BILL ANALYSIS                                                                                                                                                                                                    

                                                                     AB 765

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          Date of Hearing:  May 27, 2015


                                 Jimmy Gomez, Chair

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

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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          This bill raises the standard reimbursement rate (SSR) for  
          subsidized child care as necessary to provide a living wage and  
          specified benefits, and redefines "cost-of-living adjustment"  
          for purposes of this bill. Specifically, this bill:  


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          1)Requires the SRR to be raised as needed to provide a living  
            wage, reasonable health insurance, 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.

          2)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.

          FISCAL EFFECT:

          1)Living wage calculations will vary by county, but CDE  
            estimates that every 1% increase in the SSR equates to  
            additional costs of $11.5 million (GF).  

          2)Minor and absorbable costs to CDE to revise contracts and to  
            issue guidance documents.


          1)Purpose. 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  
            adjustments equal to the inflation adjustments given to K-12  


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            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 SSR."
          2)SSR. CDE-administered subsidized child care can be provided  
            through contracted providers which are funded through the  
            receipt of the 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 for a number of years, leaving the SSR 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 now $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  

          3)Living wage.  A "living wage" often refers 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.  Living wage estimates tend to vary  
            by family size, given the differing child care needs  
            associated with the number and ages of children.


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            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 2014 hourly living wages per this standard for  
            one adult with two preschool-age children, ranged from $29 per  
            hour in Riverside County to $40 per hour in Santa Clara  

          Analysis Prepared by:Jennifer Swenson / APPR. / (916)