Senate Budget and Fiscal Review Subcommittee No. 3 on Health and Human Services

Alright. Good morning, y'all. Let's get started. Oh, thank you. Let's get started today. We're gonna be covering three items today. Childcare, child welfare, and immigration services. We're gonna do childcare, then break for public comment.

And then do the last two sections and then do public comment as well again. So let's kick it off with having the Department of Social Services coming up and provide us an overview, and start off with issue one on childcare budget. I know the Director won't be in the hot seat today, so it falls. Okay.

Good morning, Chair and Members. Thank you for having us today. My name is Claire Ramsey. I'm one of the Chief Deputy Directors here at the Department of Social Services. Before I start focusing on your specific questions in issue one, I want to talk very briefly at a higher level about the childcare and development programs overseen by CDSS and our reimbursement rates.

Our childcare and development programs are provided through voucher based programs, which provide certificates for families to obtain care in a setting that best fits their needs. And state contracted direct services programs for children... Excuse me.

For childcare centers to provide a fixed number of childcare slots for eligible families. In recognition of the critical and positive impacts of early childcare care and early learning on children and families, California has made historic investments in child care and development programs in recent years to help children and families thrive.

In the last five years alone, we have nearly doubled total funding for child and development programs. We have increased the maximum number of children served annually from 294,100 in 2019-20 to more than 366,700 per month currently.

And we have negotiated both our first and subsequent, two subsequent memorandum of understanding between the state and our Childcare Providers United union. Now to move to your questions.

Your first question requested an overview of the governor's budget related to childcare, including the proposed Prop 64 funds to support disasters. The governor's budget includes $6.8 billion in FY 26-27 for CDSS childcare programs. This reflects a net increase of $71.6 million in total funds from the Budget Act of 2025.

Additionally, the 2026-27 governor's proposed budget includes $11.5 million in a one time transfer of the Youth Education Prevention, Early Intervention and Treatment Account, also known as Prop 64 funds, to the California Department of Social Services.

These funds will be issued as mini grants to approximately 400 eligible licensed childcare facilities impacted by state declared disasters in 2025 to support minor repairs, renovations, and facility improvements. Eligible facilities must have reported disaster impacts to community care licensing and currently hold an active license.

Including those that were displaced but have since relocated and remain licensed. This will include facilities largely that were impacted by the LA fires because of the scale of that disaster. Moving to your next question.

I want to do a little overview of the CCDF and Prop 64 reductions. First, the Department of Social Services was notified that there would be an 86.1 million federal reduction in the federal fiscal year 2025. That accounts for $75.3 million in a slot, slot decrease.

Based on a formula change from the federal or a formula update from the federal government. The administration is also currently projecting a $22.7 million Prop 64 reduction for fiscal 26-27. These two funding reductions combined translate to about a 4,176 CCTR slot reduction.

And we are currently assessing how those fund reductions could be absorbed with minimum impact to children in care. So our key considerations in that assessment include how to minimize and avoid any service disruptions to currently enrolled children and families.

To reevaluate across each program, including both our CCTR slots and our CAPP slots, which are our vouchers, so that we can see where reductions can be absorbed and where there might be underspending or unspent funds.

In the case of our CCTR programs, we're looking to determine which contractors will naturally underspend and therefore allow them to not interrupt current activities, such as preparatory activities, but that they will not be impacting currently used slots. And then we do anticipate providing an update of this estimate in May.

And be able to provide more around funds, how the reduction might impact specific programs and estimated slot impacts. My colleague at the Department of Finance will provide additional context on question two. Now moving to question three.

Excuse me. There were a couple questions embedded here related to our general childcare slots and ones that have not been entered into contract and what are common reasons. So with respect to that question, we do think the agenda does a good job describing this issue.

But I want to provide some additional context and information. First, we want to confirm that CDSS has awarded all available CCTR slots, but they just aren't all in contract. Which means we have identified the providers, but they have not all been able to materialize these into slots for children yet.

To find out more what was delaying some slots from entering contract, we did a survey of our CCTR awardees in December of 2025 to further understand their current status, when they think they can start program dates, and their reason for delays.

We saw a couple reasons really rise to the top of what was causing these delays. First, for some of these providers, they are truly creating new childcare infrastructure with these dollars where it didn't exist before.

Meaning, as was pointed out in the agenda, there are facilities to rent. There are sites and permits to be, you know, sought by local governments. They need to complete inspections, including things like fire inspections.

They need to order equipment and materials. And they may also actually still need to be licensed by the state. Additionally, we also have CCTR contractors who are working to recruit and train new staff.

Engage in outreach to make sure they are reaching families who need care, and then enrolling those families. As you may have heard from that list, most of those activities are outside of the control of CDSS. Meaning, we don't have the ability to influence or expedite those processes.

Where we can help is in sharing hiring and enrollment best practices. We do, on the other side of our house, oversee community care licensing of childcare facilities. So where we have heard from a contractor that licensing is a delay or an issue, we are working with our community care licensing team to expedite review and to move that through the process.

We are continuing to provide office hours and targeted in person training opportunities and workshops across the state to support these readiness activities. And we're also trying to really talk to providers realistically about what is possible and whether or not they've correctly assessed the number of slots that they can bring on board.

We wanna continue to have that conversation and determine how best because we, along with you all, want to make sure that we are getting slots into contract and kids are actually being served by those slots. So with that, I'll pause, and happy to answer any questions.

Department of Finance can do more on the number two.

Yes. Brandon Castaneda, Department of Finance. So I do wanna reiterate some points that our DSS colleague just made. The CCDF award reduction is the decrease that we're seeing is exclusively due to formula updates with that.

So that's exclusively due to those formula updates that have been updated since that haven't been updated since the COVID 19 pandemic are now being updated. Additionally, the Proposition 64 adjustment that you're seeing is also just due to revenue adjustment.

The updated revenue adjustments that we're seeing compared to previous estimates. This is this isn't a decrease to the state's commitment to childcare. As a matter of fact, the 26-27 governor's budget is continuing to maintain 1.8 billion towards the over a 125,000 childcare slots that have been added since fiscal year 21-22. Happy to answer any questions.

Is there a rationale as to why it's not being backfilled? I think that's the actual...

Yeah. So the option to backfill is I think this is just made point in time given the conditions like the general fund condition, taking that into account. So as of right now, the state of California doesn't have the resources to provide a backfill to lost federal funds.

LAO.

Good morning, Chair, Members. Dylan Hawksworth-Lutzow with the LAO. We recommend the legislature adopt the proposal to reduce general childcare funding to align with the lower Proposition 64 and CCDF revenues.

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 childcare that have gone unspent.

Our current understanding is that this reduction can be made without removing any children that are currently receiving care from services. We recommend closely monitoring unspent general childcare funding over the coming years. If additional unspent funds remain, the legislature could consider further reductions.

Although that would run counter to the legislature's goal of increasing childcare slots, it could put the state in better, a better fiscal position over the next few years and help avoid reductions to other programs that would result in a reduction of the level of services provided to Californians.

Lastly, we also recommend the legislature provide or request more information on the details of the $11.5 million infrastructure grant program. More information on the planned program timing and awards would help the legislature make legislature make more informed decisions in the space. Happy to answer questions.

Yeah. Thank you so much. Senator, if you have any questions.

Thank you, Chair. Just was wondering, do we have a reason why so many of the slots are being unutilized?

Senator, Claire Ramsey for the Department of Social Services. I'll start, and then if my colleague Deputy Director Jaime-Mileham would like to add. We are seeing right now with slots that are CCTR slots almost that we've hit the sort of extent of the low hanging fruit.

Where we were able to make expansions in either programs that were already serving children but had maybe like extra classrooms that could be activated and could provide additional slot for the CCTR dollars. What we're seeing now is much more almost like infrastructure.

People are going out and actually looking for new facilities or looking to create new spaces that weren't in existence already. And it's just a much longer process to get things from, you know, maybe just expanding a classroom or a few classrooms to actually like renting a new facility, building it out for childcare, and doing all those several steps.

And so we do recognize for some, it has just taken a lot longer. The other thing I would add is we are trying to work with providers who may not be the typical providers who contract with the state. And we think that's an important goal because it's gonna be be bringing potentially underserved areas and new contractors into the system.

But it also means they're fairly unfamiliar with our processes and the work it takes to sort of bring all these pieces online. And so we're just seeing that the newer providers are needing a lot of TA and support to keep moving through the process, and that has definitely made things take longer. And would you add anything else?

Yes. Dr. Lupe Jaime-Mileham, Deputy Director of the Childcare and Development Division. What I would add is, as we continue to assess those direct contractors that apply for the dollars and are going through the, the process, we are also having discussions whether the numbers they had initially submitted in the RFA are realistic.

A lot of times they have a site that they are potentially going to expand. And because the process of the original RFA does take about eight to nine months to go through appeals and all that, they could lose the site.

And therefore, now they are looking for a separate site that may not have necessarily targeted all, I'll use an example, 100 children. But instead, now the new site has 50. It's still a process to have that site open.

When we find that those are available, we have now added another question in our continuing application with our current contractors to say, if you happen to have room to expand, please identify yourself and how many children. And therefore, we then look at that list to make sure that it does stay within the county, which is always our priority. And then be able to fund those relinquishments a lot quicker.

But we've been in this situation for a couple of years now. I think at least I since I've been in the subcommittee. So it's the same story over and over again. But we're not doing anything different. I'm just I just keep hearing the same thing every year.

What are we doing differently to adjust? We know we've known that this has been this issue. Every single year is the same. This is the issue with the contracting. It's the infrastructure. What have we adjusted?

Yeah. So a couple of things that we've adjusted. One is a recognition that when we award slots in a center, in this case, the general childcare, we are now going to speak about what that means. Right? What that means is that it's highly likely that they will not be enrolling children within the next couple years.

And so making sure that we all know that as we're making decisions in the future to understand those timelines I think is going to also inform how we look at slot allocations. So that's one piece. The other piece is that, as we are looking at those applications, we are also now looking at the readiness of those applications. And determining then of that readiness, how quickly we can award those funds to get them into contract.

I think that's another piece that we can do better and make sure that application has that. With current contractors though that are in play now, what is different is that it's more of a contact that we're having with them to make sure we're tracking at what state they are with these dollars.

What that means, and unfortunately, having some honest conversations whether it makes sense for us to continue to invest in a site that perhaps has been in for a couple years but maybe is in step one. And redirect those dollars.

And then finally, the last piece is when we are finding relinquishments or looking at these adjustments, we do have contractors that have also shared that they are more than willing to expand through a family childcare home educational network. Those type of contracts that still adhere to Title 5 do tend to do the enrollments a lot quicker. And we've seen an increase of those two.

Because 10,000 slots is a huge number. And I think what saves us as to why the 4,200 is not gonna stop any services is because we're behind on meeting the moment. So I would disagree with you, sir, that we have continued progress because we have not moved forward.

If we've said that we've added a 130,000 slots, those are including the 10,000 that we have not contracted. Now also subtracting almost 4,200 from that. We are actually going backwards. So I think, again, that's a false statement to say we have continued to move forward. Yes, we've invested so much in childcare. We are leading. I get that.

But I think it's also a false statement to say that we have progressed. We have invested a lot, but we're falling a little bit behind on this. What happens to the unspent dollars? LAO, you've allocated, you've said that it's almost half a billion that has gone up spent in 23-24, and about 170 for 25-26. Where do those dollars go if they're not used?

They just revert to the state.

