BILL ANALYSIS                                                                                                                                                                                                    

                                                                     AB 833

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          Date of Hearing:   April 28, 2015


                                  Kansen Chu, Chair

          AB 833  
          (Bonta) - As Amended April 22, 2015

          SUBJECT:  Early childhood education

          SUMMARY:  Establishes a subsidized child care pilot program in  
          Alameda County.  

          Specifically, this bill:  

          1)States Legislative intent to build a stable, comprehensive,  
            and adequately funded high-quality early learning and  
            educational support system.

          2)Permits Alameda County to develop and implement an  
            individualized county child care subsidy plan, as specified,  
            to include the following:

             a)   An assessment to identify the county's goal for its  
               subsidized child care system, as specified;

             b)   Development of a local policy to eliminate state-imposed  
               regulatory barriers to the county's achievement of its  


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               desired outcomes for subsidized child care, as specified;

             c)   Recognition that all funding sources utilized by direct  
               child care service contractors in the county are eligible  
               to be included in the county's plan; and

             d)   Establishment of measurable outcomes to evaluate the  
               success of the plan to achieve the county's child care  
               goals and to overcome any barriers identified in the  
               state's child care subsidy plan.

          1)Requires the California Department of Education's (CDE) Child  
            Development Division (CDD) to review and either approve or  
            disapprove any modification of the plan within 30 days of  
            receiving it.  Further specifies that CDD may only disapprove  
            those portions of the plan that are not in conformance with  
            the provisions of this bill or that are in conflict with  
            federal law.

          2)Requires the county to prepare and submit a report summarizing  
            the success of the county's plan, as specified, to the  
            Legislature, the Department of Social Services (DSS), and CDE  
            each year.

          3)Requires a participating contractor to receive any increase or  
            decrease in funding that the contractor would have received  
            had the contractor not participated in the plan.

          4)Repeals the provisions of this bill as of January 1, 2021.

          5)Declares legislative findings that a special law is necessary  
            and that a general law cannot be made applicable because of  


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            the unique circumstances in Alameda County, 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, and  
            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  
            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  


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            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)To allow for maximum parental choice, authorizes the operation  
            of Alternative Payment Programs (APPs) and provision of  
            alternative payments and support services to parents and child  
            care providers by local government agencies or non-profit  
            organizations that contract with CDE.  (EDC 8220)

          6)Establishes rules and requirements for APPs and providers, as  
            contracted agencies with CDE, to observe, including but not  
            limited to accounting and auditing requirements, attendance  
            monitoring requirements, referral requirements where  
            applicable, and reimbursement and payment procedures.  (EDC  
            8220 et seq.)

          7)Requires the Superintendent of Public Instruction to adopt  
            rules and regulations regarding eligibility, enrollment, and  
            priority of services.  (EDC 8263) 

          8)Requires the Superintendent to adopt rules, regulations, and  
            guidelines to facilitate funding and reimbursement procedures  
            for subsidized child care.  (EDC 8269)

          9)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)

          10)Establishes the San Mateo County and San Francisco  
            individualized county child care subsidy plan pilot projects  
            and provides for them to sunset in 2016 and 2018,  


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            respectively.  (EDC 8347 and 8335)

          FISCAL EFFECT:  Unknown


          Subsidized child care:  Subsidized child care may be available  
          to low-income families through a number of programs.   
          Additionally, California offers State Preschool Programs to  
          eligible three-and four-year-olds. 

          California offers subsidized child care to parents participating  
          in CalWORKs and to families transitioning off of and no longer  
          receiving aid.  This child care is offered in three "stages";  
          DSS administers Stage 1, and CDE administers Stages 2 and 3.   
          CDE also administers non-CalWORKs child care.  The largest  
          programs are:  General Child Care, which includes contracted  
          centers and family child care homes; the California State  
          Preschool Program, which includes contracted centers and family  
          child care homes for three- and four-year olds; and APPs, which  
          provide vouchers that can be used to obtain child care in a  
          center, family child care home, or from a license-exempt  
          provider.  Waitlists for non-CalWORKs child care are common.

          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.  The current SRR  
          is $36.10 per child for a full day of care.  Adjustment factors  
          are applied to the SRR in some instances to reflect the  
          increased cost of care for the different ages and needs of  


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          The Regional Market Rate survey calculates the market rates for  
          child care in each of California's 58 counties and uses these to  
          establish maximum child care reimbursement rates for child care  
          services for families in various APP or other voucher child care  
          programs. States are required to conduct a market rate survey  
          every two years, but are not required to use the most recent  
          survey to set rates.  Reimbursement rates for licensed providers  
          accepting vouchers are currently set at the 85th percentile of  
          the 2009 RMR survey less 10.11%.  License-exempt providers are  
          reimbursed at 60% of the Family Child Care Home ceilings.  In  
          Santa Clara County, for example, the full-time daily RMR for a  
          preschool-age child in a child care center is $66.77.  For that  
          same child in a family child care home, the RMR is $55.39, and  
          with a license-exempt provider, the RMR is $33.23.

