Assembly Budget Subcommittee No. 2 on Human Services

We are going to call this meeting of the assembly budget subcommittees number two and three to order. I want to thank assembly member Alvarez for his continued collaboration as we both have parts of the early childhood education system, and we as we try to model what it means to break down silos and to make sure that we're hearing the same things and try to make this system as supportive and smooth as possible between the various segments of the early childhood education system.

This is a very important issue to so many members of the legislature, but most importantly, to working families, just trying to find ways to both support their family, but also ensure that their children are in safe, high quality, nursing environments. It is gonna be important to know that public comment will be taken, in person after the completion of all the panels, and we will make go just jump right into it. We're in for quite a busy day.

And so as always, you'll start to see members going in and out as we beg and plead to get our bills out of different committees. So why don't we just jump on in it and bring up our first issue? And so if you're on the first panel, please come on up. Got it. This hearing is primarily on childcare issues, but we will have another committee meeting on when we start talking about our goals and our dreams to achieve universal preschool as well.

And we'll also be talking at that time about TK and the other segments of the early childhood education system. So at this time, we will start off with the department of finance.

Good morning, chair and members. Krishnam Alhocha, Department of Finance. At this time, we'll be speaking to questions one and six in the agenda as they are directed towards finance, and we will defer, parts of the rest of the questions to the Department of Social Services. For question one, what does DOF estimate is the total annual cost of the proposal for the DSS childcare programs as calculated based on the 2.41% cost of living adjustment and including funding for the CalWORK stages and the emergency childcare bridge program.

The COLA estimate is a 133,800,000 general fund in 2627, and, again, that is inclusive of all programs.

For question number six, we'll say that the for for child care programs, the multiyear projections include only requirements in current law, including the cost living adjustment, baseline program funding, and cost of care plus rates. And for question number two, we'll note that we'll defer the second half of the question to the department.

But for the first half of the question, statute and the collective bargaining agreement do not specify if cost of care plus payments must be paid inside or out of contract, and the department can speak to the process for those being in contract. And for number three, sorry, one more question. Current law requires that reimbursement rates based on the alternative methodology should not be reduced from the reimbursement rates that were in effect on 06/30/2024, inclusive of the cost of care plus rates.

The governor's budget does not propose changes to the statutory language.

Does that include department of finance?

That is it for now, and we're available for questions.

Okay. LEO.

Good morning, mister chairs, members. Dylan Hoxapaluzzo with the Legislative Analyst's Office. We recommend modifying the proposed COLA language to align state preschool and childcare provider, cost of care plus increases. Similar to previous years, the proposed language would provide a increase to cost of care plus payments in lieu of the statutory COLA. Unlike previous years, however, the, the current language would provide different increases across programs.

On page eight of your agenda, you'll see our estimates of what we think the cost of care plus payments will look like for state preschool and child care providers, assuming the colo base is adjusted upward and then may revise from where it is currently, which finance did talk about the adjusted upward amount.

We recommend changing cost of care plus payments uniformly across provider types to stay consistent with the spirit of moving towards an alternative methodology, that that provides rates to the different biofactors such as child age and region, and not provider type. I'll close by noting that the exact COLA percentages that chain will change. It may revise when we have, updated estimates. Currently, our office is expecting COLA to be slightly higher than the 2.41% in the governor's budget.

Thank you. I'm happy to answer questions.

Department of finance.

Good morning. It is Perez with the department of finance. I'll be giving an overview of the California State Preschool Program the governor's budget proposals as well as answering, question one.

Are we doing preschool?

Alright. So the governor's budget provides a total of 2,000,000,000 ongoing proposition 98 general fund and 1,000,000,000 ongoing for non proposition 98 general fund to support CSPP in 2627, which provides both part day and full day curriculum based services for income eligible three and four year old children. Additionally, the governor's budget includes 46,200,000.0 ongoing proposition 98 general fund and 24,300,000.0 ongoing non proposition 98 general fund to redirect the COLA to cost of care plus payments for CSPP contractors in 2627.

We wanna note that this is consistent with the approach we took in the 2025 budget act when we implemented cost secure plus payments in 2526. Additionally, there's an approved BCP for CSPP, which proposes onetime funding of 2,100,000.0 non proposition 98 general fund to continue contracting with third party vendors to provide payment options for CSPP contractors, including electronic fund transfers, EFTs, direct deposits, and paper checks.

And, in response to the first question on the agenda, we wanna note that the 2627 governor's budget includes 46,200,000.0 proposition 98 general fund and 24,300,000.0 non proposition 98 general fund for COLA adjustments to CSPP contractors in 2627. We do wanna note that these numbers may be updated in the May revision pending updated COLA data as well. Thank you.

Okay. Now we'll have CDSS.

Good morning, and thank you. Jennifer Troia, the director of the Department of Social Services. If I may, very briefly, I just wanna take a second to step back before jumping into the questions on the agenda to talk at a higher level about our childcare and development programs at CDSS and reimbursement rates.

Our programs are provided through both voucher based programs, which provide certificates for families to obtain care in a setting that best fits their needs, and state contracted direct service programs for child care centers that provide a fixed number of slots for eligible families. In recent years, in recognition of the critical and positive impacts of early learning and care on children and families, the governor and legislature have together invested quite significantly in this system of early learning and care.

In the last five years, we've nearly doubled total funding for childcare and development programs. We've increased the maximum number of children served significantly. We've negotiated our first and subsequent memorandums of understanding with the state and the childcare providers United Union. And on the topic of this panel, we've taken initial steps to unify our reimbursement rate structures, which have historically been divided between voucher rates informed by the regional market rate survey and a standard reimbursement rate applicable to the direct contracted programs.

Our goals collectively for rate reform include increasing positive outcomes for children, families, and the early care and education workforce and moving toward payment rates that are informed by the actual cost to deliver care services rather than the price that parents can afford to pay as evidenced by the market.

So then turning to your more specific questions that have not yet been addressed by finance, I'll answer the second part of question two. This is a question on your agenda about how we've structured the cost of care plus payments in combination with other childcare payments. So those payments originated from our agreements with the childcare providers United Union as additional payments on top of our, prior reimbursement rates.

More specifically, the question focuses on the distinctions between providing those payments as part of our overall contracts with childcare contractors versus the way that we have approached them, which is providing them separately outside of those contracts. As finance noted, neither the statute nor agreement between the state and CCPU impose a requirement about which direction we go.

That said, providing these funds outside of the contracts has been the most efficient way to make the payments and has resulted in more consistency in the amount of increases received by providers. Another distinction is that providing these funds outside the contracts ensures that all of the additional funding goes directly to the providers. If we were to instead include the allocation for those cost of care plus payments in the contracts, It would take significantly more time to automate the necessary changes and amend all of the contracts.

In addition, the cost of care plus payment structure is simple and consistent across all providers that reside in the same county and are in the same setting. By contrast, there are more than 1,000 per child rate categories.

So bridging these differences would require us to translate cost of care plus payment levels to in contract rate levels, while adhering to the cost of care plus regional payment structure. Finally, folding in out of contract cost of care plus payments into the contracts may require additional funds to maintain the same per child payment amount while accommodating a higher in contract administrative rate. Turning to your fourth question, which was about the process for publicly vetting the next alternative methodology.

So again, we have replaced the regional market rate study as a way of looking at rates and moved to a measure of the cost of care, which is called the alternative methodology. The timelines for our conducting these alternative methodology surveys are set by the federal government and federal requirements.

The next requirement for us to turn one in is for the twenty twenty eight to twenty thirty childcare and development fund state plan. We have to submit that plan no later than 07/01/2027, and it must include an updated alternative methodology. We are in the process currently of establishing a contract with a vendor to support that update to the alternative methodology for the next state plan.

At the time, public engagement activities will include provider surveys to collect up to date information on program operations and associated costs, focus groups to help us further clarify the time and costs associated with meeting specific program requirements, and presentations in public meetings and engagement such as the early childhood, policy council. These activities would happen across fiscal 2627 with specific dates and times dependent on our agreements with that vendor who will be supporting the completion of the activities and the alternative methodology report.

Your fifth question was related to, the time estimates for readiness to set rates according to the alternative methodology. So not just to have proposed that alternative methodology to the federal government as a way of assessing our current rates, but to actually set rates that are informed by it.

What we have shared in prior hearings and quarterly reports to the legislature is that upon finalization of a single rate structure, the policies for that and the availability of needing needed funding, there would be a minimum of two years that would be necessary to complete automation and program implementation activities to transition to that new structure, and that timeline would be subject to change depending on the scale and magnitude of the automation changes, the state resources, and the specific single rate structure rate levels, which have not yet been determined.

In the meantime, we are still making progress toward defining and gaining feedback about single rate structure policies for when that time comes.

More specifically, on 12/01/2025, a joint labor management committee that consisted of representatives of CDSS, the Department of Education, and the Child Care Providers United Union submitted to me as the director of CDSS both joint and individual recommendations on single rate structure policies, such as how the rate structure should vary based on a child's age, on time categories, on nontraditional or extended hours of care, and inclusion rates.

The JLMC recommendations marked a significant milestone in the development of possible single rate structure policies for consideration by the administration and legislature. Those are the updates we have at this time about the time line for transitioning to rates that are informed by the alternative methodology. Happy to take your questions at the appropriate time.

CBE?

Thank you so much, chairs, and members. Virginia Early, with the California Department of Education speaking on behalf of state superintendent Tony Thurmond. So we have heard for years in our state preschool programs from our contractors that the low reimbursement rate in the California state preschool program, especially in our high cost counties, makes it very difficult for them to recruit and retain qualified staff in their programs. And this workforce is primarily comprised of women of color.

And so we have been doing a lot of technical assistance for our programs around increasing enrollment.

And on a recent office hour, we asked folks what are their top barriers for increasing their enrollment. And two out of the top three barriers were staff recruitment and staff retention. So we are really happy to see the cost of living adjustment proposal in the governor's budget. We also know that more is needed when we look at the alternative methodology is true cost of care and what we see in the governor's budget.

So for example, in LA County, the rates on the governor's budget are 29% below what the alternative methodology deems is the true cost of care.

And in San Diego and Contra Costa, those rates are about 14% below what the alternative methodology deems the true cost of care. In terms of cola specifically, we would recommend that any cost of living adjustments get added to the base rate rather than to the cost of care plus rate. And this is really for two reasons. The first reason is that, we continue to hear from our contractors that there's a perception that cost of care plus funds are not ongoing.

And despite extensive TA and we point out the the section of statute that the legislature added to clarify that there's a hold harmless for the rates, there's still a perception and that, is a barrier for folks putting, putting these funds into ongoing expenses such as salaries.

The other, the other thing that we would just share is that, as Elio mentioned, the governor's budget would give different cost of care plus increases to state preschool versus, childcare programs. And so if, you do decide to put these increases into the cost of care plus rate rather than the base rate, we would align with the LAO recommendation of making sure the increases are the same across the board.

In terms of your questions in the agenda, for question number two, I'll just cut touch on a a couple points because I think DSS covered, a lot of it. But, essentially, neither statute nor the agreement, in the CCPU agreement require that cost of care plus rates be added to inside or outside of contract.

I think the challenge is that, the structure of how the rates were negotiated makes it very challenging to put in the contract rate because it's a fixed monthly per child amount, whereas the the current rate is a daily amount that's adjusted based on child factors, such as whether they're part day, whether they have a disability, whether they're a three year old, whether they're a dual language learner.

And so if you if you put the cost of care plus rates in the base rate, then those cost of care like, then those dollars would be adjusted by the adjustment factors that apply. And so that wasn't, what was negotiated. And so because of that, it's hard to put it in the base rate.

So, the final thing is that on the timeline for the alternative methodology question, CD shared in budget hearings last year, that we would need about 24 positions to implement the necessary data system changes. We really appreciate, the allocation of four positions in last year's budget to get started, but also this is not sufficient for us to move forward at this that the pace that would be needed.