So they go back to the general fund?

That's correct.

That's BS. Because we are falling behind on further investment in childcare and the money because our inability to be more flexible or really meet the moment in changing the rules that need to be changed to put the dollars out.

And we don't do that. It goes back to the general fund. So we're using once again dollars for childcare to go offset the general fund. And we're not even backfilling what is being removed from the federal and the Prop 64. So it's a double cut. Taking back the dollars that were already given and not backfilling the dollars that the federal government is taking from us.

And yet, in this subcommittee, we're taking a lot of money from counties and we're expecting the counties to meet the moment and fulfill their obligations for all the programs. The federal government has done the same thing to us, but we're not obligating, we're not obligating ourselves to continue to fund our programs.

A little hypocritical of us if we want counties to do that, but we're not doing that. How can we be more flexible in the funds? If it's unused, can they just be directed to vouchers since that's really easy funding that goes out?

Yeah. So we are more than happy to have that discussion in regards to looking at alternatives for the slots.

And the one other thing, Senator, I just wanna add is one component of the reversion is related to the max exposure budgeting that we do do in childcare, which means we're basically budgeting to say we might be using the most expensive type of childcare for the most expensive type of child to basically ensure that we are covering, like, our basis in terms of, like, we won't come in too low.

But that does mean it is anticipated that not every child will use the most expensive kind of care and that money will revert. So that is a portion of why the reversions look so large is because there is a deliberate choice being made to max exposure budget on the voucher side, which does basically lead to reversion. So I just wanna make sure that...

Right. But I think I guess we'd is there a way to not make that decision of reversion right upfront? Like we can do language where after x amount of months, it's not used in contract. That's leftover, for sure leftover, to then revert after 12, 24 months to go back to vouchers. So it doesn't go to the general fund. Or LAO?

Edgar Cabral with the LAO. I think, to your point, I think that is a possibility. I think the one thing to keep in mind is, in that case, if you're from the voucher side, I think providing a lot of money on a if it's only one time, that does create problems because then those slots can be sustained.

So the way to do that in a way that's sustainable would then have to be to permanently take those contract funds from CCTR and move them into the voucher program. So I would be saying contractor, you're not, you haven't gotten up to contract. We're gonna withdraw those funds, but then you'd have to get rid of that contract permanently in order to avoid creating problems on the voucher.

And that makes sense. I know in the Senate plan we put out for 44,000 slots and I forget how much we did. 12,000 are for contract slots. Even us, we're reevaluating if that's too high of a number given the fact that we already have 10,000 in the wait list.

So we're even considering on the Senate side that that should also be decreased so it's not a one time. And I know we have to do an ongoing. As we're looking at the Senate plan and we're negotiating, I do think we need to decrease the number of percentage we allocate for contract.

Recognizing the problems that we have, reevaluating that later once revenues are better because we can continue to have this conversation that we have these many on wait list. Additionally, I'm wondering if you can give me feedback, Chief Deputy, on flexibility on further contract.

If dollars can be used for the first or second year for infrastructure, recognizing that the barriers around permitting, finding a location, all the things that they have to go through. That's it's an impediment for them to move forward. Is there anything holding us back from providing flexibility in how the dollars are used the first to second years?

There is some flexibility we can look at that we could use dollars upfront. There are some restrictions on what CCDF dollars can be used for. For example, it can't be used to build a new facility from the ground up. But we could look at the ways in which dollars could be flexible and the ways in which...

For expansion potentially?

For expansion, yes. But we could certainly take that back. I wouldn't wanna overly commit to that possibility. But I think it's certainly one we could take back and discuss more and discuss with our colleagues.

I definitely would love the the department to look at two options. How we can do permanent removal from contracts to do to vouchers to get more kids in childcare. And second, flexibility around how funding can utilize the first first year to second, so that we can get more contracts.

Recognizing that there's a barrier, you can't do from the ground up a full building. But if expansion, looking at that. And as we do the three party negotiation with the Senate plan, again, moving forward with less contracts until we get it handled and more on the voucher side.

Because again, it's really unacceptable that we invest these dollars in childcare and then the general fund recuperate, claws it back. It should stay in general fund. Okay. Is there anything, Chief Deputy, you can share on the $11.5 million for...

Yes. Thank you. And we are working to provide additional detail on how that would work. We are looking to model it after the minor infrastructure grant that we previously opened up so that we have some basis for kind of how people would apply. They could, they would be, we would be running the application.

It would be again people who had indicated they had impacts through community care licensing. So we would have some validation that they were involved in the disaster. They were within the disaster area and their childcare was in some way impacted.

And then we would allow for sort of set grant amounts. And we're looking potentially at trying to have sort of fixed amounts depending on whether you're looking to provide minor infrastructure on, or excuse me, minor renovations on a center or a family childcare home.

So that there's sort of a predictability and a clear cut way to apply and put out the funds so they can be fairly timely. I'm, excuse me once. I'm just trying to see if I can pull up the timelines. We are looking at the funds... I'm sorry. I didn't don't see it immediately in front of me.

I don't know if you have it, Lupe. But the funds have, I think, three years to be expended. And so we would obviously wanna kick that process off quickly and really start to get the money out expeditiously, which is one of the reasons we're trying to frame it this way.

Because it gives us a good sense of, like, who the eligible people are, how much money there is to provide to them, and kind of the set universe so we can release and running the process through ourselves so we can get the money out more quick.

Full details May Revise?

Yes.

Okay. Going back to Prop 64. Can you clarify? Maybe this is the LAO and Department of Finance question. Can you clarify? Last year, the legislature passed a bill to temporarily halt the increased tax that was gonna come in to increase revenues to Prop 64. Approved by the legislature signed by the governor. So doesn't that say that we did this to ourselves as to the less revenues in Prop 64?

I think yes. So this there are effects by actions that the legislature have taken that affects revenues, and that does mean it changes the amount of revenue coming in so that in, you know, there is a formula in terms of different accounts within the Prop 64 funds. And then and then there's this specific percentage that has been historically provided to childcare. So it does mean that there's a that that there are effects because of the those policy changes.

I think one thing I would notice that our office did put out updated estimates of Prop 64 revenue and we do project that there will be an increase in funding based on more recent months of information. And so the difference may not be as large as that it wasn't in when we get to the May Revision.

Why do we think there's gonna be an increase?

I think it's just based on more recent recent revenue, like what's come in in recent months. It's been a little bit higher in recent months. And so we think it's likely that, you know, when the administration is updating their numbers at May Revision that that would be up.

So of the Prop 64 that's around 964 general childcare slots. So there's a potential in the May Revise for that to be a lower number is what you're saying? Out of the 22.7 million decrease?

Yes. That's right. We think that that would be best. Our estimate is that revenues would be about 17 million higher from Prop 64. So that would help, you know, if those funds are then provided to the CCTR program as they have been before, then that would offset some of those reductions that are in the in the budget because of the decline in federal funding.

Okay. Thank you. Thank you for that. On the CCDF grants fund, we're getting because it was recalculated by the federal government. Are we in the same boat as, are other states in the same boat as us?

Yes, Senator. The federal government did recalculate for every state, and other states did see decreases as well. And it is a fixed pot. So it's not necessarily saying that California had some significant decrease in the number of children or in the rates that were being used to calculate. But instead, that just proportionally, it shifted some of the revenue, or excuse me, some of the funds between different states.

Okay. Thank you. Moving on to the prospective pay. So I know the funds have not been utilized for the past two allocations. So no one's been hired?

We have been waiting to hire to see what was happening. Once the new administration came in last year, there was an indication that they may be looking at these regulations and changing them. And then later in 2025, that is what happened.

They put out a proposed new rule that would make the prospective pay optional and not required, but they haven't. That was just a proposed rule. We haven't seen the final rule yet. We are hoping it'll come out later in spring or early summer.

And we're hoping that will provide more guidance to what the federal government would expect of a state if they were to pursue prospective pay. So until that time, we did not wanna invest state dollars in a proposal that we weren't clear what it was going to look like or what the new timeline might be.

Okay. So there's a, we won't know until next year, next budget year, negotiations to see if we need those dollars or not.

I think that's likely given the fact that the federal government hasn't put out the final regulations yet. Although, I guess they could any day now.

Okay. Thank you for that. Question on the emergency childcare bridge. Can you, can you talk to me a little bit more about how, I know there were a couple of counties that we were able to reallocate some funds and meet their needs.

Can you talk to me in real life? Like what, how is it that we step in? Is it that counties are reaching out mid year saying hey we're running out of funds, and you check with other counties who have extra funds?

Senator, I'll start, and then we'll let Lupe continue with some more specifics. But that's correct. We do do an allocation. There was a reduction in the, some contract or some counties allocation to try to match it to what their expenditures were.

When counties do identify for us, however, that they think there is going to be a projected shortfall, we do work to see if other counties have additional dollars that will go unspent and we do redistribute. That did happen this year with a few counties who had a projected shortfall and some counties who had additional money that they were not going to spend, and we did do that redistribution.

And, you know, we do our best to adequately allocate the money at the beginning of the year based on prior spending. But it can be sometimes a little bit of an art to get the numbers right and so we do sometimes need to do this redistribution. That's a pretty standard process for us. Anything you would add?

Two periods of time that we have for redistribution. One is in December. So we, so we're meeting with counties, hearing what is their need, and then there is a formal process that goes out. And so we have an idea of how much we may already been tracking.

The other due date is towards the end of the fiscal year to make sure that counties are, in a sense, saying we enrolled more, etcetera. Then we're also tracking allocations of others. And if possible, then we'll also do another redistribution then.

Dr. Lupe, have you seen in those conversations the 57.2? I know we've reduced a lot to meet the more accurate need. 52, 57.2, is that seem to be the accurate amount that is needed for the state?

At this point, the expenditures are aligning to this and that's what we're tracking. But of course, we are happy to provide more information in May Revise.

LAO, do you have anything to add on that program? Okay. Senator Grove, do you have any questions on the first item?

I do, Madam Chair. Thank you. I do. I just have a couple of questions and follow-up. You know, when you talk about the 4,200 children care, childcare slots that will result in elimination. Currently, right now, those 4,200 slots do not have children in them. Correct?

That's correct, Senator. We think those right now can be can be basically taken without disenrolling any children who are actively in care.

And it still gives you a cushion of the 10,000 slots that are available minus the 4,200.

That's right.

So that's not, I just wanna make sure that we I understood that.

That's correct. Yes.

And then on the emergency childcare bridge, which was just addressed by the Chair, there was $30 million in unspent money in the 24-25 budget. Correct? And so the decision was made, since you didn't spend the money, we're gonna reduce that down to the baseline. But they don't attribute that equally to counties.

Like I read that Santa Barbara County was not, for seven months didn't, they slowed the enrollment program. Is there the way is there a way that the department can, you know, like if if Santa Barbara's using their money to enroll these foster youth, and I don't, Kern, whoever isn't, can't you just transfer funds?

Because the total budget didn't use $30 million. So how do we make sure it's attributed to counties who are actually working enrolling students in foster care, these foster care programs, and do you have the flexibility to do that or is it all done legislatively?

I'll start, and let Dr. Jaime-Mileham continue. But I would say, yes. We did do a right sizing in last year's budget to reduce the bridge, overall bridge spending to more align with actual expenditures, and that did take effect this year. That did cause some changes to individual counties allocation.

With regard to Santa Barbara, we did see that they had a particularly high potential like over enrollment in their bridge program and did work very closely with them to transfer children as needed to make sure that they could stay enrolled in childcare and there were no disenrollments.

