Assembly Budget Subcommittee No. 2 on Human Services

Testing. Testing.

We are going to call this informational hearing to order a joint budget Subcommitee hearing with human Services and Education Finance. Today's hearing will provide a timely update on the development process for an alternative methodology for funding all childcare and preschool program rates. Surprisingly, there is no January budget proposal on child care funding rates.

The statutory date for shifting to this methodology in July 1, 2025. After over 10 years of policy work on this direction, the process seems jammed at best. The Legislature and the budget process sets the rates for funding child care.

And the Legislature has led the charge for over two decades to Fund the child care system based on family stability, child outcomes, and treating providers as the professionals that they are. And we have no intention to slow down this process. So why is any delay simply not acceptable?

Because our economy and society as a whole will remain handicapped without an affordable and robust child care system. So this body remains laser focused on reforming and expanding this system because anything less is simply not acceptable. So we will hear the priorities and concerns of our expert interest holders and a process update from the Administration.

It is also important to note that public comment will be taken in person after the completion of all the panels and any discussion from the Members of the subcommittees. So at this time, is there any Members who would like to make any additional comments? At this time, seeing none, we will welcome our first panel.

Panel number one, please come on up. It's hot in here because the Chair comes from Southern California and we. And we don't do this cold stuff. But actually Assembly Member we are doing. We were just wrapping up opening comments. Would you like to make any comments on behalf Picture.

Thank you.

Thank you, Mr. Chairman. Chairmans. First, I want to thank my colleagues, the chairs of the subcommittees 2 and 3. For their generosity in opening up this hearing to Members of the Women's Legislative Caucus. I deeply appreciate your partnership. The Legislative Women's Caucus has consistently made child care our very first priority for over a decade.

This focus is largely because we know child care is provided by women workers, predominantly women of color, and is critical to the economic success of all working families.

Put simply, I don't know how this Legislature or the Administration can address California's cost of living if we don't properly support care providers or if people can't work for lack of care for their children. Since 2014, there have been legislative attempts to reform the reimbursement rate system for California's child care providers.

In April 2019, the Assembly released a blue Ribbon Commission report which highlighted the need to make significant reforms to reimbursement to ensure childcare workers are paid a fair wage and to reaffirm that child care workers are historically marginalized, underpaid and under resourced.

In 2022 and 2023 budget agreements, the Legislature came to agreements to move forward the adoption of a single reimbursement rate and the transition to an alternative methodology. This methodology would be based on the true cost of care rather than the tuition charged by the private market.

Additionally, in the first two contracts negotiated by child care providers United, there were agreements to move toward the adoption of a new reimbursement methodology. You know, I sound like a broken record. I'm going to sound like a broken record when I say that it is time to move past planning.

We need actual implementation to rebuild, rebuild our depleted and shrinking child care workforce. As we continue to drag out this process, the inadequate rate structure perpetuates. Excuse me. These challenges. Programs struggle to hire teachers and aides, so entire ECE classrooms are sitting dark, not serving Low income children who are on waiting lists for care.

The reimbursement rates are so Low that providers offer 33% less than a fast food chain's hourly $20 an hour wage. What are we doing right now? It's not working. It's not working. When are we going to stop talking about it and make things happen? Thank you.

Thank you very much. Assemblymember Chair Alvarez, you have any opening remarks?

Yes. Thank you very much, Mr. Chair. Want to also acknowledge the work of the chair of the Women's Caucus on this. Over the course of. Not just this year, not just last year. It's been ongoing commitment and heard that loud and clear. And I want to make sure everybody hears it loud and clear.

I just want to add my voice to the frustration of what we do in this, in this job. This is not, unfortunately, the only circumstance under which we spend a lot of time talking and make a lot of promises and then see that it doesn't get delivered in the proposed budget.

This is only one of a few examples, and that's just not right. We are, we're wasting people's time who are coming here and testifying and providing their own experience as we listen to them and we try to be responsive to them, and then we say we're going to, and then we're not.

So I want to acknowledge that for those of you who have spent the time and the effort and certainly again, being legislatively being led by the Women's Caucus, the chair of this Committee, it's time that this year we make good on a promise that we've made. So we have to get to work.

And I look forward to this discussion. Thank you, Mr. Chair.

Thank you very much. Is there any other Members who would like to make any opening comments at this time? Yep.

So I just want to say thank you to all of you joining us today. This is something that is extremely important to me as well. I know, and I just wanted to make this abundantly clear that I've got another meeting as well that I'm going to be in right across the hall that I have to be in.

But this is vital to California, and I hope that all of you know that. I look forward to listening, I look forward to hearing and working together with everybody so that way we can find the solutions that we need here in California. I look at this as I was a child less than 12 years ago.

So I think I have some experience and some lived experience fairly recently.

I know how it feels with my mother, who immigrated here from the island of Tonga and, and where she had to work and take care of us, to where there were times that I had to go with her to work when she was just trying, while she was trying to learn English, while she was trying to get by and live the American dream.

So I just want you to know as I'm bouncing back and forth, that I'm listening, I hear you, and I really do look forward to working together. Thank you.

Thank you very much. And congratulations on your being Vice Chair of the budget sub 2 as well. Assemblymember Muratsuchi.

Thank you very much. I just wanted to say that echo my colleagues in talking about how important affordable child care is for all of us. But also as chair of the Education Committee, I know that there is a, you know, intimate relationship between the mixed delivery child care system and our efforts to expand universal preschool.

And so that is my interest, primary interest. How can we support both, how can we have a sustainable and affordable child care system while at the same time continue our efforts to expand universal preschool? Thank you.

Thank you very much, Assemblymember Pellerin.

I just want to thank you both for holding this hearing today and inviting the Women's Caucus. My kids are now 27 and 30, and I lived this when I was working and looking for childcare for my kids. And pretty much my entire paycheck went to pay for daycare for childcare for my kids.

And I had to supplement it with somebody to come pick them up if I couldn't get there right at 5:00 to go pick them up. So it was extremely stressful at that time.

And I was grateful to have a husband, a second income in my family so we could pay for food and shelter and all those other necessities. And I don't know how single parents do it today. I cannot imagine. So the urgency, I mean, 30 decades, 30 years ago, and we are still fighting this.

So I am here 100% to support our childcare workers and ensure that parents and families can access affordable childcare. So thank you for being here.

Thank you very much, Senator Rubio.

Thank you. I also just want to thank the Women's Caucus. As you know, we've made it a priority to engage in this issue. And as an educator for 20 years, I also know what we see when children come to our schools, when they're bouncing around and they don't have stability.

So we just want to say thank you to all the child care workers and everyone that's out there helping and filling in the gaps every time a parent doesn't have child care. So I wanted to say thank you and thank you to the Women's Caucus for, for making this the top priority. So we're here with you. Thank you.

All right, any other Members at this time? We good. Well, we're going to jump into our first panel. And our first panel is dealing with a coming from the perspective on the context of rate reform and our child care system progress. And first up is Carmen Figueroa. Would you like to introduce yourself?

And you may begin your comments. And you have three minutes.

Good afternoon, everyone. My name is Carmen Figueroa and I've had the honor of being an early child educator in Marina valley for over 20 years. Our partnership with the Legislative Women's Caucus, the Legislature and the Governor have allowed CCPU to accomplish Real progress for the child care providers.

We have fought and won health care coverage, increased pay and a training Fund and the first retirement Fund in the country for family child care providers and access to care for more diverse families. But with our victories comes the opportunity to take bigger challenges that our providers still face.

Thank you for continuing support and taking the time to listen to us and I just want to share a little bit about myself. I dedicated 12 hours a day, five days a week to keeping my facility running smoothly.

My assistant and I start each morning by making sure that everything is within compliance for the safety and well being of all the young children that we receive. By the time the children arrive, the space is more than ready.

It's a sanctuary place for the 14 children in our care and a safe, seen and welcomed with open arms environment Ready for our day. Our program is ever changing and tailored to help the children in our care develop socially, physically, mentally and emotionally.

We offer a full program with nutritious meals and snacks throughout the course of the day. We got to feed those hungry kids make and then it I strive to make every holiday a special celebration and learning opportunity and creating lasting memories for children and the whole family together.

Early childhood education has always been my calling and my passion. It became personal more when I became a mother, reinforcing my passion for building a space where my son, my daughter and the children in my community learn and thrive. I worked several childcare facilities throughout the course of my years.

But before opening my own facility in 2004, I was determined to create a kind of environment that was unique that I had always envisioned for myself. One that strives not only for my own children, but for the children in my community. However, in 2022, my life changed forever. I was diagnosed with breast cancer. I was terrified, overwhelmed.

But I was determined to keep working hard to run my daycare despite what I was feeling or going through. Because those children needed me. Those families needed me. Despite the challenges that it would bring.

With the support of my own family, my husband, my children, my mother, but especially for my union family, I found the strength to keep fighting, refusing to give up. One of the biggest reasons I was able to continue fighting was because of my union. Because of the child care providers health care Fund that came to my rescue.

Before joining the union, I had no access to child care benefits to health care benefits. But after I became a Member, the Health Care Fund became became my lifeline. When faced with the medical bills, I simply couldn't afford the Health Care Fund. I couldn't afford it.

The health Care Fund helped me cover my radiation, my medications and my treatment, allowing me to focus on healing instead of worrying about how to pay for my care. At the same time able to focus how to continue with providing a good child care for my families and remaining open to provide employment for my employee.

Today I'm still on treatment. I still continue to need close monitoring to prevent cancer from returning into my life. It goes without saying that the CALF Fund remains the most important support and I am so incredibly grateful. But I know that this is crucial.

It's a crucial benefit that has been a lifesaver not just for me, but for 40,000 providers alone in California. But for many of us, it's a very essential thing to have in our lives. The Healthcare Fund allows us to take care of ourselves so we can continue caring and educating for children in our community.

Healthy providers can continue to provide good care for our young children. Child care providers are essentials. We are the foundation that allows parents to work knowing their children are safe in a learning and loving environment. But without affordable care and benefits like the CCPUA Healthcare Fund, many providers, including myself, will not be able to sustain this work.

That's why I'm here today to advocate not just for myself, but for all the childcare providers in California. We must continue the funding the CCPU Health Care Fund to ensure that we can keep caring for our families, communities and the generations of the children who rely on us on an everyday basis.

Before I wrap, I want to give a special thanks to those who have stood with us to make CCPU Healthcare Fund and so many other strong victories that have happened. Thank you for your time and thank you for listening.

Thank you very much for all that you do despite your difficult times.

Thank you.

And either way, you look good, girl.

I'm strong and I'm here. All right. Because of.

All right.

Thank you.

Okay, next up we have Mrs. Jandres. Yes. You are up. Please introduce yourself and you have three minutes.

Wonderful. Good afternoon. My name is Maria Jandres. I'm originally from Nicaragua, but I lived in the Bay Area for about 10 years now I am a Member with Parent Voices California. I'm very happy to be joining forces with the childcare providers as a mother.

I have an 8 year old boy, single mother struggling when my son was born.

I was fleeing a domestic violence relationship became homeless and it was only when cow works and childcare assistance I was able to get on a consistent basis throughout the whole time I was having reliable and dependable childcare because I was homeless that made a Big difference.

But it was making me also struggle and dealing with other necessities that I needed because without childcare, I cannot work. Today I have three jobs. I earn a paralegal certificate at City College. I went to SF State, graduated with a bachelor's in liberal arts and have my own business, Antonietta Paralegal Services.