And what we're what we're able to do is have some initial planning conversations. What we're not able to do is actually make all of the data system modifications necessary, and we would need additional resources to be to be in a spot to you know, I think DSS said, you know, they need a certain timeline. To even start that timeline for us, we would need the resources in place. And happy to answer any of your other questions at the appropriate time. Thank you.

Questions at this time?

I'll just make a brief comment. Thank you all for your presentations today. Feel very encouraged that we're heading in the right direction with looking at cost of care because I think our workers and our families know that the true cost of care is what we need to fund. So thank you for working towards this.

Thank you, assembly member. Director Troyer, you were mentioning the focus groups that'll be a part of the next round of process, what will the focus group be made focus groups be made out of?

We haven't made those determinations at this time. We're still in the process of onboarding a contractor. And once we have them in place, then we'll make more specific plans for exactly what that will look like.

Okay. I I wanna make sure that just from a the process, I'm assuming some of many of those focus groups members would be actual providers in the various roles that they play. Right? And at what point will the legislature have input on on the alternative methodology? Obviously, the legislative branch is the one that allocates funds, And so, we don't wanna come up with another issue where there is a disagreement, between what we believe providers should be paid and what the administration believes should be paid.

And we wanna make sure that we close that gap in the beginning as opposed to the end.

So we'll be working on the alternative methodology with that contractor once they're in place throughout '26 and '20 the the fiscal year '26, '27 time frame. And absolutely, we'll be both engaging with you all and as you mentioned already with, providers directly and publicly, about the development of that alternative methodology. So I think there will be many opportunities for us to have those that dialogue, and we look forward to it.

Also, does CDSS have an updated time estimate for the readiness to set the rates per the alternative methodology?

Yeah. So I'll I'll reiterate a little bit what I shared. So actually transitioning to the alternate so we have completed the alternative methodology in terms of identifying what is the cost of care, submitting that to the federal government, and using it as a basis for comparison to the adequacy of our rates.

So we have an alternative methodology for assessing rates, setting rates that are informed by the alternative methodology as opposed to the rates we've sort of grandparented in that are that were based on the RMR and the SRR, will take additional resources funding and, statute that actually identified what those rates are. From that period is what I was, earlier referencing in my testimony.

It would be about twenty four months, we estimate, depending on the complexity of those rates that are ultimately set in statute to automate and prepare for implementation of such a transition in the rates. So so much is contingent on the conversations that we have and when we are ready to actually make those changes in statute and begin to implement. We have we do not have a proposal at this time to change how we have set the rates.

But when we reach that point together, then we estimate about twenty four months to make the actual transition.

Department of Finance, the administration has reported a multiyear day of deficit based on the requirements of current law. Does the administration's fiscal assumptions include funding over the multiyear for the increased cost of childcare reimbursement rates that are aligned to the alternative methodology?

Specific to childcare programs, the multiyear projections include only requirements in current law. So that includes cost of today, baseline program funding, and the cost of care plus rates. Since current law doesn't specify rate increases, it's not included in the out year deficit.

What do does Department of Finance predict would be the additional cost necessary to achieve the alternative rate?

Is the question what is the amount? I think I've turned back to the department if they have an amount that was Okay. To transition to rates.

Oh, wait. The cost appear.

Jackie Burrows with Department of Social Services. Let me know if I answer your question. So in the July 2025 quarterly report that we submitted to the legislature, we did provide aa 100% total cost of care as estimated at the alternative methodology at that time, which is around $18,700,000,000 in total. And

With a b in total.

that's So 18,700,000,000.0. Billion dollars with a b.

And it's capturing now or later?

That is capturing this direct service cost, so it's not inclusive of admin cost to contractors.

Thank you for that. Obviously, first of all, I want to say, first, thank the administration for our shared commitment to baseline COLA adjustments to child care. As you know, We just now put back in the COLA adjustments as opposed to the what we had to do to in terms of a pause in COLA. I think this new commitment is a highlight from last year's budget agreement and appreciate the administration for including that in the January budget.

This year's COLA proposal was another temporary solution, though, not a long term policy to build a single rate system that recognizes the true cost of child care reflecting the alternative methodology.

I want to recognize that this proposed temporary COLA policy has many drawbacks as well. One, the administrative cost of alternative payment and CalWORKs agencies are not addressed in the COLA. Two, the increases are in a gray area for legal authority and oversight. They are outside the scope of contract requirements. So, while it's great to have the COLA, we also need to make sure that we get the COLA right ongoing.

I also am concerned that the proposal does not provide further direction to CDSS and CDE on the next alternative methodology process. For example, interest holders have expressed concerns about regional design. As you know, that's the story of California. Our California is so vast with different cost of living, and how can we get it make sure that it that our that moving forward, we gotta figure this part out because we in some places, our our rates are well,

I don't think none of our rates are really the way we need it to be, but some are even worse depending on where they are in the region. Also, the arbitrary ceilings for license exempt providers and the lack, of consideration for, state preschool staff standards as well. CDSS, really, we need to make sure that CDSS, you're not just flying alone on this methodology study design.

We do need to make sure that we have a closer process moving forward so that we can make sure that we're in lockstep of this. I know that, number one, we wouldn't be where we are without the administration setting this as a priority.

And not only that, because of that, we have legislative taken advantage of this, of setting this as a legislative priority so that this goes beyond administrations as well. But we have to continue to to move forward in this effort. So thank you very much for your partnership in this, and looking forward to even greater partnership moving forward. Thank you very much to this panel. Let's bring on up issue number two, case loads and service levels.

And Department of Finance, you may begin when you're ready.

Brandon Brandon Casimir, Department of Finance. Good morning, chair members. The Department of Finance will be deferring to DSS for the responses to the questions outlined in the agenda.

Okay. I would like for you to actually to go through your budget proposal when it comes to this item.

Yeah.

So, Baron Ksenia, Department of Finance, the total funding for childcare programs in the in the proposed governor's budget is 7,300,000,000.0. 4,900,000,000.0 is general fund, 2,200,000,000.0 being federal funds, and 199,000,000 being published in 64 funds. In the proposed budget, there's a federal fund reduction of approximately 76,000,000, and that's in CCDF TCDF funds, and there's a also a reduction of 26,000,000 in proposition 64 funds. Yeah. And total funded slots in the governor's budget is 403,000.

And while the newly added slots since 2021 is around a 125,000.

Idalys Perez with the Department of Finance. So for CSPP, the governor's budget provides a total of 2,000,000,000 ongoing proposition 98 general fund and 1,000,000,000 ongoing for a non proposition 98 general fund to support CSPP in 26-27, and this provides both part day and full day curriculum services for low income eligible three and four year old children. Now in response to the fifth question in the agenda, the 26-27 governor's budget does not include new funding for more three year olds to be served in preschool.

However, we wanna note that in the 2025 budget act, it allocated 35,100,000.0 non proposition 98 general fund and 63,400,000.0 proposition 98 general fund toward a projected 10% growth in three year old enrollment in preschool. We're also happy to have further conversations on this as we work to reach a final budget agreement this spring.

Thank you. LAO.

Dylan Hoxiflazzo with the LAO. Providing a little bit of context, in 2122, the legislature and the administration agreed to expand childcare slots by 02/6800 over the next several years. That plan has been modified in some years. But as of the 24-25 budget, a 129,800 additional slots have been funded. The current intent language would have the state add another 44,000 slots in the 26-27 budget and 33,000 slots in the 27-28 budget.

The actual budget, proposed budget, the governor's budget does not include those additional slots. And as finance mentioned, there was a a seventy five, seventy six-ish million dollar reduction in federal funds in the current year, 25-26, and then also a a net $23,000,000 reduction, mostly proposition 64 in the proposed budget. This adds up to 4,167 slots that would be reduced in general childcare. Our office recommends adopting the proposed reduction in general child care funding.

Given the state's current fiscal condition, we think this reduction will help avoid worsening the structural deficit in the coming years.

Additionally, in recent years, there have been hundreds of millions of dollars within general child care that have gone unspent. Based on the most recent information that we have received, we think this reduction will be made without removing any children who are currently receiving care from services. Lastly, we recommend the legislature monitor unspent general child care funding over the coming years. If additional unspent funds remain in the program, the legislature could consider making further reductions.

This could help put the state in a better fiscal condition and help avoid reductions in the level of services that child that Californians are receiving currently.

That concludes my comments. Happy to answer questions.

CDSS. Good morning, Chair and Members. Claire Ramsey, Chief Deputy Director of the Department of Social Services. The Department of Social Services childcare development programs serve on average 366,700 children each month and aim to provide equitable and stable access to subsidized childcare for eligible low income families and children. As my partners at Department of Finance and colleagues at

LAO have gone over over the last several years since 2021, we have been able to increase our level of slots funded by almost 89% with a 125 new slots added across multiple programs. Additionally, our budget does include reductions because of a federal decrease from our CCDF fund of $75,300,000 and an additional reduction in our prop 64 funding of $22,700,000.

As we move through this process, the department is looking to its administrative processes that it typically relies on, to identify where there may be relinquishment of funds for slots that would not naturally be used. And we are monitoring and expect to provide updates in the May revise related to that that issue.

Going to your questions now, first, how many of the 1,000 excuse me, 4,167 slots have been awarded to contractors, and what are the estimated dates when these services were set to come online? So the governor's budget does expect one 4,167 estimated slots to be to be impacted by the funding reductions because of the federal reduction to our CCDF funding and the prop 64 reduction. We do expect some CCR TR awarded funds to go unspent, however.

And so as a result, we're in the process of identifying where there will be naturally unspent funds. We are working with key considerations, including how to minimize and possibly avoid any service disruptions to currently enrolled children and families.

And we are looking to determine whether there are savings across other programs outside of CCTR, where naturally unspent funds could be used to ensure no family is impacted by this. And again, we do expect to provide an update in me in May revision related to, any unspent funds that could be used for this purpose. Your second question was how many families have been notified of new service ability excuse me, new service availability?

Our intent of the department is to absorb the fund reduction through unspent funds and not impact services for currently enrolled families. As such, if services for families remain unaffected as we are working to, to do, contractors would not need to issue any notices to currently enrolled families.

Question three, what are our immediate cost to childcare contractors for preparations to begin services? And question four, what are the long term impacts of rescinding awards for contractors who have assumed preparation work?

We'll both just for both answers to those questions, we just want to say our intent is to absorb the reduction where dollars would have gone unspent, and this includes identifying contracts and award amounts that can be adjusted while minimizing or eliminating any disruption to contractor operations or their preparatory activities so that we hope not to in impact them directly and allow them to continue completing those exercises in preparation to serve children and to make to expand our contract. Thank you. Happy to take any questions.

C. D.

Good morning, Chair and Members. Stephen Propheter, Director of the Early Education Division at the California Department of Education, speaking on behalf of state superintendent of public construction, Tony Thurman. I'm just gonna provide some brief remarks and some data, some contextual remarks and data around enrollment in the California State Preschool Program. So in October 2025, our state preschool enrollment was about 100,000 children. Well, that's a monthly snapshot.

The annual enrollment is about a 154,000. With the exciting rollout of transitional kindergarten, with this being our first year of it being universal, we've seen our state preschool programs pivot to serving younger children. With the enrollment of children meeting the statutory def the statutory definition of what a three year old is, that number has grown about 77% since twenty one twenty twenty one to 2025. So first year of of kind of our our TK expansion to, to to present.

However, when we consider state preschool enrollment from the, kind of perspective of, when they'll be in kindergarten, when when when a child today will be in kindergarten, We see that children that are two years out from kindergarten entry, so what we would consider threes, comprise the largest age group in state preschool since '23, '24, and that continues to increase year over year.

We do greatly appreciate the funds that were provided in last year's budget that were intended to support the increase in the number of three year old children. A little context, the the reimbursement for a three year old in state preschool is higher than it is for a four year old. So we as you serve more, more three year olds, it it takes up more of your contract funds. So we appreciated the kind of infusion of additional fall funds to ensure, funded enrollment didn't increase.

