BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 260 (Gordon) - Individualized County Child Care Subsidy Plans
Amended: June 25, 2013 Policy Vote: Education 9-0
Urgency: No Mandate: No
Hearing Date: July 1, 2013 Consultant: Jacqueline
Wong-Hernandez
This bill meets the criteria for referral to the Suspense File.
Bill Summary: This bill makes permanent the San Mateo County
individualized child care subsidy plan and extends by 2 years
the San Francisco County individualized child care subsidy plan.
Fiscal Impact:
San Mateo subsidy plan: Potentially substantial loss of
state savings beginning in 2014-15; likely in excess of $1
million dollars annually.
San Francisco subsidy: Substantial loss of state savings in
2015-16; likely in the low millions of dollars.
Oversight: Minor workload savings to the California
Department of Education (CDE); the department would no
longer have administrative workload associated with the
requirements of the pilot itself.
Background: The state subsidizes child care and development for
certain low income families. Certain child care providers have
direct service contracts with the CDE, and are commonly referred
to as licensed Title 5 programs. These child care providers must
meet education and training standards that exceed those of Title
22 child care providers (licensed and license-exempt), as well
as provide care that includes an educational component. Title 5
providers are reimbursed at the Standard Reimbursement Rate,
which is currently $34.38 per child per day.
Current law authorizes pilot projects in San Mateo County (since
2004) and San Francisco City and County (since 2006) that allow
the counties to develop and implement an individualized county
child care subsidy plan in recognition of the high-cost of
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living in those counties. The plans allow Title 5 child care
providers in the county to supersede state requirements in the
following factors: 1) Eligibility criteria including age, family
size, time limits, income level, inclusion of former and current
CalWORKs participants, and special needs considerations; 2)
fees, including family fees, sliding scale fees, and co-payments
for those families that are not income eligible;
3) reimbursement rates; and, 4) methods of maximizing the
efficient use of subsidy funds including multi-year contracting
with the CDE for center-based child care, and interagency
agreements that allow for flexible transfer of funds among
agencies.
(Education Code 8335.1 and 8341)
Individualized child care subsidy plans must be implemented
within allocated funds. No additional state funding is provided
to either San Francisco or San Mateo counties for individualized
child care subsidy plans.
Both counties have been required to submit period reports to the
Legislature, and are required to terminate and phase out the
individualized county child care subsidy plans as follows:
1) San Mateo is to terminate the plan on January 1, 2014, and
phase out until January 1, 2016, at which time the county
is to implement the state's requirements for child care
subsidies.
2) San Francisco is to terminate the plan on July 1, 2014, and
phase out until July 1, 2016, at which time the city and
county is to implement the state's requirements for child
care subsidies.
The individualized child care subsidy plan is phased out by not
enrolling additional children under the alternative criteria
once the plan is terminated. As children age-out or disenroll
for other reasons, fewer and fewer children meet the criteria of
the individualized plan.
Proposed Law: AB 260 makes permanent the San Mateo County
individualized child care subsidy plan and extends by two years
the San Francisco County individualized child care subsidy plan.
With regard to San Mateo County, this bill:
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1) Extends by 6 months the individualized child care subsidy
plan, from January 1, 2014, to July 1, 2014.
2) Authorizes the individualized child care subsidy plan to
continue to be implemented permanently.
3) Sunsets the existing provisions and recasts nearly
identical language for the continuance of the
individualized child care subsidy plan with the existing
requirement for showing increases in enrollment and the
role of the Department of Social Services (DSS) in
reviewing outcome measures.
4) Requires the county to prepare and submit to the
Legislature, the DSS, and the CDE, an annual report, until
January 1, 2018, as specified.
With regard to San Francisco County, this bill:
1) Extends the sunset on the individualized child care subsidy
plan for 2 years, from July 1, 2014, to July 1, 2016, and
phase out period (to 2016-2018).
2) Extends by 6 months the due date of the final report to the
Legislature, and requires that the report include an
evaluation of the pilot project's operation between the
2011-12 and 2013-14 fiscal years, and provide a
recommendation as to whether the pilot project should
continue as a permanent program.
Related Legislation: AB 86 (Committee on Budget), approved by
the Legislature on June 14, 2013, extends both the San Francisco
and San Mateo individualized child care subsidy plans for an
additional year. The prior two extensions were implemented
through the Budget Act. This bill exceeds the authority granted
by the Budget Act and would chapter out those provisions if
enacted.
Staff Comments: The individualized child care subsidy pilot
program in San Mateo and San Francisco counties was established
to increase subsidized child care access and options in two
counties with a high cost of living. Under the pilot program,
both counties were allowed to provide subsidized child care to
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families whose income levels would have made them ineligible in
other parts of the state, to pay increased reimbursement rates
to child care providers, and to temporarily reallocate funds
among providers when one provider was not going to be able to
fully expend the funding in its contract. The pilot program did
not provide the counties additional funding for subsidized child
care; it simply made it easier for the two counties to spend the
funding they were allocated annually. As intended, the pilot
resulted in more subsidized child care money being spent on
subsidized child care in those counties, and less reverting back
to the state General Fund.
In 2002-03, the year before the pilot began, San Mateo County
was unable to spend 15% of its allocation, and returned that
money to the General Fund. By contrast, in 2011-12, it was
unable to spend only 3.6% of its allocation, and returned
$652,580 to the state. San Francisco County returned $1,134,639
- 2.3% of its allocation, in 2011-12. The flexibility afforded
by the pilot program is the primary reason that the county has
been able to offer more subsidized child care and spend its
allocation. Another reason is that state budget reductions to
subsidized child care have substantially reduced the available
funds for each county to spend.
Absent the special rules (whether in pilot or permanent form)
governing subsidized child care in San Mateo and San Francisco
counties, there would be a reduction in child care services.
Providers would no longer find it as attractive to offer
subsidized child care services (which reimburse less than the
market rate for child care) and fewer families would qualify for
the services in those counties, to begin with. The amount of
unspent funds that would revert from those counties back to the
General Fund would increase, but it is not clear how much it
would increase. Since 2002-03, a number of mitigating factors
have been introduced, including child care allocation
reductions, contract changes, and the flexibility for all
counties to temporarily reallocate funds among child care
providers in the county when a provider is not going to spend
its full contract amount (which was previously only allowable
for San Mateo and San Francisco counties under this pilot).
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