And we also provided additional money to them specifically from other counties who did relinquish, to your point. Exactly the idea that you just suggested, which is some county counties are going to underspend.

Maybe just they don't have as many kids to provide the care for, and some counties will need more. And so we did do a redistribution, and Santa Barbara was one of the counties that received that redistribution.

So you have the flexibility to do that?

We do. We do. And we do try to though be, to the point. We do try to be thoughtful about that and make sure we're working with counties to make sure they're staying within their allocation generally, but then also to work hard not to disenroll any children.

Thank you. Thank you for that. Thank you, Madam Chair.

Thank you. We're gonna hold that item open and move on to issue number two, which is our, a little panel on our commitment to expand childcare. I know we have the department here already, but I'd like to invite Stanislaus County Office of Education up. Parent Voices California and the California Budget and Policy Center up. I think we might have to move this chair over. Yes. Thank you, Dylan. Wait. You're not Dylan. Are you Dylan? Yes. You're Dylan. Full house.

We're gonna have the commit the department kick off this panel.

Thank you, chair and members. Claire Ramsey from the Department of Social Services. The agenda does a good job providing an overview of key achievements of the last five years related to general childcare expansion. So I'll jump in to your specific questions related to progress on slot expansion. To your first question sub a, a description of that progress.

In fiscal year twenty one, twenty two, the governor and legislature agreed to expand access to subsidized childcare by adding a little over 200,000 slots over a multiyear period. Since 2122, nearly a 125,000 new slots have been awarded under a number of different programs including our general childcare development program which is known as CCTR. Our California alternative payment program also known as CAP. Our migrant alternative payment program, CMAP. And the emergency childcare bridge program.

This expansion reflects a near doubling of total funds for childcare and development programs as I met mentioned on the last panel. And that number of a 125 does reflect, the decrease of approximately 4,200 slots from the, federal funds and prop 64 reductions. All of the expansion in slots has allowed us to increase the maximum number of children we are able to serve from 294,100 in 1920 to more than 366,700 per month currently.

So we are, proud of the collective work we've all done to make progress in this space. Next to your sub b, a description of the process towards excuse me, the progress towards changing the way the state pays for childcare in the single rate structure.

In the last year, I'd like to like review our progress. We've made the following progress toward defining and gaining feedback regarding the single rate structure policies. Specifically, we completed the first alternative methodology by the 07/01/2025 federal deadline. And this gives the state the ability to determine the differences between our current reimbursement rates. And we have two of them, both the standard reimbursement rate and the regional market rate.

And the actual cost of care. On 12/01/2025, a joint labor management committee consisting of representatives from the Department of Social Services, Department of Education, and the Child Care Providers United Union submitted to the director of the Department of Social Services both joint and individual recommendations on single rate policies excuse me, single rate structure policies. This report included full joint recommendations on how rates under a single rate structure would vary based on a child's age.

And partially joint recommendations on how rates would vary based on time categories, nontraditional or extended hours of care, and inclusion enhanced rates. The JLMC recommendations provide the department with potential single rate structure policy frameworks to further engage contractors on the feasibility and implementation complexity.

And what additional detail or guidance would be needed before contractors can start making, process and system changes. Next, I'll turn to the what the challenges of achieving the goals of slot expansion and rate reform are. For our CCTR contracts, many of those challenges were described in panel one and relate to creating new childcare places and spaces largely where they didn't exist before.

And additionally, we do see that there are other things that require work to bring, contractors online including hiring staff, doing the training, getting all the materials, doing the enrollment and outreach for families and children. With respect to vouchers, we do see that vouchers can be utilized more quickly.

But we do still see that there are ramp up activities required to utilize those vouchers and to make sure there's outreach and enrollment of families. CDSS is providing, technical guidance on how agencies should routinely also monitor enrollment growth to ensure that they are both enrolling kids, but also enrolling them at a rate that they can sustain over time with their contract amount. On rate reform, over the last year, the state has completed those key milestones that I listed.

But we also see that for, moving forward, we will continue to have, pieces to work on. These include to modifying local and state automation systems, amending existing law and regulations, working to provide clear guidance to contractors, allowing local contractors to modify their procedures and processes and to determine how to set funds and rates under the sing single rate structure.

In other words, this is a major structural change we are making to a long existing childcare system. So we think we've taken many many steps forward but we realize, to the chairs question that it is complex that there, are additional, steps that need to be taken to make progress and to actually get us transitioned over, including key policy decisions that will need to be made in order for us to both move forward on the full rate structure.

And then once that's happened to actually set rates based on that structure. I will turn over for the third question to doctor Jaime Milam.

Yeah. So how can the state then maximize existing childcare funding to ensure that all spaces are filled? So I had on the first panel, I spoke about the continuing funding application capturing that data And as, awardees are relinquishing funds, then we have already the data to look at where we can redistribute funds quickly through the process. Additionally, we have upcoming policy changes to reimburse the the CCTR enrollment now with moving from enrollment, moving to enrollment. Currently, right now, we have based on the hold harmless.

Meaning, we are paying based on, you know, I'm saying that backwards. I'm sorry. We have the policy that pays on right now both number of children in enrolled as well as expenditures. And expenditures is, what drives a lot of this. And therefore now shifting that policy now to uncentered enrollment, will be critical in regards to making sure that we have more, families enrolled in these programs.

In the long term, part of the idea of the single rate structure also addresses the disparities that may inadvertently disincentivize the contractors per, participating in, lower rate reimbursements. And so we know that with the single rate structure, some of these areas that are barriers will potentially be addressed.

And then, similar then, some contractors that operate CSPP state preschool as well as the general childcare at the rate of disparity may cause them to make business decisions that may limit then the expansion of those dollars because of the different rates that exist between the current structure. And and inadvertently then enroll less of an infant toddler, for example, if they're able to get a higher rate in a different, program on that too.

And then finally, the single rate structure program with the same program rules that serve the same children will be addressed, which is one of the key factors addressing this.

Thank you. Are you Tony? I am. Tony, you're next.

Thank you, Senator. Tony Jordan, executive director of child and family services division at the Stanislaus County office education in Modesto, California. Specific to doctor Lupe's penultimate point, and on issue one that was discussed earlier. The information I wanna share with you this morning, I think, speaks directly to not only challenges that we're facing in the field, but also a solution that's a low hanging fruit that we think is a viable thing for, this committee and and further legislation to look at, moving forward.

But a little bit about who we are, we are, the early ed division at the Stanislaus County Office of Ed.

This last year, we were privileged and honored to serve just over 11,100 children and 8,700 families from, a variety of programs. We operate 22 different funding sources, including general childcare, state based migrant, state preschool, and then we collaborate our head start, early head start, and migrant seasonal head start programs, both in center based and family childcare home models. We as you can see in your pamphlet on the left side, there's a folder that you should have been given.

The left side will speak to the issue and the low hanging fruit solution that we see, all of us staring in the face. On the right side, you'll see some one pagers that really speak to who we are in our annual public report to the public.

On page two, you'll see a summary, one pager of our local planning childcare needs assessment. And on the third page, you'll see, the year to date quarterly resource and referral report. Just to give you some background information and help you dive into the weeds a little bit more if you so choose. And then the two booklets that are provided are the full annual republic and the full local childcare, needs assessment from Stanislaus County.

Anyhow, looking at our data, you'll see that our LPC has noted a need of still over 10,000 infant and toddler childcare slots in our county.

Just this year alone, we've already received, over 3,500 requests through resource and referral for childcare specific to infant and toddler needs. And so we know that that's a big need, especially with the advent of transitional kindergarten, not only center based, but also family childcare home, providers having to move to serve the younger age group. What we found is that there is a disparity in our adjustment factors when you look at the center based contracts from CDSS and state preschool center based contracts.

The page two on your left side, all you have to do is look at that sheet and see all the red, and you'll see where all those rate disparities exist. So if we're talking same child, same age group, same, factor that that child might have, whether they're, English language learner, child with special needs, what have you, There is currently a disparity that that needs to be addressed.

And speaking, as I said earlier, that could directly go to some of the challenges you were describing, that are being faced in issue one, as well as what we are here talking about, with issue two. What could that mean? We did two case studies. Had we chosen to enroll families in state preschool who were two years old which over two years old, our revenue would have been a $100,000 higher in just one classroom alone.

Had we enrolled state based migrant children in state preschool, our revenue in one classroom alone would have been a $154,000 higher.

So this rate disparity and the challenge with programs, fully able to earn their contracts in general childcare, state based migrant, could be addressed by aligning the adjustment factors where there's currently some, disparity. What would that do for us at the local level? Well, we firmly believe that we'd be able to, invest and, really speak to and address staffing compensation challenges, ratios, and quality, as well as the family childcare network, programs that we operate, we could really relook at the reimbursement rates for those contracts as well.

And we did have to make decisions. Do we transition those children into state preschool?

Because we can serve two year olds in state preschool, which is a great thing. We don't want that to sunset. But what would that do to our general childcare and state based migrant programs? So we we would be essentially focusing on one program and the other. We do that for a couple years.

We're gonna be told that we're under enrolled and we're gonna have our contract taken away. So this disparity is something that really needs to be addressed. That that process can happen from either CDE or CDSS, and we don't wanna be in that situation as a local contract. Some

final thoughts, sir.

Okay. Final thoughts is, just look at all the red on that second sheet of paper and you can see what the challenges that we're facing in local, programs such as ours that are trying to really do our best to operate this mixed childcare delivery system as seamlessly as possible.

Thank you so much. Thank you. We're gonna turn over to parent voices. Terry Ann.

Good morning, chairman Gervais and community members. I I appreciate the opportunity to be able to share my story. My name is Terry Dare. I live in Lancaster in Los Angeles County. I'm the program manager at A New Vision for You where we provide therapeutic outpatient and aftercare services as well as the supervisor for the community culture broker program where we support and advocate for African American families navigating open cases with the Department of Child and Family Services.

I'm also a mother of seven. My oldest is 26, and my youngest is three. So when I speak about childcare in California, I'm not speaking from theory. I'm speaking from lived experience. When I first moved to California, I wasn't just relocating.

I was fleeing a domestic violence. I was I arrived with two children, two bags, two black eyes, and a a sprained arm, and a busted knee. I was looking for safety, stability, and a chance to rebuild. Instead, as I tried to access childcare, I found myself going through a system that felt traumatizing. I turned to a system that is supposed to support women in situations like mine, but the process was so invasive, so demanding that it felt like I was being victimized all over again.

The amount of information I was required to provide and the way it was handled made me fear for my safety and ultimately led to my abuser finding me. I had to disclose personal details about every aspect of my life without knowing if any answer might disqualify me. It felt like my ability to provide for my children depended entirely on how I completed paperwork. That's not just stressful, it's dehumanizing. After all of that, I waited.

It was it was constant urgency followed by silence. Hurry up and submit everything, and then wait. Meanwhile, my children weren't in stable learning environments. I couldn't work or go to school. Bills didn't stop.

Rent didn't pause. And I felt like I was failing my children even though I was doing everything I could. Eventually, I was approved for CalWORKs and childcare, but the stress didn't end there. Every year meant recertification, more paperwork, and constant fear of losing support if I made even a small mistake, like not turning in a QR seven. There was never a sense of stability, just ongoing pressure.

