BILL ANALYSIS �
AB 260
Page 1
Date of Hearing: April 16, 2013
ASSEMBLY COMMITTEE ON HUMAN SERVICES
Mark Stone, Chair
AB 260 (Gordon) - As Introduced: February 7, 2013
SUBJECT : Individualized county child care subsidy plans
SUMMARY : Makes permanent the individualized county child care
subsidy pilot plans (pilot) for San Mateo and San Francisco
County. Specifically, this bill :
1)Maintains the sunset date for the San Francisco County pilot
until July 1, 2014 and allows it to continue as a permanent
program thereafter.
2)Changes the statutory inoperative and repeal dates for the San
Francisco County pilot from July 1, 2016 to July 1, 2014 and
from January 1, 2017 to January 1, 2015, respectively.
3)Changes the sunset date for the San Mateo County pilot from
January 1, 2016 to July 1, 2014 and allows it to continue as a
permanent program thereafter.
4)Changes the statutory inoperative and repeal dates for the San
Mateo County pilot from January 1, 2016 to July 1, 2014 and
from January 1, 2016 to January 1, 2015, respectively.
EXISTING LAW
1)Authorizes San Mateo and San Francisco County to develop and
implement a pilot, upon approval by their local child care
planning council (council) and the California Department of
Education (CDE) to ensure that child care subsidies received
by the county are used to address local needs, conditions, and
priorities of working families in the community.
2)Allows both counties' pilot plan to supersede state law on
only the following factors:
a) Eligibility criteria, as specified;
b) Fees, as specified;
c) Reimbursement rates; and
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d) Methods of maximizing subsidized funds.
3)Requires both counties to work with the CDE in developing the
pilot, which includes an assessment to identify each county's
subsidized child care system barriers and goals for
participation in the pilot, which includes a comprehensive
review of each county's:
a) Demographics;
b) Availability of subsidized child care;
c) Level of need for subsidized child care;
d) Subsidized child care rates, i.e. the Standard
Reimbursement Rate (SRR) and Regional Market Rate (RMR);
e) Self-sufficiency income level;
f) Family fee schedule;
g) Child care provider costs; and
h) Unemployment trends and housing affordability index.
4)Requires each pilot to be reviewed by the Legislative Analyst
and the Senate Office of Research prior to submission to their
council for approval.
5)Requires each pilot to submit an independent evaluation report
to the Legislature, California Department of Education and the
California Department of Social Services (DSS).
6)Allows the San Francisco County pilot to operate until July 1,
2014, phases out the pilot through July 1, 2016 and renders
the authorizing statute inoperative July 1, 2016 and repeals
it January 1, 2017.
7)Allows the San Mateo County pilot to operate until January 1,
2014, phases out the pilot through January 1, 2016 and renders
the authorizing statute inoperative and repeals it January 1,
2016.
FISCAL EFFECT : Unknown
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COMMENTS :
Background
There are generally two types of child development providers in
the state; commonly referred to as either Title 22 or Title 5
programs. Title 22 refers to Division 2 of Title 22 of the
California Code of Regulations (CCR), which is governed by DSS
and Title 5 refers to Divisions 19 and 19.5 of the CCR, which is
governed by the CDE.
Title 22 establishes general health and safety requirements,
staff to child ratios, and basic provider training
qualifications. In order for any person to operate a child
development program, the program must first become a licensed
provider under Title 22. Title 22 providers set their own rates
and may voluntarily accept child development subsidy vouchers,
along with statutorily established family fees, provided through
the California Work Opportunity and Responsibility to Kids
(CalWORKs) program or other state-funded child care subsidy
programs.
Voucher rates are set by the Regional Market Rate (RMR), which
is generally intended to reflect the true regional cost of care
in the private child care market. However, as established by AB
1497 of 2012, the education budget trailer bill (Chapter 29,
Statutes of 2012), the RMR is currently set at the 85th
percentile of the 2005 RMR Survey.
According to DSS, as of February 6, 2013, there were
approximately 47,477 child care agencies with a licensed
capacity to serve up to 1,095,672 children in California.
