BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2150


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          ASSEMBLY THIRD READING


          AB  
          2150 (Santiago, et al.)


          As Amended  May 27, 2016


          Majority vote


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          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Human Services  |7-0  |Bonilla, Grove,       |                    |
          |                |     |Calderon, Lopez,      |                    |
          |                |     |Maienschein,          |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Mark Stone, Thurmond  |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |20-0 |Gonzalez, Bigelow,    |                    |
          |                |     |Bloom, Bonilla,       |                    |
          |                |     |Bonta, Calderon,      |                    |
          |                |     |Chang, Daly, Eggman,  |                    |
          |                |     |Gallagher, Eduardo    |                    |
          |                |     |Garcia, Roger         |                    |
          |                |     |Hernández, Holden,    |                    |
          |                |     |Jones, Obernolte,     |                    |
          |                |     |Quirk, Santiago,      |                    |
          |                |     |Wagner, Weber, Wood   |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |








                                                                    AB 2150


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          SUMMARY:  Provides for changes to eligibility determination and  
          redetermination for subsidized child care.  Specifically, this  
          bill:  


          1)Requires a family, upon establishing initial or ongoing  
            eligibility for subsidized child care services, to:


             a)   Be considered to meet all eligibility requirements for a  
               period of not less than 12 months, unless the family  
               established eligibility on the basis of seeking employment,  
               as specified;


             b)   Receive subsidized child care services for not less than  
               12 months prior to having their eligibility redetermined,  
               unless the family established eligibility on the basis of  
               seeking employment, as specified; and


             c)   Not be required to report changes to income or other  
               changes for at least 12 months, unless the family attains  
               an income that exceeds the threshold for ongoing  
               eligibility, as specified.


          2)Requires a family that establishes initial eligibility on the  
            basis of seeking employment to receive services for not less  
            than six months and further requires a family that establishes  
            ongoing eligibility for subsidized child care to receive  
            services for six additional months unless the family becomes  
            otherwise eligible, as specified.


          3)Requires a family to report increases in income that exceed  








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            the threshold for ongoing income eligibility, as specified,  
            and further requires the family's ongoing eligibility to be  
            redetermined at that time.


          4)Permits a family to, at any time, voluntarily report income or  
            other changes for purposes of reducing a family's fees,  
            increasing a family's subsidy, or extending the period of the  
            family's eligibility prior to redetermination.


          5)Specifies that, for purposes of establishing initial income  
            eligibility for subsidized child care services, "income  
            eligible" means that a family's adjusted monthly income is at  
            or below 70% of the state median income (SMI) based on the  
            most recent data published by the United States Census Bureau  
            for a family of the same size.


          6)Defines, for purposes of establishing ongoing income  
            eligibility for subsidized child care services, "ongoing  
            income eligible" to mean that a family's adjusted monthly  
            income is at or below 85% of the SMI based on the most recent  
            data published by the United States Census Bureau for a family  
            of the same size.


          7)Authorizes any family that receives first priority for  
            subsidized child care services, as specified, to be exempt  
            from family fees for up to 12 months.


          8)Makes technical amendments, including removing provisions that  
            specify or refer to eligibility determination periods that  
            conflict with the provisions contained in this bill.


          EXISTING LAW:  









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          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.  (Education  
            Code Section (EDC) 8200 et seq.)


          2)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)


          3)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 California Department of  
            Education (CDE).  (EDC 8220)


          4)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.)


          5)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)









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          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee, this bill may result in the following costs:


          1)Unknown, potentially major costs to the CDE, estimated in the  
            range of $1 million to $5 million annually, due to increased  
            caseload for CalWORKs stages 2 and 3 child care.  With  
            existing data we are unable to identify the percentage of  
            children leaving child care due to loss of eligibility.  This  
            estimate assumes between 2% and 10% of the existing number of  
            children leaving child care each month would instead continue  
            child care under this bill.


