BILL ANALYSIS Ó AB 2150 Page 1 ASSEMBLY THIRD READING AB 2150 (Santiago, et al.) As Amended May 27, 2016 Majority vote ------------------------------------------------------------------ |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 Page 2 ------------------------------------------------------------------ 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 AB 2150 Page 3 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: AB 2150 Page 4 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) AB 2150 Page 5 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. AB 2150 Page 6 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 AB 2150 Page 7 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 AB 2150 Page 8 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 AB 2150 Page 9 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