I also do some work with CalWORKS Families as a realtor finding housing for these families because I understand also the necessity that they have when they are looking for housing. With the family fee reform, I was able. I was paying. Without the family fee reform, I was paying 350amonth.

I was paying a predatory credit card and just paid the minimum. When these passed, I was able to use those $350 a month and use it to pay off that credit card, pay off a car. And since that, I was able to save around $17,000 for the past over four years.

I put those 350amonth that were paying off that credit card and my credit score went from 550 to 700. Before the family fee reform, I didn't see any pathway. I was struggle with debt. Now I'm debt free.

This victory, which saved California families over 100 million a year, was possible with the partnership between Parent Voices, child care providers, United ECE advocates, legislative champions and the Governor working together toward this incredible change. But there's so much more work to do today. Many families remain on the wait list.

Childcare providers are still not getting paid fair wages. We know that that's best for our providers and what's best for our families. They do some of the most important work in our society. Partnering with them prepares the children for the future.

It only makes sense for us to partner together to fight for a better childcare system and build on successes we have won. We're calling on California once again. Prove that when we work together, government can and must be a source of positive change.

You can do that by keeping the promise made, the Fund for more slots and Fund the true cost of care. We know that we have champions in the building who believe in the same vision for childcare that we have. I am a success story, but there's still many, many children in that wait list.

And that's why I'm here today. My son is already at preschool level, but I know that I am committed because there's many other parents behind me. So thank you everyone today and we will keep fighting until all the families have access to the care they deserve. Child care providers have access to wages and benefits.

Like Carmen mentioned, we need to continue providing the secure fair wages for providers. Thank you so much.

Thank you. And now we'll go to an overview of rate reform history and the statutory timelines and commitments. We have the LAO.

Good afternoon Mr. Chairs. My name is Dylan Hawksworth-Lutzow the LAO. We've been asked to provide an overview of the current reimbursement rates the state has. The what the alternative methodology.

The alternative reimbursement rate structure is as well as give a timeline or give an overview overview of the timelines, the federal and state timelines around that process. You should all well, we brought a handout. It's also [email protected] so we're going to start with an explanation of the state's current reimbursement rates.

The state currently has two rates, the standard reimbursement rate and the regional market rate. The standard reimbursement rate, or SRR, is a fixed statewide rate. It's currently $54.93 per child per day for childcare providers. It's $55.27 for for state preschool providers.

This rate does receive a cost of living adjustment year to year and it's historically been used for direct contract to child care providers. In contrast, the RMR or the regional market rate is a rate that varies by region or county and it's based on market surveys of childcare providers in the state.

Currently we Fund the child or the regional market rate at 75 at the 75th percentile of the 2018 survey, which was the last survey that California produced.

In 2021, the state allowed child care providers to be reimbursed by either the SRR or the rmr, whichever one was higher and that did see a decent number of providers switch between the one they were on previously and then in 202324 the state implemented temporary cost of care plus payments.

These are monthly per child payments ranging from $140 to $211 based on the region the provider is in. And these are currently expected to expire in June of this year. 2025 going to go next to alternative methodology. This is on page three of the handout.

The state began the development of the alternative reimbursement rate structure, which we call the alternative methodology in 2021. This has been a collaboration with Department of Social Services, Department of Education, the Legislature and child care providers united.

The alternative reimbursement rate structure, somewhat like the market rates, is going to vary, but it's going to vary by more than just region. It's Also based on a variety of variables.

So the main goal is that this structure, instead of having multiple different reimbursement rates like the RMR and the srr, it's going to be one structure that's going to provide a rate to all the providers in the state. It's going to do this with a base rate and then enhancements to that base rate.

So the base rate is going to include variables such as staffing costs, training costs, additional funds for dual language learners, and then enhancements to that rate are going to be based off of things like child transportation costs, extended hours, and additional support for children with disabilities.

One important note about changing rates is that the state is required to get approval, federal approval on changing reimbursement rates. This is because currently California receives about $1.0 billion each year from the federal Child Care Development Fund. And one of the conditions for receiving that money is getting federal approval. Any reimbursement rate changes.

Now we're going to go to a discussion of the timelines. We're on page five of the handout. First, we're going to talk about federal timelines. So most of these deadlines have already happened. Happened.

So up until this point, Department of Social Services has submitted a proposal to the Office of the Federal Office of Child Care to get pre approval. They got the pre approval and then they submitted their plan to the federal Child Care Development Fund in July of last year. They then got approval from that.

And where we are now, there's just one federal deadline left. It's July 1st of this year, 2025. At that point, data collection, analyses, reports, they all need to be done. And then the rates set through the alternative rate structure need to be, they need to be set.

Additionally, there needs to be an implementation plan to actually have those rates start being used. On page six, we have the state timelines. The state timeline is largely pretty similar to the federal timelines. There's just a few additional details in state statute. So again, most of these have already happened.

DSS began the data collection process in early 2024. They defined the base rate and the elements of the enhanced rate in collaboration with CDE and the Legislature and job curve providers united. And then in July of last year, they submitted their plan to Child Care Development Fund. After that, they did got approval.

And now we're in the same spot as in the federal timeline with one important addition. So again, July 12025 DSS needs to have the rate set.

But additionally, if the rates are set but not yet implemented by that point, by July 1, then DSS also needs to provide a transition plan for including rates for providers in the meantime before the alternative reimbursement structure rates are actually implemented.

Importantly, those transition rates do need to be at least as high as rates are are under the current collective bargaining agreement. Lastly, there were some reporting requirements during throughout all this process. Starting in 2024, January 2024, there are quarterly reports required from DSS. These continue through January 2026.

So there's a few more of those that we haven't seen yet.

I know.

And then there is also A report required 60 days post federal approval of the alternative methodology. DSS got approval, federal approval on November 8th of 2024 and then they submitted their report on January 7th of this year. That concludes our presentation. We're happy to take any questions. Thank you.

Thank you very much. Next we will have Heidi Kaiser and some of you may have to do a little musical chairs. There.

Thank you. Good afternoon, Chairs Jackson and Alvarez and Committee Members. My name is Heidi Kaiser. I'm the Director, the Director of Government affairs for Child Action. I appreciate the opportunity to address an issue that is not merely about policy, but about justice, equality and the future of our children and communities.

For almost five decades, Child Action has supported families and childcare providers in Sacramento county, ensuring every child has access to quality early education and care. Through our services, we work to touch thousands of lives. Today, our subsidy program serves over 16,000 children and 8,600 families.

These are real people, hard working parents, dedicated educators and children who deserve every opportunity to thrive. Over 90% of the early educators in our subsidy program program our women, which I'm sure is not a surprise to you. These women are the backbone of our communities. Yet they're undervalued and underpaid.

The current reimbursement rate barely covers the cost of care, forcing providers into impossible choices. Cutting corners may be closing their doors or passing costs onto struggling families. This system is unsustainable and unjust. The need is staggering. Only 14% of California's children are who are eligible for subsidized care are actually enrolled.

To put this into perspective, imagine if 86% of children eligible for nutritious meals went hungry every night. In Sac County alone, over 4,000 children are waiting for childcare. Children who could be learning, growing and preparing for a bright future if we had the resources to support them. Let me share a story that illustrates this urgency.

In one of Sacramento's most underserved communities, a child care center opened its doors just before the pandemic. It was a beacon of hope for families needing care during those non traditional hours when parents with Low wages require it most. Yet within a year, that center closed because the state's reimbursement rates were woefully inadequate to cover operating costs.

I know you know that this is not an isolated incident. The current reimbursement rate forces providers to accept fees based on estate shortfalls supplemented by struggling families. This does not cover the true cost of care, leaving early educators uneasy when asking parents for a copay. Parents who are often not able to make ends meet.

Meanwhile, families who can pay out of pocket have ample access to childcare. This is a disparity that undermines the California dream. For many hard working families, this dynamic is most damaging in less fortunate neighborhoods where childcare spaces are scarce. As a result, families are scrambling for care.

Children miss out on critical early education, and parents face impossible choices between work and their kids. The delays we see in enrollment, even in the centers that are like the ones we support. A child action are not due to the lack of demand for childcare, but rather the shortage of available spaces.

With a true cost of care model, we could recruit and retain more providers, expanding access to care for parents and offering them the choices they deserve. Investing in early education is not only a social good, it's an economic imperative. I know I don't need to tell you all that. Research shows that early education yields lifelong benefits.

According to the California Budget center, if we continue on our current trajectory, it will take nearly 60 years for early educators wages to capture to the median wage of all workers. I know you know that those 60 years is not acceptable. We cannot wait until 2083 to properly value the people shaping our children's future.

I urge you to expedite the reimbursement rate reform and ensure performance providers are paid the true cost of care. I know you know this isn't about a one time fix, but a sustained structural investment. I thank you all for your support. Let's act on, act now because our children cannot wait. Thank you.

Thank you very much. Next up is Jessica Guerra.

Hi, can you hear me? Zero, yeah. Good afternoon, chairs and Committee Members. My name is Jessica Guerra. I am with the Child Care alliance of Los Angeles. I'm the government External Affairs Manager. Manager.

The alliance is a partnership of 10 agencies across Los Angeles County that provide children, families and providers an array of services such as the resource and referral program, child care subsidy programs, and workforce development. So on behalf of the Alliance, I cannot overstate the urgency for California to implement a true cost of care model.

Child care is a failed market where parents can afford to pay and providers can't afford to stay. Nearly 50% of providers rely on public subsidies and social safety net programs to make ends meet.

As you heard earlier about the rmr, the regional market rate and the standard reimbursement rate, they both fail to reflect the true cost of providing childcare. These rates do not account for fair wages, rising operational expenses or quality improvements needed to sustain the workforce force.

A recent report from the California Budget and Policy Center noted while recent RMR increases may seem like progress, they remain misaligned with rising costs, including a 65% increase in the state minimum wage within the past decade, further widening the gender gap for childcare providers.

In Los Angeles County, reimbursement rates within those 10 years for licensed family child care providers serving children ages 0 to 3 increased by 40% while those serving ages 2 to 5 saw a 39% increase for child care centers, rates rose 27% for those serving children under 3 and 37% for those serving preschool age children.

However, these adjustments still fail to keep pace with real world costs, leaving providers financially strained and struggling to stay afloat. While we recognize that federal political dynamics may impact long term funding, the state has the power to take immediate action to advance this effort. The true cost of care model is not a new concept.

Rate reform has been a long standing priority and child care providers cannot afford to wait any longer. One critical first step is updating the rate ceiling chart, allowing agencies such as those represented by the Child Care alliance to begin planning for implementation.

For child care agencies as a whole, just like those we represent, it is important that the implemented rates be as clear and understandable as possible. For decades, agencies have built systems to implement reimbursement to providers based on the state ceiling rate chart. From our perspective, the implementation of rates should follow a similar approach.

The big change is the shift toward a cost based model. However, aligning the implementation process will help ensure a smooth and efficient transition. If the new structure introduces multiple calculation factors, agencies will require adequate time and funding to modify software, train staff and educate providers on the changes.

Lastly, implementing a true cost of care model is not just an economic necessity. It is key to breaking the cycle of poverty that affects children, families and the child care workforce.

By ensuring fair, sustainable compensation for providers and guaranteeing high quality, stable childcare for families, California can build a stronger, more equitable society where all children have the foundation to thrive. As has been said many times, the time to act is now. So thank you for your time.

