BILL ANALYSIS �
AB 2573
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Date of Hearing: April 18, 2012
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Sandre Swanson, Chair
AB 2573 (Furutani) - As Amended: March 29, 2012
SUBJECT : Child care: family child care providers: bargaining
representative.
SUMMARY : Authorizes family child care providers to form, join
and participate in "provider organizations" for purposes of
negotiating with state agencies on specified matters.
Specifically, this bill :
1)Defines a "family child care provider" or "provider" as either
of the following:
a) A family child care provider that is licensed.
b) An individual who provides child care in his or her home
or in the home of the child receiving care, is exempt from
licensing requirements, and participates in a child care
subsidy program.
2)Defines a "provider organization" as an organization that has
all of the following characteristics:
a) The organization includes family child care providers.
b) The organization has as one of its main purposes the
representation of family child care providers in their
relations with public and private entities in the state.
c) The organization is not an entity that contracts with
the state or a county to administer or process payments for
a child care subsidy program.
3)Provides that family child care providers have the right to
form, join and participate in the activities of provider
organizations of their own choosing for purposes of
representation on specified matters.
4)Specifies that family child care providers are not public
employees, and that this bill does not create an
employer-employee relationship between family child care
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providers and the state or any other entity. This bill does
not change the child care providers' status as independent
business owners or classify child care providers as public
employees.
5)Provides that the "state action" antitrust exemption to the
application of federal and state antitrust laws is applicable
to the activities of family child care providers and their
representatives.
6)Specifies that the scope of representation shall include all
of the following:
a) The administration of laws and regulations governing
licensing for providers.
b) Joint labor-management committees.
c) Contract grievance arbitration.
d) Expanded access to professional development and training
opportunities for providers.
e) Benefits for providers.
f) Payment procedures for child care subsidy programs.
g) Reimbursement rates for providers participating in a
child care subsidy program. However, at the Governor's
option, the scope of representation may exclude this issue
until July 1, 2014.
h) Expanded access to food and nutrition programs.
i) The deduction of membership dues and fees.
j) Any other changes to current practice that would result
in specified improvements to the child care system.
7)Requires the Department of Social Services to make available
to a provider organization, upon request, the name, address,
telephone number and other information regarding child care
providers, as specified.
8)Establishes a petition and election process for the selection
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of provider organizations, to be administered by the Public
Employment Relations Board (PERB), as specified.
9)Provides that there shall be no more than one bargaining unit
at any time, and that unit shall be represented by no more
than one certified provider organization.
10)Requires a provider organization to represent all family
child care providers in the unit fairly and without
discrimination and without regard to whether the providers are
members of the provider organization.
11)Requires the Governor, through the Department of Personnel
Administration, to meet and confer in good faith regarding all
matters within the scope of representation. "Meet and confer
in good faith" means the parties have the mutual obligation
personally to meet and confer promptly upon request by either
party and continue for a reasonable period of time. The duty
to meet and confer in good faith also requires the parties to
begin negotiations sufficiently in advance of the adoption of
the state's final budget for the ensuing year.
12)Requires any agreement reached to be reflected in a written
memorandum of understanding, which will be binding on all
state departments and agencies that are involved in the
administration of child care subsidy programs, and the
relevant contractors or subcontractors of those departments
and agencies.
13)Authorizes a provider organization to enter an agreement with
the state regarding the payment of dues, as specified.
14)Prohibits a provider organization from directing or calling a
strike.
15)Enacts related and conforming changes.
16)Makes related legislative findings and declarations.
EXISTING LAW :
1 Authorizes the Superintendent of Public Instruction to develop
standards for quality child care programs and to enter into
contracts with child care centers and family child care homes
for the provision of child care and development services.
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Family child care is provided by someone who resides in the
home where care is provided.