          2)Administrative costs to CDE of approximately $40,000 in Fiscal  
            Year (FY) 2016-17 and $23,000 in FY 2017-18 to update  
            regulations.


          COMMENTS:  


          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"; Department of Social Services  
          (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.








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          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 $38.29 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  
          children.


          The Regional Market Rate (RMR) 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 APPs 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 derived by  
          applying a formula to the 2009 RMR.  License-exempt providers  
          are reimbursed at 65% 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 $69.77.  For  
          that same child in a family child care home, the RMR is $57.88,  
          and with a license-exempt provider, the RMR is $37.62.


          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).  


          Families may be charged a "family fee" depending on their  
          income.  For a family of 3, for example, subsidized child care  








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          remains at no cost for families earning less than $1,950 per  
          month.  However, with incomes between $1,950 a month and the  
          monthly income ceiling of $3,518, a family fee is charged, the  
          amount of which increases with income, but never to surpass 10%  
          of a family's income.  For a family of three with a monthly  
          income of $1,950, the family fee per month for full-time care is  
          $42; for a family of three earning $3,518 per month, this fee is  
          $345.


          Across the various subsidized child care programs, there are  
          estimated to be over 195,000 slots (not including State  
          Preschool).  State Preschool contains over 157,000 additional  
          slots.


          Child Care and Development Block Grant (CCDBG):  The federal  
          Child Care and Development Block Grant Act of 2014 (P.L.  
          113-186) reauthorized the Child Care and Development Block Grant  
          Act of 1990.  This reauthorization brought about a number of  
          changes aimed at addressing health and safety requirements,  
          quality of care, and consumer and provider education.


          One specific change adopted by this reauthorization establishes  
          a 12-month eligibility redetermination period for families,  
          regardless of changes in income (provided income does not exceed  
          85% of the SMI, the maximum income ceiling allowable under  
          federal law) or temporary changes in participation in work,  
          training, or education activities.


          Also, according to the federal Administration for Children and  
          Families' (ACF) Office of Child Care:



            The [CCDBG Act] specifies that a State must provide for a  
            graduated phase-out of assistance for families whose income  








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            has increased at the time of re-determination, but still  
            does not exceed the federal income limit of 85% of State  
            Median Income (SMI).  Providing a graduated phase-out  
            promotes continuity by allowing for wage growth, a tapered  
            transition out of the child care subsidy program, and  
            supports long-term financial stability to help families get  
            to a point where they no longer need the subsidy.  Sudden  
            withdrawal of support can destabilize and undermine a  
            family's pathway to financial stability.



            ACF strongly encourages States and Territories to consider  
            how to continue to support families through access to  
            financial assistance for child care until they have achieved  
            financial stability.  Pending additional guidance from ACF,  
            this could be achieved through policies such as establishing  
            a second income eligibility threshold at re-determination  
            (e.g., establishing a different eligibility threshold for  
            families first applying for assistance and those already  
            receiving assistance, sometimes called an 'exit threshold')  
            or by granting a sustained period of continued assistance to  
            the family before termination.  The law allows the exit  
            threshold to be set as high as 85% of SMI.  States could  
            adjust co-pays for families during this period to create a  
            gradual shift in how families must adjust their budget to  
            cover the full cost of care once they are no longer  
            receiving a subsidy, but should consider how to do this in a  
            way that minimizes paperwork and reporting burdens on  
            working families.


          Need for this bill:  According to the author: 

            In California, burdensome reporting rules cause eligible  
            families to churn between child care programs and long  
            waiting lists for the programs.  Churning disrupts  
            children's school readiness and development; makes it  
            impossible for child care providers to balance ledgers or  








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            plan for quality investments; and burdens employers and  
            education providers to sign off on endless paperwork.  

            There is broad consensus among child care administrators,  
            advocates, and parents that the state's current reporting  
            rules are harmful, and that establishing more stability  
            within the child care system will create better outcomes for  
            children.



          Analysis Prepared by:                                             
                          Daphne Hunt / HUM. S. / (916) 319-2089  FN:  
          0003270