Thank you very much. Next up is Erica Sonnenfeld.

Good afternoon. Thank you for allowing me to speak about my experience with the child care and preschool alternative rate methodology process. My name is Eric Sonnenfeld. I'm an Assistant Administrator at the Tulare County Office of Education's Early Childhood Education Program programs.

My county office operates a wide range of early learning and care programs serving children 0 through age 13.

These include the California State Preschool, State Preschool Program, the Alternative Payment Program, the calwork Stages 2 and 3, the Childcare Bridge Program, Center Based Family Child Care Home Education Network, the Resource and Referral Program, the Local Child Care Planning Council, QRS Impact Programs, and also a Head Start Early Head Start and a Migrant Seasonal Head Start grantee.

We utilize 1,126 child care providers and a staff of 350 people to serve approximately 5,200 students or children. So we are one of the true mixed delivery partners in the field to make sure that parents have choice for their children and make sure that there's quality choice for their children.

I also serve as a Member of the Rate and Quality Workgroup and transition to the Member of the Rate and Quality Advisory Panel and have been in the field of early learning and care for over 20 years.

Is it unfortunate that the discussions about rate reform have been endless over multiple decades and I've been involved in those conversations too many times without any fruition? However, there is hope in California.

The Governor and the Legislature is finally and hopefully on an unwavering path with the assistance of CCPU for comprehensive rate reform to base rates on what it costs to provide safe, high quality early learning and child care options, making sure that parents have choice in those options.

We must not lose sight of any momentum that has derailed previous attempts at comprehensive rate reform.

The Rate and Quality Workgroup and the Rate and Quality Advisory Panel have been working over the last two years and meetings have been going, ongoing public input has been taken, work groups have been developed, but unfortunately that process is a little bit flawed. It has taken way too long.

We have still not have any rates to talk about to be able to be sunshined in the General public debate which has no input for the Legislature and or the Administration to put a dollar amount on what it's going to cost so that the Legislature can then assign appropriate resources or decide how to implement this based upon the state's finances.

I understand this is not going to be a tomorrow solution. This would be an ongoing step of probably 10,000. However, we must set the goal high because our children demand a high bar. I take exception as a workgroup Member that some of the recommendations of the work group were not taken.

One of those is utilizing the MIT wage calculator for the basis for calculating the wages that our early learning and care workforce needs instead of utilizing the Bureau of Labor Statistics data, which is technically dirty, it is not fine enough for California's uses to determine and pull out and adequately value the amount of cost it takes to run an early learning and care program here in California.

In addition to that, there is the strategy to wait until the negotiations with CCPU are over and have this kind of congruent path with the non representative side of our child care field, the center based Title V contractors.

That probably is not going to do us well because we have a July 1 deadline and with the interesting things that are happening in Washington, I'm not quite sure if California misses that deadline. What may happen There may not be a do over.

And so my concern is how the Legislature and how the Governor are going to accelerate this plan to meet the Jail one deadline with full public access to it, full debate on the legislative issues without even addressing it in the January budget proposal.

So as a work group Member, we need to actually have the rates to discuss and not talk about the methodology. The calculator has been built. All of those variables are in the calculator.

We need to get some dollars out of the calculator to determine where the rates need to be so then we can have that public discourse, we can have that communication in the public square and decide where we're going forward together. And with that, thank you for listening and have a wonderful afternoon.

Thank you very much.

Lisa Wilkin hi, my name is Lisa Wilkin. I am the Executive Director of the Child Development Consortium of Los Angeles CDCLA. CDCLA serves 650 infants, toddlers and preschoolers each day in 10 childcare centers and a family child care home education network throughout Los Angeles County.

Funded by CCTR and CSPP contracts, alternative payment program vouchers and private tuition paying parents. We employ 150 early educators and contract with 45 family child care homes. I'm here to provide perspective from the direct contracting center based and family child care home education Network. Fetch in. I'm going to use the shorthand so it'll be a lot faster.

Agencies those of us who are direct contractors have seen significant changes to our operational requirements in the past few years. With the split of the child care contracts, we now have to report to two different state departments along with continually diverging rules and requirements, resulting in a doubling of the administrative burden on our agency.

We have double the quarterly reporting, double the compliance workload and different income guidelines, sometimes for the same family whose children receive services under two different contracts.

We are weathering the rollout of transitional kindergarten with the corresponding negative impact of our preschool enrollment, the requirement for state preschool programs to serve increasing numbers of children with exceptional needs, implementation of new classroom assessment tools and increased professional development requirements.

There are financial pressures from the mandatory minimum wage increases and the increasing cost of goods and services due to inflation.

On top of that, the Commission on Teacher Credentialing is overhauling the child development permit requirements and authorizations which will exponentially increase the staffing requirements and costs in subsidized childcare center classrooms, further exacerbating our struggles to find staff and compromising our ability to pay reasonable wages. We've been asked to do more and more with no additional funding.

We haven't received an increase to our reimbursement rates for the past two years and there's no plan in the Governor's January budget proposal for a rate increase in 2526. Since the pandemic, we've been operating under the hold harmless provisions which have helped us adjust to these changes and cost pressures through through its flexibility.

The hold harmless provisions are going away on June 302025 and we will be returning to the more restrictive reimbursement rules from pre pandemic times which will make it harder for us to earn our contracts and serve children in our communities.

The current plan to have the direct contract rate set through a process that is concurrent with and informed by rate negotiations with family child care providers is unreasonable.

Sorry.

I found that child care providers and their representatives with the best intentions have really minimal understanding of the direct contracting system, including how FETCH INS operate and so cannot effectively represent our interest during contract negotiations.

Direct contract child care centers and FETCH in agencies have very different and more extensive regulatory performance requirements than voucher funded family child care homes and centers. Negotiating a reimbursement system for family childcare and center providers who accept vouchers and setting a rate for direct contractors are two very different things and should not be coupled.

The current Joint Labor Management Commission Committee, which has no direct contractor or center based representation, has approved a matrix of base rate elements which does not fully reflect the substantial differences between program types.

Every Child California, which I'm a Member, has created an amendment to this matrix which I have brought copies of for people to see through a number of stakeholder focus groups that better illustrates the cost drivers for the different types of center based childcare programs, including FETCH ins.

This matrix has also been provided to the Rate and Quality Advisory Panel panel, but we have not heard back yet. The child care system in California is extremely complex and the way the system is funded and reimbursed is even more complex.

We need to replace the current reimbursement system with one that is simpler, more equitable and is based on based on the quantifiable variables of the different types of care, the mandatory components of each, and geographic cost pressures. There's a rush to meet the negotiations timeline. We concur. We can't wait.

We need updated rates now in the center based programs, but we urge you to separate the center based rate conversation from the CCPU negotiations and give contractors an interim rate increase to help us keep up with the increased costs that we are experiencing.

The state has an opportunity to positively transform the way we pay for childcare and early education in the state into something that really meets the needs of the providers and programs.

We need to get it right so that we do not create a new system that continues to underpay and undervalue the child care system and its workforce in California. Thank you for the opportunity to speak today.

Thank you very much. Next we have Anita Vaccini. Uh huh.

Got it. That was good. Good afternoon. My name is Anita Vaccini and I am a large licensed child care provider in Tuolumne county and I am here representing CCPU and I speak for the thousands of providers throughout California.

For the past 14 years, I have dedicated my life to caring for children, providing services for up to 14 children at a time ranging in ages from 3 months to 12 years.

I care for the children of firefighters, two of whom were called out to the LA fires, cattle ranchers, nurses, EMTs, social service professionals and post office employees, all of whom are essential workers. My official hours are Monday through Friday, 6am to 6pm but the reality is this job goes far beyond those hours.

My day starts at 5am preparing cups and bottles, meals, snacks and organizing for the day ahead. When the last child leaves in the evening, the work continues, cleaning, disinfecting, preparing activities and updating children's files. I also participate in childcare trainings offered via Zoom, including CCPU's training Fund.

Weekends are for deep cleaning, daycare, laundry, outdoor maintenance and grocery shopping. But the pay I receive is only for the hours when children are in my care, despite the 20 or more additional hours I put in each week. I don't say this to complain. I really do love my work and take pride in shaping young minds.

We teach reading, writing, counting and more. And more importantly, we set the foundation for these children for the rest of their lives. We strive to instill values of community service with our kids.

Each Christmas they help create Grab and go baskets filled with healthy snacks for our local police officers, allowing them to connect with these, connect with those who protect our community. Last year we collected 180 blankets and delivered them to an assisted living facility, bringing joy to both the children and the residents. But love don't pay my bills.

Despite our passion, it is becoming harder and harder to make a living. My husband, who holds a master's degree in history and education, works alongside me. The cost of running a childcare business continues to rise. Educational materials, groceries, utilities and insurance have all increased dramatically.

Three years ago, I was dropped from my homeowners insurance and forced onto the California fair plan, paying $4,060 a year. Next month, that rate will jump, lucky me, to $5,925, a 45% increase. While most industries receive cost of living adjustments, childcare providers do not. We are still being paid 75% of the regional market rate from 2018.

Through collective bargaining, we have secured a cost of care increase, but we need a real change. For the past three years, CCPU and the state have worked on a policy shift to adopt new rate structure based on the actual cost of care.

Despite multiple studies showing the need for this change, as well as the experience of providers like me, progress has stalled. That is why I'm speaking today. The lack of progress at the bargaining table, as well as the state's recent implementation reports fail to meet legislative directives on key issues like timeliness, cost estimates and funding sources.

More importantly, it lacks the urgency we desperately need. Child care providers are closing their doors. And family, friend, neighbor providers are making even less than we do. Parents struggle to find care so they can work. This is an urgent crisis.

We need a real implementation plan, one that ensures that we meet the July 12025 deadline or at the very least, provides an interim rate to transition us into a system that reflects the actual cost of care. There is no there there in this document. This report should be about solutions, not excuses.

CCPU providers like myself have rolled up our sleeves and we are here ready to meet the state now to do the work everyone needs done. The future of child care and the families we serve depend on it. Thank you.

Thank you very much. And before we have questions before this, after this panel, we have Max Arias.

Good afternoon. Thank you. Dr. Jackson. My name is Max Arias. I am the Executive Director of SCU Local 99, but I'm also chair of Child Care Providers United, and I have the privilege of being the chief negotiator for CCPU. I sit in a room with 30 or more family child care providers negotiating with the state.

And now we're bargaining over alternative methodology. And many of the providers bargaining are in the room today or outside in the hallway. You may not have seen them, but you probably have heard them out there in the hallway. As you have heard from Anita. Family child care providers care profoundly about the work they do.

They're caregivers and educators. They invest time and resources into transforming their homes into classrooms, playgrounds and places of learning. Indeed, the state itself recognized providers work by declaring them essential workers during the COVID 19 pandemic and recently during the wildfires in Los Angeles.

Yet for all their dedication and investment to child care, this workforce A majority, black and brown and immigrant women, do not earn enough to provide for the basic needs of their own families.

California uses an outdated payment system, as you heard, that does not account for the many costs of providing care, including additional staff, rent or mortgage, total hours worked, or even a steady salary for providers. As a result, providers have long struggled to survive at rates that meet just 25 to 30% of the current cost to provide care.

This is even after recent rate increases. So this means many providers, actually most of the ones I know, are unable to pay themselves a sustaining wage, unable to offer extended hours that working families need, and unable to make improvements to their homes that benefit the children in their care.