Later, with my younger children, I experienced a different kind of barrier. I have worked hard to graduate college and start a career providing behavioral health services for foster youth. I was proud to move off of CalWORKs and into a job I earned. But then I was I was told I was no longer qualified for childcare because I was no longer a recipient for CalWORKs. Made too much to qualify, not enough to afford.

I was told I would be placed on a waiting list, but the list wasn't even open due to lack of state funding, so I had to wait for a slot to open on that waiting list. And once that happened, I would then be placed at the bottom of that list. And even then, there was no guarantee I would ever receive care due to the limited funding and slots available. That reality simply didn't make sense.

For a time, I was fortunate enough to have a mother-in-law that I that I got along with.

She stepped in, and because of her, I was able to work. But then when she passed away, we lost more than family. We lost our support. Grief, job disruption, and financial strain collided all at once. I was making life decisions in the grocery store and eventually became homeless for a year.

If I worked, my entire paycheck would go to childcare. All of this happened because the system was not built to ensure that families like mine have access to childcare. I would give our current system an f. In addition to the lack of funding I was told, we also have to acknowledge that this system perpetrates inequity and upholds anti black racism. There are also there are people in positions within childcare agencies who do not look like me or share my lived experience.

And as a result, decisions reflect priorities that favor one demographic over another. As a black woman, I often found myself having to explain and justify my reality to individuals who could not fully understand it, only to be told I didn't qualify. I had to fight through emails, calls, and constant persistence to ask to access what should have been basic support. If I would have given up, I wouldn't have childcare currently.

And I know many families don't have the time, knowledge, or capacity to navigate that kind of fight.

The result is overwhelming overwhelming stress, anxiety, depression, and parents feeling like they are not enough for their children. Child care should not be this complicated. It should

Sorry, Carrie. If you wanna let your colleagues speak as well.

Oh, sorry. Okay. It should be as straightforward as obtaining a birth certificate. Simple, guaranteed, and assessable. Parents who are working, going to school, or or participating in programs like How Works need childcare.

Families should not have to choose between providing for their children and being present for them.

You want me to do this part? Yes. I

think I think that was a good final thought. I'm gonna move it on to you. Yeah. You can let that work.

Alright. Chair members, thank you for the opportunity to testify. I think Terry's, experience was wrong and cruel. And I applaud her vulnerability because it's the mothers and children that are coming after her that are going to benefit. And we thank you.

We were asked to speak about our vision for care. It's simple and bold. A California where every family has access to publicly funded childcare system for children birth to 13. One that centers children's safety, well-being, and development, and is provided through a mixed delivery system with a workforce paid what their work is truly worth. But to get there, we have to be honest about how we got here.

Decades of underinvestment did not create a broken system. It created a system doing exactly what it was designed to do. Serve the fewest children, push families out, and underpay early educators. Designed by a scarcity mindset and by policies that reflect and reinforce racist, sexist, and classist beliefs about who deserves care. But we've made some progress.

We now guarantee up to twenty four months of care. We have updated income rules, so families don't have to turn down, raises. And we've eliminated family fees for the majority of families. But we are far from where we need to be. We would like to offer a different path rooted in racial, gender, and economic justice.

It starts with equity. It means building a system that reflects how families today actually live with different schedules, juggling work and school, and different types of care all at the same time, rather than forcing everyone into a nine to five model that doesn't fit. And we have to say it plainly. A system is not equitable if it exploits the people providing care. Second, access must be universal.

Every family, regardless of income, immigration status, or circumstance, should be able to find care. Like survivors like Terry, a parent working at the night shift at Target, or a farm worker needing care at 4am. So, they can find the care where and when they need it. That's when we know the system is truly accessible and working. It needs to be free.

No co payments, no barriers, just like we treat K through 12 education. We're not asking for pay stubs. And where do you work? It's just guaranteed. We must invest in a thriving works, workforce.

Educators, disproportionately women of color, deserve living wages, benefits, and the right to organize, fund it at the true cost of care. They must be treated as essential, not expendable. The system must be culturally, linguistically responsive. And thanks to our partners at Black ECE, that includes black English when we speak about language justice. And finally, families and providers must share power in shaping the system.

It's those who are closest to the problem, who are closest to the solutions. You have to have folks who are running programs, who are on the floor with children, who are having to deal with navigating paperwork. If the system was designed by them, it would actually work. We believe that universal childcare is not just a vision, it is a choice. California has a choice.

We must choose children, not corporate well revenue plan. We're grateful for the 44,000 slots. We that should be the minimum. We don't wanna see that reduced. Thank you for the, revenues as well.

Thank you. Thank you. So much. And our final, panelist. Sorry.

Laura?

Good morning.

You can get it closer if you

if you can move it. Yeah.

Oh, or maybe not. There we go.

Alright. Thank you. Good morning, Chair Menjivar and members of the committee. My name is Laura Pryor and I am the research director at the California Budget and Policy Center. We are a nonpartisan research and analysis nonprofit that uses our budget expertise to advance public policies that improve the lives of Californians with low and middle incomes.

We appreciate the opportunity to join this important conversation around California's commitment to expand childcare, which the Senate has proposed to advance in your recent budget plan. My remarks outline California's recent public investments for expanding childcare, as well as considerations for increasing these investments. I'll begin by discussing three key points. First, addressing the unmet need for childcare. Next, expanding across our mixed delivery system.

And thirdly, supporting the childcare workforce. To my first point overall, the state has invested in expanding the number of subsidized spaces, but this expansion has been indefinitely paused well before fulfilling the demand. Specifically, the number of children enrolled in California Department of Social Services or CDSS childcare programs grew from about 218,000 in 2019 to 356,000 in 2024, reflecting a 63% increase. And while this increase should be celebrated, it is still very far from the overall need for childcare.

The budget center estimates that in 2024, only 16% of children eligible for childcare programs were actually enrolled.

Now, this is an improvement from the 11% in 2022, but the reality is that 1,800,000 children are eligible for childcare programs, but not yet served. To my second point, expanding programs across our mixed delivery system, childcare program enrollment during October 2024 shows that 40% of parents chose licensed family childcare, 31% chose family friend and neighbor, and 29% chose a licensed center.

This diversity of options is critical, particularly for families who work outside of traditional school hours and for families who prefer providers that reflect their culture and language. However, in recent years, the state has chosen to invest heavily in only one setting, school based, through universal transitional kindergarten or TK. Universal TK cost the state an ongoing 3,000,000,000 proposition $98.

Since TK does not operate in non school based settings, this funding structure prevents many families and children from benefiting from this significant investment. To my third point on the workforce, the state has made important investments in the childcare workforce, but providers are still paid far below the cost of care, which in turn limits access for children and families across our state.

Led by the hard work of Childcare Providers United or CCPU, the union representing home based childcare providers, in recent years, the state has funded cost of care plus rates, as well as a retirement and health care fund for home based providers. Additionally, in 2023, the state launched their rate reform process so that provider pay will be based on the cost of care instead of basing rates on what parents can afford to pay.

Despite these investments, currently, some providers are only being paid as low as 24% of the cost of care for infants.

The state has not provided a clear timeline for finalizing the rate reform process to ensure that the gap between current rates and the cost of care meaningfully closes. These three points highlight that the state has made important investments in childcare, but these gains have not gone far enough. The state should be charting intentional steps forward that build on recent investments. The budget center recommends the following actionable next steps. First, all investments should center parent and provider priorities.

Everything that Terry and Mary just shared must be the foundation to all policy decisions. Without this, the state's childcare policies may perpetuate the long standing racial and economic injustices baked into the system. Therefore, in addition to funding the 77,000 promised spaces, an actionable next step is to ensure that we are learning from the shortcomings of TK expansion and direct future expansion across all programs in our mixed delivery system.

Second, the state needs to advance rate reform based on an accurate cost of care as soon as possible. The state's version of the cost of care estimates are complete.

However, these estimates assume that for some counties and some providers, the current rates already exceed the cost of care, which is not true and problematic. A rate structure built on this foundation may result in an equitable pay. As an immediate next step, the state should incorporate feedback from CCPU and others to create a more accurate cost of care estimate, as well as set a clear timeline for implementing a new single rate structure and immediate funding to address the unacceptably low pay providers receive.

Lastly, the state needs to raise new revenue. In 2024, an appropriation of 7,500,000,000 only got us to enroll 16% of eligible children.

You can imagine how much more would be needed to get to 100%. Funding will also need to incorporate rates based on the cost of care and additional childcare facilities. To give you a sense of scale on facilities, the Low Income Investment Fund shared that it cost between 9 and $10,000,000 for a brand new center serving 130 children, as estimated by the National Children's Facilities Network calculator. While these numbers may be daunting, California has the resources to invest more in families.

Our state spends billions of dollars each year on tax breaks, benefiting profitable corporations and the wealthy.

This diverts resources away from meeting families' needs. California can start to raise the revenues needed to expand childcare by creating reasonable limits on corporate tax credits and deductions, and ending corporate tax breaks like Water's Edge, which allows corporations operating internationally to avoid 3 to $4,000,000,000 in state taxes each year by stashing profits in offshore tax havens.

Overall, the state can continue to work toward filling the unmet need for childcare by charting a clear roadmap forward that prioritizes families and providers, pays providers the cost of care, and raises new revenue to care for our communities. Thank you.

Thank you so much. Does LAO have any Yes. Thank you.

Dylan Aslutto with the LAO. We were asked to provide an estimate of the cost of bringing CCTR adjustment factors for three year olds and children with disabilities in line with CSPP adjustment factors. We think this change would cost between 88,000,000 and $131,000,000 ongoing. Our range reflects, that we don't have statewide comprehensive data on the percentage of children in the CCTR program that have disabilities. So it's it reflects our best estimates of what that percentage might be.

Happy to take questions.

Department of Finance, anything to add?

Vernon Kasenera, Department of Finance. Nothing further to add.

Okay. Great. Thank you so much. Let's start with the last point. I think one of the common thing that comes up in in the committee's background did a really good job in in showing the disparity between, state preschool, versus those funded by, social services.

And we just hear the, we just heard the cause potentially from and bring that up to parity. But can there be a ramp up? Have we looked up of just increasing it little by little to get to parity? And can we hear a little bit more from the department of why that disparity exists now?

Claire Ramsey, Department of Social Services. I'll start by saying we're hap we have not had conversations at this point about ramping up. But I think we're open to continued conversations with the legislature and the LAO to understand what a proposal would look like and what sort of the suggestion is toward ramping up on the adjustment factors.

In terms of the adjustment factors, it's a little complicated for the Department of Social Services because those rate increases on were all on the CDE side so they weren't under our purview when they were increased. But basically, during the last few years, there was a recognition of some of the effects of t k.

Our understanding is there was a recognition of some of the effects of t k on CSPP enrollment. And as such, there was a decision made to increase the adjustment factors on a few of these different line items to help level out the, pay rate for, providers in the CSPP space. It just ended up that those adjustment factors were raised only on that side of the house and not on the CDSS side. My

impact was gonna be felt not just with them. Right?

I think we are seeing from our contractors that that's correct because many do hold contracts on both side. But again, it was a proposal made on the CDE side so we were not directly involved. I know

CDE is here if they wanted to add some technical some any additional comments to the creation of.

Yes. Steven Proffer, the director of early education at the California Department of Education. I'm here on behalf of state superintendent of public instruction, Tony Thurman. The I believe we're talking about the the adjustment factor for three year olds in state's preschool program.

That was added shortly after the expansion of transitional kindergarten, really to support state preschools in serving younger three year old children in a recognition that it is more expensive to operate a program that is primarily three year olds versus a, say, a blended three and four year old classroom.

