BILL ANALYSIS                                                                                                                                                                                                    

                                                                     AB 765

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          Date of Hearing:   April 28, 2015


                                  Kansen Chu, Chair

          AB 765  
          (Ridley-Thomas) - As Amended March 26, 2015

          SUBJECT:  Child care and development:  reimbursement rates

          SUMMARY:  Raises the standard reimbursement rate for subsidized  
          child care. 

          Specifically, this bill:  

          1)States a number of legislative findings and declarations  
            related to teachers in state-funded child development programs  
            and the low wages and lack of benefits they often receive.

          2)States that the standard reimbursement rate (SRR) is not  
            intended to fund mandated costs imposed upon child development  
            programs due to actions of law relating to minimum wage  
            requirements, health insurance requirements, new or increased  
            fees, new or expanded program requirements, or other cost  
            increases due to legislative action.

          3)Requires, in addition to application of the specified  
            cost-of-living adjustment (COLA), the SRR to be raised as  
            needed to provide a living wage, reasonable health insurance,  


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            and retirement benefits for employees in order to support the  
            recruitment and retention of skilled and trained teachers, to  
            support the financial stability of programs and educational  
            quality, and to achieve gender pay equity.

          4)Defines "cost-of-living adjustment" to mean an annual increase  
            in funding and the SRR to maintain buying power as a result of  
            inflation, and requires the COLA as currently calculated to at  
            least be equal to the amount of the inflation adjustment  
            applied to K-12 school district revenue limits, as specified.

          EXISTING LAW: 

          1)Establishes the Child Care and Development Services Act to  
            provide child care and development services as part of a  
            coordinated, comprehensive, and cost-effective system serving  
            children from birth to 13 years old and their parents  
            including a full range of supervision, health, and support  
            services through full- and part-time programs.  (EDC 8200 et  

          2)Defines "child care and development services" to mean services  
            designed to meet a wide variety of children's and families'  
            needs while parents and guardians are working, in training,  
            seeking employment, incapacitated, or in need of respite.   
            (EDC 8208)

          3)States the intent of the Legislature that all families have  
            access to child care and development services, through  
            resource and referral where appropriate, and regardless of  
            demographic background or special needs, and that families are  
            provided the opportunity to attain financial stability through  
            employment, while maximizing growth and development of their  
            children, and enhancing their parenting skills through  


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            participation in child care and development programs.  (EDC  

          4)Requires the Superintendent of Public Instruction to  
            administer general child care and development programs to  
            include, among other things as specified, age- and  
            developmentally-appropriate activities, supervision, parenting  
            education and involvement, and nutrition.  Further allows such  
            programs to be designed to meet child-related needs identified  
            by parents or guardians, as specified.  (EDC 8240 and 8241)

          5)Requires the Superintendent to implement a plan that  
            establishes reasonable standards and reimbursement rates for  
            subsidized child care, as specified.  Sets the amount of the  
            SRR.  (EDC 8265) 

          6)Requires the Superintendent to establish a family fee schedule  
            for subsidized child care, as specified, contingent on income  
            and subject to a cap.  (EDC 8273)

          FISCAL EFFECT:  Unknown


          Subsidized child care and the Standard Reimbursement Rate:   
          Families are typically eligible for subsidized child care if  
          their income is less than 70% of the 2007-08 State Median Income  
          (about $42,000 per year for a family of 3), if the parents have  
          a need related to work, training, or education, and if the  
          children are up to 12 years old (or 21 years old for youth with  
          exceptional needs).  The state's subsidized child development  
          programs, with the exception of CalWORKs Stage 1 child care, are  
          overseen by the California Department of Education (CDE).  The  


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          Department of Social Services (DSS) administers CalWORKs Stage 1  
          child care and is also responsible for the licensing and  
          regulation of child day care centers and family child care  

          CDE-administered subsidized child care can be provided through  
          contracts; contracted providers are funded through the receipt  
          of the Standard Reimbursement Rate (SRR) based on the number of  
          children enrolled and the hours of care provided.  Families may  
          also be required to pay a family fee if they earn above a  
          certain threshold income for their family size.  Care is  
          provided in child care centers and family child care homes.