So in essence, we're keeping the same amount of slots, available for families in in state preschool, which we really appreciated.

Some state preschool programs also chose to enroll two year old children. That was permitted in actions in the 24-25 budget, but it's currently a temporary provision that, expires, 06/30/2027. Between if we're looking at our data for how two year old enrollment has looked in state preschool, so between October 24 and October 25, we've seen a 522% increase. Now in fairness, we did start at 476 children. We went to two about 3,000 children.

That's a pretty substantial increase in the number of two year olds served in state preschool. Based on feedback from our programs, we believe that state preschool could serve a larger share of two year olds. We could create more access to two year old fam two year olds in California through the state preschool program if there were assurances that the ability to serve two year olds in state preschool went beyond 06/30/2027.

As we move out of the hold harmless period that we've we've kind of experienced the last few years, it's difficult to predict how enrollment will look starting after July 2026, which is when we we shift to reimbursement based on on enrollment and out of the hold harmless. Many of our state preschool programs are fully enrolled, and have shared with us that they've, used kind of this time with the in hold harmless to to rebuild capacity and better support families, following the disrupt disruptions of the pandemic.

At the same time, some contractors are still working hard to increase enrollment as they navigate fewer total, preschoolers in the state, in part due to declining birth rates, as well as challenges attracting and retaining workforce, as you heard on the previous panel addressing rate reform. Due to the end of, Hold Harmless, we anticipate that enrollment patterns may shift, you know, in in the short term that make, historical comparisons, unreliable.

And to support, contractors in the transition or the department, over the last few years, we've provided extensive technical assistance. We do see, enrollment as an ex as existential, if if you will. We've done a lot of webinars, office hours, provided online resources, focused on strategies to to maximize enrollment and prepare for this change.

We're also planning on holding some input sessions as we look to, as as we look to the summer to really address, other aspects that make that may make enrollment challenging, such as what families have to provide, right, to demonstrate their the eligibility in in state preschool, as well as what programs have to have to document. Thank you, and that concludes my remarks. We're happy to hear happy to answer any questions at the appropriate time.

Thank you very much. You know, I continue to be disheartened about, at least every year since I've been chair, despite budget agreements between the administration, and the legislature. The administration continues to propose cutting pre childcare slots in the January budget even though we agreed in the previous budget that we will find a certain amount of slots. Why does the administration continue to not hold up to our agreement when it comes to funding the slots at the number of slots that we've agreed to in the past.

Sure. Sorry.

Thank you, chair, for your question. We appreciate our collaboration throughout this process to work on increasing slots across California to make sure our children are served, and we were also quite disappointed to see that our CCDF funding was going down. This was due to a formula change that took place after three successive years of the formula being held flat at the federal government, so it wasn't an expected change. However, it did result directly in us having a reduction in our federal dollars.

We do think that we can absorb this reduction through unspent using unspent funds.

However, we understand the concern about the overall slot reduction as we work toward our goals that we've established together.

I I understand the argument in terms of a reduction of federal funds, but I've always said that it's not that California doesn't have the money. We just don't have the priorities. And the problem with that is is that the federal government also stopped tax credits for Californians to be able to buy Teslas. But the administration found $200,000,000 to put in the budget in January, but, yeah, we did not think that we could find money for these 4,167 slots.

So are we saying that, buying Teslas are more important than providing preschool childcare slots?

Go ahead.

Claire Ramsey for the Department of Social Services. We thank you for that question. And as the department, we see, enormous priority on childcare, but could not speak to external decisions, outside of our department on, tax credits for cars.

Department of Finance?

Tamar Webber, Department of Finance. Can we can't speak to other parts of the budget, but we did make, sort of decisions on how to fund the current slot levels based on what we thought that we could maintain. And so these decisions are made based on the idea that we could maintain the current service level.

LAO, do we not project or or aren't our revenue projections exceeding what we projected from the from even the January budget?

I believe that is the case.

And and did that not happen the previous year also?

Edgar Cabral with the legislative analyst office. So I think we did put out a more recent update of revenues where our revenues are higher in our our projections for 25-26 are higher than the administrations by, I believe, $8,000,000,000. Our estimates of of revenue for 26-27, though, are are a few billion dollars lower than the administration. And I think in either either our revenue estimates or the administration's projections, the bigger issue is less of 26-27, and more going into 27-28.

I think in either case, we have multiyear structural deficits projected, whether you use, previous estimates that the LIO had or, estimates that the Department of Finance had.

And so I think that's that informs part of our, our recommendations. It's not just whether we have the, the funding to cover the costs associated with it in 26-27, but also, you know, if, if you were to backfill, say, these reductions, that does mean your program is bigger moving into 27-28 when when budget deficits are projected to be, $20,000,000,000 or higher.

Does the $20,000,000,000 ongoing deficit structural deficit also includes a prediction that we will also reinstate the corporate net operating expenses?

I'm not sure about that specific policy, but our our forecast at least just projects what's current law, what what are current law and policies. So if that was scheduled to if that had already been approved, whatever the the the state's policy has been on that and and and when it's scheduled to either come back or turn off, that's what we would assume in our budget. So, yeah, that's before assuming any specific actions that the legislature would take to address the budget problem.

That's just sort of our baseline expectation of your current policy related to revenues, current policy related to expenditures.

How many of the administration how many of the 4,167 slots have been awarded to contractors?

Thank you, chair. Claire Ramsey from CDSS. All slots have been awarded in CCTR, but I do wanna draw a distinction. There is us awarding to the contractors, and that has all already happened. And then there is the question of whether all those slots are being utilized in contract and not all slots have been utilized in contract.

So we have awarded them all, but they're not all in contract.

Yeah. What is the primary reason why those slots are have not been filled up?

There are a couple different reasons. Thank you for that question. With relation to slots under our CCTR, we do see that contractors often need multiyear timelines to bring online new classrooms and new facilities. Sometimes that's because they need to actually do construction. Sometimes it's because they have to find and expand a site or do renovations to existing sites.

There's also them going through the proper permitting process and licensing if necessary along with preparing the actual program hiring staff. So we do see that some contractors as they're working toward being able to serve children have taken longer in order to get slots actually up and available ready to serve children. We are trying to keep an eye on that to make sure that those are going to materialize and that contractors can fulfill those obligations.

For our cap funds, which are our voucher funds, we do see sometimes that we need our APPs to be able to absorb the various increases that have happened over the last several years and have the capacity to work with the additional families and children that they will be working with, which means hiring staff, making sure they have processes and procedures in place. Sometimes it includes finding new office space or other facility space.

So some of it is just the system being able to absorb the new money and new slots in the program effectively in under a tight timeline.

So aren't childcare providers already spending money to prepare for these slots only to be informed that those slots will no longer be filled?

Thank you for that question. Our intent is that no one who is in preparation to actually bring on board slots would experience a decrease in their contract if we can find the unspent funds from contractors or funds that will naturally go unspent. Meaning, maybe you thought you were going to bring online enough classrooms to serve a 100 children and you realize that now you're only gonna be able to serve 75, and so naturally that 25 would could be relinquished to us.

So that's an example of where we're really trying to monitor both where contractors cannot fulfill their full contract or will have chronic under spending that we can work with them to write to adjust their contracts to minimize money sitting and being un unutilized.

I could just chime in for CEC. One of the struggles we have is that the assurances for scaling for, like, two year olds don't go beyond the twenty twenty seven year. So they're not necessarily using those funding because they're not confident in the state continuing to fund for those roles, and they would need adjustments for facilities. It's the parties of bodies issue that we face year over year when we try to expand the age range.

So sometimes we see dollars left on the table for slots in that area because people are concerned that they won't see continued funding or reasonable assurances moving forward.

And then I tried to say

Saying they're expecting the state to be consistent?

One would hope.

Interesting. Okay.

And I'd be remiss if I didn't just chime in on question five that our the staff so lovingly set up for us on budget, and I just wanna flag that the additional funds for three year olds was was really helpful, but it wasn't enough to cover all the three year old interest we saw. As I mentioned as Steve mentioned, there was a 522% increase in three year olds that the state preschool program took up.

And so we could use the unallocated prop 98 to meet it, but we would need an additional 123,000,000 to serve our non prop 98 community based organizations. I just wanted to make sure we have that on record since additional funding would be needed to serve those three year olds.

I think the the the reason for my questioning is this. Every year, we fight for slots and then the administrations pulls them out. And then we fight to put them back in only for the administration to pull some of them out the next year. In other words, you continue to break the agreement between the legislature and the administration. And over time, that breaks down the democratic process.

We have to trust that when we make an agreement, we are going to stick with it. And if there's any changes, we don't just find out in a budget release, but we actually have conversations because that's what you do when people have agreements with one another. And so we've gotta change this process because the way it's going is not okay, and children and families are being hurt in the process, and it's gotta stop. And so once again, the administration, we're gonna reject this proposal.

We are going to figure out, based upon priorities, how to fund these 4,167 slots just like we've found out how to fund the 11,000 slots the previous year.

And so it's my hope that when we go through these agreements, that we actually hold up to what we're gonna say because people are spending money based upon our commitments with one another. And I can find a whole host of different ways that we can cut money somewhere else that is a less of a priority than funding families with children.

Because my training tells me as a social worker, there is no greater investments that a government can make, no greater investments than govern government can make than investing in families with children. And I will challenge anyone to look at the data and to look at the research to find something that says otherwise. Not only that, childcare has a multiple multiplier effect that when you spend money on childcare, it actually supercharges local economies also.

That also brings back money into the general fund. Am I wrong in that, LAO, in terms of the the the return on investment when it comes to spending money on families with children and how that contributes to local and state economy?

Sorry. I can't speak to any specific I I understand the the point you're making that, obviously, childcare is a very important thing for people to be able to go out in the workforce and that can help. But I don't think we have any specific research or anything saying that, but we yeah. Appreciate your point.

LIO does not have any research on the benefits of childcare to the economy. Is that what you're telling me?

No. I think I think all I'm saying is in terms of the specific with these specific slots, I I don't I don't know.

Well, I'm not talking about specific slots. I'm talking about childcare as a whole. Right? I mean, obviously I mean, I can probably I probably can just Google your your your site and and actually, I have it right here. According to you, LAO well, including according to some studies from James Hackman on child care, a 13% annual return per year per child.

All that to say is this, is that for us to continue to not invest in child care when we have so many other things we are investing in, I think in the long term is foolish. And I know you all are just the messengers, but what I'm trying to make clear is this. Child care slots are no longer up for debate. We have got to follow through, especially after we've had past commitments already.

The administration has made great strides, and we wouldn't even have made the great strides we have if it wasn't for this administration.

So let me be clear on that. But we have got to make sure that we don't continue to go back to fighting for slots, proposing cutting slots, fighting for slots again. That's just not sustainable, and it's losing trust with child care providers. And the last thing we want is to say that, okay. We wanna fund another 20,000 slots, and they say, well, we don't believe you.

And then now we can't even fill in and create new childcare slots. This is a problem. And so our hope that we can is that we can improve on this system and improve on our process because, our our current, process is not sustainable at this time. Members, any questions or comments? Doctor?

Thank you, chair. I want to echo some of the sentiments of the chair. In my very quick research, I was also able to find some numbers from first first five years fund that it's a $3 ROI per dollar invested as well as an estimated of $24,900,000,000 in economic loss for the childcare that is out there waiting to be found.

And when our families, our women, our single moms, our hardworking families can't go and follow their dreams and find a way to make their families thrive, and they're not able to find childcare, that not only causes economic hardship to our communities, but it also limits the ability of our women and of our families to gain social mobility and then further, bolster our California's economy. So a specific question, those specific 4,167 slots, I'm very disappointing.