          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). 

          Across the various subsidized child care programs, there are  
          estimated to be over 205,000 slots (not including State  
          Preschool).  State Preschool contains close to 150,000  
          additional slots.

          Child care in Alameda County:  14,206 children are served by  
          subsidized child care programs in Alameda County (note that  
          these data do not include the number of children in CalWORKs  
          Stage 1 child care). The following shows enrollment across  
          programs (there is some duplication and therefore, these numbers  
          total to more than 14,206):


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            Alternative Payment Programs:1,270

            CalWORKs Stage 2:           1,722

            CalWORKs Stage 3:           1,778

            General Child Care:         2,507

            For children with severe disabilities:     73

            State Preschool:            7,763

          While Alameda County does not have a centralized eligibility  
          list that provides an exact number of children wait-listed for  
          subsidized child care, the Alameda County Early Care and  
          Education Planning Council has polled a number of providers in  
          the county and found that there are over 9,750 children on their  
          waitlists.  This indicates that there are likely well over  
          10,000 children in the county who are eligible for, but unable  
          to access slots in, local subsidized child care programs.

          An evaluation of the San Francisco pilot program found that,  
          during the period of 2011-12 to 2013-14, Alameda County lost 22%  
          of its subsidized child care contractors.  (The San Francisco  
          pilot, by comparison, lost 10%.)

          San Mateo County and San Francisco pilot programs:  AB 1326  
          (Simitian), Chapter 691, Statutes of 2003, established the San  
          Mateo County individualized county child care subsidy plan pilot  
          project and SB 701 (Migden), Chapter 725, Statutes of 2005,  
          established the San Francisco individualized county child care  


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          subsidy plan pilot project.  Both pilots were developed to  
          address two significant issues facing subsidized child care in  
          high-cost counties: 1) that low-income families earning just  
          enough to afford housing in a high-cost area may be deemed to  
          earn too much to qualify for assistance with child care by  
          statewide eligibility standards, and 2) that the statewide SRR  
          paid to contracted child care centers and family child care  
          homes is often not sufficient to cover program costs and  
          overhead, particularly in high-cost areas.  Both counties would  
          see a portion of their child care subsidy funds go unused as  
          low-income families failed to qualify for eligibility by uniform  
          statewide criteria, and as provider reimbursement rates made  
          offering subsidized care untenable for some providers.

          San Mateo County's and San Francisco's pilot programs, still in  
          operation today, offer them the limited local flexibility to  
          revise eligibility rules and adjust provider rates and family  
          fees within the context of local evaluation and assessment and  
          heightened state oversight.  Thus, the counties are able to  
          reinvest otherwise-unused funds through increased reimbursement  
          rates.  A December 2014 memo regarding the San Francisco pilot  
          stated that, "In June 2014, Governor Jerry Brown signed the  
          Budget Act of 2014 that included an increase in the SRR from  
          $34.38 to $36.10 per day beginning on July 2014.  Accordingly,  
          the SRR Pilot in San Francisco increased from $36.63 to $38.46  
          per day.  Despite this increase, the SRR is far below the San  
          Francisco market (e.g., $76.76 per day for preschool)."

          Both San Mateo County and San Francisco are also allowed  
          flexibility regarding eligibility rules.   San Mateo County and  
          San Francisco currently set their eligibility income thresholds  
          at 80% of the current State Median Income, compared to 70% as  
          the state does.

          Evaluation of the pilot programs:  In its most recent annual  
          report, which is for 2012-13, San Mateo County reports that  
          "Overall, we see that San Mateo's pilot project has shown  


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          success in meeting several of the goals presented in the pilot  
          plan." These include: 

          a)Increasing the retention of center-based child care and  
            development services contractors;

          b)Increasing the aggregate child days of enrollment in  
            subsidized child care;

          c)Increasing the ability of low-income families to move toward  
            self-sufficiency through higher earnings;

          d)Increasing the stability of child care placements for children  
            whose families would otherwise become income-ineligible for  
            child care subsidies; and

          e)Maximizing the take-up of San Mateo County's child care and  
            child development subsidy allocations:  San Mateo County  
            reports that the share of funds returned to the state has  
            fallen from 15% in 2002-03 to 2% in 2012-13.

          San Francisco has met with a few more challenges in the  
          implementation of its pilot.  Some of this difficulty may be  
          attributed to the fact the San Francisco's pilot initially  
          mirrored that of San Mateo County, and thus was not designed to  
          address the unique challenges facing San Francisco's subsidized  
          child care system.  In the first six years of the pilot, San  
          Francisco saw its contract earnings decrease, rather than  
          increase, from 98% to 93%.