As a result, many providers have been forced to close their doors. Many never enter the profession and parents struggle with fewer childcare options. And when providers are faced with an emergency like the wildfires, they have no savings or a safety net to recover and reopen.

Consider that in the Eaton fire we know of 24 providers who lost their homes and over 150 who suffered extensive damage, extensive damage that left their homes non operational.

And many of these providers are being denied FEMA and SBA assistance either because they have some form of renters insurance or home insurance, or get this because they don't make enough money.

When we went to the state to say we need to support these providers, the response was actually use the SBA loans and, and figure it out because we have received nothing. So I just urge us to do something around that. So our current contract negotiations, we're working to correct these historic wrongs.

And I just want to share that, that we are at the table right now with, with the state. We have made already a proposal for a comprehensive, comprehensive rate reform. It's there. When you ask providers what is the cost of care, providers can answer better than anybody. I know what the cost of care is.

So we have given it across the table to the State of California months ago and have received absolutely no response. In fact, we have been ignored. We have just been told that maybe next time, maybe next time. That is no way to get an agreement by July 1st. But we're not going to give up.

Quite honestly, the state has shown no urgency to lift these providers out of poverty, no urgency to move towards the true cost of care model, and no urgency to ensure that providers like Anita can sustain their families while doing the work they love.

Let's face it, every, every improvement that we have won as CCPU has not been given to us. It is a result of an organized fight, an organized struggle in partnership with a coalition that we built of different organizations, some of them sitting here right now and the Legislature. It's not been easy.

Improving, expanding, and stabilizing child care in California can be done, though. I know because after all that fight, milestones have been achieved through collective bargaining in partnership with the Legislature, the Governor, and organizations like this. Together, we have increased childcare slots for children and families.

We've achieved significant reform to our state's family fees program, resulting in Low to no costs for families. We've made some progress in stabilizing the family child care workforce by increasing pay, creating a first in the nation retirement plan and California's first health care plan just for early educators.

But without our new payment methodology, these changes fall short of achieving the child care system children, families, and providers need and deserve. I urge you to continue to work with us to truly transform the child care industry in California by ensuring providers earn the true cost of care. Thank you.

Thank you very much. Members, any questions for our first panel, including the Lao Assembly Member Bonta.

Thank you so much. I joined the Legislature in 2021. I put myself through law school by part, by working in part, in a child care center. And I think you said the time to act is now. The reality is that the time to act was yesterday.

We've been in a situation where for decades we have undervalued the quality of care and childcare in the State of California and in the United States. And we've done that on the backs of black and brown women. I think I just want to be very pointed about that because that's what's been happening for years.

And I think it's very important that the State of California takes ownership and responsibility for our part in continuing and perpetuating the economic injustice that has been foisted upon our black and brown childcare providers in whatever setting that they are in.

I fundamentally believe that as we push so hard for transitional kindergarten, we did not take the steps that we needed to to ensure that we could have a robust TK12 system and also not completely annihilate our early child care system.

And we've been fighting in the women's caucus, and I'm so thankful for the leadership of the women's caucus over years to really acknowledge the harm that was caused in doing so. And so now, from my perspective, this is a very simple thing.

On page nine on the Laos report, it says, as of this publication of this agenda, CDSS and the Administration has not been able to confirm a projected timeline for a public proposal for the alternative methodology rates based on this new methodology or a plan for when and how to Fund childcare programs based on these new rates.

That is fundamentally the problem. We've been doing this for three years. I know because I wanted to do something and I said, and people I was told don't wait, wait, wait. Because we can't focus on our mixed delivery system right now because we're trying to figure out this rate reform.

And right now we have an opportunity to fix what we have broken by ensuring that we're focused on a true total cost of care in this moment right now.

And I would just want to caution us, I know that it's hard in this world of scarcity when we have had to go through Covid and we have had to go through years of negotiations and stalls and lack of acknowledgement of the impact on our early child care providers while we built up our older system.

It is very hard to kind of hold the line and be unified. We have family child care providers, we have friend and neighbor sites, we have center based providers, we have direct contract child care contractors. And I know that each provider has its own zone of concern and focus.

And I believe wholeheartedly that it is only through the organizing that you all have done collectively that has kept us in a conversation where we may have an opportunity to act right now.

And I am deathly afraid of the fact that we are doing that within the context of a Federal Government and a person in the White House who basically says that women belong in the kitchen and does not value black and brown women, does not value children and does not recognize that we need to be able to take care of our children.

So I feel like we're really close. And I know that you have champions in the women Caucus, women's caucus, and in this Legislature that will continue to hold our feet to the fire to make sure that we deliver for you all. So please don't be too weary. We will try to deliver.

Any other questions from Members? My question is from the for the lao, is there any in your analysis of the process, what do you think is the main hindrance of getting to where we need to go by July 1st?

Edward Cabral with the Legislative Office I don't know that we would say, I mean that we have our own thoughts on the specifics of what are the key barriers here? I think the Administration is taking the lead here on implementing these changes and trying to meet those deadlines.

I think in terms of just the categories of issues, there is one is just the issue of negotiating what the rates are, getting to agreement on what those are. And then there are also some of the more practical challenges of then how do we move forward once we decide. What those are, what should, you know.

What specific detailed systems have to be updated, things like that. More of the practical aspects. I think we haven't had as much. Of those conversations because there is so much kind of uncertainty still in terms. Of publicly what's in the rates. I think once those land, I think.

We can provide you with a little bit more detail on what we think. If there are some concerns and more. Day to day challenges. But I think right now we're in the middle of the process. The Administration is working through that. So I think we don't have any.

Insight specifically to what to what needs to be done still.

Do you have any thoughts in terms of, I mean, when the July 1st timeline was first created? Do you think that was a realistic timeline?

I mean, I think there are challenges there. I think there's the challenge of the deadline, but also for the Legislature that timing is just challenging given when the. State budget needs to be passed. Right. That's, that's after the June 15 deadline. And so I think, and this has.

Been the case with not just this deadline, but I think in General with. The when the mouse expire for child care, where the Legislature is trying to pass a budget while it still doesn't have a lot final information on what's going on. So I think that's just a kind.

Of an issue that will be, that will be moving forward with these timelines the way they are.

And certainly when we were talking last year, as we understood that this was going to be last year, was going to be a two year budget planning process, it was quite clear to this Committee that a red flag was the fact that there was we didn't know how we were going to pay for this.

We asked whether we're going to see some details. We asked whether, you know, when were we going to see some details. And I think we are yet to see those details.

And so certainly we are probably going to have to get to the point where the Legislature takes the lead as opposed to waiting for the Administration to take the lead. And so looking forward to having more discussions about that. I want to thank this panel very much for. zero, you have a question. Go for it.

Thank you very much, Mr. Chair. I wasn't sure if you're planning on having the last word. I apologize. But I, you know, first of all. I want to acknowledge Ms. Bonta. I can feel that controlled anger and that passion for and thank the Women's. Caucus for your leadership. You know, I. Want to support everything.

That the Women's Caucus is doing in this space. You know, I heard Ms. Bonto loud and clear that, you know, the devastating impact of the transitional kindergarten program on. The child care industry.

And you know, and yet I think like one of the panelists referenced, you know, we know the abundance of research that shows the beneficial effects of closing. The achievement gap with the early childhood education investments. And so, you know, how do we do both? How do we, how do we expand. Affordable childcare for all. While at the.

Same time continue to make progress with our universal preschool efforts? I know, I was looking at the staff analysis and references made about the concern about the lack of the transition plan for childcare reimbursement rates in the January budget.

You know, how are we supposed to be having any kind of legislative debate, you know, for the setting of rates by or before July 1st of this year? I want to ask Mr. Adias, as the lead negotiator for the Child care Providers United. You know, do you have.

Any, can you share any thoughts as to why you think there was no proposed transition plan in the January budget? Second, to what extent is this related to, you know, the multi year budget deficits that the Department of Finance is projecting?

And three, is there a need for a new revenue source to support, you know, having child care reimbursement rates that reflect the actual cost of providing child care?

Thank you. Senator Mary Sushi. I just want to share that the deadlines were very clear the whole time from when we bargained this contract. It lives in the CCPU contract. It's there, it says that we will reopen our contract in November of last year after the state had submitted its plan. Everything you heard happened.

The state submitted its plan. We set the parameters for the state. We even talked about the Berkeley rate versus the whole thing that you heard. So all of that was done in a timely manner. And we met with the state starting in December and made our initial proposal and that's where it stagnated, literally.

It's completely stuck in the collective bargaining process. It is stuck in that the other side is not willing or ready to respond. What we have heard back is that they don't know when they're going to respond. And all they mention is we don't know the environment.

Now, the revenue sources that you mentioned, yes, it would be great to have a dedicated funding. I don't know if there is one at this moment. However, understanding the urgency of what this is, and you've heard decades, the state has more than enough resources to make this happen. It's a matter of will. And I think Ms.

Bonta said it best. This is really a debt on top of we have to take care of the future. We owe a debt to generations of family child care providers and it's generational. I don't know if you've heard them speak on how their mother did this and that's how they got into it.

Now their children are doing this work. Generational debt we have. We need to get this done. So I think that while we do have to find a revenue source, that cannot be an excuse or an impediment to getting this done immediately. We know the state can afford it. We're ready to get to work. All we really need.

It might be we are over complicating a simple matter which is we need to get reimbursement rates to match what it actually costs to care. It's a very simple matter. I know it's complex, it's arcane because we have made it so we don't have to make it.

So I just want to reiterate, we have a comprehensive cost of care proposal that we work hard with our providers to put forth to the State of California is just sitting there without any work being done.

If you can get that expedited, if the state's serious about getting to work, even start to work on the non monetary issues with the proposal. The proposal has structures. It talks about the current structures that have to do with the counties rates being set are not necessarily making any sense. So we're proposing new geographies.

There's a lot of things that could be working. So if we can get that done in time, I mean in time we're ready to work, ready to start tomorrow. If the state wants, we can get that. The rates, which is what I heard everybody's just waiting for, we're waiting for those rates.

But we're seeing the same pattern we see every time we bargain. I'm sorry, I'm going on. Because this is exactly the same pattern. We sit at a table. The collective bargaining law itself, the Building a Better Child Care and Education act says that the Governor of California is the collective bargaining agent with us.

And we're sitting there and every cycle it is the same until we don't act and paint the streets of Sacramento yellow. There's no movement. And we know we can't wait for another the same pattern to repeat itself this year because we cannot be waiting till June 30th to do this. So appreciate all of the.

Without the Legislature's partnership and all of our partners out there, Parent Voices, etc. I want to start saying names so I don't forget. This would not have been achieved. And we are all ready, I think again, but we're not going to be waiting until June to do that.

So I appreciate this panel being held and appreciate all the advocates here. And let's get to work and roll our sleeves.

Thank you Assemblymember Patel, and then Assemblymember Lee.

Thank you panelists for being here today. I am a new Assembly Member representing the San Diego region as the daughter of Indian immigrants whose mother provided childcare work to make ends meet. When we were struggling through tough economic times.

As a woman who depended on childcare to fulfill my career dreams and my economic potential and was, you know, frankly broken out of working because of how expensive childcare was, I ended up staying home to raise my three kids because I couldn't afford childcare in the Bay Area.

And then as a community Member who has seen child care centers, home care centers in my own community struggling to keep their doors open, Asian providers. So it's not just black and brown, it's in our Asian communities as well.

