BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 2150 (Santiago) - Subsidized child care and development  
          services:  eligibility periods
          
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          |Version: June 1, 2016           |Policy Vote: ED. 9 - 0          |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 1, 2016    |Consultant: Jillian Kissee      |
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          This bill meets the criteria for referral to the Suspense File.




          


          Bill  
          Summary:  This bill makes changes to eligibility determination  
          and re-determination requirements for subsidized child care to  
          promote continuity of services for no less than 12 months.


          Fiscal  
          Impact:  
           Unknown, but costs potentially in the low tens of millions  
            General Fund annually for CalWORKS Stage 2 and Stage 3, an  
            entitlement program, to provide eligibility for services for  
            12 months, despite changes in family circumstances, due to  
            less program attrition.  (General Fund)
           Significant increase in cost pressure for capped child care  







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            programs.  Providing guaranteed eligibility for 12 months  
            results in longer waitlists for programs that have a capped  
            number of slots due to children remaining in programs despite  
            changes in income or need that would have otherwise caused  
            them to become ineligible, thus freeing up a slot for a  
            waiting family.  This bill further reduces program attrition  
            in out years by increasing the ongoing income eligibility  
            threshold.  It also allows more families to qualify for  
            services by updating the initial income eligibility threshold,  
            thereby adding families to existing waitlists.  
           One-time cost to the California Department of Education (CDE)  
            to develop regulations to implement this bill, estimated to be  
            $147,000 over an 18 month timeline.  (General Fund)
           State and local administrative workload could be reduced due  
            to less paperwork related to reporting changes that affect  
            eligibility.  The magnitude of this effect is unquantifiable.


          Background:  Current law 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.  Children are  
          eligible for subsidized child care if the family currently  
          receives aid, meets specified income eligibility requirements,  
          is homeless, or if the child is the recipient of protective  
          services, or has been identified as being, or at risk of being,  
          neglected, abused or exploited.  
          To be income eligible for subsidized child care and services the  
          state requires a family's adjusted monthly income to be at or  
          below 70 percent of the state median income, about $42,000 per  
          year for a family of three.  For the 2016-17 fiscal year, the  
          income eligibility limits are based on what was in use for the  
          2007-08 fiscal year, adjusted for family size.  Families are  
          required to report changes in circumstances, including changes  
          in income and employment status, throughout their child's  
          enrollment that could disqualify a child from the program.  


          The federal Child Care and Development Block Grant (CCDBG) Act  
          of 1990 was reauthorized in 2014.  This reauthorization brought  
          about a number of changes aimed at addressing health and safety  
          requirements, quality of care, and consumer and provider  








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          education.  Among the changes adopted, the reauthorization  
          establishes a 12-month eligibility redetermination period for  
          families, regardless of changes in income (provided income does  
          not exceed 85 percent of state median income), or temporary  
          changes in participation in work, training, or education  
          activities.


          State regulations require families to notify their child care  
          contractor within five days of any changes in family income,  
          family size, or the need for services.  Families receiving  
          services because the child is at risk of, or has experienced  
          actual, abuse, neglect or exploitation are recertified at once  
          every six months.  All other families are recertified at least  
          once each contract period and at intervals not to exceed 12  
          months.  There is some debate as to whether California's current  
          eligibility provisions will meet the new federal requirement.   
          According to the author's office, this bill seeks to provide  
          stability to families and ensure that California is incompliance  
          with the federal CCDBG Act which specifies the minimum period of  
          eligibility to be 12 months for each child who receives  
          assistance.




          Proposed Law:  
            This bill changes eligibility with regard to the minimum  
          duration of services and income eligibility to qualify for  
          services.  
           12-month Eligibility  


          Specifically, this bill requires, upon establishing initial  
          eligibility or ongoing eligibility for services for child care  
          services, a family to be considered to meet eligibility for  
          services for not less than 12 months.  Except as specified, this  
          bill provides that re-determination of eligibility must not  
          occur before the 12 months of services are provided and a family  
          is not required to report changes to income or other changes  
          that affect eligibility during that time.  However, a family  
          must report increases in income that exceed the threshold for  
          "ongoing income eligibility" as defined below, and the family's  
          ongoing eligibility for services must then be re-determined.  








