BILL ANALYSIS Ó AB 233 Page 1 Date of Hearing: April 29, 2015 ASSEMBLY COMMITTEE ON EDUCATION Patrick O'Donnell, Chair AB 233 (Lopez) - As Amended April 9, 2015 [Note: This bill was doubled referred to the Assembly Human Services Committee and was heard by that Committee as it relates to issues under its jurisdiction.] SUBJECT: Child care and development services: alternative payment programs: reimbursement rates SUMMARY: Provides a 12-month eligibility determination process for specified child care and development programs and makes changes to the administration of various programs. Specifically, this bill: 1)Adds "access" to the current designated purpose of alternative payment programs (APPs) of allowing for maximum parental choice. 2)Establishes an eligibility determination process of every 12 months for APPs. AB 233 Page 2 3)Deletes the requirement that alternative payment (AP) child care providers maintain monthly attendance records or invoices in the unaltered original format and instead simply requires that these records or invoices be maintained. 4)Deletes the requirement that contractors track absences for purpose of reimbursement to providers through an APP. 5)Authorizes an APP to implement an altered rate level once per year. 6)Deletes the requirement that a licensed child care provider post its rates and discounts or scholarship policies in a prominent location adjacent to the provider's license at a child care facility. 7)Deletes the requirement for an APP to verify provider rates no less frequently than once a year by randomly selecting 10% of licensed child care providers serving subsidized families. 8)Deletes the provision requiring the California Department of Education (CDE) to develop regulations addressing discrepancies in the provider rate levels identified through the rate verification process. AB 233 Page 3 9)Changes the requirement that every agency operating both a direct service program and an APP provide at least four referrals to a family, as specified, to apply only to resource and referral agencies. 10)Specifies that a family may receive child care services for 12 months, rather than up to 12 months, on the basis of a certification by the county child welfare agency that child care services continue to be necessary, or if the child is receiving child protective services during that period of time. 11)Specifies that a family that transfers from one subsidized child care program to another in order to maintain eligibility shall be considered continuously eligible for services for 12 months from the time of initial, or subsequent, eligibility determination. 12)States that it is the intent of the Legislature that an extension of the 60-day working period improve services in areas with high unemployment rates or areas with disproportionately high numbers of seasonal agricultural jobs, or both. 13)Deletes the requirement that families have a physical examination and evaluation, including age-appropriate AB 233 Page 4 immunization, as a condition of enrollment in a child care and development program. Deletes the requirement that a standard, rule, or regulation shall not require medical examination or immunization for admission to a child care and development program of a child whose parent or guardian files a letter with the governing board of the child care and development program stating that the medical examination or immunization is contrary to his or her religious beliefs, or provide for the exclusion of a child from the program because of a parent or guardian having filed the letter. Deletes the requirement that if there is good cause to believe that a child is suffering from a recognized contagious or infectious disease, the child shall be temporarily excluded from the program until the governing board of the child care and development program is satisfied that the child is not suffering from that contagious or infectious disease. 14)Specifies that the funding and reimbursement procedures the Superintendent of Public Instruction (SPI) is currently required to adopt rules, regulations, and guidelines for apply to contractors operating centers, family child care homes, or both. 15)Authorizes an APP contractor to develop a written policy directing parents to pay family fees directly to the child care provider. Establishes requirements related to this process, as follows: a) The contractor shall provide written notification of the assessed fee to both the parent and the child care AB 233 Page 5 provider. b) The contractor shall deduct the amount of the family fee assessed to the parent when calculating the payment due to the child care provider. c) The contractor shall report its payment to the child care provider plus the assessed family fees as an expense on the attendance and expenditure reports as required by regulation. d) A contractor with a written policy directing parents to pay family fees directly to the child care provider are exempt from all of the following: i) Requiring families to pay family fees in advance of child care services. ii) Requiring any record or proof that the family paid any applicable family fees to the child care provider. AB 233 Page 6 iii) Notification of delinquent fees or termination for delinquent fees. e) The contractor is authorized to require child care providers to collect the family fee, which shall be deducted from the reimbursement to the child care provider, or to collect the family fee amount directly from the parent. 16)Strikes obsolete provisions and makes technical, non-substantive changes. EXISTING LAW: 1)Establishes eligibility for child care services and child development programs administered by the CDE and requires the SPI to adopt rules and regulations on eligibility, enrollment and priority of services needed for implementation (Education Code (EC) Section 8263). 2)Provides that CalWORKs recipients are eligible for three stages of child care services. Stage one child care begins when a recipient first receives CalWORKs aid and is limited to six months. Stage two begins when a recipient's work or work activity is stable and is available for up to two years after a recipient is no longer eligible for CalWORKs aid. Families can maintain child care benefits if it meets income eligibility under stage 3 if there are slots available. (EC Sections 8350-8359.1) 3)Specifies that in order to be eligible for federal and state subsidized child development services, families must meet at least one requirement in each of the following areas: AB 233 Page 7 a) A family is (A) a current aid recipient, (B) income eligible, (C) homeless or (D) one whose children are recipients of protective services, or whose children have been identified as being abused, neglected, or exploited, or at risk of being abused, neglected, or exploited; and, b) A family needs the child care services (A) because the child is identified by a legal, medical, social services agency, or emergency shelter as (i) a recipient of protective services or (ii) being neglected, abused, or exploited, or