After UTK was rolled out and as a school board trustee seeing how UTK negatively impacted our community, woman owned, minority owned businesses. Now learning that we're not even making progress on adequately paying people is just flooring me.

It's really like this plan has been in place for such a long time and I can't comprehend why it's not in the budget. So I'm trying to better understand how did this omission happen? How did this not get included in the budget? The timeline is very obvious.

Can somebody help me understand why this was not in the Governor's Budget proposal to Fund this or is that just going to drop like a rock?

I think you'll have an opportunity to ask that question again in the next panel.

Lovely. Love it. But some specific questions I'm trying to understand a little bit better. Max, can you explain to me, I didn't catch all of what you were saying about the circular logic behind childcare providers not being paid adequately.

And then the SBA and FEMA coming back and saying, well, you don't make enough money to have us covered.

Yeah. So that, that is pretty surprising. So FEMA, the FEMA denials have to do with the insurance providers that have, they have to have insurance to be able to be licensed. And so, and so that is The SBA denials are being providers are being told you don't make enough income.

Furthermore, because just the 30 the Governor gave an immediate order on a 30 day extension of payments.

So providers then had a guarantee of getting paid for 30 days, but they no longer have a guaranteed so if your house is burnt down or is inoperable at this point and you go to get an SBA loan, they'll tell you how are you going to pay us if you don't have any income.

And so that is a solution that the state told us across the table you need to apply for. And so they did it. So that's how those two things are not working out at this point.

Okay, thank you for that. Like you were saying, they're getting it from all sides.

Thank you very much. Assemblymember Lee thank you.

Thank you, Mr. Chair. I just wanted to make some brief comments and then I have more questions for our second panel and I think our other Members will have that too is mostly, you know, because we are in the budgetary setting right now in this oversight setting. It strikes me so much as Dr.

Jackson was speaking that we have released and Max is saying too, we have really seen this pattern over and over again with everyone in the care ecosystem, whether it be kids, seniors, development, disabled is a lot of the same track record of the delays and the hopeful promises to fairly compensate those who take care of our loved ones and still hasn't materialized.

And I think that's a matter of prioritization. So I would really second what our chair, Dr. Jackson was saying about like it should be a Legislature taking more priority, especially now as we face potentially a very hostile Federal Government that might be playing with our money that is rightfully, legally ours.

And at the same time we might have some budget uncertainty on our own front. We do have to be realistic about saying what is the real math equation of getting the right compensation. I saw in the SAF report it could be in the 2 billion to 12 billion mark. And that is of course a large number.

But what is the realistic mature conversation we're going to have about reaching those goals? Because California's budget when I started was like 200 billion. Now we're at 300 billion. So our economy luckily is growing. But is the economy growing for everyone? And the answer even in for my Silicon Valley district is it's not growing for everyone.

So we have to think about realistically how do we approach portion the money and the resources so that people are being taken care of. And I cannot think of any other cause Right now any more suitable cause of our budgetary priorities than taking care of our children and our loved ones like that?

Because of course, we want to do right by you, the child care providers, but for all the families and parents, and I'm hopeful, future parent one day is that they want to take care of those folks too. And it's. It's encompassing of the entire care ecosystem.

So I do think we have to really press on the Administration to think about what are the dollars and how we're going to really get there, because House and the Legislature really was the one that pressed last year of how important it was to save the human services budget.

And that was a lot of our advocacy last year. And so we played a really strong critical role in defense. And now maybe it's time to go on the offense and we say, what more should we do?

Because in this budget and future budgets, we should really be centering our budget about working people, about families, and less and less about corporate special interests. And so we should really act with that kind of prioritization of the urgency. So I just want to second all the comments from our wonderful chair, Dr.

Jackson, that we need to take more of a prioritization in this. Thank you.

I want to thank all the Members for their questions for this panel. I just want to be clear as we close this panel that more than ever, California must be clear, consistent and predictable in everything that we do.

And it is this Committee's priority to make it clear and consistent and predictable that we will move forward on child care. Okay. And so we look forward to continue to having this dialogue, especially as we move into the process of the may revise. And at that time we'll have further discussions.

So thank you all very much for this panel, for your time. And next, I want to invite panel number two. Please come on up. zero, shoot.

While they're coming up, while the next panel is coming up, I just wanted to offer and I really appreciate Assemblymember Lee's framing of this being a budget conversation. Right Our budget speaks our values. Having sat on the Public Safety Budget Subcommitee, chaired that Budget Subcommitee, I just want to throw out some numbers for us to hold.

We spent $132 million in legal fees to be able to support the actions of CDCR. We have a $14.6 billion budget dedicated to prison in our State of California.

So if you talk about a delta between 2 and 20 $1.0 billion, I know very clearly where we can very easily get at least $2 billion from an overinflated budget. That is the opposite of ensuring that we don't have a school to prison pipeline.

Thank you for dropping that mic, Assembly Member. Next up, we want to invite the Administration Director Troia. Welcome and congratulations on your new role.

Thank you so much. It's a pleasure to be here with you in my new capacity at cdss. We are very committed to our mission to serve, support and protect Californians experiencing need or vulnerability. And this of course includes our youngest Californians and their families.

We appreciate the focus of today's hearing on the early care and learning subsidy rate reforms and the alternative methodology.

Before responding to the specific questions that are teed up in your agenda, I just want to take a moment to acknowledge a little bit of the larger context for subsidized child care and development in California at this particular moment.

In recognition of the critical and positive impacts of early care and learning on children and families and the advocacy from so many of you in partnership with the Administration, we in California have made historic investments in childcare and development programs in recent years to help children and families thrive.

More specifically, in the last five years we have nearly doubled the total funding for child care and development programs that are subsidized from $3.3 billion in 201920 to 6.4 billion total funds in 2425. We increased the maximum number of children served annually from around 294,000 in 2019 to more than 378,000 in 202425.

We transferred oversight of the child care and development programs from the Department of Education to cdss. We negotiated our first and subsequent memorandums of understanding between the state and the Child Care Providers United Union, whose Members you've heard from on the first panel.

We've also taken some initial steps to unify our reimbursement rate structures, which were historically divided, as you heard, between the regional market rate and the standard reimbursement rate. So today we get to focus on another critical reform we're working toward, which, as you've heard, is the alternative methodology that will be used to inform child care subsidy rates.

We've been asked to focus on an overview of the purpose of moving to that alternative methodology, the improvements. We expect the alternative methodology to create for us the General components of the methodology and finally the process for adopting the methodology.

So I'll briefly touch on the purpose and the expected improvements and then turn it over to Jackie Barocio, our branch chief within the CDSS Childcare and Development Division, to talk some more about the remaining topics for CDSs.

So with respect to the purpose of moving to an alternative methodology, stepping back the Federal Government requires the state to certify that our subsidy rates are sufficient to ensure equal access for eligible children. That's comparable to the child care services provided to children whose parents are not eligible for subsidies.

To demonstrate this, we can base our subsidy rates on the results of a regional market rate survey, as we have historically done. That survey is focused on the market rates or the prices that parents can afford to pay.

Or we can use an alternative methodology which uses a cost estimation model or a cost study to focus instead on the cost to the provider of delivering the services rather than the price that parents can pay.

Because the prices that parents can pay in many cases do not align with the cost of delivering care, we have collectively determined over the years that you heard about earlier that the alternative methodology will be a better approach to meeting that federal requirement.

We expect that transitioning to the alternative methodology will also help to address historical inequities that stem from using a market based study, which include how we inconsistently calculate rates across program types under the prior system.

Moving to an alternative methodology gives us a better understanding of what it costs programs and providers to provide care which can advance equitable access to high quality early learning and care, provide greater opportunities to ensure the workforce is supported, and incentivize improvements in program quality. So before I turn it over to Ms.

Barocio, I want to acknowledge what some of you also shared, which is that this move to the alternative methodology builds upon years of dedication by our community, by our program partners, by our partners in the Legislature and the Administration, all working together toward this rate reform.

Along the way, there are several key events that have marked our progress, each building on the last, including a 2018 Rate Reimbursement Workgroup, the 2019 Assembly Blue Ribbon Commission report that was Already referenced, the 2020 Master Plan for Early Learning and Care, which also recommended a phased in tiered reimbursement model informed by the cost of Care, the 2022 Joint Labor Management Committee and 2022 Rate and Quality Workgroup reports, and the continuing input we're receiving from the ongoing Rate and Quality Advisory Panel.

These years of dedicated effort and collaboration have led us to this point and we're excited to be in the final stages before implementing the alternative methodology. I want to agree with Assemblymember Bonta. We are very close and it is exciting. We have made a great deal of progress already.

This includes the development of a consensus on the approach to use the alternative methodology, the proposal of an alternative methodology to the Federal Government, and the completion of the process of gaining the Federal Government's required preapproval for using that alternative methodology.

We've established the definitions of base and enhanced rates and we've developed a cost estimation tool under the new methodology. So those are steps we had never previously taken in all those years of talking about reforms that we have now completed.

There are still key milestones coming up to determine the selection points that correspond to those base and enhanced rates and then to conduct the actual rate setting. We are very committed to continuing progress toward full, intimate implementation as soon as possible and we fully intend to meet the July 12025 deadline for or setting rates.

That is a federal deadline and it is also enshrined in state statute. As you referenced earlier, in addition to our work together through the budget process, including this hearing, we will continue to keep the Legislature and our partners informed through regular communications, including quarterly updates and public input sessions. So with that I will pass it to Ms.

Barocio to talk more about the alternative methodology and the process ahead.

Jackie Bouracio, Department of Social Services hi everyone. I just really would want to echo the sentiment of where we find ourselves today is truly the result of years long work that is a multitude of work groups, reports, cost analyses, hearings, public input sessions that are still happening on an ongoing basis.

I'll address those more technical aspects of the alternative methodology, the questions and the agenda.

But I think it would be helpful to first kind of take step back so that we can get a better understanding of the alternative methodology process and how that is distinct from the single rate structure and then also rate setting and that alternative methodology as the Director outlined, it's one of those two ways in which we can meet that federal requirement of how we're assessing reimbursement levels and this will the ultimate outcome is that we're developing then that cost estimation model to then assess what is the cost of providing care based off of various program standards, health and safety requirements, et cetera, following the completion of that alternative methodology that then needs to be translated into the rate structure itself.

And then the result of the rate structure that will consist of various design features or structural parameters that will then be used to establish those specific rate categories.

I think a nice parallel is, as the Director mentioned, historically we've met this federal requirement with the regional market rate survey where we've surveyed providers, asked them, how much are you charging? How much are families paying?

We collect all that input, the math happens, and then we create these rate categories that vary by region, age of a child, et cetera. From there, that is where rate setting happens. Once we have those structural parameters, rate setting would then consist of determining the rate levels within each of those defined rate categories.

At this time, some components of the alternative methodology remain to be determined, namely the values or selection points of those rate elements that we've already defined. And those rate elements are generally the cost categories that the cost model is based off of.

Now it's just determining what are the values, what are the numerical values for each of those that then would spit out a total cost of care. At this point, we do not know the specific dates in which the selection points will be finalized.

And this is because the selection points for family child care providers are subject to that collective bargaining process. But for centers, the selection points, those will be established by the Department of Social Services in collaboration with the Department of Education and presented for public comment in future rate and quality advisory panel meetings.

And while we don't have the specific date established for when selection points will be shared with the Legislature and presented to the rate and quality advisory panel future meetings, we will note that the timing is separate from.

