BILL ANALYSIS
AB 315
Page 1
Date of Hearing: April 29, 2009
ASSEMBLY COMMITTEE ON EDUCATION
Julia Brownley, Chair
AB 315 (De Leon) - As Amended: April 14, 2009
SUBJECT : Child care and development services: Alternative
Payment Programs
SUMMARY : Requires the California Department of Education (CDE)
to adopt regulations to establish guidelines for Alternative
Payment Programs (APPs) regarding payments to providers and
other related administrative procedures. Specifically, this
bill :
1)Expresses the following intent of the Legislature:
a) Eliminate late and inaccurate payments to child care
providers;
b) Eliminate ambiguities that have led to changing
guidelines;
c) Eliminate insufficient communication about policies, and
the lack of a system that addresses child care provider
payment problems that has led to more experienced, quality
providers choosing not to accept subsidized children,
thereby reducing parental choice and availability of care
for families relying on the subsidized child care system;
and,
d) Create a uniform and timely system of payments to child
care providers by providing clear and consistent directives
for APPs.
2)Requires the CDE to adopt regulations to establish guidelines
for APP on all of the following:
a) Timeliness of payments to child care providers;
b) Due process and complaint process;
c) Filling out time sheets;
d) Manner of issuing payments to child care providers, and
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whether an alternative payment program may issue a single
check for multiple children;
e) Timeliness of notice to providers when a child is no
longer eligible to receive subsidies; and,
f) Administrative recourse and penalties for late payments
to child care providers.
EXISTING LAW establishes a system of child care and development
services for children up to 13 years of age and provides certain
requirements for the payment by the state for these child care
and development services and establishes reimbursement rates,
including requirements for their adjustment and application.
FISCAL EFFECT : Unknown
COMMENTS : Background . The CDE administers a child care and
child development system, maintaining over 1,500 service
contracts with approximately 786 public and private agencies
supporting and providing services to about 500,000 children.
Contractors include school districts, county offices of
education, cities, colleges, other public entities,
community-based organizations, and private agencies.
Alternative Payment Programs, funded with state and federal
funds, offer a variety of child care arrangements for parents,
including licensed family child care homes and center-based
care, and arrange for payments to licensed-exempt providers, who
are relatives or friends of parents or guardians. The APP helps
families access child care services and makes payment for those
services directly to the child care provider selected by the
family. The APP is intended to increase parental choice and
accommodate the individual needs of the family. APPs are
reimbursed based on the number of children served and funds are
appropriated based on the fiscal reporting process and budget
estimations. There are 84 APPs throughout the state and they
range from private, nonprofit organizations to county offices of
education. APPs began as pilot programs in 1977 and became
permanent in 1980.
The federal Temporary Assistance for Needy Families (TANF),
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passed in 1996, increased the demand for child care services
through APPs. According to the CDE, families who are eligible
for child care services because they are recipients of cash aid
or have income less than 75% of the state median income receive
a specified number of hours of child care need per week
(certified hours of care) based on their documented need. The
certified hours of care are based on participation in county
mandated welfare-to-work activities, employment, employment
searches, and/or vocational training, and include time for
transportation to and from approved activities.
Purpose of the bill . According to the author, lack of clarity
in state regulations and guidelines has led to inconsistencies
in how APPs administer payments, which has led to undue burdens
on child care providers. These problems have led to more
experienced, quality child care providers choosing not to accept
subsidized children, which reduces choice in providers and
ultimately limits access for working families that rely on child
care to maintain their livelihoods. It is unclear how many
providers are no longer accepting children who receive state
assistance.
Existing Regulations . Title 5, Division 1, Chapter 19 and 19.5
of the California Code of Regulations establishes broad
guidelines regarding enrollment, attendance accounting, rates,
and provider participation. The regulations related to provider
payments include the following:
1)Requires contractors operating centers and/or family child
care homes to use daily sign in/sign-out attendance sheet with
parent/guardians' full signatures as the primary source of
documentation for reimbursement and audit purposes.
2)Requires an APP to develop and implement written policies and
procedures for provider participation, which include the
following:
a) How to maximize parental choice with consideration of
the contractor's ability to pay for the services within the
funding provided in the annual child development contract;
b) Acceptance, rejection and termination of provider
affiliation with the program; and,
c) Grievance procedures for parents and providers.
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3)Requires an APP to provide information either through written
materials or through an interpreter if the provider speaks a
language other than English. Among the materials required to
be provided to providers are a schedule for the payment of
services and instructions on enrollment and attendance
recordkeeping requirements.
4)Requires a contractor to develop and implement a plan for
timely payment to providers. The plan shall include a
description of parent fee collection methods in accordance
with the policy required by Section 18221 (h).