The women's caucus has made it a priority to fully fund childcare. So know that all of the women out there and everyone who knows and loves a woman really cares about these slots. So how much would funding those slots cost? What what are we looking at for a budgetary delta on that?

Tamar Webber, Department of Finance. So in order to fund those to return the reduced funding, that would be around a $100,000,000 for both the CCDF reduction and the proposition 64 reduction.

And that would be funding to the level of the new formula?

For the CC I'm sorry. Remember for the CCDF. Yes. That's correct.

Okay. So when we talk about the talk about the loss of economic revenue, the cost actually of not funding these slots, it's much greater than the cost of actually funding them. So I would echo the chair's sentiment here that we have to find a way to fund these slots because the long term investment is just it's going to be remarkable and it's gonna help unlock areas of our economy that we just don't even know about. So wanna look at that.

Specifically around this 522% increase in three year olds, that's very exciting to see that more people are seeking preschool access.

Is this a regional increase or is this statewide? Is this distributed?

I'm so sorry. That that 522% increase is on two year olds

Two year olds.

77% increase Okay. On three year olds. My team texted me right after I said it, but I just wanted to

That's great. Thank you.

Increase across the board.

But that, that's remarkable for two year olds. That means that more families than ever are trying to gain access to the economy and to work and to find education and childcare options for their children. When we look at that percentage, are there regional hot spots, or is this evenly distributed?

Thank you for clarifying that.

We can follow-up on that and break

it down by region for you.

Because then that could help us better understand what that cost is gonna be if we're funding based on regional local expenses for the true cost of care. We can have a better understanding of what budget we're looking for if we can look at it regionally. And then a bigger question with the cuts that came from the federal side, how are other states dealing with this? Do are we looking at what other states are doing to make up their losses?

Claire Ramsey, CDSS. We do engage with other states to understand their concerns. It may be helpful for my colleague colleague, deputy director Jaime Milam to come up to discuss more about our interactions with other states around their cuts. I will just note as California is the largest state by far and we received the most money in CCDF, our funding cut was significant compared to dollar wise compared to some of the other states. Sure.

Thank you, chief deputy. Good morning, doctor Lupe Jaime Milam. I'm the deputy director of the childcare and development division, also CCDF administrator for California. So when speaking to other CCDF administrators across the state, please know that this is also impacting them tremendously as other states don't also have funds to be able to backfill what they were building up. So similar type of conversations that we're holding across the nation.

So I would imagine this would have a federal economic impact as well. It's not just the state of California that's struggling here. Would love to hear some thoughts back on what other states are doing and what collective action we are taking with our, you know, red and blue states across The United States to try to, you know, open up that economy for for all of our families that are looking for childcare slots. This isn't just a California problem. This is a United States problem.

And I wanna make sure that we're doing everything we can to, work together collaboratively through collective action to to fund child care. So thank you.

Thank you.

Okay.

Salimene Alvarez.

Thank you. K. So we've established certainly the the disappointment and the reduction of of slots overall. And from the 98 side, obviously, wearing that hat as chair of that committee, trying to understand what that means for the 98 funded preschool slots. What what is of the 4,167 slots that the governor's budget reduces, how many of them, are attributed to preschool slots?

Hello. Steven Proffer, Department of Education. The 4,167, slot cuts, it's strictly federal, doesn't affect the California State Preschool Program, doesn't affect the Prop 98. They're separate issues.

So at the end of the day though, these are less slots for families to send their children. What would be cut? Who would not what slots would not be available?

I would defer for so it no impact to the California State Preschool Program for the actual cuts and the impact I would defer to our colleagues at social services. Okay.

Thank you.

Chair, Claire Ramsey from CDSS. The slots are coming from two buckets of funding. Just to clarify, it's from the CCDF and from the Prop 64. We are looking for funding that will naturally go unspent already and do expect to have updates in our May revision, but we are looking to not have any children who are currently enrolled or any families currently enrolled actually lose access to care through this reduction.

Although, we do realize it reduces the total number of funded slots in California if it goes forward.

Are are you stating I don't wanna miss misquote, that you're believe that you may identify some savings within the within the current year's budget that can then be allocated to not reduce the 4,167 slots.

We think we can identify some relinquishments that may not have been able to be spent, and then we can use that to help us fill the gap, so we aren't actively removing, or lowering contracts for children in care.

And, I I you know, to to the doctor Jackson's, it's it's a little I have to get past the sort of infuriating part of now we're talking about restoring cuts. It just but so I'm we're trying to solve that problem, which is not a problem that we've created. It's a problem that the administration's proposal has created, and that's kind of an unfair place to position us in. But nonetheless, that's where we're at.

So I understand now from DSS sort of where, some funding could come to for that, for for the for preschool and the growth potential growth in '98, finance, are you potentially considering growth in '98 for additional preschool slots, to be funded with the May revise?

Is that something that's on the table for you?

Oh, would you mind restating your question, please?

Yeah. So Prop Decision '98 funding of preschool slots and potentially the growth in in in revenue that we're seeing. While it may not be ongoing, there may be growth there to could we utilize any of the proposition 98 funding to help fund slots, whether it's the I know they're different funded differently and they're different types of slots, but childcare is childcare to families. And so if our our goal is to try to produce more childcare opportunities for families, we need to do it in this way.

Are there opportunities for preschool slots to be increased in a May revision proposal from the governor?

Britney Thompson, Department of Finance. Are you asking is there gonna be funding for preschool, additional funding in May revision?

I'm asking whatever you can give me information on about preschool slots related to the May revision. Whatever information you have.

We don't have a proposal for that at the time.

You don't have a proposal, but if there were to be, funds available in Prop 98, would that be a consideration of the administration?

I think we'll certainly see what resources are available within the guarantee.

K. Thank you.

I'm glad I'm, I think I'm, oh, yes.

Welcome the expense of of appropriations. We would be able to address additional slots of receiving additional slots.

You. They they might have not caught that on the microphone, but CDE?

We would welcome additional dollars for slots and would be able to expense that appropriation.

Thank you. K.

Thank you, Mister Chair.

Thank you very much. What I wanna do is I I I wanna have a a discussion after this hearing and before May revise so that we can reaffirm our commitment to each other on how we do business. And so I would like to have, a meeting, with Department of Finance and the administration and CDSS to really talk about moving forward, because we're tired of being surprised in the May revise. And it's gotta stop. There's no net it's not necessary.

We know how to make hard decisions too. We made it in partnership with the administration. Right? But I think, that, this whole, rush at the end only puts people in a place where we're hurting people that don't need to be hurt because we are only making some of the most harmful decisions within a two to three week period. That's not how we should be doing business in the state of California.

And so I would like to make sure that we have the commitment with Department of Finance and the administration that we're gonna sit down and actually start hashing this out so that we can have some joint governance the way the constitution says we should. Do I have that commitment between you all?

Hi, chair. Tamara Webber, Department of Finance. Absolutely. So this is the governor's budget proposal, and I think as we mentioned many hearings, we put forward what is basically a workload budget intending to reflect current law and to maintain service levels, and we see this as just the beginning of where we can start conversations from. So very happy to have those conversations and to have them, ahead of the May revisions so that, we aren't, you know, just scrambling at the end.

I appreciate it. And chair, CDSS is also happy to join those conversations and agrees with our colleague at finance. Thank you.

Thank you very much. So we're gonna hold open this item, and we're gonna request LAO to work with CDSS to identify a solution to achieve federal fund reductions without permanent slot reductions, including but not limited to carryover funds from the childcare programs. And if you need any additional follow-up, which you typically do when I ask for something, which is totally my fault, by the way, please reach out so that we can make sure that we clarify any request that we may have.

So with that, thank you all very much. This concludes this issue, and we'll move on to issue number three.

Department of Finance, you may begin when you're ready.

Vernon Castaneda, Department of Finance. So the governor's budget proposes an an increase of 11,500,000.0 in one time proposition 64 funding for childcare infrastructure specifically targeted towards communities impacted by recent fires. Happy to answer any follow-up questions. LEO?

Yeah. Dylan Hoxiflutze with the LEO. We'll mirror our office's comments on page 19 of your agenda and recommend the legislature request more information on the details of this program. Currently, there's not a lot of information known and more having more information would allow the legislature to make more informed decisions in this space. Happy to answer questions.

CVSS.

Yes. Doctor Lupe Jaime Milam, deputy director of DSS of childcare and development division. I'll start with some just high level opening remarks in regards to the 2627 governor's proposal budget included in the 11,500,000.0 one time transfer of the youth education prevention, early intervention, and treatment account funds pursuant to prop 64 from the California Department of Health Care Services to the California Department of Social Services.

These funds will issue many grants to eligible licensed childcare facilities impacted by the state declared disasters in 2025 to support minor renovations, repairs, and facility improvements. Eligible eligible facilities must have reported disaster impacts to community care license and currently hold an active license, including those that were displaced or have relocated into a new location.

The department is tracking approximately about a 400 or so licensed chakra facilities that reported to community care licensing that they were impacted by the state declared emergency, which also includes the LA fires. LA fires was a primary number in regards to licensed communities affected from those state disaster from that year. As far as the questions itself, how would CDSS recommend amending this program to focus on while this recovery needs?

The intent of the governor's proposal is to support licensed childcare facilities impacted by the state disasters in 2025. The intent of these funds, are targeted for the to make sure that they are recovery.

And then, we're always open to hold further conversations regarding TBL to align with the intent, and support future infrastructure grants of state declared disasters. In terms of the next question, will these funds be specific to LA County victims or statewide? As a reference, it would be statewide of 2025 state disasters. However, mentioning that the the LA, virus was a state disaster and has the the bulk of these dollars, because of that. Happy to answer additional questions when appropriate.

Thank you.

I wanna thank the administration on hearing me on this issue. As you know, I brought this up last year as I went to the fire areas and met with childcare providers, and they talked to me about what their needs were. And we know how hard it is that once you lose a childcare slot in a community, how hard it is to try to get it back.

And I just wanna make sure that, number one, I'll I want LAO to help us with trailer bill language on this because there's a few things that I wanna bring up in my conversations with child care providers that not only is it that when they lost their homes in terms of home based child care or the centers where damage was done.

But all the things that were in it We wanna make sure that these these funds are available for them to be able to recoup, buy new instructional material.

Right? Play equipment, all the different things, and not just the horrific requirements of the fire marshal. I I hear y'all loud and clear on that one. I'm I'm still trying to figure out that. But so we wanna make sure that this is as flexible as possible so that we can get those slots back up and running as quick as possible and even strengthen those.

I know there's still a bit of a transition. I know that families are still trying to make their way back into the community, all those type of things. So I I would love for us to work together to make sure that trailer bill on this particular issue is as inclusive as possible, as well as possible insurance needs. I know I'm sure that insurance rates are increasing. And how do we help fill the gap to make sure that they get the insurance they need, the permitting fees.

Right? I mean, all of those different things that come with making a childcare slot available and operational as well. Any questions on this item? Yep. Assume Assume Amen.

Thank you so much, mister chair, and thank you to everyone for the presentation here today. I just wanted to uplift up the chair's comments on how we can continue to aid with the recovery in Los Angeles and out to Gina and the Palisades and wildfires across the region and the state as you mentioned. So anything that we can do to continue to uplift this request is is near and dear. And so thank you so much, mister chair, for bringing this forward.

One quick question I had was if this is to be done, how quickly could funds be allocated towards folks who have been impacted by this and tryna go back?

So it would be in a way of a mini grant. And as we reference those that had reported out to communicator licensing that they were impacted by the disaster would be prioritized for these funds. So in a sense, they would be asked to apply for these funds versus opening it up to everyone. Just

Thank you so much for that context. And we just wanna make sure that this program is to be allocated and going forward that we get the information out to the community as well in a timely manner. Thank you so much, mister chair.

Thank you very much. Thank you very much for this panel. Really appreciate it. Looking forward to working with you on the trailer bill language. I'm sure that is exciting news for our hardworking providers in these areas.