at risk of neglect, abuse or exploitation, or (B) because the parents are (i) engaged in vocational training leading directly to a recognized trade, paraprofession or profession, (ii) employed or seeking employment, (iii) seeking permanent housing for family stability, or (iv) incapacitated. (EC Section 8263(a)) 4)Defines "income eligible" as a family whose adjusted monthly income is at or below 70% of the state median income (SMI), adjusted for family size, and adjusted annually. For the 2014-15 fiscal year, the income eligibility shall be 70% of the SMI that was in use for the 2007-08 fiscal year, adjusted for family size. (EC Section 8263.1) 5)Authorizes child care and development funds to be used for APPs to allow for maximum parental choice. (EC Section 8220) 6)Requires the SPI to establish a family fee schedule for subsidized child care, as specified, contingent on income and subject to a cap. (EC Section 8273) FISCAL EFFECT: Unknown COMMENTS: Background on child care and development programs. The CDE administers a child care and development system, maintaining over 1,300 service contracts with approximately 750 AB 233 Page 8 public and private agencies supporting and providing services to children from birth through 12 years of age. Contractors include school districts, county offices of education, cities, colleges, other public entities, community-based organizations, and private agencies. Programs administered by the CDE include General Child Care, California State Preschool Program, Migrant Child Care, and APPs. In fiscal year (FY) 2014-15, $2.4 billion was provided for child care and development programs from state and federal funds, offering 355,000 slots. This bill is sponsored by the California Alternative Payment Program Association (CAPPA). APPs, funded with state and federal funds, offer a variety of child care arrangements for parents, including licensed family child care homes and center-based care, and arrange for payments to licensed-exempt providers, who are relatives or friends of parents or guardians. The APP helps families access child care services and makes payment for those services directly to the child care provider selected by the family. The APP is intended to increase parental choice and accommodate the individual needs of the family. APPs are reimbursed based on the number of children served and funds are appropriated based on the fiscal reporting process and budget estimations. In 2013-14, there were 76 APPs throughout the state and they range from private, nonprofit organizations to county offices of education. APPs began as pilot programs in 1977 and became permanent in 1980. The bill has the following major components: 1)12-month eligibility: This bill extends eligibility for child care services to 12 months for APPs and for families transferring from one subsidized child care program to another. With the exception of families receiving care due to social services placements, California already has a 12-month eligibility determination practice. The issue addressed by the bill is whether and to what extent families should be AB 233 Page 9 required to report changes during the 12 month period and whether these changes should result in termination of services. California requires families to report any changes in income or need within five calendar days. This bill negates this regulation and the requirement for contractors to recertify families receiving services. The 12-month eligibility provision is incorporated in the APP section of the EC and in the section regarding families transferring from one subsidized child care program to another. Staff recommends striking the 12-month eligibility language in the two sections in the bill and instead adding a new subdivision in EC 8263 to apply the 12-month eligibility determination to all child care and development programs. A 12-month eligibility determination provides certainty to families. It is also consistent with the changes in the reauthorization of the federal Child Care and Development Block Grant, from which California received $570 million in 2014-15. 2)Physical examination and evaluation. The bill deletes requirements that a physical exam and evaluation, including age-appropriate immunization, be required before, or within six weeks of, enrollment. The bill also strikes the provision offering an exemption from the requirement for religious reasons, and the authority to remove a child temporarily if a child is suffering from a recognized contagious or infectious disease. According to the sponsor, this provision was removed AB 233 Page 10 because APPs do not directly work with children. This provision is not specific to APPs and should not be deleted. Staff recommends reinstating this provision and instead adding language clarifying the provisions that apply to providers. 3)Elimination of requirement for APs to verify provider rates. This bill eliminates a requirement for an APP to verify provider rates at least once a year in order to ascertain the rates charged to nonsubsidized families. The sponsor argues that this is unnecessary because the rates is established by the regional market rate established by the Legislature. According to the CDE, this provision is necessary to verify the amount being charged to non-subsidized families. Staff recommends reinstating this provision. 4)Family fee. This bill authorizes an APP to develop a written policy that directs parents to pay family fees directly to the child care provider and exempts APs from the responsibility for collecting fees. This provision reduces administrative responsibilities for APs, but may put a burden and financial risk on a provider to collect fees, as the bill authorizes the AP contractor to deduct the family fee amount in the reimbursement to a child care provider. It is also unclear who will be responsible for conducting the administrative functions currently required of APs, such as maintaining records of payments and issuing a Notice of Action if a family fails to pay a fee. According to the sponsor, many providers have already assumed the responsibilities for collecting the fees. Staff recommends adding an amendment to specify that an AP may direct a parent to pay family fees directly to a provider upon agreement by a child care provider to collect the fee. Arguments in support. According to the author, "The priority of this bill is to provide maximum parental choice, access and AB 233 Page 11 stable child care for eligible working families up to 12 months. Our working poor families dealing with a multitude of poverty stressors, that are getting up, working and doing everything we ask of them to move towards self-sufficiency, ought to have peace of mind that their child care is stable. Additionally, this bill aims to create greater efficiencies and maximize the use of public funds to greater support working families." REGISTERED SUPPORT / OPPOSITION: Support One individual Opposition None on file Analysis Prepared by:Sophia Kwong Kim / ED. / (916) 319-2087 AB 233 Page 12