          The SRR is set in statute and is supposed to be increased using  
          a COLA each year.  However, this adjustment has been suspended  
          in years past, remaining the same, at $34.38 for a full day of  
          care, from fiscal year 2007-08 through 2013-14.  The SRR was  
          increased by five percent in the Budget Act of 2014, and is  
          therefore $36.10 for fiscal year 2014-15.  Adjustment factors  
          are applied to the SRR in some instances to reflect the  
          increased cost of care for the different ages and needs of  

          The SRR COLA is set in statute, as is the elementary and  
          secondary school district revenue limit COLA.  However, they are  
          calculated differently.  Also, as previously stated, the SRR  
          COLA has been suspended repeatedly in recent years.

          Gender pay inequity:  The continued persistence of a gender pay  
          gap in the state and country is well-recognized.  According to  
          2014 data from the American Association of University Women  
          (AAUW), in the United States, women made 78 cents for every  
          dollar men did.  This ratio was slightly better in California,  
          where median earnings for women were $42,199, equaling 84% of  
          men's median earnings of $50,268.


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          However, simply looking at the difference in pay between men and  
          women can miss other dynamics, particularly those pertaining to  
          race and ethnicity.  A report from the National Women's Law  
          Center looking at 2012 census data for the United States found  
          that, while women overall were paid 77 cents per every dollar  
          earned by their male counterparts, parsing these data showed how  
          women fared differently by race and ethnicity.  White,  
          non-Hispanic women earned 78% of what white, non-Hispanic men  
          did.  Asian women earned 87% of what these same (white,  
          non-Hispanic) men did.  Black women earned 64% compared to  
          white, non-Hispanic men, and Hispanic women earned 54% compared  
          to them.

          The gender pay gap may, in certain industry sectors, be both  
          cause and effect of "typically male" and "typically female"  
          jobs.  Evidence indicates that the child care workforce in  
          California is predominantly female.  For example, a 2006 study  
          by The California Child Care Resource and Referral Network and  
          the Center for the Study of Child Care Employment, housed in the  
          Institute of Industrial Relations at the University of  
          California at Berkeley, looked at a random sample of 1,800  
          family child care providers in the state and found that 96% of  
          the study sample was female.

          Living wage:  A "living wage" is often used to refer to the  
          amount of income necessary for workers to meet the basic needs  
          of themselves and their families, typically including housing,  
          food, health care, child care, transportation, taxes, and  
          miscellaneous costs.  Methodologies for determining living wages  
          vary, but they tend to involve calculations at the regional  
          (city or county) level in order to account for variance in  
          housing costs.  Additionally, living wage estimates also tend to  


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          vary by family size, given the differing child care needs  
          associated with the number and ages of children.

          Living wages tend to be significantly higher than the minimum  
          wage.  For example, the Insight Center for Community Economic  
          Development has developed the family economic self-sufficiency  
          standard.  The following are the 2014 hourly living wages per  
          this standard, by county, for one adult with two preschool-age  

            Alameda County =  $36.28/hour

            Los Angeles County = $35.48/hour

            Riverside County = $29.09/hour

            Sacramento County = $27.28/hour

            San Diego County = $33.96/hour

            Santa Clara County = $40.26/hour

            Santa Cruz County = $38.99/hour

          Need for this bill:  According to the author, "This bill would  
          help to build a strong and professional early care and education  
          workforce that is defined by high-quality, reasonable  
          compensation, and job retention and security.  The bill would  
          clarify that it is the intent of the Legislature to provide  
          child development programs with annual cost of living  


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          adjustments equal to the inflation adjustments given to K-12  
          education, as well as to rebuild wages, benefits and financial  
          stability in these programs - including the elimination of  
          gender pay inequity.  Furthermore, the bill would help to ensure  
          and enhance the ability of these programs for young children to  
          meet the high educational standards required by state and  
          federal law, and to retain skilled and highly-trained teachers  
          by increasing the Standard Reimbursement Rate."