Okay. So you saw the need and you provided the increase to offset? The administration,

did, with the legislature's, concurrence. Okay. Thank you. Yes.

But at that moment, social services did not think that was going to also be felt with the other providers. Which is why at that moment we didn't

provide an increase. I'll I'll defer to my colleague in a second. But I would guess I would say, I don't know that we would say we didn't agree it would be felt. It was that we did not have a proposal at that time to make concurrent adjustments. But please And

I know doctor if you have anything I'd More to add there. There's gonna be another item we're gonna look at that also increases that disparity. So it just it we recognize there's a disparity and we're adding to it. We're looking to add to it. So it's just

Yeah. So I just wanna clarify one thing. In addition to adjustment factors, there's also the base that is different. So a base for, CCTR would be 54.93 per day versus state preschool would be 55.27. And then you layer on the adjustment factors which have, exceptional needs is 2.4 for a state preschool versus 1.54, during, CCTR and migrant.

And then dual language learners is a 1.2 for state preschool versus a 1.1 in regards to, CCTR CMIG. And then toddlers that are 18 36, 1.8 through state preschool. And then, general childcare

and migraine is 1.54. Deputy Director, most of their their title five. Right? So pretty much the same requirements. Why is the base different?

I'll start by just acknowledging that, I think there has been an ongoing conversation like throughout a number of years related to whether or not we should be seeing CCTR and CSPP as sort of identical to each other in terms of their requirements.

The single rate structure right now as heat up in the alternative methodology does recommend and sort of put forward the idea that they are equivalent to each other and are based on the same requirements and that provider should be paid the same whether they're operating on either side.

That is that is something that we are looking to and I think has just is a good example of the ways in which our very complex stratified dual rate system now doesn't necessarily sort of make a lot of common sense

Yeah.

When you're sort of looking at it because it's built been built on so many different things and for, you know, as, Steven Proffeter just mentioned. Right? Like different pressures on different sides have sometimes resulted in different solutions. And so just acknowledging that it doesn't always all map now and that is the the goal of the single rate structure.

Yeah. That's one of the the the JMC report. That was one of the key points. Right? All programs that are the same age of children and have the same program requirements receive the same reimbursement regardless of how they're contracted.

So is it the intent of the administration that once the single rate, structure gets implemented, this disparity will go away? That that is the goal that was

put forth in that as you just referenced in that joint recommendation. Anything you would add there?

Yeah. And as noted single rate structure, the title implies in regards to looking at that same three year old with those with the same qualifications to receive the same rate.

Now, is there a scenario where I forgot all these acronyms. CCTR. Yeah. I forgot which one's which. CCTR is the answer.

Okay. Is there a scenario only exist where CCTR will jump or where preschool reimbursement would drop down?

Is that in regards to the single rate structure? Yes. So in the single rate structure, we have some decisions that are, ahead of us regarding how we want to, how we want to roll out the single rate structure. We are obviously looking at who is furthest from opportunity. Meaning, looking at the current rates regarding the, maximum cost of care plus and seeing who is the furthest away from that.

Within that structure, we may tier. Meaning, we may look at different ways of, rolling this out with one priority over another in multiple years or moving forward with all moving into it. There's just a lot of different decisions ahead of us that we'd like to have further conversations on.

Doctor. Lupo, which one is the furthest away from the true true cost of care?

When looking at the data, we would call that the infant toddler rate is the furthest from opportunity. Okay.

Mister Jordan, you talked about the great need for infant toddler slots. And I'm wondering if you can expand on any suggestions on how to meet that mark. I know there are ratios are very important. Other states have redefined what an infant and toddler is. Other states define it 12 and above, 18 and above, 20 and above.

We define it after 24. Just if you could share anecdotally or what you're hearing of what else we can do in

that bottleneck. Absolutely, Senator. Thank you for the question. So certainly, infant and toddler care has not been a challenge that's been ever addressed. Right?

So, but I think with all things coming together with with this perfect storm as you will with the advent of TK, with some of the adjustment factor disparities which go across all age groups, two, three, and four year olds, if you look at the analysis chart that our team at Stanislaus County Office of Ed put together, and the spaces that are available, when you look at a family chakra home, either small or large, they are limited on how many infants and toddlers they can serve.

When you look at their ratios of either one to three or one to four in state funded center based programs, that that is a dilemma. The space can only be used, you know, for so much when you have to then take into account napping time and sick child areas. Our facilities aren't big enough to handle the need. So I think it's a multi pronged approach that needs to be looked at with not only center based programs but family, childcare, home.

Currently one of the biggest needs we see from families is them looking for family, friend and neighbors. That's a very limited, ratio, if you will, if you look at it from that perspective. We've been working a lot with our quality counts to try to help family, friends and neighbors maybe become licensed family childcare providers for a number of reasons that could be beneficial to them. A number of them which CCPU obviously worked on. So I think it's a multi pronged approach.

There's not a silver bullet. Our our LPC report talks about the great need. If you look at page 57 on our report, it talks about the dollars that it would take to address that great need specifically just in Stanislaus County. So we have to all work together, on this issue with capacity, making sure that what's available for families meets their needs and that there's dollars behind that to support the efforts.

Thank you. Miss Pryor? You I wanna make sure I understood. You're saying incorporating more true cost of care. So you're saying what the administration just came out with 2025 is not truly the true cost of care.

So I would refer to the JLMC recommendations that CCPU put forth that the state did not agree to. And I have some estimates. So we're talking about infant toddler care. And that that is the group that's furthest away from the cost of care. But given the outputs we're seeing in the cost of care estimates, by by my calculations for a large family childcare home education over Fetchyan in Alameda County, infant care is already above the cost of care.

So the current rate is above the cost of care estimate, which seems untrue. Okay. Yeah. So that would be an example of a problem that I would point to in our current care estimates. Okay.

So under that current structure, it could create, as I mentioned, some inequitable pay structures.

Okay. So you're So the current What we we just calculated has Alameda County as above already in that they don't need anymore.

For For infant care. For a large veteran. Okay. So it would be up to the single rate structure to decide, you know, how that estimate translates to a rate. But the cost of care is by the state's current estimates is saying that cost of care estimate is below the current rate.

Okay. Okay. Thank you. For that. Back to the to the department.

I know there's a lot that needs to be done before we get to funding the full, single rate structure. And one of the things that needs to be done is the automating part that has been reported that it's gonna take approximately two years to do. But the report came out last year. If we would have started work on that last year, we'd have been one year in of the two year process. But we haven't started that work.

We've allocated funding for that. Yes. We've allocated funding for that or we have federal funding for that. Why haven't we started the auto mini process?

It really is related to the fact that we are still working to with everyone to determine policy decisions. So we need those policy decisions in order to automate. So a good example would be the age definitions. Until we've locked in what the age definitions will be in the rate structure, we can't automate the rate the ages. So we are trying to, sequence things such that decisions are made and we don't automate things that then have to be fixed or changed or you know, basically done again.

So we are trying

to wait. There's nothing we can start on that has been agreed upon that at least moves

the needle forward. Yeah. Do you wanna speak to that?

Yeah. So the automation is packaged Okay. In a sense. And so, as we are landing these policy decisions, then that is going to contribute to the overall package, of the automation. So therefore, it is difficult to start it without these decisions being finalized.

I'll I'll use an example of transportation. That is an element that is new. We had not, had, a policy around reimbursing for providers to transport children. Although, we recognize that that does occur in childcare. And so this policy decisions around how that is applied is very critical to that package of that we are putting together for the automation.

Okay. When what's the timeline on this?

So we are actively in focus groups today. And within the last couple months to dive into transportation in these areas. The idea with that is that that's going to help us inform from both the contractor standpoint to make sure that is, not only how do you implement, but most importantly, is it implementable. Meaning, if we came up with a policy that stated on there that we would pay for mileage, that may not necessarily be implementable versus a percentage versus a per child versus a flat.

So those decisions are ones that we're having decisions now.

In terms of timeline then, once we finalize that then we will be bringing back some proposals.

But how much time are we giving ourselves? Like I don't wanna say we're in conversations. We're just gonna be in conversations for what's our internal? When do we want this to be done?

I don't know that we can like articulate yet a clear timeline. I I do wanna, sort of just build a little bit on what, Lupe just said related to we do have, you know, significant conversations and the report out that came out from the JLMC. But that was related to family childcare.

So some of these additional conversations are a good example of the complexity which now we're having some of the very similar conversations on the center side who are not represented by the union and have unique and different needs. And we're trying to pour all that input in to basically understand the full scope of the system and what a full single rate structure would look like that is fair across these different forms of care.

Even while there might be, similarities across the age ages or other, adjustment factors or things like that. So we certainly don't wanna be elusive. We just also do not want to, get sort of the cart ahead of the horse in terms of actually having understood what is needed from the field, what the inputs are, and how we can combine all of that to create a workable single rate structure that truly works for California, works for the families, works for the providers, and achieves

the goals we're all looking to achieve here. Understandable. Yeah. I'd love to understand and I'll kick it over to you. But we need we need deadlines.

We work with deadlines. The public needs deadlines on this. And I think if we don't have that, we just have an open ended, we're having conversations. It's really hard to see an end to the conversations. Mary Mary.

Yeah. I just wanna say Terry and I were talking. If she misses a deadline,

she loses her childcare. Like, we've been having this conversation for multiple years, multiple multiple studies. The urgency, the desire to get this fixed is there. I don't know why we aren't wrapping this up. Like, this should be done because these providers are closing.

They have no incentive to stay open. So we need the urgency that we treat families and providers with. We need the department, the administration, the legislature, everyone who has to make the decisions to make it now. Like, we cannot wait any longer.

Yeah. Mary, I've said that a couple of times. And one of the things I wrote in my little notes here, I just I keep saying this over and over again. I just don't want another master plan in sub three. Sub three is the known for master plans that go nowhere.

And, we have the motto of the true cost and we've we've had it now about a year. We need a timeline of when we're gonna implement this. Deadlines are needed for conversations. And what I don't understand is why, and I think we've heard from the department that, oh, that the final rate setting would take place through collective bargaining. I don't know why we're holding ourselves to that.

Why can't we come out ahead of that? I don't if I misunderstood until another until collective bargaining happens in 2028. I don't want 2028 to be the year when we implement single rate structure.

Claire Ramsey again from the department. We don't need to necessarily hold for for the new MOU or the because we for two reasons. One is there's obviously work that can be done that's like outside of that process. And then also there is a reopener in our current MOU if there is additional significant investments. We already have a reopener that's in place to basically talk about, like meet and confer with the union over those, additional dollars.

So there are mechanisms in place, that are locked in that will allow us to continue to move forward and not to wait for an artificial timeline.

Hi. Stephen Crawford with the California Department of Education again. Sorry. Just on the topic of automation, I just did wanted to flag that, with changes to, systems at Department of Social Services, the Department of Education maintains, payment systems that would need to be modified and updated as well. So we're just just to be part of that conversation as well around automation and expenses.

Great. Did you know? Did we know that? Okay. Great.

The chair of this subcommittee is really going to be pushing for additional we we did turn the bill language before, right? To put an actual timeline on the report. I'm really interested in doing deadlines for conversations and a ramp up. I recognize it's a huge price tag to to do the I get that. I'm not asking for that even though I know we need to do that.

But a ramp up would be helpful. A timeline as we get closer to the true cost. I would love further conversations on some discrepancies I've been hearing from stakeholders on the actual true cost. If we're having these conversations, might as well throw those topics in there. But again, the deadlines, a ramp up timeline because upon appropriation, it's really hard to digest.

