BILL ANALYSIS �
AB 2125
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Date of Hearing: May 7, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 2125 (Ridley-Thomas) - As Amended: May 1, 2014
Policy Committee: EducationVote:6-1
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill replaces the statutory standard reimbursement rate
(SRR) for State Preschool and General Child Care programs with a
rate based on the most recent regional market rate survey with a
ceiling at the 100th percentile, as specified. Updates the
Regional Market Rate (RMR) for CALWORKS recipients and child
care voucher programs to the 85th percentile of the current RMR
survey for each region. Specifically, this bill:
1)Requires the Superintendent of Public Instruction (SPI) to
implement a plan that establishes reasonable standards and
assigned reimbursement rates through a single reimbursement
system which varies with the length of the program year and
the hours of service.
2)Specifies that the adjustment factors for infants, toddlers,
children with exceptional needs, severely disabled children, a
child at risk of neglect, abuse, or exploitation, and
limited-English-speaking and non-English-speaking children
shall apply without regard to whether the programs are at or
below the SRR and without regard to whether the reimbursement
rate exceeds the adjusted SRR.
3)Makes other technical, clarifying amendments.
FISCAL EFFECT
1)General Fund/Proposition 98 costs of approximately $1.1
billion for State Preschool and $1 billion for General Child
Care to update the SRR to the 100th percentile of the 2012
regional market rate survey.
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2)General Fund costs of approximately $210 million to update the
RMR to the 85th percentile of the most recent regional market
rate survey.
COMMENTS
1)Purpose . According to supporters, this bill is intended to
establish a single reimbursement rate system for child care
and development programs and increase payments to providers.
To that end, the bill adjusts both the SRR and the RMR. The
SRR has been the same since FY 2007-08. Supporters of the
bill contend the current SRR rate has caused contractors to
stop providing services to low-income families. Further, in
some counties, the RMR is higher than the SRR, causing
providers to terminate contracts with CDE over the years, due
to insufficient funding. According to the author, aligning
and increasing these rates, will allow early childhood
education providers to improve the pay of the workforce and
maintain services.
2)Payment system . The state uses two different methodologies
for determining the rates for child care and development
program payments.
a) RMR . The CDE administers a voucher program that enables
eligible families to choose their providers, which may be a
licensed center, licensed family child care homes, or
license-exempt care (e.g., care by a relative). The
voucher program is administered by Alternative Payment
Programs (APPs) selected by the CDE. Child care licensed
providers receive reimbursements of up to the 85th
percentile of child care rates charged by private providers
in the area. The rates are determined by the RMR survey
and vary depending on the geographical location of the
provider. The rate is intended to enable access to 85% of
all licensed providers in a county and represents the
maximum amount the state will pay for services. Providers
that charge at or below the RMR will receive the actual
costs. If a family chooses a provider that charges above
the RMR, the family pays the additional amount. State and
federal law requires the survey to be updated every two
years. However, due to budgetary reasons, the current RMR
is based on the 2005 survey.
b) SRR . Child development programs and preschools that
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contract directly with CDE through the General Child Care,
Migrant and Handicapped child care, and California State
Preschool Programs must comply with higher standards
(teacher qualifications, child development) than programs
described above that receive the RMR. The SRR is a
specified rate established in statute and adjusted through
the budget act. The current SRR, which was last adjusted
in 2007-08, is at $34.38 per day for full-day care (or
$8,595 annually) and $21.22 per day per child for part-day
(or $3,714 annually). The monthly rate for full day care
for a four-year-old is $716.
3)Background on child care and development programs . In fiscal
year (FY) 2013-14, $2.1 billion was provided for child care
and development programs from state and federal funds,
enrolling an estimated 340,000 children. The Governor's
proposed FY 2014-15 budget provides an increase of $66 million
over FY 2013-14 funds for a total of $2.2 billion for child
care and development programs to provide an estimated 343,000
child care and preschool slots.
Analysis Prepared by : Misty Feusahrens / APPR. / (916)
319-2081