BILL ANALYSIS                                                                                                                                                                                                    

                               Senator McGuire, Chair
                                2015 - 2016  Regular 

          Bill No:              SB 567
          |Author:   |Liu                                                   |
          |Version:  |February 26, 2015      |Hearing    |April 21, 2015   |
          |          |                       |Date:      |                 |
          |Urgency:  |No                     |Fiscal:    |Yes              |
          |Consultant|Mareva Brown                                          |
          |:         |                                                      |
               Subject:  Child care programs:  continuity of services

          This bill would require 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.

          Existing law:

             1)   Establishes in federal law the Child Care and  
               Developmental Block Grant (CCDBG), reauthorized in 2014  
               with the following purposes:

                  a.        To allow each state maximum flexibility in  
                    developing child care programs and policies that best  
                    suit the needs of children and parents within that  
                  b.        To promote parental choice to empower working  
                    parents to make their own decisions regarding the  
                    child care services that best suit their family's  
                  c.        To encourage states to provide consumer  
                    education information to help parents make informed  
                    choices about child care services and to promote  
                    involvement by parents and family members in the  
                    development of their children in child care settings; 


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                  d.        To assist states in delivering high-quality,  
                    coordinated early childhood care and education  
                    services to maximize parents' options and support  
                    parents trying to achieve independence from public  
                  e.        To assist states in improving the overall  
                    quality of child care services and programs by  
                    implementing the health, safety, licensing, training,  
                    and oversight standards; 
                  f.        To improve child care and development of  
                    participating children; and 
                  g.        To increase the number and percentage of  
                    low-income children in high-quality child care  
                    settings." (42 USC 9801,  658A)

             2)   Requires in the CCDBG that state plans demonstrate that  
               each child who receives assistance will be considered to  
               meet all eligibility requirements and will receive  
               assistance for not less than 12 months before the state or  
               designated local entity re-determines the eligibility of  
               the child, regardless of a temporary change in the ongoing  
               status of the child's parent as working or attending a job  
               training or educational program, or a change in family  
               income for the child's family, if that family income does  
               not exceed 85 percent of the state median income for a  
               family of the same size. (42 USC 9801,  658E(c)(2)(N)(i))

             3)   Establishes in state law the Child Care and Development  
               Services Act and outlines its purpose to include a  
               comprehensive, coordinated and cost-effective system of  
               child care and development services for children from  
               infancy to 13 years of age in an environment that is  
               healthy and nurturing for all children, among other goals.  
               (EDC 8200, et seq.)

             4)   Requires the Superintendent of Public Instruction to  
               adopt rules and regulations on eligibility, enrollment, and  
               priority of services. In order to be eligible for federal  
               and state subsidized child development services, families  
               shall meet at least one requirement in each of the  
               following areas: The child's family is a current aid  
               recipient, income eligible, homeless, or involved with the  
               child protection system, and the child's family needs child  
               care. (EDC 8263)


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             5)   Defines income eligibility to mean that a family's  
               adjusted monthly income is at or below 70 percent of the  
               state median income, adjusted for family size, and adjusted  
               annually. (EDC 8263.1 (a)) For the 2014-15 fiscal year, the  
               income eligibility limits shall be 70 percent of the state  
               median income that was in use for the 2007-08 fiscal year,  
               adjusted for family size. (EDC 8263.1 (e))

             6)   Establishes a 12-month certification for child care  
               providing the family continues to require child care and  
               remains otherwise eligible. This time limit does not apply  
               if the family's child care referral is recertified. (EDC  
               8263 (b)(1)(c))

             7)   Requires that families be disenrolled from subsidized  
               child care services in a specified order, with families  
               whose incomes are above 70 percent of SMI being disenrolled  
               first and families with the highest incomes below 70  
               percent of SMI being disenrolled next, unless certain  
               factors are present, as specified. (EDC 8263.2, EDC 8263.3)

             8)   Requires families to notify their child care contractor  
               within five calendar days of any changes in family income,  
               family size or the need for services. (Title V Regulations,  
               18102, 18410 and 18425)

             9)   Permits a family enrolled in a state or federally funded  
               child care and development program whose services would  
               otherwise be terminated because the family no longer meets  
               the program income, eligibility, or need criteria, to  
               continue to receive child development services in another  
               state or federally funded child care and development  
               program if the contractor is able to transfer the family's  
               enrollment to another program, as specified.  (EDC 8263  
          This bill:

             1)   States Legislative intent to strategically use state and  
               federal funds to provide a stable, comprehensive, and  
               adequately funded early learning and educational support  
               system for children from birth to five years of age that  
               promotes access to safe, high-quality, part-day and  


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               full-day services that support the development of the whole  
               child, especially for those children who need it most, as  

             2)   Requires that, notwithstanding any other law, in order  
               to promote continuity of services, subsequent to enrollment  
               in a state or federally funded child care program, a child  
               shall be deemed eligible for the remainder of the program  

            FISCAL IMPACT
          This bill has not been analyzed by a fiscal committee.

          Purpose of the bill:

          According to the author, families that receive state-subsidized  
          childcare are certified for 12 months of eligibility; however  
          they are also required to report changes in circumstances  
          throughout that period that can result in the loss of the care  
          subsidy. For example, a single mother who receives a .50 raise  
          at an hourly job can lose her entire subsidy if that raise puts  
          her $1.00 over the income ceiling, the author states. Working 40  
          hours a week, a 50-cent raise equates to $20 per week, the  
          author writes that is hardly enough to obtain childcare in the  
          private market. The author also states that changes like this  
          can destabilize families, create a disincentive to garner raises  
          and interrupt the continuity of care for children. 

