BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 2368 (Gordon) - Child care and development services: individualized county child care subsidy plan: County of Santa Clara ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: April 5, 2016 |Policy Vote: ED. 9 - 0, HUMAN | | | S. 5 - 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 authorizes the County of Santa Clara to establish a 5-year pilot program for purposes of developing and implementing an individualized county child care subsidy plan that meets the particular needs of families in the county. Fiscal Impact: Potentially significant loss in savings to the state due to Santa Clara County being able to spend more of its allocation under an individualized county child care subsidy plan. The AB 2368 (Gordon) Page 1 of ? plan is allowed to supersede state law in specific areas which would allow greater access to services within the county. Without this bill these savings could otherwise be redistributed for services in other counties. See staff comments. (General Fund/Proposition 98) The California Department of Education (CDE) estimates that this bill will result in initial costs to the CDE of $130,000 for the first year and $95,000 ongoing costs for work across several positions to review and monitor the new plan. This estimate also includes travel costs. Costs are expected to decrease over time. (General Fund) Background: California offers a variety of subsidized child care and development services that serve low-income families who are working, seeking work, in training, or providing community services. Families participating in CalWORKs receive subsidies through three stages of the CalWORKs child care program. Non-CalWORKs families participate in the AP Program, General Child Care, or State Preschool. Existing law establishes the San Mateo County, San Francisco, and Alameda County individualized county child care subsidy plan pilot projects due to the similar barriers to services of living in a high-cost area. (EDC 8347, 8335, and 8340) The sunset date of the San Francisco plan has been extended three times. Alameda County, San Mateo County and San Francisco all have individualized county child care subsidy plans that 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 child care assistance under statewide eligibility standards, and 2) that the reimbursement rate 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 of the state. Because of this child care subsidies received by counties were unable to be fully expended. Unexpended funds get collected at the state level and reappropriated for another purpose. According to the author, this bill seeks to maximize state AB 2368 (Gordon) Page 2 of ? allocated funding and efficiently use child care subsidy funds to meet local conditions. Proposed Law: This bill authorizes the County of Santa Clara to develop and implement an individualized county child care subsidy plan, as a pilot. The plan must ensure that child care subsidies received are used to address local needs, conditions, and priorities of working families in the community. The plan must include: An assessment to identify the county's goals for its subsidized child care system, examine whether the current structure adequately supports working families in the county and whether the county's goals coincide with the state's requirements for funding, eligibility, priority, and reimbursement, and examine barriers to reaching the goals. The assessment must take into consideration various things such as the county's demographics, current supply of subsidized child care, the needs for services, the county's self-sufficiency income level, cost of providing care, and other economic factors. Development of a local policy to eliminate regulatory barriers to the county's desired outcomes for subsidized child care. o The local policy must do various things such as prioritize lowest income families first; follow the family fee schedule for families that are income eligible, as specified; identify existing policies that would be affected by the county's plan; authorize an agency that provides child care and development services in the county through a contract with the CDE, as specified. o The local policy may supersede state law concerning child care subsidy programs with regard to the following: AB 2368 (Gordon) Page 3 of ? § Eligibility criteria including age, family size, time limits, income level, special needs, and inclusion of former and current CalWORKs participants, as specified. § Fees § Reimbursement rates § Methods of maximizing the efficient use of subsidy funds, including, multiyear contracting with the CDE for center-based child care, and interagency agreements that allow for flexible and temporary transfer of funds among agencies. Recognition that all funding sources used by direct service contractors that provide child care and development services in the county and contractors that contract with licensed providers and centers are eligible to be included in the county's plan. 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 system. The plan is required to be submitted to the local planning council for approval, and after at least one hearing, and if the Board of Supervisors of the County of Santa Clara approves the plan, it must be submitted to the CDE for review. By the end of the first fiscal year of the pilot the county must show an increase in the aggregate days of enrollment in child care in the county as compared to the enrollment in 2015-16. AB 2368 (Gordon) Page 4 of ? The requirements of this bill are scheduled to sunset January 1, 2022. Related Legislation: AB 833 (Bonta, Chapter 563, Statutes of 2015), similar to this bill, authorized Alameda County to develop and implement, as a pilot project, an individualized county child care subsidy plan. 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, respectively. Staff Comments: This bill establishes a fourth county-wide pilot. It allows Santa Clara County, a high-cost-of-living county, to develop and implement an individualized county child care subsidy plan for five years. The plan may supersede state law governing child care subsidy programs in certain specified areas, including eligibility criteria. For example, San Mateo County and San Francisco currently set their income eligibility thresholds at 85 percent of the current state median income, compared to 70 percent as the state does. This allows San Mateo County and San Francisco to provide services to children with family incomes above 70 percent, which they otherwise are not permitted to do without special statutory authorization to implement an individualized county child care subsidy plan. In the 2014-15 fiscal year Santa Clara County was unable to expend $9.4 million of its contracted allocations, or 7.3 percent of the total. As context, across all counties 6.9 percent of allocations went unspent. However, in the 2012-13 and 2013-14 fiscal years Santa Clara County had 1.7 percent and 3.5 percent unexpended, as compared to 5.3 and 5.2 percent statewide, respectively. To the extent that implementation of this pilot enables Santa AB 2368 (Gordon) Page 5 of ? Clara County to spend more for additional child care and development services, less unexpended funds would revert to the state. For example, if 5 percent of the county's $9.4 million was able to be spent on local services, this would result in about $470,000 less in savings to the state. -- END --