Thank you so much. We'll move on to issue number four. Just a minute. Okay. Department of Finance, you may begin.

Krishnan Malhotra, Department of Finance. This panel, requests it has a question about possible savings to for abandonment of care guidance. I would defer that question to the department, but I'm available to provide an overview on these trailer bill proposals if requested.

Yes. Why don't you do that? Great.

The first proposal on the agenda is related to family fee deduction. This proposal would codify and ensure that contractors shall reimburse subsidized family childcare providers for the full amount of their certificate and without deducting any family fees to align with current federal requirements. So this proposal is bringing us into federal compliance. The next proposal has to do with excessive absences. So this proposal would give me one second.

This proposal will maximize vital resources for those in need and create a clear definition for excessive unexplained absences and allow the department to disenroll families if they have abandoned care and have had more than thirty days of unexcused absences within a twelve month interval. So just ensure that that slot can be cleared up and another child would be able to be enrolled in the event that family is not utilizing the slot. The final proposal on the agenda has to do with temporary absences.

This proposal would amend health and safety code to expand expand flexibilities for child care providers to be temporarily and occasionally absent from their facility. This would increase the amount of time that a provider could be absent from 20% of the hours, per day to per month, which would allow providers to take medical appointments, participate in collective bargaining, etcetera, while ensuring the children are, still adequately provided for, with substitutes and that parents are notified. And I would defer question one, to the department.

Elio?

No common circumstance on these proposals.

CDSS?

Yeah. So, again, doctor Lupe Jaime Milam, deputy director of the childcare development division, CDSS. Terms of the question in regards to possible state cost savings of having clear abandonment of care guidance, we don't anticipate any cost savings because we assume that if a child is disenrolled or a family is disenrolled for excessive unexplained absence, then another family would be enrolled in place of

CDE?

Thank you, Kimberly Rosenberger, director of government affairs, on behalf of the state superintendent public instruction, Tony Thurmond. On developmentally appropriate TK, we appreciate the clarification about the curriculum, and we look forward to continue discussing it. On family fees, if the legislature chooses to adopt the proposal in the governor's budget for CDSS childcare, we'd request a similar change for CDE programs.

And on abandonment of care, we're gonna air against parity here because we have been in the rule making process with a number of input from parents, contractors, and and public engagement. And so we are already working on, through our regulatory rule making, something to our pace.

The regulation with new language based on extensive input. And the main changes would include, we will now define what qualifies as best interest days, family emergencies. CSPP will have a limited number of unexcused absences and the number of best interest days. So, again, on the abandonment of care policy, we do not want parity as we are already going through the rule making process. And that is all for us.

Thank you for bringing up the parity issue. I I agree that that's also important. Let's have further discussions about that moving forward. The term excessive absence and unexplained Oh, boy. The dreaded definitions.

Yes. So that is part of our CCDF regulations, not health California cannot take credit for having that type of terminology created. Excessive unexplained absences, you know, is what they would like us to have a policy on.

And how are we defining that? Or do we need to continue to or is there already a definition that has to be followed? Yeah.

So the trailer bill reference, I believe, thirty days in regards to a a family that is is not accessing care but has not reported out to the contractor for the reason why. That doesn't trigger an automatic, in a sense, disenrollment. It triggers a conversation to find out what has happened, so then be able to come up with either resources or supports or eventually termination depending on what occurs there.

Okay. If you

the as I said, we've been going through the regulatory process and we've shared our language as well before I went public. But we've put families first and kept contractors whole. So for our definition, we are you know, our expectations are more in alignment with families for tkthrough 12. And so we are happy to share that language with the committee as well. I believe we have shared it after last week, but, that is with family feedback.

And so the the absences do include accommodation for additional services needed by children with disabilities, inclusion of children's religious holidays, and then children won't be disenrolled during a pill period for suspension. So there's a lot of consideration to put families first that we use with the feedback we receive from families and the contractors that we'd be happy to share.

Okay. Any additional questions on this item? No? You know, the the term unexplained, are you saying that that is required to be in there? Yeah.

It's to mirror the federal language that is required from our CCDF regulations.

Is this something new that they've that they are trying that they have added?

No. It it's actually been part of regulations, and it's us then attempting to make sure that we're in line.

Well, let's make sure that we, we're we'll hold this item open, but I wanna request the c CDSS that we continue to work together to further clarify excessive absences. We prefer to remove this term unexplained, but, obviously, we can let's let's keep drilling down on this so that everyone is feeling comfortable moving forward. We don't wanna set up situations where there's some unintended consequences and also making sure that we just understand the what we predict to be a lot of instability moving forward.

And as you know, this type of instability, we anticipate more families being in crisis mode, due to issues of HR one and survival mode, which means it has ripples effect ripple effects, and I I I anticipate that, this might affect people's attend children's attendance and things like that. So let's keep an eye on this just to see, you know, what what and and I'm wondering.

This is dangerous. I'm just going off the fly. So I apologize to the speaker right now. I wonder what can we do when we find that a family is so unstable moving forward that is preventing them from getting their child to childcare and what type of supports we can provide them.

Is there something we can do to even I mean, obviously, I anticipate the data says when people start losing food assistance, when people stop receiving all kinds of benefits that obviously, HR one is going to be provided, that there's gonna be some additional supports.

And maybe the first time we hear about it is based upon a child not showing up. I'm sure CDE can attest to that when we talk about the chronic absenteeism, right, that we're still trying to figure out in terms of the k through 12 system. I would love to have a conversation about what can we do because I don't wanna be back here next year and we hear about not being able to find children who are supposed to get these slots.

And there's now we know that they needed additional assistance, and we know it's coming. What can we do now?

Let's think about that And and about additional ideas that we can do to help stabilize families so that they their child is not missing out on opportunities.

And if I can just kick off that conversation to share the that the contractors that we work with, that both the title five and the alternative payment providers across the state are pretty well poised to do that work. They are the first trusted messengers a lot of times to be to be in contact with the families and work alongside the families to provide them what they know locally are the resources, that makes sense to them and also do the follow-up.

I appreciate them, especially because although they have the case management of enrolling families, many of them reference themselves as navigators because of that work that takes place as part of their, as part of this work. They they truly are trying to meet families where they are and wanting to be supportive.

I just wonder if there's an opportunity to increase additional supports, meaning, you know, obviously, how do we make sure that maybe they're at risk of now being homeless? And so now the mother or father or everyone's trying to figure out, hey. I can't get my child to childcare. We're trying to figure out where we're gonna sleep next. Right?

What I want us to think innovatively like we did during the pandemic. Right? Not about what we currently have because that ain't enough. If you are a family that is still recovering from the fire, local resources may not be what they used to be. So what additional help can we do to give to providers or to connect them so that they don't have to be the sole navigation provider?

That makes sense? I know LAO is gonna tell me, well, hey. Don't forget about the structural deficit, but, you know, that's why I'm not making eye contact with them right now. So let's let's think through this in an innovative way because I I I research show that there's gonna be a ripple effect, and providers are gonna see that ripple effect. And they're gonna need additional support to support the families as well.

So just something I wanna follow-up with you on. Okay?

Thank you.

Alright. Thank you very much to this panel, and we'll move on to issue number five. We're going through this rather fast. We might actually see the sun if we keep going at this rate.

Alright. Thank you very much to this panel, and we'll move on to issue number five. We're going through this rather fast. We might actually see the sun if we keep going at this rate.

And LAO, you may begin when you're ready.

Dylan Hawksworth-Lutzow with the LAO. We were asked to provide a brief overview on prospective pay. In 2024, the federal administration under Biden issued a rule requiring childcare providers be paid prospectively rather than after submitting time sheets. California received a waiver for this requirement until August 2026 and began the process of implementing prospective pay, including providing $30,100,000 in the 25-26 budget package to for system updates and administrative staffing. The governor's budget provides $43,800,000, ongoing general fund to continue supporting admin administrative staffing costs.

In January, a federal rule change was proposed rescinding the requirement to pay providers prospectively. If this change goes into a in into effect, it could be an opportunity for state savings. By not switching to prospective pay, the state could save the $43,800,000 ongoing. That concludes my comments.

CVSS? Claire Ramsey, chief deputy director at the Department of Social Services. Good morning again. The LAO did a nice job giving an overview of the history of perspective pay. So I won't repeat that.

I will just flag that currently, we are required to pay, our providers who work in the subsidized childcare system within twenty one days of the submission of a completed attendance record or sign in and sign out. She does currently required by state law, and we are continuing with that process currently. We did have the federal requirement that has now come under question whether it will move to be an option instead of a requirement, and we are closely monitoring the federal release of their guidance.

We do anticipate the administration for children and families will release its final guidance later this spring. That's the estimated timeline where we hope to understand both whether they are moving it from required to permissive, which I think is fairly expected.

However, we're also hoping for additional guidance on all the implementation and expectation components that would go along with moving to a perspective pay. With that, I'll move into your questions. First question, is it true that CDSS has halted budget at payments to agencies for perspective pay and with what authority? As the LAO

mentioned funds were included in the budget, both one time automation funds and ongoing funds to pay for contractor level activities. We have not halted that, but we have not released that funding to our contractors yet, and we have not moved forward with automation because we really, need to understand what the federal requirements will look like and what, the state will be required to do to, obtain full compliance with prospective pay if that is the discussion that continues to go forward even under a permissive structure.

And so we did not have a timeline laid out in our state budget authority on when we had to release those funds. So it is still available funds. It is still in our January budget, in governor's budget.

However, we are not, releasing it until we have seen what the final rule and guidance is from the federal government because we anticipate there will be probably very specific rules about how to stay in compliance if we move forward with this rule. To your second question, in light of the current federal policy, is the state at risk of not meeting the current legal deadlines and what could be the consequences.

So as was mentioned by the LAO, we are currently under a waiver to delay our implementation of perspective pay until 08/01/2026. However, we do expect updated guidance. Along with that updated guidance from the federal government, the, Administration for Children and Families has also offered states an extension of their waiver if needed as long as, as far in the future until 08/01/2028, if needed.

However, if the administration for children and families makes prospective pay policy optional, a waiver is no longer needed because the state is not out of compliance. To question three, does the administration support a shift to perspective pay? We are happy to continue conversations with the legislature around this.

We do recognize as the LAO does that there could be savings if we did not move forward, including the savings necessary to move payments forward into the current fiscal year in order to make them for the next fiscal year. And we do anticipate that has a significant cost in the 1 to $2,000,000,000 range because we always would have to pay one quarter of the coming fiscal year in the previous fiscal year.

So we do look forward to additional conversations with the admin excuse me, with the legislature about the policy once we see the federal guidance. And then I'm skipping question four because that was an LAO question to question five. Have we halted hiring our five authorized positions? We are currently holding the five positions open pending the outcome of the federal guidance and the add additional discussions that are needed. Thank you.

I'm happy to take any questions.

CDE.

Kimberly Rosenberger, CDE, speaking on behalf of the state superintendent public instruction. After some initial input sessions on prospective pay, we have been waiting to implement prospective pay and allocate funds in order to align with the timing from CDSS.

If the state was to move forward, we would recommend that programs use fiscal year twenty twenty six, twenty twenty seven to prepare for prospective pay so we can hire necessary staff, staff, adjust the workload, and work on the data system automation, and be prepared for full implementation of fiscal year twenty twenty seven, twenty twenty eight. We are happy to share more, respond to questions at the appropriate time.

And if needed, we can also help fill in the numbers for question four where LAO may not have them.

Thank you.

Department of Finance. Krishan Malhotra, Department of Finance. Just to reiterate the chief deputy director's comments on question three, if the federal requirement is removed, the administration would have the opportunity to reevaluate our approach for perspective pay, and that is something that we're happy to do in in conjunction with the legislature. And, again, just emphasizing the one time general fund cost between 1 and $2,000,000,000 to move to a prospective model.