Title 5 governs the state's subsidized child development
programs, which are overseen by the CDE. These programs must be
licensed by DSS under Title 22 regulations and meet higher
quality standards established under Title 5 regulations. These
requirements include:
A developmentally and age-appropriate educational
program for enrolled children;
Staff development opportunities to improve program
quality;
Parental involvement and education, including a parent
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survey;
Nutritional standards that comply with federal child
nutrition program requirements, such as the National School
Lunch Program:
A health and social services component to identify and
refer eligible children and their families to community or
public health and social services, such as CalFresh:
A self-evaluation process to continually improve and
enhance their program; and
An environment rating scale that measures educational,
staff development and parental involvement and education.
It is important to note that Title 5 programs, as a condition of
being contracted with the CDE, must accept and serve needy and
eligible subsidized children. Title 5 programs are funded
through the receipt of the Standard Reimbursement Rate (SRR)
based upon the number of children enrolled and the number of
hours of care, and statutorily established family fees. Whereas
a Title 22 program accepting a voucher would be reimbursed by
the RMR, which is generally higher than the SRR because of its
association with the regional private provider market, a Title 5
program is reimbursed using the SRR.
The SRR is statutorily set and is supposed to be increased
annually with a cost of living adjustment (COLA), however, a
COLA has not been provided since the 2007-08 fiscal year. The
SRR currently stands at $34.38 for one full-day of enrolled
care, which is defined by regulation as six and one half hours
of care. There are "adjustment factors" that are applied to the
SRR to reflect the increased cost of care for the varying ages
and needs of children, i.e., infants and toddlers, special
needs, etc. however, they too have not changed since their
establishment in AB 2311 (Chu), Chapter 435, Statutes of 2002.
Title 5 programs earn their SRR reimbursement based upon child
days of enrollment, meaning they are reimbursed at the rate of
$34.38 per day for each day the needy or eligible child receives
care. This creates challenges for Title 5 programs, as they
budget based upon the total number of days and children they
anticipate having to serve in a fiscal year. Add into this the
uncertainty of a child's regular and continuous enrollment, a
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family being deemed as no longer eligible or in need of care,
and fluctuating statewide budgets, it becomes a formidable
challenge for a Title 5 program to fully earn their contract's
maximum reimbursable amount (MRA). The goal set by CDE for
Title 5 programs is to annually earn no less than 98% of their
MRA.
According to CDE, as of the 2009-10 fiscal year, there were
approximately 1,420 service contracts with nearly 770 public and
private agencies supporting and providing services to 489,200
children. Title 5 providers contract with the CDE and include
school districts, county offices of education, cities, local
park and recreation districts, county welfare departments, other
public entities, community-based organizations, and private
agencies.
Supply and demand
In 1997, the state developed a nine county pilot program to
consolidate waiting lists for subsidized child care programs to
better organize and prioritize enrollment of eligible and needy
children. This nine-county pilot was expanded statewide and
made permanent in 2005. Referred to as the Centralized
Eligibility List (CEL), it not only became a valuable tool to
help prioritize enrollment based upon eligibility and need, it
also helped to demonstrate the need for subsidized child care
and funding county-by-county and statewide.
The state annually appropriated $7.9 million to operate all 58
county CELs and the statewide CEL. Unfortunately, due to the
ongoing budget deficit at the time, funding for CEL was
eliminated in the Budget Act of 2011 (Senate Bill 87, Chapter
33). At the time of its elimination, there were approximately
240,000 eligible and needy children waiting for a subsidized
child care slot to open up. Since then, some counties have
pursued maintaining their own CEL with existing local funds, but
it remains difficult to accurately estimate the total number of
needy and eligible families and children waiting for subsidized
child care.
However, using the number of eligible and needy children who
were on the statewide CEL in 2011, and taking into account the
nearly $700 million, or 42% of subsidized child care funding
that has been cut from the budget over the past five years, it
is not unreasonable to estimate that the number of eligible and
needy children waiting for subsidized child care is hovering
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around 300,000 children statewide.
History of the pilot and challenges to provide subsidized child
care in high cost counties
The San Mateo County pilot was established in 2004 and the San
Francisco pilot in 2006. Both were established in response to
the unintended consequences of living in a high cost county has
on needy and otherwise eligible families and the ability of
Title 5 programs to accept and serve them. On the one hand, a
low-income family who earns just enough money to meet the high
costs of housing could inadvertently be deemed as having too
high an income to qualify for subsidized child care. On the
other, the statutorily established SRR, which is the uniform
statewide reimbursement rate for subsidized care is wholly
insufficient for agencies to cover their program and operational
costs.
