BILL ANALYSIS Ó AB 765 Page 1 Date of Hearing: May 27, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 765 (Ridley-Thomas) - As Amended March 26, 2015 ----------------------------------------------------------------- |Policy |Human Services |Vote:|5 - 2 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: 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: AB 765 Page 2 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. COMMENTS: 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 AB 765 Page 3 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 children. 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. AB 765 Page 4 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 County. Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081