BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
AB 274 (Bonilla) - Child Care: Alternative Payment Program
Amended: July 9, 2013 Policy Vote: Education 9-0
Urgency: No Mandate: No
Hearing Date: August 19, 2013
Consultant: Jacqueline Wong-Hernandez
This bill may meet the criteria for referral to the Suspense
File.
Bill Summary: AB 274 makes changes to attendance reporting for
child care providers that contract with Alternative Payment (AP)
programs, as specified. This bill authorizes AP programs and
providers to maintain records in electronic format if the
original documents were created in electronic format, as
specified. This bill also requires the California Department of
Education (CDE), once the Superintendent of Public Instruction
(SPI) determines that the Financial Information System for
California (FI$Cal) has been implemented within the CDE, to
request the State Controller (SCO) to make payments via direct
deposit by electronic funds transfer to providers who request
such.
Fiscal Impact:
Attendance record-keeping: Potentially significant workload
savings for child care providers and AP programs.
Auditing: Potentially significant increased auditing
workload for the CDE, depending on how providers track
attendance moving forward. Additional auditing time could
increase costs up to $120,000 in 2014-15, and up to $60,000
annually thereafter. The CDE has indicated that 80% ($96,000
in the first year) of this additional expense would be paid
for with Federal Funds and 20% ($24,000 in the first year)
with General Fund. See staff comments.
Direct deposit option: Minor annual costs to the CDE in
per-transaction fees paid to the SCO to process direct
deposit payments.
Background: Existing law authorizes local government agencies or
non-profit organizations to contract with the CDE to operate AP
Programs and provide alternative payments and support services
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to parents and child development providers. AP Programs help
parents arrange child care services and makes payments directly
to the provider, which may be in-home care, family child care or
center-based care, and either licensed or license-exempt.
(Education Code § 8220)
Current regulations require child care and development providers
that contract with AP Programs to submit periodic reports that
must include: a) the days and hours of enrollment and
attendance; b) the total days of operation; and, c) services,
revenues and expenditures relating to care provided for
subsidized and unsubsidized children.
Parents are required to physically sign-in and sign-out each
child when they drop off and pick up their child each day.
(California Code of Regulations, Title 5, § 18065)
Current regulations require, and Management Bulletin issued by
the CDE clarifies, child care and development providers that
contract with AP Programs to review attendance records to ensure
the days and hours of services used by the parent were broadly
consistent with the certification establishing the parent's
hours and days of service, and the parent completed the
attendance records as required by signing in and out on a daily
basis. (CCR, Title 5, § 18065 and § 18066; CDE Management
Bulletin 12-17)
Child care and development providers that contract with AP
Programs are required to maintain records for up to five years.
(CCR, Title 5, § 18067)
Proposed Law: AB 274 authorizes child care and development
providers that contract with AP Programs to submit attendance
records on a monthly basis, as specified. This bill also
authorizes AP Programs and providers to maintain records
electronically, subject to compliance with state and federal
auditing requirements, as specified. This bill requires the CDE
to request the SCO issue payments to AP Programs, upon request
of the contractor, via direct deposit through Fi$Cal, once it
has been implemented within the CDE.
Staff Comments: This bill's primary fiscal impact on the state
stems from its potential to increase the CDE's audit costs,
particularly in the first few years after the attendance
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accounting changes go into effect. Currently, the CDE conducts
annual program audits of child care providers, and verifies that
the provider has kept the required sign-in/sign-out attendance
sheets and that they contain the required parent/guardian
signatures. This bill would remove the specific signature
requirement, and replace it with a more general requirement for
providers to have "documentation that includes, at a minimum,
the name of the child receiving services, the dates and actual
times care was provided each day, including the time the child
entered and the time the child left care each day, that is
signed under penalty of perjury by both the parent or guardian
and the child care provider, attesting that the required
information provided is accurate." This bill functionally allows
each provider to keep the information in a different manner,
which the CDE believes will result in significant additional
work for auditors.
The Child Development Division of the CDE, which conducts the
child care audits, is supported through a split of Federal Funds
(80%) and state General Fund (20%) and is a part of the state's
administration of child care programs. The CDE has opined that
any increase in audit costs would be paid at the same
federal/state split funding levels, as part of the child care
program administration, and could be funded with existing child
care program funds if it were permitted to divert state and
federal funds from other program expenses (i.e. providing child
care) to program administration. Currently, California has
elected to cap the administration for this program at 2%,
significantly less than the federal cap of 5%, in order to spend
more of the funding on services. The CDE spends its full federal
and state allocation for this program. Thus, this bill would
either require additional resources from the General Fund, or
flexibility for the CDE to spend more federal and state funds on
administration.
The CDE believes that it will need to update audit procedures
and training to reflect that auditors will be expected to verify
the attendance information, but that it will vary by provider.
Some providers may continue to use sign-in/sign-out sheets,
others may use spreadsheets or another method that works best
for the provider. To the extent that auditors take more time to
verify information based on each provider's tracking system,
audit workload would be increased. It is likely that there will
be an initial spike in workload for auditor training, and while
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they transition to the new procedures, and that auditing
efficiency will increase over time.
The most significant increase in workload is likely to be
realized in 2014-15, when the provider audits for the 2013-14
fiscal year are conducted. This bill takes effect on January 1,
2014, which would allow providers to change the way they track
attendance mid-year. In the next audit, auditors will encounter
programs that changed their tracking systems mid-year, and will
need to account for both types of tracking systems in the same
audit of the same provider.
Recommended Amendments: Staff recommends that this bill's
implementation date be delayed until July 1, 2014, the first day
of the 2014-15 fiscal year.