As a result, child care subsidy funds allocated to these two
counties were not being fully expended because too many
low-income families were being deemed ineligible due to the high
cost of living, and provider reimbursement rates were
insufficient to cover the cost of care. Since slots went
unfilled, subsidies went unspent.
Through the pilot, San Mateo and San Francisco County are
provided limited local flexibility with increased state
oversight to revise their eligibility and need determinations,
adjust their reimbursement rates and family fees based upon a
local evaluation and assessment, and modify their funding
requirements, as specified.
This allows both counties to use the funds they would have
otherwise not earned and reinvest that into their providers
through increased reimbursement rates. For example, prior to
the pilot, San Mateo County returned upwards of 15% of their
overall subsidized child care allocation to the state. Using an
ongoing estimation of how much money would go un-earned, in the
2010-11 fiscal year, San Mateo was able to reallocate those
funds amongst its agencies that were able to increase their
enrollment. They were also able to provide increased
reimbursement rates ranging from 1.5 percent to eight percent
above the SRR. In San Francisco, the reimbursement rates were
increased to $36.63 for their center based agencies and $39.46
for their programs operated by San Francisco Unified School
District.
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Both counties are also able to adjust how they determine a
family to be eligible for subsidized care. In San Mateo County,
they switched from using the 75% of the "benchmark" state median
income to 85% of current state median income as published by the
U.S. Department of Health and Human Services, the maximum
allowable under federal regulations (which is the maximum
allowable under the pilot). According to San Mateo County in
their initial 2004 subsidy plan:
Although this represents a 39% increase in the income
eligibility threshold, this new threshold is only 67% of
San Mateo County's median income from the 2000 Census and
still falls well below the County self-sufficiency
standards developed by Wider Opportunities for Women, the
San Mateo County Human Services Agency or the California
Budget Project.
In San Francisco, eligibility was set at 80% of state median
income, which allowed San Francisco to retain 392 children who
would have been otherwise deemed ineligible under the statewide
rate of 70% of state median income for the 2011-12 fiscal year.
Evaluation of the pilot programs
San Mateo County
San Mateo County has been successful in meeting the goals of the
pilot. Over the first six years of the pilot, San Mateo
consistently increased their child days of enrollment, which has
helped to steadily increase their contract earnings. According
to their independent evaluation, they increased their earnings
percentage from 88% in the 2003-04 fiscal year, which was the
year prior to the implementation of the pilot, to 96% the
following fiscal year. On average, San Mateo earned just over
97% of their total direct service funds over the first seven
years of the pilot.
Based upon this data and the independent evaluations of the San
Mateo County pilot, San Mateo County has continually met and
exceeded the goals of the pilot and merits having it made
permanent.
City and County of San Francisco
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San Francisco has had a few more challenges in implementing the
pilot. Some of its challenges can be attributed to how the
pilot was implemented. At the outset, San Francisco's pilot
mirrored much of San Mateo's, which, in retrospect was not the
best use of the pilot as it did not reflect the unique and
different challenges facing San Francisco. Although this was
not the only challenge facing its pilot, it did present a
significant challenge. As a result, San Francisco decreased,
rather than increased its contract earnings. They dropped from
98% to an average of 93% over the first six years of the pilot.
In response, San Francisco and the CDE conducted a holistic
review and adjustment of the pilot for the 2011-12 fiscal year.
As a result, the pilot was revised and a number of revised
elements were implemented. According to the independent
evaluation of San Francisco's 2011-12 fiscal year, the revised
pilot:
? draws upon lessons learned in the original pilot and
focuses on unique aspects of the San Francisco Pilot
project, such as technical assistance and the beginning of
an enhanced CEL called the San Francisco Child Care
Connection (SF3C).
