BILL ANALYSIS
AB 304
Page 1
Date of Hearing: May 20, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 304 (Price) - As Amended: April 21, 2009
Policy Committee: Human
ServicesVote:5 - 2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires that by January 1, 2011, all child care
alternative payment providers (APPs) offer their child care
providers the option of receiving state subsidy reimbursements
via electronic banking.
FISCAL EFFECT
1)Unknown costs in the range of tens of millions of dollars for
county offices of education, cities, and county welfare
departments that operate as APPs to redesign their billing
systems to allow for electronic banking.
2)Unknown, likely significant, cost pressure in the range of
$500,000 for APPs to redesign current billing systems,
administer electronic banking, and for transaction fees
associated with electronic banking.
COMMENTS
1)Purpose . The author's office asserts that payments to
providers for state subsidized child care are often slow,
affecting the providers' ability to plan ahead and pay their
bills and obligations on time. The intent of this legislation
is to require an electronic payment process which should
reduce the delay in paying providers.
2)Subsidized Child Care . The state's subsidized child care
system serves nearly 700,000 families. Care is provided to
children in families currently or previously receiving
CalWORKs, as well as to other low-income working families
AB 304
Page 2
subject to available resources. The state spends a total of
$3.1 billion on child care, $1.4 billion of which are federal
funds from the Temporary Assistance for Needy Families (TANF)
and the Child Care and Development block grants.
3)Alternative Payment Providers : APPs have been in operation in
California since 1977. These programs offer subsidized child
care to help working poor families find and afford child care,
including family child care in the provider's home,
license-exempt care and center-based care. This service often
takes the form of a vendor payment (a certificate or voucher)
issued monthly to a provider selected by the family. The APP
program is intended to protect and increase parental choice
and accommodate the individual needs of the family.
California currently has 89 APPs.
4)Current Payment Process : The processes for distributing state
money that subsidizes child care include the State
Controller's Office, the APP, and the child care provider.
Generally, the payment process starts when a provider submits
its child attendance forms to the APP for reimbursement. The
APP then generates and submits its expenditure report for all
of its providers to the SCO, and the SCO sends a check to the
APP so it can in turn reimburse providers. Currently, it is
common practice for APPs to mail checks to the provider to
reimburse them.
Child Action, Inc., Sacramento's APP agency, is the exception
to the rule as it already provides electronic banking for its
providers. It states that the move from paper checks to
electronic deposit has improved the payment process for both
itself and its direct clients.
5)Related legislation : AB 315 (De Le?n) would require the State
Department of Education to adopt regulations to establish
guidelines for APPs, including timelines of payment to child
care providers. AB 315 is currently pending in this
committee.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081