          Continuity for children is one of the most important aspects of  
          effective early learning and care programs, according to the  
          author. She states that this bill would guarantee eligibility to  
          families enrolled in subsidized care for the remainder of the  
          program year, ensuring that families can make long-term plans  
          for economic prosperity and that children receive the care  
          necessary to thrive.

          Child Care
          The state's child care slots are means-tested for families,  
          meaning that eligibility is predicated on families remaining at  
          or below 70 percent of the state median income. Currently a  


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          family of three loses eligibility for child care if they earn  
          more than $42,216 annually and a family of four loses  
          eligibility at $46,896. Concern about families whose wages  
          fluctuate or who receive incremental increases that bump them  
          above the eligibility threshold have been persistent both in  
          California and nationwide. Researchers have documented that  
          maintaining a primary caregiver relationship until a child is at  
          least 3 years old is an important effort to support children and  
          their families.<1> 

          Deep reductions in child care slots and reimbursement rates  
          during the Great Recession have left California about 16 percent  
          fewer slots than in 2008-09. In FY 2015-16, approximately  
          360,000 children will receive subsidized child care funding in a  
          variety of settings.

          Child Care and Development Block Grant reauthorization
          The federal CCDBG is the primary source of federal funding to  
          help families pay for care. In November 2014, Congress  
          re-authorized the block grant (S.1086) with major changes to  
          programming requirements, including more frequent inspections,  
          higher health and safety standards and policies to help  
          low-income working families maintain greater stability in their  
          child care arrangements. The new federal statute is the first  
          comprehensive reauthorization of the original CCDBG, which was  
          first authorized nearly 25 years ago with minimal safety and  
          quality requirements.  

          Deadline change

          The reauthorization bill mandated a state plan be submitted to  
          the federal government by June 30, 2015, detailing how states  
          would spend federal funds. California's 2014 state budget  
          required the California Department of Education (CDE) to provide  
          the revised state plan and a description of the changes to the  
          Director of Finance and the Legislature by April 1, 2015.  
          However correspondence from the U.S. Health and Human Services  
          Agency's Office of Child Care in late March moved that date back  
          by nine months, to March 1, 2016, leaving California with  
          <1> "Promoting continuity of Care in Infant/Toddler Settings:  
          What Can State/Territory Leaders Do?" National Center on Child  
          Care professional Development Systems and Workforce Initiatives,  
          September 2012.


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          additional planning time.

          Placement stability 

          The reauthorization bill includes a requirement that every child  
          receiving care under the CCDBG must be considered eligible for  
          that care for not less than 12 months before the state imposes  
          any kind of redetermination on the family, regardless of  
          temporary changes in the parent's income or work status so long  
          as the family income does not exceed 85 percent of the state  
          median income. It also allows for a graduated phase-out period  
          for parents who have exceeded income eligibility at the time of  
          redetermination, in keeping with many state practices.<2>

          California's statute currently includes a 12-month eligibility  
          period, but requires parents to report changes in income or work  
          status, which can trigger a loss of the child care subsidy. CDE  
          has recently sought an internal legal opinion about whether  
          California's 12-month eligibility statute is sufficient to  
          comply with the new federal block grant.

          This bill is silent on the 12-month requirement, and instead  
          requires that a child retains eligibility to remain in the  
          program for the remainder of the program year. The author states  
          that this language is a step toward fulfilling the stability  
          requirement until there is clarity around the need for  
          legislation on the 12-month mandate. The author intends this  
          requirement to encompass school-year programs as well as  
          programs that run continuously and therefore may be subject to a  
          calendar year timeline. Should the state additionally enacted  
          legislation to satisfy the 12-month federal mandate, this bill  
          would require that some children be maintained in a program  
          longer than 12 months if that 12-month period does not coincide  
          with the end of a program year.

          Related legislation:

          AB 233 (Lopez, 2015) would require that a family enrolled in a  
          state or federally funded child care and development program to  
          be considered eligible for services for 12 months from time of  
          initial or annual, eligibility determination. The bill  
          additionally would make substantial changes to the process used  

          <2> Child Care Law Center, CCDBG Legislative Update, November  


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          by alternative payment providers in establishing and tracking  
          SB 1123 (Liu, 2014) would have permitted providers to have  
          choices that enable greater funding flexibility and allow  
          services to be tailored to fit community needs including the  
          remainder of program year eligibility. This bill died in the  
          Assembly Appropriations Committee.

          SB 192 (Liu, 2014) would have recast existing child care and  
          development statute as the Early Learning and Educational  
          Support Act, and would require the Superintendent to develop  
          standards for the implementation of high-quality early learning  
          and educational support programs based on certain indicia of  
          quality, as defined. This bill died in the Assembly  
          appropriations committee.

          Despite the roll-back of the CCDBG state plan deadline from  
          September 2015 to March 2016, changes still need to be  
          considered and implemented in this Legislative session. The  
          author states she intends this bill to be a vehicle for those  
          necessary changes and plans to include other required changes as  
          the bill moves forward and guidance from the federal government  
          becomes clearer.

          Mandating a child remain eligible for the remainder of the  
          program year does not explicitly align with the CCDBG  
          requirements to make children eligible for a minimum of 12  
          months. The author states that the intent of this bill is to  
          comply with the intent of the stabilization language and that if  
          CDE's legal opinion indicates the current law does not comply  
          with the new mandate that this bill can be changed. 

          Staff suggests that should this bill move to the Senate  
          Education Committee, the author consider adding a minimum  
          12-month requirement into this language, to comply with federal  
          reauthorization language. Staff also recommends the author  
          consider establishing what entity defines the duration of a  
          program year.



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