BILL ANALYSIS Ó AB 188 Page 1 Date of Hearing: March 24, 2015 ASSEMBLY COMMITTEE ON HUMAN SERVICES Chu, Chair AB 188 (Cristina Garcia) - As Introduced January 27, 2015 SUBJECT: Child care: alternative payment providers: reimbursement rates: eligibility requirements SUMMARY: Increases the allowable reimbursable amount included in contracts for alternative payment programs for child care. Specifically, this bill: Adds a 3% reimbursement rate for making eligibility determinations to the allowable reimbursable amount for an alternative payment program contract. EXISTING LAW: 1)Establishes the California Child Care and Developmental Services Act (CCDSA) for the purpose of providing a comprehensive, coordinated, and cost-effective system of child care and development services, as specified, for children from infancy to 13 years of age, and their parents, through full- and part-time programs. (EDC 8200 et seq.) 2)States the intent of the Legislature that all families have access to child care and development services, as specified, regardless of ethnic status, cultural background, or special needs, and the intent that subsidized child care and AB 188 Page 2 development services be provided to eligible families, to the extent funding is available. (EDC 8202) 3)Defines alternative payments as payments made by one child care agency to another agency or provider for the provision of child care and development services, and payments that are made by an agency to a parent for the parent's purchase of child care and development services. Further defines alternative payment program as a local government agency or nonprofit organization that has contracted with the California Department of Education (CDE), as specified, to provide alternative payments and to provide support services to parents and providers. (EDC 8208(a) and (b)) 4)Authorizes the use of child care and development funds, as specified, for alternative payment programs in order to maximize parental choice in selecting an appropriate child care setting. (EDC 8220) 5)Requires an alternative payment program reimbursement to include the cost of child care paid to a child care provider in addition to the administrative and support services costs for the alternative payment program, and caps the amount for administrative and support services at 17.5% of the total contract amount. (EDC 8223) 6)Further prohibits administrative costs from exceeding the costs allowable for administration under federal requirements. (EDC 8223) FISCAL EFFECT: Unknown COMMENTS: AB 188 Page 3 Alternative Payment Programs(APPs): There are currently 76 APPs contracted with CDE, funded through state and federal funds, to provide an array of support and payment services that enable eligible low-income families to access subsidized child care. APPs do not provide direct child development services or programs, rather they help families arrange child care services and make payments directly to the child care provider selected by the family. This comes in the form of subsidized child care vouchers they provide to families who are participating in welfare-to-work activities under the California Work Opportunities and Responsibility to Kids (CalWORKs) program, or who are low-income but do not qualify for CalWORKs. More broadly, APPs are charged with increasing parental choice in child care and addressing the individual needs of the families they serve. Typically, a family that receives a voucher from an APP will then be referred to a local child care resource and referral (R&R) network. The R&R network, also funded through state and federal dollars, will assist a family by helping identify and access the appropriate and desired child development program for the child or children. Child care vouchers can be used to access child care at either a Title 5 or Title 22 child development center or with a license-exempt child care provider who meets certain criteria. However, due to a lack of state resources and ongoing cuts within the CCDSA, access to programs able to accept vouchers is limited. Should a family be unable to find appropriate care, they will be placed on a waiting list, if one is available. APPs are funded through an administrative cap set by statute, which requires the total cost for administrative and support services to not exceed 17.5% of their overall total contract amount, with the rest of the contract amount consisting of the actual cost of child care that is paid to providers. The administrative and support services amount was originally capped at 20% of the total contract amount. However, due to the state's ongoing budget deficits and funding cuts over the past ten years, the cap was lowered to the current percentage. This has resulted in many APPs having to lay off staff, struggling to pay competitive wages, and not being able to fill open positions AB 188 Page 4 while they are mandated to serve increasing numbers of families in need of child care. APPs currently support over 213,000 children and 142,000 families. Need for the bill: According to the author, "APPs are only funded based on the reimbursements to providers that are actually 'put out the door' in the form of a child care payment. The child care payment is made once a working family is deemed income eligible for a child care subsidy and has chosen a child care provider. All of the work leading up to the actual enrollment of an income eligible family that will result in a child care payment to a provider is not reimbursed?Without a remedy, APPs will experience greater caseworker turnover, families needing child care will have to wait longer and longer times in order to begin the process, and existing families and children will suffer greater holes and access in their support system safety net?It is hugely important that we provide crucial funding to community based agencies that will allow them to more fully meet the needs of working families needing child care, will support protection of public dollars by only enrolling those working families that meet stringent eligibility criteria, and that will lead to a greater strengthening of our 'safety net' programs." Staff comments: The additional 3% contract reimbursement under this bill is specifically provided for making eligibility determinations, which would be added to the total allowable reimbursement for administrative and support services. While "administrative and support services" is broad and lacking an explanation of what it entails, it encompasses all of the functions the APPs carry out to assist parents in finding and maintaining child care, and it does not simply include overhead costs. Rather than simply increase the allowable reimbursement for administrative and support services from 17.5% to 20.5%, the 3% is clearly added in a way that would not be perceived as offsetting the amount in the APP contract that is paid to providers for child care. However, by adding 3% explicitly for making eligibility determinations, this bill could have the effect of limiting the APPs flexibility in assisting families, thereby not really helping the APPs provide overall high quality AB 188 Page 5 services and meet families' individual needs. Should this bill move forward, the author may wish to provide more details around how the additional 3% contract amount will be used. REGISTERED SUPPORT / OPPOSITION: Support CAPPA Children's Foundation Child Care Links Child Development Associates, Inc. Child Development Resources of Ventura County, Inc. Community Action Partnership of San Luis Obispo Community Child Care Council (4C's) of Alameda County Community Resources for Children Controltec, Inc. Davis Street Family Resource Center Family Resource & Referral Center Mexican American Opportunity Foundation North Coast Opportunities, Inc. AB 188 Page 6 Santa Cruz County Parents Association Sierra Nevada Children's Services Supportive Services, Inc. Valley Oak Children's Services Opposition None on File. Analysis Prepared by: Myesha Jackson/HUM. S./(916) 319-2089