2) Establishes a reimbursement system for subsidized child care
in which:
a) Parents can choose a licensed center or family child
care home, and the state reimburses the provider the same
rate that the provider charges a family who is not
subsidized, up to a ceiling established by the state.
b) Parents can choose a provider who is not required to be
licensed (usually a relative, neighbor or friend), and the
state reimburses that provider a rate set within each
county based on the mean cost of licensed care in the
county.
c) Parents can enroll their children in a center or network
of family child care homes that has a direct contract with
the State Department of Education. Child care in these
programs is reimbursed at a daily rate established in the
contract. For most contractors, the daily rate is the
Standard Reimbursement Rate, set in statute and adjusted by
the Legislature to reflect changes in the cost of living.
d) The daily rate for direct contractors is adjusted by a
statutory formula for infants, school-aged children,
children with disabilities, children at-risk of abuse or
neglect, children who have limited English proficiency and
children who spend less than six hours per day in care or
more than eight-and-one-half hours per day in care.
FISCAL EFFECT : Unknown
COMMENTS : This bill is jointly sponsored by the American
Federation of State, County and Municipal Employees (AFSCME) and
the Service Employees International Union (SEIU). This bill
authorizes family child care providers to form, join and
participate in "provider organizations" for purposes of
negotiating with state agencies on specified matters. The bill
states that its purpose is to "promote quality, access, and
stability in the child care system by authorizing an appropriate
unit of family child care providers to choose a provider
organization to act as their exclusive representative on all
matters" within the scope of representation as defined in the
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bill. The bill also states that it is intended to promote full
communication between providers and the state by permitting a
provider organization to meet and confer with the state
regarding the state's child care system.
Brief Background on Child Care in California
The state's subsidized child care system serves around 900,000
children, of which 366,000 are subsidized. Care is provided to
children in families currently or previously receiving CalWORKs,
as well as to other low-income working families subject to
available resources. The state spends a total of approximately
$2.4 billion on child care, of which $900,000 represents federal
funds from the Temporary Assistance for Needy Families (TANF)
and the Child Care and Development block grants. An estimated
200,000 eligible children are unserved because of a shortage of
resources.
The state's child care system has a dual purpose: caring for
children while their parents work, and enhancing their
developmental potential as they prepare for and attend school.
Two state departments administer child care programs: the
Department of Education (responsible for more than 2/3 of the
funds) and the Department of Social Services (responsible for
administering the first stage of child care for CalWORKs
recipients).
Families are eligible for subsidized care when their incomes are
lower than 70% of the State Median Income (SMI). Above 50% of
SMI, a graduated schedule of family fees applies, up to 8% of
gross income.
Slightly less than half of the total cost of subsidized child
care is spent for current or former recipients of CalWORKs.
Delivery of care for this population is provided through a
3-stage process. In Stage 1, CalWORKs applicants and recipients
are provided care early in their welfare-to-work activities
before their care situation becomes stabilized. In Stage 2,
current and former recipients are guaranteed care while they
continue to participate and for two years after they leave aid.
Stage 3 has been provided since CalWORKs began, covering
families after Stage 2 until they no longer need care or exceed
the general subsidized care income eligibility limits.
Child care to low-income families, whether in CalWORKs or not,
is provided by a variety of entities: child care centers, which
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contract directly with the Department of Education (SDE) and
must meet established educational and health and safety
standards enforced by SDE; licensed family day care, which must
meet health and safety standards enforced by the Department of
Social Services; specialized care such as migrant care; and
informal license-exempt care provided by relatives or for a
single child or children from a single family. Alternative
payment programs administer voucher payments, and resource and
referral agencies provide education, training and support and
help families find appropriate care.
Providers are exempt from the licensing requirement if they
provide care for the children of only one family in addition to
his or her own children, or if they participate in a cooperative
arrangement with other parents when no payment is involved and
specified conditions are met. SDE estimates that there are
approximately 48,000 license-exempt child care providers in the
state (although this number may have decreased with recent
budget cuts).
A recent study<1> by the U.C. Berkeley Labor Center found that
early care and education (ECE) is an important industry in
California, serving more than 850,000 California children and
their families and bringing in gross receipts of at least $5.6
billion annually. The study reported that the industry not only
benefits the children who receive care, but also strengthens the
California economy as a whole by promoting and facilitating
parents' ability to participate in the paid workforce, something
that is especially important during this time in which
California is struggling with high unemployment and a weak
economic recovery. In particular, the study noted that analyses
of the costs and benefits of ECE have found impressive returns
on investments to the public, ranging from $2.69 to $7.16 per
dollar invested.