          Staff comments:  Child care and development programs are a  
          crucial support for working families:  they enable parents to go  
          to work to and earn an income for their families, and at the  
          same time, they can provide children with the care and education  
          that will help form the strong developmental foundation that is  
          known to contribute to a number of positive outcomes later in  
          life.  The providers of this care play a vital role in the  
          success of early care and education programs, and it is widely  
          recognized that all too often, the wages associated with this  
          important work are low. 

          This bill's goals of addressing gender pay inequity, the  
          recruitment and retention of quality care providers, and the  
          financial stability and educational quality of subsidized child  
          care programs are laudable.  Furthermore, its efforts to  
          increase the SRR to better fund early care and education  
          providers point to the need for a well-supported subsidized  
          child care system.  In particular, this bill's proposal to keep  
          the SRR COLA on par with the K-12 school district revenue limit  
          COLA may be one way to better support this system.  However,  
          other components of this bill may unintentionally conflict with,  
          or at least complicate, this approach.  Should this bill move  
          forward, the author may wish to consider the following: 

          1)The intent language stating that, "The standard reimbursement  
            rate is not intended to fund mandated costs imposed upon child  
            development programs due to actions of law relating to minimum  


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            wage requirements, health insurance requirements, new or  
            increased fees, new or expanded program requirements, or other  
            cost increases due to legislative action," may be interpreted  
            to mean that the SRR should not be used to pay for any of the  
            specified increases and that other funds, such as additional  
            state General Fund, must instead be used for these purposes.   
            If the intent of this language is to encourage an attendant  
            increase in the SRR per any increases in the items listed,  
            rewording of this provision with added detail may be helpful.

          2)This bill requires the adjustment of the SRR according to a  
            wide variety of factors, a number of which are not clearly  
            defined in order to operationalize easily.  For example,  
            "reasonable health insurance" and "living wage" are not  
            defined, and are left open to interpretation.  Additionally,  
            the type of retirement benefits required are not specified.   
            Furthermore, no timeframe is offered for the adjustment of the  
            SRR outside of "as needed."  In order to offer clear direction  
            to the Superintendent and CDE, it may be useful to better  
            define terms and timelines.  At the same time, it may also be  
            useful to specify these factors - living wage, reasonable  
            health insurance, and retirement benefits - as ultimate goals,  
            and the adjusted COLA as an important first step.

          3)Requiring the SRR to be indexed to a living wage can entail  
            numerous complicated calculations, given that living wages are  
            typically responsive to regional costs (including housing  
            costs) and family size (including ages of children).  The SRR  
            is a statewide rate, and it is unclear how a uniform statewide  
            rate would be adjusted by a regionally-responsive living wage.  
             Additionally, it is unclear how a change based on a living  
            wage, which is an hourly wage for an individual worker, would  
            translate into a change in the SRR, which is a per-child,  
            per-day amount.  That is, the language in this bill doesn't  
            make clear if this is a percent-for-percent increase, or if  
            some other method may be used for adjusting the SRR per the  
            living wage, as well as per reasonable health insurance and  


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            retirement benefits. 
          Clarifying language may be useful to ensure this bill can help  
          to achieve the author's goals of rightfully elevating the wage  
          profile of child care workers, whose work is essential in  
          promoting successful outcomes for children.



          California Child Development Administrators Association (CCDAA)
          Cal-SAFE Program at Redwood High School 

          Coalition of California Welfare Rights Organization, Inc.

          Community Action Marin Child Development Program 

          Extended Child Care Coalition of Sonoma County 

          Go Kids 

          Professional Association for childhood Education 
          Quality Children's Services 

          The Advancement Project 
          5 individuals


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          None on file.

          Analysis Prepared by:Daphne Hunt / HUM. S. / (916) 319-2089