For the timing for the center selection points is separate from, from, and not contingent to the timing of the decisions related to selection points for rates that are applicable for the family child care providers, which again, those are subject to the bargaining process, collective bargaining process.

Lastly, a few of the questions in the agenda do elevate this need to consider equity throughout the alternative methodology.

And I did want to flag that a component of this entire process that we are tracking is also then the development of that equity evaluation framework that will and tool that will help us continuously evaluate the alternative methodology and rate levels as it relates to that equity lens and the creation of that particular equity assessment tool is still underway.

And additionally, while rates is one way in which we can address these inequities within the programs. I do not want to lose sight of all the other important initiatives and work that we have going on, many of which have come out of legislation that try to also improve the outcomes for families children.

Just one example that I'll highlight is the whole Child Community Equity Initiative that came out of an Assembly Bill and that is meant to support the ending of racial and economic inequities in child care in California by developing a whole child community equity screening tool that can be used to ensure that the programs, the child care programs, incorporate that whole child approach and prioritizes the full scope of a child's developmental needs that includes their emotional well being, safety, health and more.

And then with that, I'll pass it over to my colleagues at the Department of Finance.

Thank you. Tamar Weber, Department of Finance I do also want to open with just thanking everybody in this room and everyone who's been working for the last couple of decades to bring us where we are today.

So I'm here representing the Department of Finance and I'd like to speak to some of the fiscal questions that have come up in the agenda. So the 202526 Governor's Budget includes $7.1 billion 4.6 billion General Fund for DSS administered child care and development programs.

The Administration is continuing to work towards a single rate structure and utilization of an alternative methodology for estimating the cost of care.

In order for the state to shift to child care rates informed by the alternative methodology, the state must one negotiate the establishment of new rates and the associated funding levels with childcare providers United for family child care home providers. And additionally, the state must develop the new rates for childcare center providers.

As both of these efforts are ongoing, it was premature to include a final proposal to shift to childcare rates to rates informed by an alternative methodology at the time that the Governor's Budget was released. Nevertheless, the Governor's Budget did maintain funding to continue the cost of care plus rates.

Monthly payments adopted for state subsidized child care providers consistent with state law that requires reimbursement rates effective July 12025 do not fall below current reimbursement rates.

And I do want to note that while the Governor's Budget did not include a proposal to shift to the new rate structure, the Administration remains committed to shifting to the new rate structure and to rates informed by the alternative methodology and we're continuing to work towards that goal. The agenda yes, okay.

The agenda also asked about the cost of living adjustments. So the Governor's Budget includes about $90 million of General Fund for child care and state preschool program cost of living adjustments as specified in current law.

However, in recent years, the Legislature and the Administration have reached various agreements as part of the final budget act to repurpose funding associated with COLAs to support the state's child care and preschool program providers, and the Administration is open to similar conversations with the Legislature this year.

And finally, I just want to say that the final rate structure informed by the alternative methodology for family child care providers are subject to the deliberative and collective bargaining process.

The Administration intends to abide by the timelines established in state law and is just unable to speculate about when bargaining with CCPU will conclude or what the final outcome of ongoing negotiations will be. Furthermore, the Administration does not disclose or discuss any potential set asides related to bargaining.

And as part of the normal development budget development process, the Administration will continue to monitor the evolving fiscal condition to inform the May revision. And ultimately, the final budget act will reflect an agreement between the Administration and the Legislature. And we look forward to working with the Legislature in the months to come.

Thank you very much. Assemblymember Lee.

Thank you for your presentation. So if I'm understanding correctly, there's a series in the order of operations in which we can get to what the final budget allocation for the new rate reform would be. Right. And it seems like it all goes back to the negotiations with contract negotiations. Ccpu. Correct.

So having heard from the previous panel, there's a lot of frustration with not seeing a lot of movement. How come the first step is not moving? So what's going on over there?

I think as the Department of Finance echoed in their opening remarks, historically we have not engaged or we've maintained the confidentiality in the bargaining process. But I'll let Department of Finance add anything else.

Yeah. So. TAMAR Weber, Department of Finance so the Administration doesn't speak about the ongoing negotiations during collective bargaining. So.

Right. So. But that, but that process began in December, correct? Yes. And now it's February and your deadline is July. Correct. So you have five months to finish the first step. Is that what you're telling me? Right.

Yeah.

Four. Four months finish first step. So. And appreciating all the work that CDSS is doing, you listed to us a series of steps that make sense.

I'm concerned is that the very first step is not, at least from, you know, the other side of the table, I understand you have confidentiality, but from that side of the table, sounds like we're not making raw progress. Doesn't give us a lot of confidence that it's moving along in a timely fashion. And I also know. Okay.

So I'm going to move on to a different question. And I know that, of course, a lot of those variables and inputs are to be determined from a lot of that negotiation. But since you are looking at this from a budgetary perspective, too, do you have a range of estimate of how much this could cost us?

I mean, our staff analysis gave us a number. But from your analysis, are you thinking about a ballpark of between this billion and this billion? Is there something you're thinking about right now, how much it costs you? Because right now you're inputting a variable number into the equation. Right. But, you know, basically the equation.

So do you have an estimate of range.

Well, I just want to clarify, and I think that the Department of Social Services laid this out. But we do want to make a distinction between what is going to be the projected cost of care based on the selection points that are decided, and then what is actually going to go in the budget, which will be the funding level of the cost of care.

So as Director Troia pointed out, the same way we had with the RMR, there's the regional market rates and then there's the funding level. So what would be in the budget would be the funding level, which is still under development. But if you're asking about what the total cost of care based on the model, that's a separate question.

Well, understanding then in this context, in our state budgetary capacity, what do you think the estimate range for our, for our state budget would be? Is there an upper limit, lower limit kind of a range?

We haven't put out a proposal for what to put into the budget yet.

Okay. And then, you know, hearing that, and I'm very glad that the administration is committed to making this happen. Are you committed to making it happen in this budget year or next budget year or the year after that? Because if the timeline is July 1, that basically puts it as trailer language for us to do in August, which we can do, but is untraditional for a large, large amount of money. So I'm just asking, realistically, plotting here, are we talking about this year or next year?

The administration is committed to meeting the July 1, 2025 deadline.

And it will be included in the 25-26 budget?

Yes.

Okay. Okay. That's good to know. Okay. Well, I mean, and again, I'm asking all these things so that we understand and have clear, consistent timelines of what we're doing here. And I'm glad that we have the clarification that we're trying to do this in the 25-26 timeline. So I look forward to working with you all to make this happen in the tight window that we have. So thank you.

Assembly Member Patel. And I just want to state, we also have CDE here for any questions as well that you may have. You don't have any comments, right?

I did have some brief opening remarks.

Oh, okay. I was told differently. That's all good. That's why you were looking at me crazy. I know. I had different instructions. I just want to let you know I had your back.

All right. I appreciate that. So to introduce myself. Good afternoon, Mr. Chair and Members. I'm Stephen Propheter, the director of the Early Education Division, on behalf of our State Superintendent of Public Instruction, Tony Thurmond. So as part of our vision at CDE is that all children deserve access to high quality early learning and care, respectable rates are essential to meeting that vision. We can't do it without rates.

We have been closely collaborating with the Department of Social Services because we oversee the California State Preschool Program, which in this current year funds 133,000 preschool spaces through different settings at our local educational agencies that are community based organizations, which include private centers and family childcare as well.

It has been important for us to provide our expertise because we hold kind of a unique perspective being the administrators of the California State Preschool Program and it's kind of different rules and requirements, et cetera. We know that action is needed to move faster on the path to paying for the true cost of care.

We've heard that for years from our programs. The low rate in state preschool program and childcare, especially in our high inclusive in our high cost counties, makes it challenging to recruit and retain qualified staff and pay a living wage to a field that is primarily comprised of women of color. We heard that on the earlier panel. I mean, in short, rates are insufficient to pay a respectable wage to members of an industry that hold up much of California's economy.

While bargaining negotiations are still ongoing and CDE staff are supporting the administration at the table in this effort, we've also been diving deeply into existing data systems. Because we know that whatever is agreed upon in terms of reimbursement rates, we need mechanisms to pay to get the money out the door, to reflect the changes, whatever changes happen to the rate, and whatever system modifications are needed. So thank you for that brief moment there. I'm joined by miss Virginia Early to help in answering questions at the appropriate time.

Thank you very much. Assembly Member Patel.

Yes, thank you very much. And I do want to acknowledge, first of all, before I ask my questions, the years of work that has been put in by all sides to try to get to this new methodology for developing a rate of reimbursement. So that's very impressive and I'm playing catch up here. So love to see all of this commitment and focused attention on making sure these rates and the adjustments get done in a timely way. Also want to reflect on how data can be used to tell a story and to shift perspective.

So in the years since funding was doubled for children served in, you know, in the years since it was doubled and, and we saw a dramatic increase in the number of children being served, there's also been a huge increase in the cost of living, the cost of doing business. Not just in housing, but in all household costs and for those providing care out of their homes.

That doubly impacts not only how much money they need to bring in to feed their own families, but their cost of operating their business. In that same time, we also saw California's GDP increase, where we're now, what, the fifth largest economy in the world, third largest economy in the United States, contributing to the U.S. being the largest economy.

However, this growth is actually leaving behind working families, essential workers and shift workers that our care systems are providing essential care for, and our care workers are providing that essential work. So making sure that we do meet that deadline is really, really important to me as a mother who has seen this impact in her community.

I need to make sure that the workers in our community have the peace of mind of knowing that their children are being cared for when they're going out into the community to do their jobs. So just to echo what Assembly Member Lee said, and I am thankful that he made it so direct that there is this commitment that it will get in the budget for this year. I just want that reassurance that we're working towards it, and however I can help in that capacity, I am here to be your champion as well. If you need anyone to help you persuade anyone that is making these decisions, I will be here to be that champion voice. So thank you. Reassurance, this is really happening.

Tamar Weber, Department of Finance. The administration is committed to meeting the July 1 deadline for rate setting.

Okay. For rate setting, but not for budgeting any of the expenses associated with increasing... I just want to make sure I'm hearing it very clearly because, like I said, I'm new to the table. So I want to make sure I understand the process and the timeline for this. So for implementation of those new rates as well?

Good afternoon. Lourdes Morales with the Department of Finance. So as sort of Department of Finance and the Department of Social Services sort of has laid out, sort of the key date is sort of July 1st for developing rates informed by the alternative methodology. And so the administration still remains committed towards meeting that date, and depending on sort of how that process sort of lays out both sort of at the negotiating table as well as for center based rates.

And we would sort of move forward and include sort of what might be necessary sort of in the budget as an agreement between the Legislature and the administration. But sort of as those discussions are ongoing, sort of the particulars of that are sort of unknown and sort of premature to speculate on.

Okay. So we have the commitment from the Department of Finance that we will get the necessary paperwork in to meet that July 1 deadline. And after that, it's not necessarily in your hands, it's in the hands of that, whatever happens at the negotiating table.

Yeah, we're sort of actively working towards that July 1st date.

Okay. Okay. Thank you for clarifying that for me.

Assembly Member Aguiar-Curry.

Again, thank you for letting me attend this today. I have a couple of questions for CDSS. Timelines are huge to the Women's Caucus because we've seen this drag on and drag on and drag on. I hope you have the answers today, and if not, I hope there's a follow up to it. What is CDSS intended timeline for the following public and legislative receipt of the complete alternative methodology?