And I think that would be easier to have a goalpost that we can work towards. At least start with the goalpost. I recognize that it'll probably be moved but at least start with the goalpost and and and work with that. Okay. That was Any final thoughts from anyone before we conclude this panel?

Okay. Thank you so much, y'all. We're gonna hold the item open and move on to issue number three.

I think we're at good afternoon, chair. Claire Ramsey from the Department of Social Services here to talk on issue three related to the childcare cost of living adjustment. We were asked to give an overview sorry. An overview of the governor's budget and trailer bill language proposal for the COLA. So I'll jump right into that.

The Department of Social Services is proposing statutory changes to apply the twenty twenty six twenty seven cost of living adjustment, the COLA, funds as an increase for all subsidized childcare providers in the form of a percentage increase to out of contract cost of care plus rate payments. So COC plus payments. The proposal will create a new welfare and institutions code section to describe this methodology for calculating the COLA.

The proposal will also amend WIC ten two eighty to continue the pause in the application of the cola to the standard reimbursement rate increases in 2627 to support the application of the cola amount to the rate increases through the cost of care plus payment. And this has been a typical way we have paused that particular section when we do cost of care excuse me, when we do colas in a new and different way as we did last year.

For CDSS, the governor's budget reflects $87,800,000 in general funds based on applying the 2.41 cola to the total CDSS program funding. This is consistent with how CDE applied a 2.41, percentage as well. However, we do wanna acknowledge that because the underlying program structures do differ, the resulting cost of care plus increases may vary across programs. Additionally, we want to acknowledge that we inadvertently excluded CalWORKs childcare and the emergency childcare bridge program from our CDSS calculation in the governor's budget.

Which means that we intend to revise our proposal.

Let me revise to accurately reflect the cola methodology that we're describing in t b and is is basically put forth in the t b l. This means that there will be additional money available toward the cola, on the CDSS side. And again, we intend to continue to work to, align our methodologies where feasible within the May revision to maintain consistency with historical practice and statutory requirements. With that, I'll pause and see if you have any questions. Dylan?

Chair, Dylan Hoxaputze with DLAO. 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 an increase to cost of care plus payments in lieu of a COLA. Unlike previous years, however, the current language would provide different increases across programs. On page 21 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 childcare providers.

We recommend changing the cost of care plus payments uniformly across programs to stay consistent with the spirit of moving towards an alternative methodology that provides rates that that differ by factors such as age and region, not program. I'll also note that the exact COLA percentage will change and may revise when we have updated revenue estimates. Currently, we're expecting COLA or our office is is is expecting COLA to be slightly higher than the 2.41% in the governor's budget. Happy to take questions.

Krishan. Good afternoon, Chair. Krishan, I'm Alejandra, Department of Finance. We have nothing further to add, but we're available for questions.

Thank you. Chief Deputy, that was one of my questions maybe LAO. So, because I thought since we, we had to add 45,000,000 more for those two programs that were inadvertently, not included that the colo was going to decrease. But in fact, it's going to increase.

That's right, chair. Basically, what it means is the pot will be bigger to distribute across the cost of care plus payments. And, we estimate currently that the 87,800,000, provides about an 11% increase on the cost of care plus payments. But with the additional funding, it would be about 16.5% Okay. Of an increase.

And can you

the recommendation that LA LAO is providing is something I I humbly would add my name to as well. But I'm wondering why the initial proposal was to do, an even distributions of cola increases knowing that our intent is to move towards a more uniform. Why was the initial proposal that way?

Happy to answer and then also to see if my, colleagues at the department of finance have anything to add. As we had discussions, we were looking to use that 2.41 as the sort of benchmark and the decision was made to sort of use that as this unifier across programs. And then to allow each side of the house, each department to apply on its cost of care plus payments. So that is where it landed. I don't know if department of finance would add anything more there.

Thank you. Yeah. They're just the methodology is the same as the chief deputy has said. It's just there are different base program funding levels across departments for different program types. So the decision was made for the calculation that we would just base the 2.41% off of the base program funding for those program types.

And that's where we kinda landed with the with the way that the funding was broken out. If the legislature, recommends for us to unify it across, all program types, something we're happy to work with you and There's

no barrier to that as long as it's part of the negotiation, nothing impedes.

That's right. Okay.

Thank you. We're gonna hold the item open. Move on to issue number four. Sorry, writing my notes here. Okay.

Welcome back.

Please proceed. Hi. Jackie Burrows here with the Department Social Services. Issue four is regarding the childcare alternative methodology survey trailer bill. So current law requires that a market rate survey be conducted every two years, which no longer matches the federal allowance and also the California shift to an alternative methodology survey.

So the proposed, trailer bill would make statutory changes so that the department can use the, federally approved alternative methodology rather than the market rate survey to inform, the childcare reimbursement rate setting. And it also aligns the timing of the survey with the federal tri annual childcare and development fund state plan frequency.

So if this statute isn't updated, then from a technical perspective, CDSS would also have to conduct a market rate survey while we are pursuing, an alternative methodology, which we no longer intend to do the rocket the market rate survey with that shift. Tyler?

We don't have any comments or concerns.

Anything to add? Jackie, I don't know if you had a moment to read some of the the staff comments at the end. If you could expand a little bit, you know. We're we're using we're we're not we haven't implemented yet. It seems like a little bit of discrepancy like it's like the intent to use it.

So we're switching over but we're not using it.

I think in terms of doing the survey. The Federal Government requires us to do a survey in order to assess the adequacy of rates every three years. Yeah. We would like to move to the alternative methodology because that gives us a better sense of a cost of care to actually then evaluate the rates and determine the distance relative to a a market rate. So there's that federal meeting, the federal requirement

Yeah.

Of doing the survey to assess every three years as a part your state plan. Then there's the state process of the actual rate setting. And, using the alternative methodology for then that single rate structure process that is definitely still ongoing.

So we're gonna be switching over from the three to the two years and per and providing the federal reassessment on something that we haven't moved forward with?

No. In the federal reassessment, they ask us to look at what your current rates are and then measure that based off of the benchmark, be it the alternative methodology or the regional market rate. So we would like to to continue to use the alternative methodology as that benchmark when we're assessing our current rates and what we report to the feds in terms of now they're assessing how far your rates from the cost of care as opposed to the regional market rate. Okay. Okay.

I already asked you if you want anything to add? Got it. Okay. Thank you. We're gonna hold the item open.

Move on to issue number five.

Sorry.

Good afternoon. Claire Ramsey for the Department of Social Services. I'm here to provide a quick overview of the licensed family daycare homes temporary absences proposal. This proposal seeks statutory changes to the health and safety code to limit family child care licensees temporary absences. Excuse me.

To no more than 20% of the hours the facility is providing care in any given calendar month. It expressly authorizes the department to waive regulations applicable to childcare. Excuse me. Excuse me.

I'm sorry. Yeah. I do. I'm sorry. Sorry about that.

Thank you.

It expressly authorizes the department to waive regulations applicable to childcare facilities. And to clarify requirements for adults who provide care and supervision in family childcare homes when the licensee is occasionally and temporarily away from the home.

It expressly authorizes the department to waive regulations applicable to childcare facilities. And to clarify requirements for adults who provide care and supervision in family childcare homes when the licensee is occasionally and temporarily away from the home.

The mistake of running to the restroom. Because it literally ran.

It also requires a licensee to notify the authorized representative of each child in their care in case of a temporary absence. We're proposing this because we have heard from childcare providers that the existing temporary absence regulation, which limits temporary absences to no more than 20% per day, is too restrictive.

And does not allow for reasonable absences like those related to medical appointments and treatment, jury duty, professional development activities, and union activities. I'm happy to answer additional questions. Dylan?

No consent.

I appreciate us responding to the needs of our providers. This was something I heard like three years ago. So I'm really glad that, the administration has moved forward with trying to build language on this. We're gonna hold the item open and move on to session number six. Thank you.

And thank you for the concern.

Issue number six. Doctor Maria Lupe Jaime-Mileham, Deputy Director of the Child Care and Development Services at DSS. This proposal adds a statutory definition to excessive unexplained absences to mean absences that are not considered excused and exceed thirty days of consecutive or non consecutive days within the twelve month interval.

To explain further, the Federal Government allows states to disenroll children from childcare services prior to the next recertification for having excessive unexplained absences despite multiple attempts by contractors to contact the family.

Current statute and regulations that govern the childcare programs under the Department of Social Services only define what is allowed as excused absences, but does not define what unexcused or unexplained absences are. So we're in a sense out of compliance for that.

This trailer bill language establishes a definition of unexplained absences and will give the department the authority to update the abandonment of care policy to align with attendance policies. Happy to answer questions.

No comments on this one.

We're gonna hold the item open. Move on to issue number seven.

Okay. In the meantime, I had a quick question I forgot. Maybe Department of Finance.

On the or Deputy Director. The 21,000,000 for the automation, that's still there whenever we need it. Doesn't hasn't been clogged back to the general fund?

Krishnan with Department of Finance. That's correct. Yeah. That is still allocated into the department's budget.

And it was the federal funding. That correct?

That's Yeah.

That is the federal funding. Yeah. So Correct.

That is still in

Still gonna be there whenever. Alright. Issue number seven.

Issue number seven is Childcare Family Fees Deduction. So this proposal requires trailer bill language to align state law with new federal requirements, to ensure that childcare providers receive a full value of a voucher or certificate without deducting the family fee.

A practice is currently vast across the state whether contractors collect the fee or whether they have their providers collect the fee directly and therefore deduct it from the providers fee.

This proposal brings California into federal compliance and standardize the process across the state requiring contractors to collect this fee and ensure reimbursement reflects the full subsidy amount. Happy to answer questions.

No comments at this time.

Deputy Director. I just wanna know if you've heard some of the concerns specifically from Riverside County. Have we provided any TA for them?

Yeah. We have heard directly from, Riverside County. We are in communication with them. We'd like to be able to pair them up with a contractor who currently is deducting fees that is of a model such as an office of debt to see if that also supports them. Looking at their own processes regarding this collection of the fees.

A contractor that we would fund or just connect?

Oh, no. Just connect them with a contractor who's already has it in practice. So therefore, then there is some learning that can take place regarding how to effectively implement this policy.

What happens if, I guess, they might be the only ones. If they're not ready come July 1, what happens if at that moment, they're not able to switch over smoothly?

We actually, would like to continue to hear conversations about the start date and possibly have more conversations with the legislator on that too.

Great. Okay. Thank you so much on that. I'm gonna hold the item open, move on to issue number eight. Oh, no.

It's coming up. I didn't know you're saying it.

Thank you. Stephen Proffner, Department of Education. CDE appreciates the policy of the administration and has moved forward. If the legislature decides to adopt it, we would request the same policy be in place for state preschool and we're happy to provide language if that's helpful.

Thank you so much for that.

Okay. Move on to issue number eight.

Early Childhood Policy Council. As background, the State Advisory Council on the Early Childhood Education and Care is required by Federal law and it is in California reference as Early Childhood Policy Council, ECPC.

In regards to the first question, the Governor's budget proposal reflects an adjustment of the $7,052,000, on one year re appropriation that was, appropriated in 2025 budget act.

The adjustment is needed because of the actual '24-'25 cost came in came in a little higher than initially estimated, slightly decreasing the previous amount reappropriated to $6,117,000. And, additionally, the governor's budget proposal is seeking to extend the reappropriation for two years.