Idalys Perez with the Department of Finance. Yeah. As as mentioned, on our side for CSPP, to align with DSS, there has been a pause of the release of payments for prospective pay due to the potential changes in federal guidance and also to maintain parity across our programs. We also wanna note that based on estimates that the total cost of prospective pay for that one time amount would be projected in the hundreds of billions.

And, you know, we would have we we're open to having further conversations on this as, we work to reach a final budget agreement.

Thank you very much. Just a couple of questions here. I know we are trying to when a provider is seeking for reimbursement, you have a goal on when to make sure that they get that reimbursement back. What is the rate of success from being able to make sure that providers are that you're meeting that reimbursement timeline?

Claire Ramsey, CDSS. We have worked very hard to ensure that we are providing we are giving providers their timely payment. It is a function of our contractors. It is not a state function, and looking to my colleagues to see if there's anything else they would add, but we are generally making timely payments to providers.

Doctor Lupe Jaime-Mileham, deputy director of the childcare and development division, I hope I heard your question because I am right under the vent.

My my question is how successful are you by meeting the timeline? Yeah.

Yeah. On the 21 days. So at this point, I would say the majority of our contractors are making that. The ones that aren't, we had worked with them in the past as we hear directly from providers to make sure that that is being reached. So as of today, I am not aware of any that is not making those payments, within that 21 day window.

Can you just provide that in writing just so that I know you might need some time just to make sure that that is correct? I would love to have that in writing, please. Okay?

Yes.

What would be the benefit of doing the prospective, pay to providers?

Thank thank you, chair. Claire Ramsey, CDSS. We do see benefits to moving toward prospective pay as most parents in the private market are expected to prospectively pay or pay in advance for the services that are received. So the initial thinking behind the federal rule change was that this would help further align our subsidized system with our private pay system by having all payments made in advance.

I do wanna flag that the expectation of a private pay parent is likely that kind of whatever amount of childcare they use in the month, they are paying to hold a slot for their child and it is their money to spend.

We have different obligations with state funds, so there are a lot of implementation and rule concerns about how we do prospective pay as a state to make sure we are being good state stewards of federal and state funds if we were to prospectively pay and that rules were followed around how much care was provided to that child.

So while it does align policy overall and that's an important policy goal, it also does come with a lot of very specific implementation needs and protections that we must put around it. So I just wanna say that there's benefits and there are challenges to moving to that system.

Thank you, for that. Any questions, mister Lane member?

Thank you, Chair. Just one question. I think CDE, I think, made a comment about, the question that we had for LAO, which is the estimated one time cost for shifting the childcare preschool program funding to the prospective model. Do you have any information for us here today on that to see the

Sure. For the one time costs?

For year one, for one time cost, we would need 112 of the funds appropriate in schedule one. So 148,000,000 would be needed to shift from the budget year to the current year. And then the funding would need to be provided in the year prior for prospective pay to be enacted in the first year, so that would be thirteen months of funding. And so that I don't know, Steven, if you can see.

Yeah. So the the 148,000,000 figure is specific to prop 98. So that's our our our LEA based preschools. But similarly to what director, Kim was sharing is for on the non prop side for community based programs, it's about 85,200,000.0. So there's two different bucks of buckets of funding that would have to be adjusted to accommodate prospective pay.

Sorry. I think I I got lost. So $8,085,200,000.0 on the non-98

Correct.

Right, and a 148,000,000 on the 98 side.

Yes. Thank you very much.

Correct.

Thank you, Mister Chair.

Thank you very much. We're gonna hold this item open when we're going to request LAO, to do a cost estimate on prospective pay by program, and looking forward to, any follow-up that you may need. Okay? Thank you very much to this panel. Issue number six, this is our last one.

It makes me, like, maybe wanna, you know, call a recess or something, you know, make this longer. You know? Department of finance, you may begin when you're ready.

Chris Chamaher, Department of Finance. There are no specific questions in the agenda on the BCPs that are listed here, but we're happy to provide an overview if if requested.

Yes. Please do so.

The first request is for the childcare and development division staffing and support BCP. This request would provide 2.2, almost 2,300,000.0 federal funds in '26, '27, and 2,240,000.00 in 2728, and ongoing to support authorized three authorized positions and the equivalent of eight positions for division supporting the childcare and development division at the Department of Social Services. These include account positions within accounting, human resources, research, and legal to assist the department in workload related to the childcare and development division.

Baran Casaneda, Department of Finance. The next one is AB752 a childcare center is a multifamily housing, which allows childcare centers collocated within multifamily housing to be considered a residential use of property for local jurisdictions and ordinances. This is requesting or the request is for 750,000 and general fund for 26-27 and 733,000 for general fund in 2728 to fund four positions for the workload created.

Thanks for

The next proposal is related to the early childhood policy council or a b five sixty three. This, this request would provide the Department of Social Services with a 185,000 general fund in '26, '27, and a 181,000 in 2728, and ongoing. We're the equivalent of one position to support workload for the early childhood poll early childhood policy council, and this position would be to draft agendas and notices for the council and ongoing workload.

Oh, go ahead.

The last proposal on the agenda is licensing during emergencies and disasters for s or or s b five eighty two. This proposal would provide the Department of Social Services with 939,000 general fund in 26-27 and 919,000 general fund in 2728 for the equivalent of five positions.

And these positions would be to implement the Senate Senate Bill 582 which would allow a licensee to request an inactive license status if their facility is not operational due to destruction, significant damage, or closure due to a state or federal, emergency declaration. We're available for any questions.

LAO? We were

asked to provide Dylan Knoxville, LAO. We were asked to provide a bit of context on the number of full time equivalent positions associated with administering, childcare programs. Based on the information that we have in twenty twenty one, twenty two, when childcare programs and support programs were moved into the Department of Social Services, the department received an additional $31,300,000 in funding for 251, additional positions.

Including the current BCPs in twenty twenty six, twenty seven, DSS would be receiving $53,000,000 in funding for 405 positions associated with administering child care programs and child care support programs. This represents a 70% increase in funding and a 62% increase in positions.

We don't have any further comments or concerns on these PCPs.

DSS?

Nothing further. Thank you.

So we're talking about over 4,000,000 in new CDSS positions for childcare. Am I correct on that?

Just to note, the childcare and development division staffing support, the first BCP on the agenda is 2,295,000.000 in federal funds in 26-27. So the this this request is not general funds.

So none of this money is general fund?

Just for that first BCP, none of the money is general fund. The other three on the agenda, so the AB752 the AB563 and the, SB582 those are general fund. But the first request, the the larger one is federal fund.

So the requests are based upon the fulfillment of legislation that was signed by the governor. Is that what you're saying?

Correct.

What are we... I think the initial concern is is that you, the administration is proposing a reduction in slots but an increase in positions. How does that, how does that make sense?

So for the positions, for the first BCP, the childcare development division staffing and support, those federal funds, federal regulations allow the department to use a percentage of the money that is received as state operations for administration. So this is just we're I believe well below that percentage to this day, but this is just in line with require, with what is allowed by the federal government for administrative costs.

Okay. And so, basically, you're just trying to bring as many federal dollars in as humanly possible. Is that what you're saying?

We're actually trying to keep up with the caseload. It's, I mean, there's the opportunity of how much growth we've had since 2021 in comparison to previous administrative through our CD partner. And so therefore, looking at our services such as legal and accounting and others, they have not been able to grow at the pace that we need in order to be able to meet this the need.

And so there will be, unfortunately, some delays that I'm sure contractors probably reach you about in regards to some of the things we do that we can obviously do better with the staffing appropriately of that of the funds.

And none of these funds can help with maintaining childcare slots?

I think we can have more conversations in regards to the slots and also the caseload. I think it's important to have both conversations.

Oh, I agree. And looking forward to having those conversations. Again, you know, we're trying to make sure that the public is not seeing us increase administrative cost but see us also cutting preschool, I mean childcare slots as well.

And so let's have that discussion because it's hard for me to justify an increased administrative cost at the state department until we are finding a way to have a commensurate increase in terms of childcare services.

I understand this is sometimes you're trying to catch up as well from the exponential growth also, but let's make sure that we have these conversations moving forward. So we'll hold this open for the till the May Revise.

Okay. This commences all of our... You sure we can't just create a new panel or something? Our next ECE hearing will be April 8, so stay tuned. So thank you very much to this panel, and we will begin with public comment. We are allowing for two minutes each for public comment. Please come on up and state your name and affiliation. Name and affiliation.

Good morning, Chair and Members. My name is Lourdes Alarcón, and I'm here with Parent Voices San Francisco Chapter. And we align our comments with the ECE Coalition. Childcare helped me my family because my husband was deported.

And at the time, I just I decided to I needed to go back to work. So in order for me to start earning enough for my family, I needed to also get education. So childcare allowed me to go back to work but at the same time get some knowledge.

And that education helped my even to raise my children. I became an educator. I'm a teacher now, and I'm really proud of, like, having raised a healthy family because I had the help of the state providing childcare for my children. Thank you very much, and please support the 77 slots and pay providers the true cost of care.

Thank you very much. Name and affiliation, please.

Good afternoon, Chair and Members. Thank you. My name is Quinn Chung. I'm a Parent Leader with Parent Voices San Francisco.

And who's that with you?

This is my daughter.

Hi, daughter.

She's a little camera shy. So...

Uh-oh.

We align our with the ECE Coalition. Access to childcare help families work and stay financially stable. I'm a registered nurse. My job is essential, but I cannot do it without childcare. I'm currently on the wait list for family, friend, and neighbor care, and I've been told that the wait is long.

Because I'm unable to work, this impacts not only my family but also the health care system that depends on workers like me. This is why we're asking you to find progressive revenue options that fund the promised 77,000 slots and pay providers the true cost of care. Thank you.

Name and affiliation, please.

Good morning, Chair and Members. My name is Elia Fernandez. I'm with Parent Voices in San Francisco, and we align with the ECE Coalition. Child care helps families in getting support in early child care education. Without child care, families can't pursue to a better lifestyle or go to work. This is why we ask to please find progressive revenue options. Thank you.

Thank you. Name and affiliation, please.

Hi. My name is Maria Luz Torre. I'm with Parent Voices San Francisco. Babies cannot vote, but their parents can. They cannot speak, but we can. That's why we're here today. When I first started working a long time ago, my first paycheck was just enough to pay for childcare.

And almost doesn't make sense to go to work, but I wanted to go to work. Then I found out that I was actually qualified for child CalWORKs childcare. And so I'm grateful for that. And I want all the families to have that same access that I had.

And as we know, because of child care, legislators can do their jobs. Doctors, lawyers, teachers can do their jobs. And so we want to make sure that our child care providers are paid fair. They get paid compensation that meets their childcare cost. And also we are asking, I'm sure you're on our side, but I just want to say it.

We're asking the legislators and the governor to keep the promise, fund all 200,000 childcare spots, and now we still have 77,000 unfunded. Pay providers what it costs to do care and find the money. Use fair revenue solutions to fill the funding gap, not cuts to kids and families. Thank you very much.

Thank you very much. Name and affiliation, please.

Good morning. Maclean Rozansky with the Alameda County Office of Education. Throughout the establishment of the mixed delivery UPK system, COEs like ACOE have played a pivotal role in supporting LEAs through planning, professional development, mentoring, and capacity building efforts.

ACOE joins LACOE along with many other advocacy and education partners in requesting ongoing funding for COEs so that we may continue to serve these critical functions. Investing in UPK is an investment in California's future.

High quality early education improves student outcomes, strengthens communities, and models organizational excellence. Continued support will empower COEs to serve as vital hubs in the mixed delivery system, fostering strong partnerships that benefit children and families statewide. Thank you.

Thank you. Name and affiliation, please.

Hello. I'm Deo Augustine. I am a family childcare home provider in San Jose for eighteen years and a member of Childcare Providers United. Right now, providers are being pushed to the edge by a system that is fundamentally broken.