In the first year of the revised pilot, San Francisco
considerably reduced their under-earned amount for the 2011-12
fiscal year to 1.7 percent of their countywide service
allocation, which is a substantial improvement. Additionally,
according to San Francisco, they are on track to further reduce
the amount of the under-earned service allocation for the
current 2012-13 fiscal year. It should also be noted that San
Francisco has also steadily increased their child days of
enrollment under the revised pilot. However, one year is not a
good measure of year-over-year consistency and progress. Should
year-over-year sustained progress for at least three consecutive
years be made, it would demonstrate that the pilot is effective
and beneficial to San Francisco and is in the state's best
interest to be made permanent.
RECOMMENDED AMENDMENTS:
It is the recommendation of this committee that should San
Francisco successfully demonstrate over three consecutive fiscal
years (2011-12, 2012-13, and 2013-14) that it earned nearly 100
percent of its countywide direct service funds and increased
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child days of enrollment, the pilot should be strongly
considered to be made permanent at that time.
In order to demonstrate continued progress, and therefore merit
making the San Francisco County pilot permanent, and recognizing
that the pilot was revised and implemented in the 2011-12 fiscal
year to better reflect the challenges San Francisco County
faces, it would be advisable that their pilot remain in effect
for an additional two years. This would:
Allow San Francisco to demonstrate, under the revised
pilot, a minimum of three consecutive years of improvement
through the 2013-14 fiscal year;
Provide sufficient time for an independent evaluation to
be conducted to report to the Legislature, DSS and CDE
whether the pilot merits permanency based upon the
principles of the revised pilot between the 2011-12 and
2013-14 fiscal years; and
Allow legislation to be pursued no sooner than the 2015
legislative year to make the pilot permanent.
Otherwise, if San Francisco is not successful, the pilot can be
phased out.
Specifically, staff recommends the following amendments:
1)On page two, line five delete "July 1, 2014" and insert "July
1, 2016"
2)On page two, line 14 before "may continue" add the following
language to read:
" shall terminate the plan. Between July 1, 2016, and July 1,
2018, the city and county shall phase out the individualized
county child care subsidy plan and, as of July 1, 2016, shall
implement the state's requirements for child care subsidies.
A child enrolling for the first time for subsidized child care
in the city and county after July 1, 2016, shall not be
enrolled in the pilot program established pursuant to this
article and is subject to existing state laws and regulations
regarding child care eligibility and priority.
3)On page two, delete lines 14 through 16.
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4)On page two, line 17 before "SEC. 2." add the following
amendment to Section 8335.1 of the Education Code to read:
8335.1. Prior to implementing the local subsidy plan, the City
and County of San Francisco, in consultation with the
department, shall develop an individualized county child care
subsidy plan for the city and county that includes the
following four elements:
(a) An assessment to identify the city and county's goal for
its subsidized child care system. The assessment shall
examine whether the current structure of subsidized child care
funding adequately supports working families in the city and
county and whether the city and county's child care goals
coincide with the state's requirements for funding,
eligibility, priority, and reimbursement. The assessment
shall also identify barriers in the state's child care subsidy
system that inhibit the city and county from meeting its child
care goals. In conducting the assessment, the city and county
shall consider all of the following:
(1) The general demographics of families who are in need of
child care, including employment, income, language, ethnic,
and family composition.
(2) The current supply of available subsidized child care.
(3) The level of need for various types of subsidized child
care services including, but not limited to, infant care,
after-hours care, and care for children with exceptional
needs.
(4) The city and county's self-sufficiency income level.
(5) Income eligibility levels for subsidized child care.
(6) Family fees.
(7) The cost of providing child care.
(8) The regional market rates, as established by the
department, for different types of child care.
(9) The standard reimbursement rate or state per diem for
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centers operating under contracts with the department.
(10) Trends in the county's unemployment rate and housing
affordability index.
(b) Development of a local policy to eliminate state-imposed
regulatory barriers to the city and county's achievement of
its desired outcomes for subsidized child care.
(1) The local policy shall do all of the following:
(A) Prioritize lowest income families first.
(B) Follow the family fee schedule established pursuant
to subdivision (f) of Section 8263 for those families
that are income eligible, as defined by Section 8263.1.
(C) Meet local goals that are consistent with the state's
child care goals.
(D) Identify existing policies that would be affected by
the city and county's child care subsidy plan.
(E) (i) Authorize any agency that provides child care and
development services in the city and county through a
contract with the department to apply to the department
to amend existing contracts in order to benefit from the
local policy once it is adopted.
