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 ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: June 1, 2016 |Policy Vote: ED. 9 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 1, 2016 |Consultant: Jillian Kissee | | | | ----------------------------------------------------------------- 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 AB 2150 (Santiago) Page 1 of ? 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 AB 2150 (Santiago) Page 2 of ? 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. AB 2150 (Santiago) Page 3 of ? 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 AB 2150 (Santiago) Page 4 of ? 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 AB 2150 (Santiago) Page 5 of ? 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. -- END --