Like Mr. Jackson said, we need a change in their system and processes. California's childcare system is unstable because reimbursement rates are based on data from a decade ago, covering as little as 30% of true cost of care.

While the prices of groceries and rent are skyrocketing, two thirds of providers cannot afford to pay themselves a salary. When providers are forced to close their doors, children lose stability. Parents are forced out of the workforce.

High quality provider care is the essential infrastructure that allows children to thrive and our entire economy to function. We love this work, but we cannot continue to carry a failing system on our backs. I urge you to find the true cost of care so that providers can stay open, children can flourish, and every family has the quality care they deserve. Thank you.

Thank you. Name and affiliation, please.

Good morning, Chair and Committee Members. My name is Portia Triplin, and I am a childcare provider. And from the City of Pasadena, I also service Altadena. I have been a family childcare provider for friends, neighbors, and families for over ten years now. I am here to speak about the LA fire childcare funding.

Last year, I watched as so many providers lost their homes and their livelihoods to the raging wildfires here in the city where I'm from. It was devastating to see how they weren't able to provide the care for the families that needed, and they couldn't go to work.

A lot of them were displaced, including myself. For several months, I could not go back home. I could not provide the services for the families, and a lot of the families left the city because their homes and everything was destroyed.

Many were second and third generation providers offering cultural competent care to historical black communities. These providers are struggling to return to work. Struggling without... Well, the families are without the providers.

They can't, they can't really do anything. It's... I also would like to make it clear that I am a licensed exempt provider for my neighborhood, my church, and we have suffered great loss as well. The childcare services must be, our, we must be included in the funding because we work, we work for the community.

I appreciate the committee's consideration of the governor's proposal to financially support these providers so that we can return to work and do the work that we love to help the communities and the parents go back to work. Thank you.

Thank you. Name and affiliation, please.

Good morning, respected Members of the Assembly. My name is Sofia Ambreen Masood, and I'm a child care provider in Union City, California for almost three decades, 29 years. I'm here on behalf of CCPU, our providers, and the families who depends on us.

Union City is in San Diego County?

It's in Alameda County, Hayward.

Okay. Thank you.

In my program, I have families who have been waiting for years, not months, years for these childcare funds. They are waiting for free childcare or affordable childcare. These are hardworking parents. They are teachers, nurses, janitors, and they're house workers working nights and days and weekends helping this economy running, but yet they don't have affordable childcare. These parents don't know how to keep their jobs and their children safe.

Imagine leaving their children with a relative, with a neighbor, getting worried about. They have to choose between the safety of their children or their job. Imagine if a parent, as a parent, if you have to do that. I hope you don't have to. This is the reality behind wait list.

Providers are forced to close their doors like me because I've been waiting for my own daycare children's siblings to get in my program. I'm forced to keep their slots open because it's a newborn baby who's turning 8, 9, 10 months year old who cannot come in my program. This is not just a childcare issue. It's a workforce crisis. This is an economic crisis.

Meanwhile, children are missing out safe and nurturing environment in the most important time of their life. That's the beginning of their life, which is the base of their childhood. State law calls for 77,000 new childcare slots in this budget for next two years.

Please fully fund these slots because the families have waited long enough. They have been on wait list for years and years. A parent should not have to choose between their job or their child's safety. Thank you so much.

Thank you. Name and affiliation, please.

Good morning. My name is Charlotte Neal from Sacramento, and I'm a 24 hour childcare provider. The expansion of the state program serving children ages two to three...

When do you sleep?

Oh, I have helpers. The state expansion of the state program serving children the age two to three was rolled out without the thought to the high needs of children who cannot thrive yet in classroom settings.

In my own childcare, I had families leave only to realize that these programs could not meet their child's needs for one on one support or to provide care during the long hours the parents work. By the time they realize this, they've lost their subsidy.

And I oftentimes fill that spot. Until more thought can be placed into how the state programs are rolled out, ensuring that unique needs of all children are met and family child care providers are included in the process.

We ask that these programs be sunset. I am here in support of AB 1981 and asking you to stand with us in voting yes on AB 1981. And I'm also asking that you stand with us. We're fighting for equality and solidarity for all child care providers. Thank you.

Thank you. Name and affiliation, please.

Good morning. Rebecca Gonzales with the Western Center on Law and Poverty. I wanna thank you for this hearing and your support for this portion of the budget. At the Western Center, we are supportive of CalWORKs childcare and childcare broadly, and especially wanna emphasize the importance given the work requirements in HR 1 for Medi-Cal and CalFresh. Thank you.

Thank you. Name and affiliation, please.

Leticia Garcia with the Riverside County Superintendent of Schools. Here on item number four, the collection of family fees. Riverside County Office of Education has one of the largest contracts with the state for childcare services.

We currently have 4,500 providers serving over 20,000 kids countywide. Currently, we have 350 families who pay fees, and this is something that they pay to their provider, someone they see every day. The practice has been in place for almost forty years.

And this is rooted in supporting and empowering our families in developing life skills. The proposal to now have contractors collect these fees starting July 1 is a big concern because it's going to create a huge shift in the field, and we are asking to have additional time to create a system that doesn't currently exist.

The additional time will give us, will have give us the opportunity to work with our partners, our providers, and our families so that we can build a system that works for everyone. So just wanted to make sure that that is noted. Thank you.

Thank you. Name and affiliation, please.

Good morning. Brianna Bruns on behalf of California County Superintendents, representing the 58 county superintendents of schools. In regards to item four, I'll align my comments with my previous colleague from Riverside County Superintendent of Schools.

We also have concerns about the trailer bill regarding the collection of family fees. As was noted, this will result in significant impacts, not just to programs, but the actual providers. Such a large lift in such a condensed timeline is our primary concern there.

In addition, we respectfully ask the administration and legislature to provide ongoing funding for the universal pre kindergarten county coordinator positions. These positions are crucial in maintaining the mixed delivery model that our state currently offers and is essential to maintaining an important early learning space. So thank you.

Thank you very much. Name and affiliation, please.

Hi. Good afternoon, morning. Nina Buthee, the Executive Director of EveryChild California. I'm here specifically to give comment on item number two, and we also strongly oppose the governor's proposal to eliminate almost 4,200 general childcare spaces. The administration points out that these are unspent funds, and that's the justification for these costs.

But when I reached out to providers about this proposed cut, the response was immediate. They're really afraid. They're upset about these proposed cuts. These are not abstract spaces. These are commitments that providers are building their programs around.

Many have incurred significant costs, construction costs, lease, hiring, and built classrooms around this in good faith on these contracts. Rescinding this funding now would leave them holding the cost with no path to recover them, and a lot of these programs already have children on their waiting lists.

In front of you, the handout, we've gathered testimony from eight providers throughout the entire state of California. And just to show that these are not hypothetical slots, they represent over 1,100 infant and toddler spaces in active development. They also represent new construction that's underway in child care deserts.

And these are providers who've already signed lease, in the process of hiring staff, in the process of completing licensing inspections. So to me, this will result in service, disruptions. As you noted, and the state tries to work towards serving younger age children, it's really disingenuous to award these spaces and then take them back.

California cannot expand our infant and toddler care while simultaneously eliminating the slots that it has already awarded to make that happen. So thank you for the support in rejecting this proposal. Any information that myself, my organization can give for you, I would be happy to provide that, and we'll follow-up with staff. Thank you.

Thank you very much. Name and affiliation, please.

Good morning. Monique Ramos on behalf of the ECE Coalition. So EveryChild California is a member of the coalition, and everyone is united behind basically proposing or rejecting the CCTR cuts. And we appreciate your work and staff's work on this topic today.

Additionally, as it relates to today's agenda, we would like to say that we support the governor's proposal for the $11.5 million for relief to fire victims and appreciate that proposal and the work that's gone into that over the last few years. And then also, we really are looking for an adoption of the alternative methodology so that we have a plan and we can move forward.

We hear continually from providers about the lack of stability that's happening and it is time to settle up and figure out what the system is like. We are in the process of developing a list of recommendations that will look very familiar to you, quite frankly, which we'll have for you before the April 8 hearing. Thank you so much.

Thank you. Name and affiliation, please.

Sara Bachez with Children Now and also a proud member of the ECE Coalition speaking on item one. As you noted, research does show that childcare costs are pushing our families into poverty every year. Not because they're not working hard enough because but simply because it's so expensive and unaffordable.

Child care is one of our clearest, most immediate ways to reduce poverty. When families can't access care, they cut back their hours, turn down jobs and opportunities, or leave the workforce completely. And that loss of income today, that loss of economic productivity over their lifetime has disproportionately impacted women.

So thank you for calling that out. But when we invest in childcare, we do the opposite. We prevent poverty, we support working families, and strengthen our economy all at one. There are just very few investments that deliver on all three.

So please continue to keep the promise to fund the remaining slots and spaces for our families. California has made significant progress, but we're still far from meeting our true cost of care and reaching all the families that need the support. Thank you.

Thank you. Name and affiliation, please.

Hello. Good morning. Stephanie Jimenez on behalf of Children's Paradise Preschool and Infant Centers. Children's Paradise provides infant, preschool, and school age programs with research based educational tools and curriculums.

Children's Paradise offers equal opportunity and access to high quality early childhood education regardless of family incomes. However, we do have deep concerns with the governor's 2026-27 budget proposal to reduce ongoing funding for general childcare slots by 4,167 slots in the CDSS program.

These cuts will be devastating and result in the centers being closed. These contracts have been agreed upon and relied upon for both the construction and the administration of our childcare centers. If these cuts are not rescinded, the effect on our community will be catastrophic.

Additionally, we want to ensure COLA is applied to the full reimbursement rate, not just the cost of care stipends. Providers can no longer wait for the cost of care rate implementation. For these reasons, we respectfully urge the legislature to preserve these slots and rather continue investing in the future of childcare. Thank you.

Thank you. Name and affiliation, please.

Good morning. My name is Maeva Renaud with Kidango. We are also a member of the ECE budget coalition and in alignment with their statement as well as EveryChild California's statement. I'm here today to let you know that Kidango.

We serve about 6,000 children and families throughout the San Francisco Bay Area, where we provide Early Head Start, Head Start, general childcare, state preschool, and we serve about 92 providers as part of our family childcare home education network.

What I wanted to share with you is that, one, we are grateful for the award that we received to expand our infant and toddler care, which is a huge need for our families, especially those who've been on our wait list. We have one family who had been on a wait list for two years. Our families are counting on us.

And it is essential for us to ensure that families do not lose access to care, especially for programs that have been awarded the CCTR spaces. If investments are reduced, it could impact our plans to expand access to over 180 infant and toddler in San Mateo County's East Palo Alto community.

Our commitment is to the children and families we serve, and we urge you to ensure that funding for childcare contracts are maintained and is based on the actual cost of care. Thank you so much.

Thank you. Name and affiliation, please.

Hi there. Jennifer Greppi, Parent Voices California. Great to be here today. In 2024, we all like came here and created a plan to fund those additional spaces to get us to the 200,000 promised spaces. And so we really just gotta, like, stick with the plan and fund the spaces.

I also just wanted to say that, like, one in nine kids in California are actually getting the care that they need. There are 2 million kids under 13 who qualify for help but aren't getting it. A single mom in California with a baby and an older child pays 63% of her income for child care subsidy.

California's child poverty rate has jumped from 7.5% in 2021 to 18.6 in 2024. And if we don't do anything about child care, that's only gonna get worse. Also not having affordable child care for parents of young children cost California an estimated $17 billion every year.

And good child care investments could bring in more than a 100,000 new moms into the workforce. And for every dollar spent, it's $3 in return. That's, like, the most, like, conservative estimates. I read all of those, like, data points because you asked the best questions that I've heard in forever in hearings.

Like, today your questions were amazing. And I just really appreciate the homework that you do to, like, really understand the issue and to hear us and to know that these policies impact every provider and every parent in the state, and we just we're grateful that you're really taking a hard look at it. So thank you.

