BILL ANALYSIS                                                                                                                                                                                                    

                                                                     AB 188

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          Date of Hearing:  March 24, 2015


                                     Chu, Chair

                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  


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            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



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          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  


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          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  


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          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.



          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. 


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          Santa Cruz County Parents Association 
          Sierra Nevada Children's Services 

          Supportive Services, Inc. 

          Valley Oak Children's Services 


          None on File.

          Analysis Prepared  
          by:              Myesha Jackson/HUM. S./(916) 319-2089