          Consequently, San Francisco and CDE conducted a review of the  
          pilot program and made adjustments for fiscal year 2011-12,  
          implementing a "Pilot 2.0," which included a number of revised  
          elements.  An evaluation of results from the first three years  
          of Pilot 2.0 (2011-12 through 2013-14) found the following:


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          a)San Francisco has lost the smallest share of subsidized child  
            care contractors compared to neighboring counties;

          b)Pilot 2.0 has served almost 1,200 children who would otherwise  
            not be eligible for subsidized child care because their  
            families increased their earnings into a range above what is  
            eligible in other counties;

          c)Pilot 2.0 returned less than 5% of contract dollars each year  
            from 2011-12 through 2013-14, compared to between 6% and 8% in  
            the three previous years;

          d)Pilot 2.0 has achieved, on average, a 3% increase in child  
            days of enrollment; and

          e)Since the beginning of San Francisco's first pilot program in  
            2005, it has continued to serve an increasing share of the  
            neediest children (those whose families earn incomes below 50%  
            of the State Median Income).
          Need for this legislation:  With close to 10,000 children  
          waitlisted for subsidized child care, and difficulties retaining  
          contractors, Alameda County may be a good candidate for an  
          individualized county child care subsidy plan like those seen in  
          San Mateo County and San Francisco.

          According to the author: 

            "In Alameda County, many children and families are unable to  
            access quality child care in part by the unintended  
            consequences of living in a high cost county.  Since many  
            families are deemed ineligible due to the high cost of living  
            and provider reimbursement rates are insufficient to cover the  
            cost of care, child care subsidy funds allocated to Alameda  
            County are not fully expended.


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            [This bill] provides Alameda County limited local flexibility  
            with increased state oversight to address the fiscal reality  
            of high-cost counties, where the cost of living and doing  
            business is well beyond the state median.  With the ability to  
            revise their eligibility and need determinations, adjust their  
            reimbursement rates and family fees based upon a local  
            evaluation and assessment, and modify their funding  
            requirements, Alameda County will be able to maximize  
            allocated funding and efficiently use child care subsidy funds  
            to meet local conditions.  As a result, more children can be  
            served with quality child care."

          Staff comments:  The results from the San Mateo County pilot and  
          the San Francisco Pilot 2.0 are encouraging and may point the  
          way towards more comprehensive reform of subsidized child care  
          throughout the state.  While the adoption of a third pilot  
          program for Alameda County may indeed be warranted, there are a  
          number of other high-cost counties in the state that also face  
          similar situations.  In coming years, the state may wish to  
          consider a more comprehensive approach to addressing the  
          subsidized child care needs of high-cost areas.

          Furthermore, the experience of San Francisco highlights the role  
          that responsiveness to unique local needs and continuous  
          assessment and refinement can play in adjusting and improving  
          pilot program performance to meet the needs of children and  
          families.  Information-sharing among the counties with pilots,  
          and comprehensive data collection and analysis, may help to  
          further each of those counties' programs, as well provide  
          valuable information for any larger statewide initiatives to  



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          AB 260 (Gordon), Chapter 731, Statutes of 2013, extended the  
          sunset dates of the San Francisco and San Mateo County  
          individualized county child care subsidy plans to 2016 and 2018,  

          AB 86 (Committee on Budget), Chapter 48, Statutes of 2013,  
          extended the sunset data of the San Francisco individualized  
          county child care subsidy plan to 2015.

          SB 1016 (Committee on Budget and Fiscal Review), Chapter 38,  
          Statutes of 2012, extended the sunset date of the San Francisco  
          individualized county child care subsidy plan to 2014.

          AB 1610 (Committee on Budget), Chapter 724, Statutes of 2010,  
          extended the sunset date of the San Francisco individualized  
          county child care subsidy plan to 2013.

          SB 1225 (Yee), 2010, would have extended the sunset date of the  
          San Francisco individualized county child care subsidy plan to  
          2016.  It died in the Senate Appropriations Committee.

          AB 1304 (Simitian), Chapter 61, Statutes of 2008, extended the  
          sunset data of the San Mateo County individualized county child  
          care subsidy plan to 2014.

          SB 701 (Migden), Chapter 725, Statutes of 2005, established the  
          San Francisco individualized county child care subsidy plan  
          pilot project, to sunset in 2011. 

          AB 1326 (Simitian), Chapter 691, Statutes of 2003, established  


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          the San Mateo County individualized county child care subsidy  
          plan pilot project, to sunset in 2009.



          Alameda County Board of Supervisors


          Bay Area Council

          Davis Street

          Early Edge California

          Ephesian children's Center

          First Five Alameda County

          The Unity Council Head Start/Early Head Start Programs


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          Via Nova Children's School 


          None on file.

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