(ii) The department shall approve an application to
amend an existing contract if the child care subsidy
plan is approved pursuant to subdivision (b) of
Section 8335.3, or modified pursuant to subdivision
(c) of Section 8335.3.
(iii) The contract of a department contractor who does
not elect to request an amendment to its contract
remains operative and enforceable.
(2) (A) The city and county shall, by the end of the first
fiscal year of operation under the approved child care
subsidy plan, demonstrate an increase in the aggregate
child days of enrollment in the county as compared to the
enrollment in the final quarter of the 2004-05 2010-11
fiscal year.
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(B) The amount of the increase shall be at least equal to
the aggregate child days of enrollment in the final
quarter of the 2004-05 2010-11 fiscal year for all
contracts amended as provided in subparagraph (E) of
paragraph (1), under which the contractor receives an
increase in its reimbursement rate, times 2 percent.
(C) The amount of the increase shall also be proportional
to the total contract maximum reimbursable amount to
reflect the changes in the budget allocation for each
fiscal year of the pilot.
(3) The local policy may supersede state law concerning
child care subsidy programs with regard only to the
following factors:
(A) Eligibility criteria including, but not limited to,
age, family size, time limits, income level, inclusion of
former and current CalWORKs participants, and special
needs considerations, except that the local policy may
not deny or reduce eligibility of a family that qualifies
for child care pursuant to Section 8353. Under the local
policy, a family that qualifies for child care pursuant
to Section 8354 shall be treated for purposes of
eligibility and fees in the same manner as a family that
qualifies for subsidized child care on another basis
pursuant to the local policy.
(B) Fees including, but not limited to, family fees,
sliding scale fees, and copayments for those families
that are not income eligible, as defined by Section
8263.1.
(C) Reimbursement rates.
(D) Methods of maximizing the efficient use of subsidy
funds, including, but not limited to, multiyear
contracting with the department for center-based child
care, and interagency agreements that allow for flexible
and temporary transfer of funds among agencies.
(c) Recognition that all funding sources utilized by direct
service contractors that provide child care and development
services in the city and county are eligible to be included in
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the child care subsidy plan of the city and county.
(d) Establishment of measurable outcomes to evaluate the
success of the plan to achieve the city and county's child
care goals and to overcome any barriers identified in the
state's child care subsidy system. The State Department of
Social Services shall have an opportunity to review and
comment on the proposed measurable outcomes before they are
submitted to the local child care planning council for
approval pursuant to Section 8335.3.
5)On page two , line 17 before "SEC. 2." add the following
amendment to Section 8335.4 of the Education Code to read:
8335.4(a) Upon approval of the plan by the Child Development
Division of the department, the City and County of San
Francisco shall annually prepare and submit to the
Legislature, the State Department of Social Services, and the
department a report that summarizes the success of the pilot
project and the city and county's ability to maximize the use
of funds and to improve and stabilize child care in the city
and county.
(b) The City and County of San Francisco shall submit an
interim a report to the Legislature, the State Department of
Social Services, and the department on or before December 31,
2010, and shall submit a final report to those entities on or
before June 30, 2014 December 31, 2014. , The report shall
summarize summarizing the impact of the plan on the child care
needs of working families in the city and county , evaluate the
pilot's operation between the 2011-12 and 2013-14 fiscal
years, and provide a recommendation as to whether the pilot
should continue as a permanent program .
6)On page two, line 20, delete "2014" and insert "2018" and
delete "2015" and insert "2019"
7)On page two, line 21, delete "2015" and insert "2019"
8)Delete all references to the City and County of San Francisco
and make conforming changes to Section 5 of the bill.
REGISTERED SUPPORT / OPPOSITION :
Support
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San Mateo County Board of Supervisors - Co-sponsor
California Alternative Payment Program Association (CAPPA)
California Child Care Coordinators Association
California State Association of Counties (CSAC)
City and County of San Francisco - Co-sponsor
County Welfare Directors Association of California (CWDA)
San Francisco Child Care Planning and Advisory Council (CPAC)
San Mateo County Child Care Partnership Council (CCPC)
San Mateo County Office of Education
Urban Counties Caucus (UCC)
Opposition
None on file
Analysis Prepared by : Chris Reefe / HUM. S. / (916) 319-2089