That will take us to 06/30/2028. Happy to answer questions when appropriate.

No comments or concerns?

Deputy Director, sorry. Because the costs are higher, it wasn't spent?

Because the costs were higher than the original $70,752,000 was reduced to $617,000. $60,717,000.

I guess, I'm sorry. So the money wasn't utilized. We appropriated before. It wasn't utilized. And now, it's being asked to reappropriate for two more years to utilize it because the costs were higher than anticipated?

Exactly. Sometimes the cost comes in go ahead.

Also, Krishan Malhotra, Department of Finance. Yeah. So the request, I think what the deputy director is trying to say, the request may have been for more. But since the cost came in a little bit higher than expected, it's a smaller request than it would have been for the re appropriation. So the re appropriation

I don't know why I'm struggling to understand that.

Why wasn't it utilized?

So the reason sometimes it's not utilized is as part of participating in the Early Childhood Policy Council, we have stipends for the families and providers. And, those are difficult to, to guess how much we could allocate. We wanna have it available to make sure full participation. But it could come in as less. Sometimes it could come in more.

So it came in less, so we have this leftover and we're just gonna continue utilizing it for the next few years.

Okay.

Correct. And that would avoid us having to allocate new general fund for the Early Childhood Policy Council and so we can just reappropriate past general fund.

Deputy Director, I don't think you did the second one. Did you? Did you go over AB?

Oh, AB. I'm happy to do that. AB 563 which is the Early Childhood Policy Council. It's a new requirement that the department needs to include details of the Early Childhood Policy Council annual report to the legislator, including the successes, challenges, and gaps, in the state childhood education system and recommendations to facilitate advancing the state mission, vision of children, families and communities. The proposal itself, request also to support this new requirement.

In the past, the requirement was to do a report that was a summary of the ECPC meetings. Now, with this added requirement, it structures the, the early childhood policy differently where we do need some support to carry this this task.

Sorry if I'm a little harsh with this but it doesn't seem like it's a lot of duties for one person. But we're also gonna use funding to pay a contract to help with travel assistance and media assistance. Can't that same person that we're paying for also do that as well and not pay for a contractor?

So there's two components in regards to how we staff the Early Childhood Policy Council. Currently, right now, we have a subcontractor. We contract with a vendor that does the facilitation, the, translations, etcetera. We do not have a contract manager, to provide oversight for that as well as provide support. So those duties are being spread between quite a few team members.

This would not only do the report addition and help with the restructuring of the ECPC, but also provide that oversight of that contract, monitoring to ensure we're meeting all the different components of the ECPC.

You don't have a staff right now?

We don't have staffing currently right now for the Early Childhood Policy Council.

Any Yeah. So anything. So

You got it.

Pay for a contractor but this is requesting to get a staffer contract.

An analyst. Yes. And now that was to actually to do that role in addition to this reporting requirement.

But we're gonna pay for a contractor and staffer?

Yes.

So we haven't, because it's being reappropriated, we haven't assigned a subcontractor just yet.

We do have a ongoing contractor who is managing those tasks.

Okay. Just, I'm sorry. I guess I'm reading will provide. So I just wanted to make sure. Because the funding was spent.

Is there a possibility for it to be unspent in the next few years? More? Or not?

It depends on what the stipends come in. That's the components of this. And also noting that there is a requirement in a couple years in regards to moving back to in person which would probably increase the number of stipends that families and providers may need to fully participate in the ECPC.

So we're also tracking that future expenditure.

So the $185 needed for next year can be absorbed with the 617 that's already allocated. Department of Finance?

Krishnan Malhotra, Department of Finance. That's not how it was proposed in the '26='27 Governor's budget. But if that's something that the legislature would like to have conversations on, we're happy to take that back.

Okay. I just wanna make sure. Is it more expensive to contract than to hire a person to do the work?

It is more expensive to hire someone to do the work.

Okay.

Because in addition to the analyst and we would need translators available. We would need also, we would need that facilitator. So there's different components of the ECPC.

To make sure that we're

So when the contractor route is more cost efficient.

You got it.

Than getting another staffer.

Okay. We're gonna hold the item open. Move on to issue number 9.

Issue number 9, is the Childcare Development Division staffing and support. This proposal continues to expand through past budget proposals. However, support divisions within the department such as human services, legal, and fiscal services have not received similar increases to support the growth and the responsibility of the new division of it. As reference, these these dollars are drawn from the CCDF, which is our federal dollars that is available for these.

And given the significant program and budget expansion in the recent years, the need to ensure strong fiscal stewards of these billions of dollars in state and federal requirements do need these positions to be intact in order to maintain the integrity of these programs.

These positions will allow us to sufficiently support the current funding levels for the Childcare Development Divisions that we oversee.

Fin?

We don't have any comments at this time.

Anything to add?

I think I need a little bit more explanation on this one because we just went over that there's less revenues under the CCDF funds. So we can't fund the the slots of 967. But at the same time, we're asking for money to fund for staff. How?

Because even though there is less slots, the work is the same. Same number of providers.

Less revenues were getting cut from CCDF grant funds. The Federal Government's giving us less fundings which is the rationale as to why we're gonna have less childcare slots. If that's a rationale for why we can't have more slots, how is there a rationale that we do have money to pay for staff? I know the I know the workload is there. I get that.

That's not what I'm disagreeing. But they're saying that there's no money for slots. How is there then money for staff?

Krishan Malhotra, Department of Finance. We just wanna note that the state is allowed to use up to 5% of its federal allocation for administrative expenses. It's a lot of work to run these programs at the department level.

And so we are you know, some of these positions that are requested are ensuring that we're able to have appeals, make sure our childcare development division has adequate human resources staff. So we're still under that 5% limit that we have from the Federal Government.

And so that is why the proposal was made.

Okay. Yeah. I know. We did 74 positions in the past couple years. So this isn't part of the 12% quality improvement?

Is this gonna fall under the 5% staffs?

Separate bucket. Yeah. This is the 5% that is allowable to be used for administrative expenses. The 12% is for quality.

So even though we're not gonna increase in childcare slots, the workload is still has increased since last year.

Yes.

Of the 74 positions that we've allocated in the past few years.

Yes. So the work continues to maintain at a level we're catching up.

Are any of these positions gonna be helpful with removing barriers for the contracting issues that we're seeing?

Yes. It is. Many of these positions are related to the contracting issue from accounting legal to review the information HR, as well as the analyst that handles the appeals.

The what are the appeals for?

Appeals are in case we have allocation of dollars and someone is not granted the dollars then there is an appeal office that handles those.

Okay. We're gonna hold the item open, move on to issue number 10. No. Just kidding. We're gonna do public comment. We are now gonna take public comment on all childcare matters only, please.

Childcare matters.

Tony Jordan, Stanislaus County Office of Education. Thank you again. And, just two comments specific to issues two and four. Base rate and adjustment factor disparities need to be addressed now as we await single rate reform as hold harmless sunsets, and as child development permit matrix changes are being looked at.

The second comment is specific to issue three, COLA on base rate for each program type, not on rate plus amounts or on child days of enrollment, the latter of which results in an expansion of services that was not requested by local programs, the former of which is not guaranteed ongoing funding especially as local programs manage the difficult fiscal compliance nuances between federal and state early education regulations.

Thank you.

Hello. Leticia Garcia on behalf of the Riverside County, Superintendent of Schools, on issue item number seven. Our COE has the largest childcare state contractor with serving over 20,000 children with 4,300 providers and 350 families who are currently paying fees.

So, we appreciate the discussions we've had with subcommittee staff. Next week, we meet with the Department of Social Services and again with Department of Finance to talk about our concern with the timeline to come into compliance as a contractor collecting these fees.

It goes beyond setting up the system. It's about really shifting, hiring, training staff to be able to do this work and making sure that we, send, we work with our providers, we work with our families to establish a system that works well for everyone.

So again, appreciate the conversations. Just wanna make sure that I echo that it could be that we still wanna request that one year extension for July 1.

And also want to uplift my colleague who's been my partner in this, and with this effort, the California County Superintendents, this is an issue for other counties as well.

Perhaps not as big as Riverside County, but, they will also have issues with the timeline. Thank you.

Good morning, chair and committee. My name is Andrew. I'm here with Childcare Providers United. I just wanted to as a quick process note, we're gonna have a couple of providers here who are gonna be giving the remarks in Spanish.

And then immediately after, we'll have a translator

I don't need a translator.

Okay. Perfect. Awesome. I figured maybe for the benefit of the room but that's wonderful. Thank you

It's okay. I usually don't do translation.

Perfect. I appreciate you very much.

Good morning, chair and committee members. My name is Ana Fonseca. I'm a childcare provider of San Leandro, and I have worked in this field for four years. I came to Sacramento today to speak in support of funding family childcare in the Senate budget blueprint. Family childcare providers applaud the Senate budget proposal, which calls for the meaningful steps in expanding access to childcare and providing 44,000 new childcare slots.

Building the government proposal to cost of living increases, we believe that this budget proposal represents meaningful progress. Expanding slots without increases pay risks in balancing the systems further.

With most providers earning 7 to $10 an hour, the state's risk losing experienced caregivers, discouraging new educators from entering the field in the time when demand is as high as ever. At the same time, we often have observed cost to help our families who need it the most.

My costs are higher than subsidy raise rates, but now families cannot pay this additional cost.

I could encourage them to absorb nearly $800 a month. It reflects that I have buy less materials that could have helped me provide a richer education experience for all of the children in my care. The bottom line is that children are missing out. Maintaining a strong, reliable child care system is essential. It's our state growth.

Our state budget must include additional slots.

Thank you.

Thank you.

Okay. [Testimony in Spanish].

[Testimony in Spanish].

Good afternoon. My name is Maria Esther Fernandez Silva, and I'm a child care provider in the City of Norwalk. I've been working with kids for more than 25 years, and I'm here to speak on behalf of the families and the child care providers. Many of the families we serve have been waiting years for child care subsidies, sometimes for more than one child.

While they wait, parents are piecing together part-time care just to stay employed. Some are working two or three jobs just to put food on the table, all while struggling to find safe, reliable care for the children. These long wait times are making the affordable crisis in our state even worse and placing a heavy burden on working families. Too often, parents are not choosing the care they want.

They're choosing what they can afford. All the same time, family child care providers are struggling to stay open. Many of us are operating month to month, doing everything we can to continue serving our community. We don't need expand child care slots, but expansion alone is not enough. We must also support and stabilize providers who are included in our cost-living increase as proposed by the governor.

Families deserve real choice through options like vouchers, and providers deserve for pay so we can continue offering flexible, high-quality early childhood education. Thank you for your consideration.

Thank you.

Hello. Good afternoon, everyone, committee chair and committee members. My name is Tanika Banahene. I live here, right here in Sacramento, California. I have been a child care provider for seven years, and proud of it.

I'm here today in support of the sunsetting, the change of the definition of toddler codified, and the 2024-2025 Budget Act. While the expansion of the state program for children age two to three-year-old were intended to help families, it was rolled out without fully considering the need of children who are not development-ready for the classroom setting. Many of these children need individual attention, especially those with speech delays, social-emotional challenges, or other developmental needs.

In my own program, I have seen this firsthand how this have impacted families. I have had a family who were enrolled in my program, their two-year-old in a state program, and they were told it would be better for the opportunity. It didn't work out so well. Within just a few weeks, the child began to struggle.