We'd like to know what the public and legislative receipt of the CDSS proposal for how to fund rates for all child care programs align to the alternative methodology and the beginning funding all child care programs with rates aligned to the alternative methodology.

So I know it's hard to tell me those probably are right now, but it's really important to the Women's Caucus that we have timelines. We've waited for quite some time. We think we'd followed a process all along in the past eight years that I've been here in the Legislature, and I need some guarantees that we can get this done.

When I think about how many families are struggling right now and we try to talk about affordability in the State of California, I think about to start at the basics. And the basics are making sure children are taken care of and mommies and daddies are taken care of. And this is one of the places it happens.

Childcare is just not childcare. These women and men that are in the business, they're also giving counseling to families. They're taking good care of them. And for them to be struggling and not to have timelines and to be. So we're so indecisive on what's going on with the federal government as well, it's frustrating.

And so I am the voice right now for the Women's Caucus. And those are the timelines. We would like to have some dates, and we'd like to have them before our next meeting, which is I believe March 12th. And there also must be recognition of real and rising costs at all child care programs in the budget year and every year. And will the administration commit to this even if the alternative methodology is running behind schedule?

So I'll take the first part of that and then defer to Finance for some parts. So first of all, thank you for the urgency that you are conveying and the deep valuing of the childcare providers and programs who serve our children and families. We absolutely share that perspective and sense of urgency with respect to the timelines.

I think we started to say this, and I hear you, that you would like greater detail than we have today. But I'll reiterate that the timeline for the completion of the alternative methodology, what remains to be finalized is the selection points within the sets of values that we have.

And those selection points are being bargained at the table with CCPU for family child care providers, and we do not know the time timing of when that part of the bargaining will conclude. But that is the forum in which that is happening for family child care providers.

With respect to the center, we will share information about the proposed selection points in the rate and quality advisory panel. We don't have a date set yet for when they will receive that information, but that will be then publicly available, and we will certainly engage with all of you and your staff regarding that same information as well.

So on that part of the alternative methodology, that is the best answer I can give you today. But I do hear you that you would like more specificity. With respect to the funding to align to the alternative methodology, I'll defer to the Department of Finance.

Once again, good afternoon. Lourdes Morales. So ultimately, we'll sort of work with the Legislature and sort of reaching a sort of budget agreement sort of not only in childcare but in sort of all of the state sort of commitments. We're sort of working within sort of the confines of the state General Fund and sort of the conditions of the state's fiscal status. And so we look forward to sort of working with the Legislature and sort of managing all of the many important sort of priorities on that front.

Thank you very much. Department of Finance, obviously you've come out with projections of a multi-year deficit. And when we think about obviously ongoing funding concerns, when the January budget was being put together, and even as you go into the May Revise, was the additional funding needed to increase reimbursement rates considered when you made these projections, particularly in the multi-year, the projection of the multi-year deficit?

I'll have my sort of colleagues speak to sort of what is included in the Governor's Budget, then we can sort of speak more broadly about sort of the sort of broader outlook.

Thank you. Tamar Weber, Department of Finance. So what was included at the Governor's Budget is what is required by current law. So that is the current rates, including the cost of plus care rates and the COLA as applied in the way that it is currently defined in statute.

And so sort of thinking sort of more broadly about the years to come, it will sort of, again, as I mentioned, you know, just be a discussion with sort of the Legislature and reaching an agreement that sort of can be sort of sustained by the state's General Fund condition. But the sort of the, the outlet sort of reflects maintaining the current rates as is required by state law.

So I wanted to, I want to just make sure that we're clear. I mean, number one, it was great to hear that you intend on establishing what those rates are going to be by the deadline. That is very good to hear. But I also want to make sure that the administration is also clear on this Committee's expectation as well. And that is that when the new budget starts, that our current rates will be adjusted in the new budget, and that although we have new rates established, that providers should not be going on with the current rates as it exists today because they're already on life support.

And I believe we've also made it clear starting last year when we were able to make great strides in preserving our social safety net, and want to thank the administration with partnering with us in terms of making sure that that happens. But also, I think we're facing the same situation going forward.

And that is, it's not whether we have the money, it's whether we have the priority to do something. And so it is our intention to making sure... And we're going to... LAO. We're going to... I'm going to ask that you work with our staff committee to make sure that we actually develop our own funding transition plan. So that we can make sure that for the next budget we actually have a way to increase rates until we can get to the point where the alternative methodology is actually not just established, but enacted.

Right. And so LAO, we're going to be best friends and working with us to make sure that that happens. At the end of the day, if things, less important things need to be cut, we need to cut it. Because child care is very, very, very, very important to the very function of our society.

And we need to make room to ensure that we make that happen. And certainly before we think about increasing any additional tax credits and tax expenditures and those type of things, it's time that we put more money in the pockets of our families. And child care certainly is a way to do that. So are there any other questions from any Members at this time? Everyone cool? Assembly Member Patel.

One brief follow up question for CDE, since you're here. Can you, if not today, in a follow up conversation, provide me some detail with how UTK has impacted our universal preschool programs and our First 5 programs?

We'd be happy to do that. We'd be happy to follow up.

Also, is there a... Are you expecting conversations on the alternative methodology to happen once the May Revision comes out? Or is this something where we can actually engage in sooner than the May Revise so that we are not rushing? It seems like we do a lot of rushing every year. I mean, I got my Five Hour Energy drink, I'm ready to go in case we have to. But I prefer us not to do that. I mean, it's going to be important that the public trust the process, right? It's not just doing something, it's how we do it.

And so I really want to make sure that we're being more thoughtful, and of course we can have some offline conversations about, about this. But I'm not a big fan of always just waiting for May Revise, right? Because it's nothing but scramble, and it's nothing about, nothing but quick decisions that may not always be thoughtful, right?

And so my ask is that we start engaging in those conversations, both at least the staff level, to begin to really make sure that we roll this out right. Making sure people are not surprised by what comes out. And certainly I do not want my colleagues to hear about it first in a press conference, right?

We gotta do this, right? So I'm asking for us to work together, and we've worked together very well, by the way, over the last few years. And I don't intend to, I don't anticipate that changing. But just think about the process. That's my big ask. Think about the process, and we'll share with you our thoughts as we work with LAO to come up what we envision seeing in terms of our plan so that we can make sure that the public has...

The public and particularly the stakeholders who are going to really be affected by this have an opportunity to make sure that they've had the conversations with as many of us as they feel they need to, to truly understand how we came to what we need to come to. Okay. Assembly Member.

Thank you. Along the lines of the Chair asking for minimizing surprises, I mean, can the Department of Finance provide any kind of, you know, preview in terms of the new methodology and the new single rate structure? Are we talking, you know, are we talking the billions of dollars in new, you know, obligations? Are we talking in the millions? I mean, can you give any ballpark?

Sure. So the agenda does sort of include some fiscal, some fiscal information. I think generally it's very clear this funding sort of true cost of care is a sort of billion dollar endeavor. The sort of exact magnitude of that will depend on the sort of specific selection points which, as we discussed, are sort of still being developed. But certainly sort of billions is the right ballpark.

Okay, thank you.

Any additional questions or comments? Everyone good? I appreciate it. This is our first hearing of the year, and looking forward to some more conversations and our good old marathon hearings moving forward. I hope you're well hydrated, I hope you're well fed, all right? Because boy, oh boy, it's going to be a long budget process. I want to thank this panel for joining with us. Looking forward to doing some follow up. Thank you all very much.

And Ms. Barocio, we, I always, I still see there or there. I don't know what you're doing. Oh, okay. All right. You're good. Okay. Good comeback. Now we're going to move to public comment. We're asking that Members keep their, that the public keep their comments to 2 minutes each. Please state your name and your affiliation. Please come on up. Name and affiliation.

Thank you for the great questions. Assemblymember My name is Ken Heron. I'm a provider CSPP and now Toddlers in Selma, California. Last year I had the pleasure of watching and listening to Chairs Alvarez and Jackson Jackson demonstrate how interested they are in this subject and I thank them profusely for caring so much.

I like to say if nothing changes, nothing changes.

If nothing changes, we will continue to attract less qualified teachers or teachers who are using state preschool as a stepping stone until they can get on with the school district as a TK teacher and earn double the pay teaching the same curriculum to the same kids but working 185 days instead of 246.

This ridiculous pay disparity has to change, and it could change if this cost of care methodology is well developed and appropriately implemented. It is evident that the cost to implement a more realistic reimbursement method will be substantial compared to current rates.

Although two years ago the state's finances theoretically could have paid for the entire costs in full, the ever changing state budget now paints a different picture. The field understands that it is probably unrealistic in the current budget outlook to expect rates to jump up in one fell swoop and that a gradual approach over time likely makes sense.

However, in that event, implementation must at least indicate a set in stone scheduled timeline for rates to increase to be gradual. We cannot continue the decades long humiliating process of showing up every year begging for money.

The cost of care implementation plan must have a concrete stair step approach to increases irrespective of the year to year status of the state's projected General Fund and Prop 98 or federal funding. We all know that California's fiscal fortunes go from boom to bust and back again with regularity.

This alternative methodology was never initiated with a specific source of funding, it was just assumed that it would be funded from the same pots as we have always drawn from. Bold visionary action requires looking to the future knowing that the alternative methodology is affordable.

As you said, just like the $300 billion in annual spending the state is currently locked into without actually knowing what its future revenues are, it's all projected.

You can literally forever change the destiny for tens of thousands of teachers and providers, enabling them to purchase a home rather than rent, enable them to Fund a decent retirement, and to build generational wealth that can be passed down and help future family Members.

I respectfully assert that rate reform without a locked in schedule for rate increases is essentially failure and no one should be slapped around slapping each other's backs congratulating them. If we don't have that locked in. We can't go from year to year whatever the state can afford. Thank you so much.

Name and affiliation please.

Hi, my name is Justina Erpelding and I'm here on behalf of every child California ECE voices and my comments are going to align with the ECE Coalition. So first I just want to say thank you for your continued support of the ECE community. It's much appreciated.

So California's child care system is at a crossroads and we've seen some enrollment increases. Most eligible children stay still lack access to subsidized care. A major contributing factor is the Low compensation for early childhood educators. Their wages are far below what they deserve and at the current rate, it will take decades for them to catch up.

This wage gap threatens the quality of care and creates a workforce crisis. We need a cost based reimbursement system that reflects the true cost of care for providing the care. And the state has committed to this alternative methodology by July 12025 as we all know.

But we do need a concrete plan, as everyone is saying, outlining how they'll meet this deadline and ensure that fair wages for our essential workers are put in place. Thank you.

Thank you very much. Name and affiliation please.

Good afternoon Chairs. My name is Juliet Terry. I'm with the Child Care Resource center and I'm also here on behalf of the ECU Coalition. I know I have a lot of coalition Members behind me, so I thought I'd do the modal favor and tell you guys our budget requests for the year so you can just meet too.

So first off, before I do that, I do want to recognize that the letter from Budget Chairs Wiener and Assemblymember Gabriel as well as the Legislative Women Caucus letter. Just thank you so much for hearing our needs. This is spot on. Follow your plan, follow your instincts. This is exactly what we need within the field.

The ECE Coalition does request this year within the budget that we do implement the cost based system for ECE providers and the true cost of care based on the federal requirements. We also are requesting the prioritization of the release of additional ECE spaces. We want to get to those 200,000 spaces.

