BILL ANALYSIS
AB 2323
Page 1
Date of Hearing: May 5, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2323 (Torlakson) - As Amended: April 19, 2010
Policy Committee: Education
Vote:5-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill authorizes a center-based child care contractor to
carry forward reimbursable expenses that exceed earnings based
on a contract issued by the State Department of Education (SDE)
and continue providing the same program services, as specified.
Specifically, this bill:
1)Prohibits the expenses carried forward from exceeding 10% of
the maximum reimbursable amount of the contract, as specified.
2)Specifies this measure does not require SDE to do either of
the following: (a) issue a new contract to a contractor in a
subsequent period to continue services or (b) increase the
future contract as a result of a contractor carrying forward
any reimbursable expenses.
3)Specifies this measure does not change requirements that
contractors earn reimbursements through serving children, or
reduces the number of children that a contractor must serve to
earn its contract.
4)Requires SDE to submit a report, by January 1, 2014, to the
appropriate legislative committees on the number and
percentage of contractors that carried over expenses and the
amounts.
5)Sunsets these provisions on January 1, 2016.
FISCAL EFFECT
AB 2323
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1)Potential for GF/98 cost pressure, likely in the low millions,
to provide additional funding for center-based child care
programs because this measure presumes the funding currently
being provided is not enough to cover their reimbursable
expenses.
Essentially, this measure allows center-based child care
programs to exceed the rate-per-child the state provides for
the program. For example, if a contractor's reimbursable
expenses exceed their allotted funding (which is based on the
number of children served at a designated rate), the
contractor (under this measure) is allowed to carry forward
these expenses to next year's contract, which can potentially
lead to serving less children.
2)GF administrative costs to SDE, likely less than $100,000, to
provide the report required by this measure.
COMMENTS
1)Purpose . General child care and development (CCD) programs
are state and federally funded programs that use centers and
family child care home networks operated or administered by
either public or private agencies and local educational
agencies (LEAs). These agencies provide child development
services for children from birth through 12 years of age and
older children with exceptional needs.
Center-based child care program contractors receive program
funds based on the number of slots they provide for child care
programs. According to SDE, there were 765 center-based child
care program contractors. (Center-based refers to child care
outside a home environment.)
According to the author, "California's Child Development
programs, which are contracted by the SDE, have had large,
annual, unexpended balances for many years. The Legislative
Analyst Office (LAO) pegs what it has labeled 'chronic
carry-over' at $200 million, and has called for a special
hearing on solving the 'chronic carry-over problem.' This is
very serious problem because, at a time when child care is
critically needed and 200,000 eligible families are on waiting
lists, legislatively-authorized funds are being returned and
re-directed to other purposes. Recent administrative efforts
by the SDE and the child development field, plus recent
AB 2323
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changes in law, should result in a significant reduction in
unspent funds. [This bill] will further reduce the level of
unspent funds."
2)Existing law authorizes and encourages center-based child care
program contractors to maintain a reserve fund, derived from
earned, but unexpended funds. "Earned funds" is the amount of
funding earned for administration by the contractor, based on
the number of children served. Existing law specifies that
money in the reserve funds can only be used for reasonable and
necessary costs related to the operation of a program,
including provider payments, employee benefits,
administration, and facilities costs. According to CDE, as of
2008-09, there was $117.4 million in the reserve fund for
center-based programs.
This bill authorizes center-based child care contractors to
carry forward reimbursable expenses (not to exceed 10%). This
presumes that contractors' expenses are exceeding the funding
provided by their contract. If this is the case, the
contractor is able to access its reserve fund to pay for these
expenses. The committee may wish to consider whether this
bill is necessary given the allowances for reserves under
current law.
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081