Department of Education, CDE, who I know is on the line, when the Administration put in the budget last year, the expansion of T-K had they factored a design then follow up of mixed delivery. Since we have heard continually that while there's much benefit to T-K without having designed it in relationship to the full ecosystem, it is now impacting the delivery of our early care and education for the pre-four-year-olds. So I'm curious about that. And then I'm also Dr. Yalow or anyone else to give us some information on what other states have done on that mixed delivery issue.

Thank you, Chair. And Senator Kim Johnson, Department of Social Services. Yes, we are committed to continue to look at mixed delivery for the universal preschool expansion as well that the governor has committed to. We are actually right now being in consultation with the Department of Education in a focused work group on just that. What are the steps that we need to take in both systems to ensure that the diversity and rich, comprehensive diversity that we have in our program and provider landscape can participate in universal preschool offerings? Whether it be as an actual program provider or as part of what was referenced earlier in this hearing about the combination of connection of programs that can meet families needs depending on their varied work schedules and their needs going forward. So right now we've had one meeting and we'll have monthly work group meetings going forward to establish additional recommendations on how we can further diversify the delivery of this part of our system.

Okay, and then does anyone want to reference the State's or was there someone else who was about to talk?

I'm sorry. It's Elanna Yalow.

Go ahead.

There is obviously kind of financial concerns associated with pulling the four year olds out of the current delivery model for early learning in the state. But it's not just a financial issue. It also has to do with leveraging the expertise that is resident in the early childhood education community. It has to do with ensuring that there is full-day, full-time care which is not available through the public schools. It's ensuring that the facilities are appropriate for young children in. It's important for ensuring that the family's unit can stay together, including both infants and their older.