There are over 2 million children currently eligible for these programs. And lastly, in response to the wildfires in Los Angeles, we'd like to ensure that ECE programs are receiving a dedicated funding and support to recover from these devastating wildfires. Funding and support should be equitably distributed to ensure Los Angeles most vulnerable communities can rebuild and thrive.

And then lastly, just more directed to the Administration on the note of legacy. For decades, California has led the nation in our commitment to funding ece. We have made significant gains over the last six years in particular, but we are falling behind other states.

Other states offer universal child care to families under 400% of the federal poverty line. They have adopted reimbursement rate systems that cover the full cost of care. They've established ECE as a constitutional right. California can regain our leadership position in ECE and funding the alternative rate methodology in a multi year plan is our first step. Thank you.

Thank you very much. Name and affiliation, please.

Hello. Thank you. Chairs, Committee Members and the Legislative Women's Caucus for your leadership. I'm Stacy Lee. On behalf of Children Now and a proud Member of the ECE Coalition. True cost of care system includes living wages and parity with TK to 12.

Every other goal we have to improve ECE and child care rides on this coming to fruition as the state has done in other reform efforts like lcff. You set the target and make multi year investments to reach it.

If the target rate is set too Low, we will find the sector in continued crisis and children facing more barriers to opportunity. If the target rate is set too Low, we cannot entice young people to enter this field. If the target rate is set too Low, we cannot entice more higher education to expand their e.

We cannot entice higher education to expand their ECE coursework because they will be evaluated based on the income of their graduates.

And we cannot then expand the system to finally serve the over 86% of families who are left out or wonder why when less than half of our third graders are at grade level for English language arts and only a third of our 8th graders are at grade level in math.

When we know offering strong early childhood supports starting prenatally can eliminate those gaps that start before kindergarten. During the most vital time in a child's life where there's the most significant brain development.

Children need stable, nurturing, caring adults in their lives who are not living paycheck to paycheck or worried if they can afford their own rent or go to the Doctor. We must lift up this field to move California forward. Thank you.

Thank you very much. Name and affiliation, please.

My name is Julia Forte Fruden. I'm the senior policy analyst at the Child Care Law center. And we're also an organization that's a Member of the EC Coalition. Child care providers are dedicated professionals who should be paid fairly and supported for their knowledge, experience and talent.

We thank the Subcommitee for their dedication to funding and implementing this life changing, just policy. And we also share similar concerns related to the timeline and progress of paying child care providers fairly. To pay child care providers fairly, state payments must cover all the costs needed to provide enriching care and operate a thriving business.

We agree with the urgency of the staff or sorry with staff comments in the hearing agenda and urge the Legislator to dedicate ongoing funding to pay child care providers 100% of the actual cost of care starting July 12025.

We also agree with staff comments regarding concerns of funding for rates being held flat and urge a Legislator to dedicate funding to increase provider payments until this policy is implemented. If the state is unable to pay providers starting July 1, paying child care providers fairly will make all our communities stronger. Thank you.

Thank you very much. Name and affiliation please.

Hi, Elizabeth Parker Phillips with Catalyst Family, Inc. So I also support the work of the ECE Coalition, but I also stand here as a product of our subsidized childcare. My mother is a single college student, used subsidized care to complete her education. Catalyst Family, Inc.

Where I work, is a nonprofit organization that provides services throughout the State of California in 16 counties and by rough Google search, that's about 8 of the counties that are represented throughout the two committees subcommittees. We support over 10,000 children in licensed, licensed, exempt and Alternative Payment Programs.

We employ over 1500 staff and it is critical for us as a nonprofit organization to have the timeline for implementation be established. This allows us to plan for services for the 20252026 fiscal year and as an agency we continue to provide services to families and high quality services too.

But like a duck on water our feet are paddling away as we continue to try to retain those quality staff. Some of those staff who could make better or the same money working at In N Out.

We also have wait lists for families in need, but we need to have the stabilization of our staff in order to meet the families on the waitlist. So knowing how we will be adequately funded will help us to stabilize the staffing and be able to enroll more families for the future. Thank you.

Thank you very much. Name and affiliation please.

Hi there, Shayla Williams Barnes with Catalyst Kids. I'm a Regional Director for Catalyst kids. I oversee 22 childcare centers which serves children infant through school, age 140, staff over 1100 children and families serve daily across our agency.

As you just heard, we serve more than 10,000 children in California and employ over 1500 early childhood professionals, professionals who are barely making a living wage. We are in crisis, without a clear budget timeline, we can't plan and our teachers can't survive. We're losing dedicated educators every day because they simply can't afford to stay with us.

Yet we expect them to show up to be the stable, caring presence that families rely on. This is very personal to me. I was raised by a single mother who worked two jobs and went to school. My child care providers were part of my village. They shaped who I am today. Where would I be without them?

The question now is, where will our children be without them? The teachers we are failing to support, we need this timeline. I'm emotional about it. Sorry.

Thank you very much. Name and affiliation please.

Hello, Mackenzie Richardson with Thriving Families California, also a Member of the ECE Coalition. Thank you so much Chair for having this hearing today on the rates. I am here to share that throughout California there exists a child care desert where there are simply not enough child care providers for families to access.

The current rates, even with the addition of the cost of care, plus is nowhere near enough to cover the true cost of providing care. And as we know, poverty is on the rise in California. We are the state with the highest poverty in our nation.

As we work on getting new rates implemented that truly cover the cost of providing care, our child care workforce needs relief now. There is no workforce pipeline of new providers on the horizon.

At a minimum, there must be a COLA budgeted in 25202526 if we are to stop the exodus of child care providers that we are seeing. Thank you.

Thank you very much. Name and affiliation please.

Chair Members, Kathy Mossberg, representing both the first five Association and Grace and child poverty Members and folks who work with the ECE Coalition. Just want to align ourselves and support the comments made by the EC ECE Coalition Representative and support. Thank you.

Thank you. Name and affiliation please.

Hi, Megan Baer on behalf of Early Edge California. First, thank you for having this important hearing. And we really want to stress the importance of, like everyone else here, ensuring timely implementation and sustainable funding of much needed rate reform. We are very concerned.

There's not yet a clear proposal, plan or timeline to move to an alternate rate based. Excuse me, an alternate methodology based reimbursement system. We can't wait any longer to adequately compensate childcare providers for the true cost of care.

Especially at a time when we are losing providers and they're struggling to keep their doors open amid rising costs and there's so much unmet need for families. So. And then lastly, we want to align our comments with the priorities of the EC budget Coalition. Thank you.

Thank you very much. Name and affiliation please.

Buenas tardes, mi nombres Martina Hernandez. Represento a Las provideoras De hables De todo, California. Tango. Benticine co Anos travajando coninos bengo De La ciudad De Hollister, C.A. es Los ninos sin Los ninos yo no soy Nada. Tango Lanfer Parkinson. Temprana De Los ninos. Parafumas Novos ninos. Parel Futuro Novos. Assembly Novo. Presidente.

Gracias.

Buenas tardes, mi nombre es Kenina Gonzalez. Vengo De LA ciudad De Hollister, California.

Gracias.

Good afternoon. Thank you for giving us a space to speak. I want to CCPU that I agree with Max, Carmen and Anita. I'm a proud Member of CCPU. My name is Claudia Alvarado and I have been a provider for 25 years. I have a large license, so I care for 14 children.

And I am here also to say that we need that rate increase to meet our family needs, but also to meet the slots of all those children who are on a waiting list.

In order for us to have high quality care, we need that rate increase because most providers, if not, I want to say 95% of the providers either have a BA, an AA in early childhood development and we have to pay out of pocket for education.

So now we are happy that our union has one of funding for education but before that we didn't have that. So I urge you, you all to help us get to that space. We shouldn't have to be fighting for this every year. Like I said, everything was starting in December. We still don't know anything by now.

So we shouldn't have to go through this every year. We shouldn't have to fight with our teeth and nails almost and close our businesses down to come every year and speak to you. March bring children with us. Families have to leave their work to come with us.

There's a lot of children that are needs that are being unmet and so are providers. Thank you.

Thank you very much. Name and affiliation please.

Hi there. Jennifer Grepi, the Director of Parent Policy with Parent Voices California. And I align our comments today with the ECE coalition as well. You know, 20 years ago I was a mom here at the Capitol fighting for, you know, quality early care and education for my kids.

And since that time, I've been working every single day to fight to make sure that our providers are paid the wage that they deserve. And when we're starting from a wage back this all started because of chattel slavery and the lack of our paying providers what they deserve and what they're worth from the beginning.

And so in order for us to be able to right the wrongs of the history of our country and of our state, we have to, and we must take this year the opportunity to pay our providers what they deserve. And we can't keep making excuses.

You know, every year we have another proposal, we have another work group, we have another opportunity to hear from everybody about what we need. But what we need today and what we need now is for action to be taken so that our providers are paid 100% of the true cost of care that they're providing.

And when we don't do that, what happens is parents are actually being asked to make up that difference through co payments. Right? So we were able. You heard from Maria today about eliminating family Feees and the $17,000 her family alone has, you know, saved because she didn't have to pay those family fees.

But now we're hearing every day we're hearing another parent tell us that their childcare provider just asked them to pay 300400, $500 in a copayment a month. Why? Because the amount that the subsidy is paying is not the total amount that they need to keep their doors open.

And so parents are having to make up that difference. And they just, they can't do it in today's economy. And so we have to take action. I really appreciate you having this hearing today. It really means the world to all of us.

And until we have this done, parents and providers will stand united and fight tooth and nail to make sure that we get what our families deserve.

Thank you. Thank you so very much. Name and affiliation, please. Gracias. Name and affiliation, please.

Daycare.

Gracias. Name and affiliation, please.

Buenas tardes. Mi nombre es Norma Mendoza vivo LA ciudad De Madera, California. Cuido a ocho ninos Porcinco anos Soyuna De Las familias Que fo affectada por El covi aquien cuando California.

Name and affiliation, please.

Posato, California.

Gracias.

Madera, California. Muchas gracias.

Thank you very much. We'll end public comment now.

Great. Really appreciate that. I guess I would say good afternoon but it's. Good evening chair, staff and Members and wanted to one thank you for the work and advocacy you're doing on behalf of the people working class families.

Wanted to align my comments with the ECE coalition but also do wanted to underline and underpin that the importance of childcare is just California runs on childcare. And the working families and the families that are and the people that are managing to uphold and keep up our childcare system have been running on E for about three exits.

And we are now at the time where we need to make decisive action to make sure that we can give folks the money that they deserve to keep us, to keep qualified staff, to keep facilities open and keep people able to pay their bills. Thank you.

Thank you very much. I want to thank everyone for participating in this hearing today. I want to thank staff for organizing this hearing as well. Want to thank my colleagues, want to thank the Members of the Women's caucus.

I want to thank my fellow Subcommitee chair, Chairman Alvarez as well for again joining us in these very important conversations for early childhood education issues. As we have stated before, as we are going to be facing yet another challenging budget year. But that never tells me that we can't do something.

And so I look forward to working with the Administration, working with the Lao Department of Finance, to making sure that we get our childcare system off of life support. We have got to make this happen. It'll never be a good time to spend more money, but one thing is for sure, we know our priorities.

And child care, it ranks one of the ones on the top of our priority list as a state and as a Legislature. And we intend to deliver on that. And so thank you all very much for being here. And at this time, we are adjourned.