Antitrust Issues and the "State Action" Doctrine
This bill seeks to allow family child care providers to engage
in specified collective activity under the "state action
doctrine" to federal and state antitrust laws. Therefore, as a
preliminary matter it is necessary to discuss some general
principals of antitrust law and the state action doctrine:
---------------------------
<1> MacGilvray, Jennifer and Laurel Lucia. "Economic Impacts in
Early Care and Education in California." U.C. Berkeley Center
for Labor Research and Education (August 2011).
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Antitrust Issues Under Federal Law
The primary purpose of federal and state statutory antitrust law
is to prevent businesses from creating unjust monopolies or
competing unfairly in the marketplace.
However, at common law throughout the nineteenth century, most
courts regarded labor unions as unlawful conspiracies in
restraint of trade, punishable civilly or criminally. In 1890,
Congress passed the Sherman Anti-Trust Act, the basic federal
antitrust statute, which declared illegal "every contract,
combination?or conspiracy in restraint of trade." In the years
following passage of the Sherman Act, the courts proceeded to
hold unions liable for antitrust violations in more instances
than businesses, which were the primary objects of concern under
the Act.
Application of the federal antitrust laws to organized labor
culminated in the Supreme Court decision in Loewe v. Lawlor
(1908) 208 U.S. 274, the famous "Danbury Hatters" case, in which
the Court upheld the applicability of the Sherman Act to unions
and union activities.
Resentment generated by the "Danbury Hatters" case placed
substantial pressure on Congress for a labor exemption to the
Sherman Act, and in 1914 the Clayton Act was passed. The labor
exemption was further articulated with the passage of the
Norris-LaGuardia Act in 1932. Both of these provisions declare
that labor unions are not combinations or conspiracies in
restraint of trade, and specifically exempt certain union
activities such as secondary picketing and group boycotts from
the application of federal antitrust laws.
Antitrust Issues Under State Law
California's general antitrust law, known as the Cartwright Act,
generally prohibits combinations of two or more persons'
capital, skill, or acts to restrict trade or commerce, reduce
the production of merchandise, increase the price of a
commodity, prevent competition, or control or fix at a standard
or figure any commodity. (California Business and Professions
Code Section 16600, et seq.)
Like its federal counterpart, the Cartwright Act contains a
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labor exemption. This exemption is found in Business and
Professions Code Section 16703, which provides: "Within the
meaning of this chapter, labor, whether skilled or unskilled, is
not a commodity." Like its federal Clayton Act counterpart,
Section 16703 was intended to insulate from antitrust liability
concerted activities by workers seeking to improve their working
terms and conditions.
Interplay Between Federal and State Regulation: The "State
Action" Doctrine
The "state action" doctrine recognizes that the federal
government did not intend to supersede the authority of the
states through antitrust regulation. This doctrine was first
articulated by the Supreme Court in 1943 in the case of Parker
v. Brown , 317 U.S. 341, in which the Court declared that the
Sherman Act was not intended to apply to the activities of the
States. Under this doctrine, a state acting within its own
domain may structure its economic market as it sees fit. The
state may allow completely unfettered competition, or substitute
a competitive market structure with regulation.
The state action doctrine provides that a private party is
immune from federal antitrust law if it can show that the state
has displaced competition via regulation. As articulated in
Parker v. Brown , a two-part test is utilized to show requisite
state action. First, the conduct is exempt if it is undertaken
pursuant to a "clearly articulated" state law that displaces
competition with a regulatory scheme. Second, the conduct is
exempt if it is "actively supervised" by the state. This latter
requirement is generally seen as ensuring that the private
parties are acting to fulfill the state's objectives, rather
than for purely self-motivated purposes.
Similar Efforts in Other States
Establishing collective bargaining rights for the child care
workforce is not entirely without precedent. Nationally, a
small percentage of child care centers and Head Start programs
have been unionized for decades. What is relatively new is the
effort to begin organizing home-based child care providers.