Thank you. Name and affiliation, please.

Child care is essential infrastructure that stabilizes families, communities, and all Californians. It's vital to the social fabric of our society. My name is Karina Laigo, and I'm with the Child Care Law Center.

We thank the committee and the Chair for your leadership in rejecting the proposal to reduce childcare spaces and for supporting the $11.5 million for financial support for childcare providers impacted by the LA fires.

We also urge the legislature to fund the remaining 77,000 childcare spaces codified in statute, as the need for affordable childcare is incredibly high and will only increase as families are harmed by the federal government and need to take on additional jobs so they can stay housed and cover their basic needs.

Also we ask the legislature to prioritize the transition to paid childcare providers based off real world costs, listening and listening to and working with providers. And finally, we ask the legislature to adopt the proposal to increase subsidy payments for providers and ensure that policy is equitable. Thank you.

Thank you. Name and affiliation, please.

Good morning, Mr. Chair. Pamela Gibbs representing the Los Angeles County Office of Education. It's a pleasure to be before the committee again. I'm here to speak in support of the universal pre kindergarten county office of education support system.

That was provided in 2021 following the creation of the universal pre kindergarten mixed delivery system. Our request is to continue the funding that we have been using to support our LEAs locally who have been implementing and planning the UPK system.

It has been a sea change for them, as you know, changing facilities, professional development. We've been providing curriculum and instruction training to them that is developmentally appropriate for the range of children that they are serving. So we urge you to continue the funding.

We have data showing the success of the services we have been providing, and our local education agencies have reached out to us and asked us to continue to support them in this way. I also wanna take the opportunity to echo the sentiments of those who spoke in support of the funding for the childcare centers that were impacted by the wildfires.

Of course, many of those centers were our partners, and we urge your continued support for the for the county and for those impacted in that way. We will be sending a letter to the committee. You may already have it. Has a list of all of our coalition members who are also urging the continuation of funding for this program. And I'll be brief.

I know the funding was set to expire in 2026. It has been extended for encumbrance dates, but the funding is running out, and we will need more funding to continue to provide the services. Thank you very much, and have a good afternoon.

Thank you. Name and affiliation, please.

Hi. Good morning. My name is Esmeralda Martin-Singh. And on behalf of the Low Income Investment Fund and Build Up California, and as a member of the ECE Coalition, I align my comments with the ECE Coalition and EveryChild California.

Including making sure rate reform must reflect the true cost of care so providers can sustain their services. We support the governor's proposed investments, including the COLA and the 11.5 million for providers impacted by the LA wildfires.

We strongly urge that these wild fire recovery funds be administered through the existing childcare infrastructure grant program, IGP, at CDSS to ensure funds are distributed quickly using already established infrastructure.

We already have a pipeline of providers who need support, and we know this because we established the LA RISE Fund in response to the LA wildfires. We had almost a 100 applicants, and we've only been able to serve 40 of those providers because of the funding that we've currently have.

Finally, we remain concerned about the funding instability that could result in families losing access to care and providers losing income. Protecting and fully utilizing existing childcare spaces must remain a priority. And I know that you support that. So thank you so much, Chair. Thank you so much for your time and your commitment to families and children in California.

Thank you very much. Name and affiliation, please.

Hello. Jess Guerra with the Child Care Alliance of Los Angeles as well as here on behalf of the Child Care Resource Center. We're both members of the ECE Coalition and align ourselves with the ECE Coalition as well as the all the previous comments that have been made.

I'll only add that as we prioritize the 11.5 million budget ask for providers that have been impacted by the wildfires, we consider family, friend, and neighbor as well as part of the distribution and receiving those funds.

They are essential to the wellbeing of our families and our communities, especially when you consider that 46% of families in LA County rely on family, friend, and neighbor care. So definitely keep them in mind, and we hope to see it in the final budget. Thank you.

Thank you. Name and affiliation, please.

Hi. Good morning. My name is Christina Moore, and I'm the Chief Program Officer at Maryvale and a board member of EveryChild California. We are aligned with EveryChild California's positions that were shared here today.

I'd like to share that Maryvale is a direct contractor for CCTR in the San Gabriel Valley, serving approximately 300 children every day, ages zero to five. I'm here today because our programs need reimbursement based on the true cost of care.

We cannot afford to wait any longer. In addition, the proposed COLA needs to be applied to the base rate. In order to continue to provide high quality early learning experiences to children and families, we need reimbursement that supports the true cost of care.

Lastly, I'm here to respectfully speak to item number two and request that CCTR spaces are not cut. These proposed cuts will negatively impact not only our programs, but also programs across the state who've been working tirelessly to create and license spaces for infants and toddlers. That doesn't happen quickly.

It will impact my programs, as we currently have a wait list of children that we actually have the physical space to serve, but that we cannot serve due to lack of funding in our CCTR contract. California needs these slots to support families, allowing them to work and thrive while their children are safe and healthy. Thank you.

Thank you. Name and affiliation, please.

Hi. Good morning. My name is Candida Duperroir. On behalf of the California Child Care Resource Referral Network and a member of the ECE Coalition, I would like to align my comments with the ECE Coalition and EveryChild California. But I also wanna say this. As a proud mother of three adult children, I was also on the program.

And now my three adult children are doing well. and I have now a granddaughter that uses CalWORKs childcare. And I also worked at an R&R for over 25 years. Erin, you know this. And I wanna say this, we have to continue and we have to do it now and not wait later to make these changes. Thank you.

Thank you. Name and affiliation, please.

Morning. Heidi Keiser, Director of Government Affairs for Child Action. We're Sacramento County subsidy and resource and referral agency. As a member of the ECE coalition, we align our comments with the coalition and EveryChild California. We're serving nearly 20,000 children here in Sacramento with more than 5,000 still waiting for access to child care.

Families need that access to thrive. Regarding the return on investment, we appreciate your comments around that. In 24-25, we invested a 160 million in childcare subsidies. That equated to 265 million in economic activity through parents working in Sacramento. As you noted, these programs are not just supports for families.

They're drivers for economic growth in our state. Rates must be grounded in a methodology that reflects the true cost of providing care. In Sac County, current subsidy rates fall well below the actual cost.

Forcing providers to absorb losses ranges from about 18 to 29% compared to private pay. We thank you for your time and advocacy for a sustainable child care system that meets the needs of families and providers.

Thank you. Name and affiliation, please.

Andrew Avila with Early Edge California. Thank you, Chair and Members, for a very informative, productive hearing. We are members of the ECE Coalition, so we wanna align our comments with theirs in addition to EveryChild California and the parents and the providers that are in the room today.

We wanna thank you for fighting back against elimination of spaces and also wanna take the time to urge that we do right by providers and review, refine, and implement the alternative methodology. Thank you.

Thank you. Name and affiliation, please.

Thank you, Chair and Members of the Subcommittee. McKenzie Richardson on behalf of Thriving Families California Foundation. We also align our comments with the ECE Coalition and their ask. As California navigates economic uncertainty, there are immediate no cost actions that the legislature can take to support families where they are and help more of them access child care today.

So with the sergeant's permission, I have a handout for you all explaining some of those low cost opportunities. SB 902 authored by Senator Grayson and AB 2314 authored by Assembly Member Rogers work together to remove barriers and maximize access for families.

They make it easier for families to complete required paperwork from anywhere while streamlining program rules so existing funds are fully utilized. Together, these measures reduce delays, cut administrative friction, and help ensure available spaces and dollars reach families currently waiting for care.

At the same time, sustaining the system is critical. A cost of care increase is essential to support the provider workforce. We also appreciate the Chair's earlier recognition of the community based organizations that administer these programs.

These nonprofits have not received meaningful cost adjustments in years despite rising costs in health care, benefits, insurance, and operations. So an additional opportunity is SB 1110, which will support these organizations as they serve hundreds of thousands of families statewide.

Additionally, SB 1051 will help more children enroll in the emergency foster care bridge program using currently appropriated funds. Supporting both providers and the organizations serving families is key to maintaining access and meeting the growing needs of California families. Thank you, Chair, for your leadership and continued commitment to families.

Thank you very much. Name and affiliation, please.

Good morning, Mr. Chair. Rosanna Carvacho Elliott here on behalf of the Early Care and Education Consortium, which is serving almost 68,000 children in the state of California. We are also members of the ECE Coalition and align our comments with the coalition.

We also share your frustration, Mr. Chair, with making deals about and making commitments about the number of slots and then and going back on them. I would just like to remind the committee and, I guess, yourself, Mr. Chair, that only 16% of eligible children, as I'm sure you know, are actually able to enroll in our subsidized program.

That's, you know, very disheartening to know that there is such a small population that is actually able to get a slot even though they are eligible. And then we can go into the economic impacts, and I'm not gonna do that. Don't worry.

But to that point, I just wanted to encourage the committee and the legislature to keep the commitment from the 2021-22 budget about the additional 77,000 slots. There are families that need these slots and on the waiting list for years and years trying to get the care. In addition, I'd like to support the money in the governor's budget for the cost of living adjustment.

I look forward to working with you and your staff on how to get that right so that providers across the board are receiving it, and it goes to the base rate so that people can make commitments in terms of how they fund their programs.

And then finally, I'd like to echo the encouragement to put in statute the alternative rate methodology. We really need to get this going and also keep that commitment to providers to pay them based on the true cost of care. Thank you.

Thank you. Name and affiliation, please.

Good morning. Alicia Hatfield, EveryChild California. Dr. Jackson, I just wanna say thank you so much for bringing the tough questions into the room today. I'm sure you felt the hopeful shift when you went there, as folks really couldn't hold back in applauding what you did today.

So thank you, honestly. So moving to the true cost of care, the cost based system is something that the field has been asking for for a long time. And as a fellow social worker, we know that...

You're an MSW?

I surely am.

Go on, girl. Alright. Sorry. We're having a moment. This is how we do it. Okay. Okay.

And as we know, you know, when folks are struggling and they're not being heard, it means so much to move to being heard. And so we wanna make sure that we make good on that promise. But we do have some concerns about how long this implementation for the new alternative methodology is gonna take and how that's gonna impact the temporal validity and stability of the model.

Given the time lag between initial data collection and implementation, we're hoping for clarity in how the model will account for temporal bias and whether a parameter stability will be assessed.

We'd also welcome information on whether external validation will be conducted, including any robustness analysis, and if methodological concerns are raised during development, how those concerns will be addressed.

Given that the original cost study would have been designed with a specific sample structure and analytical assumptions, we're interested in understanding implications on model specification, excuse me, statistical power, and interpretability of the resulting model.

When we have transparency and methodology, rigor in analytic framework, and public access to assumptions and data, we'll be able to see our true north clearly and better understand what it will take to move closer to it.

Lastly, I'd like to discuss the two year old sunset for... Excuse me, for CSPP. For childcare providers, the sunset regarding two year olds in CSPP is a funding cliff. Programs are being asked to move from increased stability back to increased volatility.

The legislature has pushed providers to fulfill their contracts through enrollment of infants and toddlers. But by allowing the sunset to move forward, it also removes the ability to meet that community need.

We respectfully ask for a thoughtful conversation and meeting with fellow stakeholders and the committee that centers on maintaining stability achieved by this policy. We remain committed to working in good faith with all partners to land on a responsible trailer bill solution.

Thank you very much. Thank you for all those that provided public comment. LAO, I forgot some more requests from you. I know you're excited about hearing that. A few things on issue number one, I want to request LAO to work with CDSS and CDE on a process to provide cost of care payments and COLA increases as part of the agency contracts.

And then number two, request LAO to provide recommendations to the subcommittee subcommittees for an alternative COLA proposal that creates a new single rate system aligned to the alternative methodology based on existing rates and that's compatible with existing data systems.

If you have any questions on that, please reach out to committee staff with that. I wanna thank everyone for participating in this hearing. I want to thank my colleague, Assembly Member Alvarez, for continuing our process of collaboration on ECE issues.