What this bill does . The underlined provisions below are the
areas for which the CDE is required to develop regulations
pursuant to this bill, followed by rationales provided by the
sponsor for the proposed regulations and staff comments:
1)Timeliness of payments to child care providers . The sponsor,
the Child Care Providers United (CCPU), states that there is
discrepancy over when providers are paid (e.g., within x
working days after receipt of attendance sheet, specified pay
dates, etc.) and how often they are paid (e.g., once or twice
a month), which makes it difficult for providers to operate
their businesses and pay their bills. In extreme situations,
providers have reported having to wait months after submitting
their attendance sheets before getting paid.
Existing regulations require the APP to develop and implement
a plan for timely payment to providers. However, when
providers are paid is connected to accuracies of attendance
sheets. If an attendance sheet requires followup, payments to
providers may be delayed.
2)Due process and complaint process . According to the sponsor,
when providers complain about late payments and other payment
problems, they have experienced retribution.
Current regulations require APPs to develop and implement
policies and procedures for provider participation, including
grievance procedures for parents and providers. It is unclear
whether providers are not following the grievance process or
whether APPs are violating the regulations by not developing a
plan or whether they are ignoring their policies.
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The CDE notes that there is due process for the clients - the
parents. Establishing a due process for providers will affect
the contractual relationship the state currently has with
APPs.
3)Filling out time sheets . The sponsor states that requirements
for attendance sheets are not consistent and that attendance
sheets have been returned because parents use different color
inks to sign in or out or because white out was used. Another
example includes rejection of attendance sheets because
parents signed a shortened version of their names (e.g., Kim
vs. Kimberly).
Payments for services are contingent upon the submission of
the attendance sheets. Any discrepancy can be an indication
of provider or parent fraud. Pursuant to annual budget acts,
the CDE is required to conduct a random sampling of family
data files to assess the administrative error rates in the
areas of eligibility, parent fee, need, and provider payment.
For Fiscal Year 2007-08, the estimated error rate for
provider payment reimbursements was 37%. CDE staff found that
most contractor errors in this area were due to either the
incorrect selection of a ceiling or the lack of quality
control to ensure that parents are completing the attendance
records on a daily basis.
Current regulations require APPs to provide written materials
to providers, including instructions on enrollment and
attendance recordkeeping. It is unclear whether providers are
not receiving the information or whether they are not
following instructions, or whether rules change.
4)Manner of issuing payments to child care providers, and
whether an alternative payment program may issue a single
check for multiple children . The sponsor states that there is
inconsistency in issuing payments to providers. Some
providers receive a single check for each child they serve at
different times of the month. Some APPs offer direct deposit
while others do not. This issue is not addressed by current
regulations.
5)Timeliness of notice to providers when a child is no longer
eligible to receive subsidies . The sponsor states that some
providers are not notified when there are changes to a
parent's eligibility (e.g., a parent's eligible hours are
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reduced or terminated) and they are not paid for services they
have provided.
Parents are required to report changes within five days. Some
APPs do notify providers when they are notified of changes and
offer a grace period before terminating payments. This issue
is not addressed by current regulations.
6)Administrative recourse and penalties for late payments to
child care providers . The sponsor states that some providers
are not paid for months, but they feel that they have no
recourse.
Existing regulation requires the APP to develop a plan for
timely payment to providers, but does not specify penalties
for failing to comply with the plan.
This bill provides directives to the CDE in the development of
regulations to resolve inconsistencies in how APPs administer
payments to child care providers, and also establish
administrative recourse and penalties for late payments to
providers. While the APPs were initially established to allow
local processes to cater to local needs, having standardized
policies and rules for areas such as attendance sheets and
notification of parent eligibility changes will help avoid
errors and expedite payments to providers.
The CDE is currently working on regulations related to provider
rates and policies, although they are not currently specific to
the areas addressed by this bill.
Related legislation . AB 304 (Price), pending in the Assembly
Human Services Committee, requires APPs to establish an
electronic banking program for payments to providers.
Arguments in Support . The American Federation of State, County
and Municipal Employees states, "The department has recently
begun a process to update their provider payment regulations.
Most of the regulations that the department is currently working
under are from the 1980s. It is not clear just what subject
matters will be addressed in this process, and the CCPU want to
be sure that the issues noticed in this legislation are to be
the focus of the regulatory package that is put forth, -- thus
the reason for this bill."
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REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees
(co-sponsor)
Service Employees International Union
Opposition
None on file
Analysis Prepared by : Sophia Kwong Kim / ED. / (916) 319-2087