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A recent report by the National Women's Law Center<2> discussed
recent developments in other states to authorize home-based
child care providers to join unions and negotiate with the state
for better compensation and working conditions. The report
noted that home-based child care providers are not in a
traditional employer- employee relationship that permits them to
unionize. Most are independent contractors and need special
legal authority to organize into unions that can bargain with
the state over rates, benefits, and similar matters.
According to the report, 14 states have authorized child care
providers to organize and negotiate with the state. These
states include Illinois, Washington, Oregon, Iowa, New Jersey,
Michigan, Wisconsin, New York, Pennsylvania, Kansas, Maryland,
Ohio, Maine and New Mexico.
The legal authority needed for child care providers to unionize
and negotiate with the state generally has been derived from an
executive order from the governor, state legislation, or both.
The executive order or legislation granting legal authority
generally defines the bargaining unit (which type of providers
may be organized and how they are grouped together for
representation and bargaining); specifies the process for
electing a representative, if not covered by existing state law;
identifies the issues the union may bargain over; and defines
the strength of the bargaining mandate and the enforceability of
any negotiated agreement. Agreements often create institutional
arrangements to ensure that providers have some voice in policy
and regulatory changes that affect their interests.
ARGUMENTS IN SUPPORT :
Supporters argue that current law doesn't allow home-based child
care providers to work together to improve child care services.
This means providers do not have ability to work with the state
to implement common sense improvements to make better use of
state child care dollars such as setting statewide standards for
how quickly and accurately reimbursements are processed,
ensuring minor discrepancies like ink color don't hold up
reimbursements, and establishing better communication when
program rules or family eligibility changes happen.
---------------------------
<2> Blank, Helen, Nancy Duff Campbell and Joan Entmacher.
"Getting Organized: Unionizing Home-Based Child Care Providers
(2010 Update)." National Women's Law Center (June 2010).
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Supporters state that California's child care system is
currently rife with problems and is inefficient in making use of
limited state resources. Some examples cited by supporters
include: 1) more than 100 local agencies administer child care
funds, following guidelines written in the 1980s and wide
latitude exists for interpreting vague state standards; 2)
insufficient state oversight result in child care providers
sometimes experiencing three months or more without payment for
work done; 3) program over-enrollment leading to interruptions
in care for children and reimbursements for providers, and
duplicative administrative functions; and 4)
months-to-year-long delays in the state certifying that child
care providers meet state licensing health and safety standards
mean that these businesswomen are prevented from expanding their
businesses or are left unable to operate when moving houses.
Supporters contend that these challenges, along with months
without pay due to state budget impasses, stagnant reimbursement
rates since 2005 and other problems, have lead California to
lose 14 percent of its licensed child care supply in the last
year. Children and families pay the price of turnover. It is
widely acknowledged that high turnover rates undermine the
quality of care received by young children and that stability in
caregiver-child relationships is important to ensuring positive
social development and educational success over the long term.
Supporters argue that this bill addresses California's broken
child care system by providing a way for these small
businesswomen, many of whom work in low-income neighborhoods, to
have a strong advocacy voice with the state.
"STRONG CONCERNS" :
The California Alternative Payment Program Association (CAPPA)
does not oppose this measure, but writes the following in
expressing "strong concerns":
"The issue of whether or not to unionize child care
providers is not CAPPA's issue, however the significant
fiscal implications to the Alternative Payment Program's
(APPs) if this bill was signed into law is. Specifically,
in our reading of the language we see that no real funding
is guaranteed to the public and private entities (APPs,
County Offices of Education, Counties, etc.) to cover the
costs associated with implementation of this bill and the
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on-going costs of complying with information requests,
developing operational procedures and collecting dues.
CAPPA has not taken a formal position but must go on record
with strong concerns that further amendments are needed to
address the funding that agencies would need in order to
comply with the demands of this legislation. It is our
desire to work with the author and the sponsors of this
bill to address our concerns.
