BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
44 (Corbett)
Hearing Date: 07/23/2009 Amended: 07/08/2009
Consultant: Dan Troy Policy Vote: ED 7-0
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BILL SUMMARY: SCR 44 would request the California Department
of Education (CDE) to review the regional market rate
methodology and implementation guidelines that set reimbursement
rates for certain child care providers and require the CDE,
should it complete this review, to submit a report to the
Legislature before the next budget cycle about the review and
any recommended changes to the methodology.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Regional Market Rate $200 to $250
General
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Under current law, many subsidized child care slots are provided
through vouchers or alternative payment programs (APPs) that are
generally funded at a Regional Market Rate (RMR) determined
through a biennial survey. Depending on the level of care,
providers are funded at a certain percentage of the cost of
private care in that region. Licensed providers (Title 22 and
family child care homes) typically are funded at 85 percent of
the RMR. The methodology used in the most recent RMR survey
involved sampling and estimation that was based first on
statistical socio-economic modeling of zip codes into "market
profiles." Licensed providers were then sampled based on the
zip code of their physical location. Reimbursement ceilings
were then calculated at the market profile level for care
setting, age of the child, and time category (hourly, daily,
weekly, monthly). County and sub-county estimates become the
weighted averages of the market profiles within their
jurisdictions.
Other providers that contract directly with the Department of
Education are reimbursed through a uniform Standard
Reimbursement Rate (SRR) that was established in 1980 and has
been increased over time through cost of living adjustments.
The differential between the RMR and SRR rates can create
disparities in funding in high-cost counties. Certain providers
are subject to the higher standards, yet the uniform SRR at
which they are funded can be lower than what license-exempt
providers may receive through the RMR in the same county.
Many child care providers who are reimbursed using the RMR also
believe that the current survey methodology relies too heavily
on median home values and incomes, which may not necessarily
have any effect on private child care rates charged in that
area.
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SCR 44 (Corbett)
In order to achieve nearly $40 million in budget savings, the
Governor proposed a reduction in the reimbursement rate ceiling,
from the 85th percentile of the 2005 Regional Market Rates to
the 75th percentile of the 2007 Regional Market Rate. This
proposal was rejected by the Budget Conference Committee.
This resolution would request CDE to review the current RMR
methodology and implementation guidelines, and question whether
adherence to the current regional market rate system has
resulted in sufficient access for working poor families.
Further, the resolution would also request CDE to operate an
open and transparent process where all vested stakeholders are
fully versed in the methodology used for the regional market
rate survey and are included in the planning and implementation
process being undertaken by the CDE to establish new rates or a
new rate structure. CDE would also be requested to submit a
report to the Legislature by April of 2010 relating to the
review of the methodology and recommend changes.
The process requested in the resolution would likely result in
costs of $200,000 to $250,000, as the CDE would need to shift
two positions to complete this task and conduct multiple
meetings throughout the state. In order to reduce costs, staff
recommends limiting the resolution to requesting CDE to convene
one meeting with stakeholders in which the Department could
explain the methodology used to calculate the RMR and could
receive feedback from stakeholders. The cost of such a meeting
would likely be in the range of $2,000 to $5,000.