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          A family that establishes eligibility for services on the basis  
          of seeking employment receives services as follows:


           If seeking employment is the basis for initial eligibility,  
            the family receives services for at least six months.


           If seeking employment is the only basis for ongoing  
            eligibility at the time of redetermination, the family  
            receives services for an additional six months unless the  
            family becomes eligible on another basis.



          This bill authorizes a family to voluntarily report income or  
          other changes which would be used to reduce a family's fees,  
          increase the family's subsidy, or extend the period of the  
          family's eligibility before redetermination.


          This bill requires the CDE to initiate a rulemaking action to  
          implement these requirements by December 31, 2017.  The CDE must  
          beforehand, convene a workgroup of parents, advocates,  
          department staff, child development program representatives, and  
          other stakeholders to develop recommendations regarding  
          implementation.  


           State Median Income  


          This bill also changes the criteria for establishing income  
          eligibility for purposes of qualifying for child care services.   
          With regard to income eligibility, this bill provides that for  
          purposes of establishing initial income eligibility for  
          services, "income eligible" means that a family's adjusted  
          monthly income is at or below 70 percent of the state median  
          income, based on the most recent data on state median income  
          published by the United States Census Bureau, for a family of  
          the same size.   
          This bill creates a new threshold for establishing "ongoing  
          income eligibility."  For purposes of establishing ongoing  
          income eligibility a family's adjusted monthly income is at or  








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          below the 85 percent of the state median income, based on the  
          most recent data on state median income published by the United  
          States Census Bureau, for a family of the same size.


          Related Legislation:  SB 567 (Liu, 2015) would have required a  
          child who is enrolled in a state or federally funded child care  
          program to be deemed eligible for that program for the remainder  
          of the program year.  SB 567 failed passage in this committee.




          Staff  
          Comments: This bill creates unknown but potential costs of up to  
          about $30 million to CalWORKS Stage 2 and 3 to require continued  
          12 month eligibility for families that would have otherwise  
          become ineligible due to exceeding the income threshold.  This  
          generally assumes an attrition rate of about 4 percent to Stage  
          2 and Stage 3 caseload and assumes that, based on total amounts  
          appropriated and the caseload being served, the annual cost of  
          care averages about $8,500.  Exact costs attributed to this  
          benefit are ultimately unknown because, though the state tracks  
          the number of children leaving care each month, there is no way  
          to know if the same child reenrolled in the same or another  
          program in the same year.  The state also does not track the  
          reason a child leaves care, including those whose families have  
          left due to no longer meeting the income eligibility.  Reasons  
          for leaving care extend beyond changes in eligibility. 
          This bill also expands eligibility by increasing the income  
          ceiling.  For the first year of services, the threshold remains  
          at the existing 70 percent of the state median income, but based  
          on updated data by which eligibility is determined.  For the  
          2016-17 fiscal year, the income eligibility limits are set at 70  
          percent of the state median income that was in use for the  
          2007-08 fiscal year, adjusted for family size.  This bill uses  
          the most recent data on state median income published by the  
          United States Census Bureau, which likely has the effect of  
          higher incomes qualifying.


          In addition, this bill establishes an ongoing eligibility limit  
          of 85 percent of the state median income.  This has the effect  
          of more children staying in services for longer as they would  








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          have otherwise become ineligible once the family's income  
          exceeds 70 percent.  Conceivably, a family's income could  
          consistently reside between 70 and 85 percent of the state  
          median income and not lose services, thereby further decreasing  
          program attrition and reducing the number of slots that become  
          available for the lowest income families. 




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