Over the past 2 years, the Child Care and Development
programs in this state have realized double-digit budget
reductions, depending on program type. Due to these
devastating cuts agencies have shortages of staff to
operate the programs, large caseloads per caseworker,
longer wait times for families meeting need and eligibility
criteria, and a reduction or downright elimination of vital
supportive services that many low-income families
desperately need during this turbulent economy.
Unfortunately, the Governor's January Budget proposal has
included an additional $540 million in child care and
development cuts. In addition to the severe budget cuts,
APPs are being choked by the dozens of unfunded mandates
foisted upon them within the last two years. These unfunded
mandates are crippling many agencies to the point of
insolvency. In regards to AB 2573, CAPPA is concerned that
the provisions included will become one more mandate."
ARGUMENTS IN OPPOSITION :
Opponents argue that this bill creates as many problems for the
child care system as it solves, and will impact community care
licensing oversight, trusline clearances, CalWORKs
implementation, rate-setting and license-exempt reimbursement,
resource and referral training, child care waiting lists of
eligible families, payment administration and dues collection,
and others.
Opponents note that budget cits for fiscal year 2012-13 have
reduced child care funding for low income families by $412
million, or 15 percent. They contend that the Governor proposes
to reduce reimbursements and eligibility significantly next
year. Therefore, the impact of this bill may lead to even less
child care availability going forward.
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Opponents also argue that state antitrust law exemptions
applicable to employees do not extend to entrepreneurs whose
"revenues depend on their own initiatives in building a
successful business that will be patronized, not by one
employer, but by many customers." Opponents contend that family
child care providers are entrepreneurs and are therefore not
suitable objects of union organizing. Opponents argue that this
bill inherently sets up an anti-competitive environment by
having all providers represented by a single organization that
could potentially dictate pricing of child care services
throughout the state.
PRIOR LEGISLATION :
This bill is identical to AB 101 (John A. P�rez) from last year,
which was vetoed by Governor Brown. In his veto message, the
Governor stated the following:
"Maintaining the quality and affordability of childcare is
a very important goal. So too is making sure that working
conditions are decent and fair for those who take care of
our children. Balancing these objectives, however, as this
bill attempts to do, is not easy or free from dispute.
Today California, like the nation itself, is facing huge
budget challenges. Given that reality, I am reluctant to
embark on a program of this magnitude and potential cost."
This bill is similar, but not identical to SB 867 (Cedillo) of
2008. SB 867 was vetoed by Governor Schwarzenegger, who, in his
veto message stated, "Given California's significant budget
challenge, I cannot consider bills that would add significant
fiscal pressures to the state's structural budget deficit."
This bill is also similar to AB 1164 (De Leon) of 2007, which
was also vetoed by Governor Schwarzenegger. In vetoing AB 1164,
the Governor stated the following:
"While I support efforts to improve the quality of child
care services and have provided increased state funding to
expand access to subsidized child care, I cannot support
this bill as it has the potential to add significant fiscal
pressures to the State's structural budget deficit. Family
child care homes currently receive prevailing market rates
for their services. They are reimbursed for the
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state-subsidized families they serve at the same rate as
that paid by the non-subsidized families they serve.
Changes in the current reimbursement structure, increases
in family child care provider reimbursement rates, expanded
provider training efforts, or other program enhancements
could come at the expense of the number of available child
care slots. In light of the current structural budget
deficit, it is imperative that we balance our fiscal
reality and the need to provide services to working
families."
Other similar prior legislation includes SB 697 (Kuehl) of 2006
(which was vetoed by Governor Schwarzenegger), SB 1600 (Kuehl)
of 2006 (which was held under submission by the Senate Committee
on Appropriations), and SB 1897 (Burton) of 2004 (which was
vetoed by Governor Schwarzenegger).
REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees
(co-sponsor)
California Labor Federation, AFL-CIO
Service Employees International Union (co-sponsor)
Strong Concern
California Alternative Payment Program Association
Opposition
Child Development Policy Institute
Kenneth Young, Riverside County Superintendent of Schools
Professional Association for Childhood Education (PACE)
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091