He was overwhelmed in the classroom, had difficulties communicating, and was not getting the one-on-one care that he needed. The parent was receiving calls frequently at the school to pick him up. Eventually, the family made a difficult decision to pull him from the school and return to family child care.

So sorry, ma'am. You'll have to wrap up.

But in the end, when the family pulled the child from the family child care, their slot was lost.

Thank you.

So when they're not getting adequate care at the schools and not the same care, it impact families. Thank you.

If we keep disrespecting my time, I'm gonna cut it down to 30 seconds. I've asked if everyone stay within a minute and a half, please, and when I say stop, you have to stop, please.

Okay. Hello. My name is Yvonne, and I'm a child care provider from here, City Sacramento. I have been in family child care for 24 years. In our last contract, child care providers won the creation of a joint labor management committee.

Last December 1st, we released a report with recommendation. This recommendation should be implemented right now. This will bring us closer to the true cost of care right away. It will stabilize providers like me and improve care for families. Cost of care should not just me and a sugar stick for our current rates.

It should be how we actually pay providers so we can keep our doors open. We need payment rates that reflect the full cost of providing care. We need rates that ensure extra pay once a family accepts 40 hours of care for wait base and certificate need. We need rates that account for higher cost in our hours outside of standard hours. We need transportation, mileage reimbursement, and pay for time spent for transporting children.

Putting more money into rates through the budget will use CCPU to bargain immediately to bring our closer to the cost of care. There are option available to us right now. We ask they commit to continue standing with child care providers. Thank you.

Thank you.

Good afternoon, Madam Chair and chair committees. My name is Charlotte Neal, and I'm a child care provider from Sacramento. I have been a child care provider for 28 plus years doing 24-hour child care. I am here to support to moving a prospective pay, the challenges child care providers face.

Child care providers begin to incur cost the moment a child is enrolled, hiring additional staff, purchasing supplies, and preparing meals, yet we do not receive reimbursement until at least 21 days and after timesheets are submitted, and often wait seven to eight weeks after investing our own money to serve children in our program.

At the same time, a 2022 UC Berkeley report found that 14.1% of family child care providers can afford $400 emergency expense. In the fourth largest economy in the world, we should not be asking the workforce, earning as little as $7 an hour, to shoulder the financial risk while hoping for accurate and timely payments from the state. Providers are effectively extending credit to the State of California just to keep their doors open. What's at stake is clear.

If family child care providers are truly essential workers, then we must be paid the true cost of care and recognized as the professionals we are. Over 90% of family child care providers are Black, Brown, Indigenous, and women immigrant whose labor has been historically undervalued. Adopting a prospective play model will pay providers before care is delivered just as private paid families do so we can plan responsibly. Thank you.

Thank you.

Good afternoon. Julia Forte Frudden, the Child Care Law Center. We're also a member of the ECE Coalition. And first, we really wanna thank you, Chair Menjivar, for all the heart and hard work you put into the Senate Budget Plan.

We strongly support the Senate's proposal to fill 44,000 new child care spaces, especially at a time when families need affordable child care the most due to the impacts of HR 1 and the new HUD proposed rules. You know, any work requirements, wherever they come from, really need to be paired with increased funding for child care, and we also urge the committee to ensure providers are supported and respected by doing exactly what you did today, prioritizing the transition of paying providers the true cost of care, and that means deadlines, clear goals, clear plan.

We also urge you to support the governor's proposal to increase child care providers' payments and for financial assistance to providers who are impacted by the LA wildfires, and that means all providers, those that are license-exempt as well, and then just as it relates to the trailer bill on the COLA, on the unexplained absences and on the 80/20 Rule, we really urge you to work with and listen to child care providers and families to ensure those are responsive to their needs and the policies are equitable.

And lastly, we just want to note that we, you know, commend and applaud the Senate Dems for raising revenues and really working to make sure corporations, wealthy corporations, are engaging in community responsibility. So thank you for your bold leadership.

Good afternoon. Alicia Hatfield, EveryChild California. First, I want to reiterate that center-based lots are being utilized. We want to make sure that everyone is thoughtful about how any shift toward vouchers could have implication for funding equity across communities. The ninth month-- excuse me.

The nine-month delay in CCTR contract finalization and ongoing licensing barriers are attributed to state timelines, not provider actions, so providers should not be penalized through reductions in CCTR spaces due to structural licensing and contracting failures. We're asking that the 4,200 slots be protected. These slots are already in construction. Cutting them wastes public investment and breaks faith with families. We believe no children need being disenrolled to justify this cut. Fund the 44,000 slots.

We support the Senate's proposal to fund all 44,000 slots. Thank you for that. We'd also like to move CSPP under Prop 98. We support the Senate's proposal with the caveat that providers' existing right to temporary transfer contracts between CSPP and CCTR be preserved. That flexibility is a lifeline for mixed delivery systems. Finally, we ask that families with two-year-olds still have the option of enrolling their children in CSPP programs. Thank you.

Thank you.

Hello. Lily with the California Resource and Referral Network. I'm the Policy and Advocacy Associate there. First, I wanna thank you for the proposal to include the 44,000 spaces in the Senate Budget proposal. The network is a statewide member organization representing child care resource and referral agencies, which are community-based programs that exist in every county.

R&Rs make up a well-developed, publicly funded child care infrastructure that supports families with navigating and understanding child care options that best meet their needs. R&Rs also expand and strengthen our child care supply and workforce by working directly with child care providers to grow their businesses, identify professional development opportunities, and navigate child care licensing. Their services are free and available to everybody, regardless of income.

Today, we urge you to maintain funding for all child care development programs, particularly the quality improvement dollars that fund R&Rs, the Child Care Initiative Project, or CCIP, and other critical supports for healthy child care system. We specifically ask for the General Fund backfill for the 10 million quality improvement federal fund reduction, as well as the 5 million reduction in child and adult food programs.

These-- any cuts to R&Rs, we've heard from members, will reduce staff hours, capacity to assist families, as well as their ability to respond to emergencies like fires, which is particularly important for our rural communities. So thank you so much, again, for today and please let us know if you have any questions.

Thank you.

Good afternoon, Chair. Anna Alvarado with the California EDGE Coalition, here to support and uplift the importance of child care access. Child care is essential to workforce participation and economic mobility. We respectfully urge our state leaders to fund the plan expansion of subsidized child care slots and avoid cuts to access. We also support provider stability and rate reform so providers can continue serving families and supporting California's workforce. Thank you for your time.

Thank you.

Good afternoon, Chair Menjivar. I'm gonna knock out two organizations in my one minute. So first, here on behalf-- Jonathan Munoz, on behalf of the Early Care and Education Coalition. We continue to urge the Department of Social Services to adopt a rate structure that accurately reflects the real cost of care that is updated regularly, is regionally responsive, and protective of current rates. We'd like, again, to thank the Senate for funding of the 44,000 slots in 26-27.

Finally, we are seeking clarity on several administrative issues: the funding reduction to the Child Care Development Funds, Proposition 64, and the need for mid-year transfers and funding for CCTR spaces. And then second, on behalf of First 5 Los Angeles, we'd like to align the comments with the EC Coalition, and would, again, thank the Senate for its-- the commitment to fund 44,000 slots.

Finally, we, First 5 LA, would like to express its support of the governor's proposal for $11.5 million one-time Prop 64 funding for child care infrastructure targeted toward communities that were affected by the LA fires. Thank you again.

Thank you.

Good afternoon, Chair Menjivar. Juliet Terry with Child Care Resource Center. We provide child care and family support services to over 65,000 families, children, and providers across Los Angeles and San Bernardino Counties. We'd first like to thank you and the Senate for the proposed 44,000 child care spaces. This will help increase access to these critically needed slots and will help CCRC enroll some of its 30,000 children that are currently waiting for access to care.

On the note of the bridge program funding levels, I just wanna highlight that the idea that current funding levels are meeting actual need might not be accurate. The program has been in a state of continual rollout, implementation, and scaling since the start of the pandemic, and the increased funding that the program was allocated in previous years was intended to meet real need across counties.

So as the program continues to evolve and increase in service connection, the restoration of these funds will be needed to meet the real needs of families across the State of California. Finally, as the Legislature continues to craft the final budget for this year, we ask for a laser-focus on protecting and preserving the current funding levels for safety net programs, treat it as a holistic system that serves the whole needs of families.

The same families that access child care are the same families that rely on Medi-Cal, CalFresh, and other safety net programs that are being heavily impacted by HR 1. These programs are foundational to family stability. Pulling one out, one support out from under families, such as child care, often leads to cascading effects, families slipping back into deep poverty that's extremely difficult to escape. So thank you, Chair Menjivar, for your commitment and leadership on this work and these issues. We look forward to being a continual partner for our vision for a just California for families.

Thank you.

Good afternoon, Chair Menjivar. Jasmine Valle, on behalf of the Low Income Investment Fund. First, we wanna express our appreciation for the inclusion of child care investments in the proposed Senate Budget and the continued recognition of Early Care and Education as essential infrastructure for California's families and workforce. We look forward to working in partnership in supporting this work together with the ECE Coalition.

LIIF has had the privilege of administering the 350 million Child Care and Development Infrastructure Grant Program and has seen firsthand the significant demand for facility funding across the state.

Funding reached about 3,800 providers, but with nearly 7,000 applicants requesting approximately $1 billion, demand clearly continues to outpace available resources, especially for those impacted by recent wildfires. The governor's proposal to allocate 11.5 million in Prop 64 funding for child care providers affected by wildfires is an important step toward recovery.

These providers play a key role in allowing parents to work and local economies to function, making the restoration of their facilities essential to helping families return to work and rebuild. Through our work on LA:RISE, we know providers need grants to assist them with rebuilding funding gaps that insurance will not cover.

We look forward to working with this committee, CDSS, and the administration on the details of this program to ensure providers have access to funds needed to rebuild and serve children in these impacted areas. Thank you.

Thank you.

Good afternoon, Madam Chair. Rosanna Carvacho Elliott, here on behalf of the Early Care and Education Consortium. Our members here in California operate 463 centers with the capacity to serve over 67,000 children. Really appreciate the Senate's plan to include the additional slots that have been promised to the field for a long time. Also wanna align ourselves with the ECE Coalition comments that you heard earlier.

Support the governor's cost of-- I'm sorry, the cost-of-living adjustment. That is obviously, as you know, very important to have any increase as we wait for the alternative rate methodology to be put into place. Would also encourage the Legislature to actually put in statute that alternate rate methodology.

Appreciated your comments today, Madam Chair, pushing the department on deadlines, but you all have the ability to put it in statute, and we would encourage you to do so, not just the deadlines, but put them in methodology and statute so you can hear from all of us in the field about what's wrong with the current rate structure, as you heard from the Budget Center.

You know, I think that is something that we know-- we know that you can do and you will hear from us. And then I-- lastly, I just wanted to thank you, Madam Chair, for uplifting the concerns about how different providers are being treated differently with the rollout of transitional kindergarten, how CSPP has received, you know, an adjustment factor but the rest of the field did not. That is-- as you know, transitional kindergarten has been a huge impact to providers, and really appreciate that and look forward to working with you. Thank you.

Thank you.

Good afternoon, Chair Menjivar. Andrew Avila with the Early Edge California. We are a member of the ECE Coalition. First, I wanna thank you for your leadership in helping protect the promised spaces to us, and second, we really appreciate the comments revolving the 80/20 Rule, aligning COLA and rates between our early learning and care programs, and moving forward the alternative methodology.