BILL ANALYSIS �
AB 2125
Page 1
ASSEMBLY THIRD READING
AB 2125 (Ridley-Thomas)
As Amended May 23, 2014
Majority vote
EDUCATION 6-1 APPROPRIATIONS 12-5
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|Ayes:|Buchanan, Olsen, |Ayes:|Gatto, Bocanegra, |
| |Gonzalez, Nazarian, | |Bradford, |
| |Weber, Williams | |Ian Calderon, Campos, |
| | | |Eggman, Gomez, Holden, |
| | | |Pan, Quirk, |
| | | |Ridley-Thomas, Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Ch�vez |Nays:|Bigelow, Donnelly, Jones, |
| | | |Linder, Wagner |
| | | | |
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SUMMARY : Requires, on or before January 1, 2016, the
Superintendent of Public Instruction (SPI) to review the plan
that establishes reasonable standards and assigned reimbursement
rates, as established pursuant to Education Code Section 8265(a)
and submit recommendations to the Legislature and the Governor
for a single reimbursement system that reflects the actual
current cost of child care based on the most recent regional
market rate survey. Specifies that the report shall be
submitted in accordance with the process required under the
Government Code. Repeals the provisions of this bill on January
1, 2017.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, unknown administrative costs to the California
Department of Education (CDE), likely in the range of $60,000 to
$100,000 to review standardized reimbursements rates and make
recommendations.
COMMENTS : The CDE administers a child care and development
system, maintaining 1,401 service contracts with approximately
758 public and private agencies supporting and providing
services to children from birth through 12 years of age.
Contractors include school districts, county offices of
education, cities, colleges, other public entities,
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community-based organizations, and private agencies. 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. This is down from $2.669 billion
initially provided in the FY 2010-11 budget (prior to midyear
trigger cuts) with almost 416,000 slots. According to the
Legislative Analyst's Office (LAO), overall funding for child
care and development programs has decreased by almost $1 billion
since 2008-09, with the elimination of 110,000 slots. 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.
The state uses two different methodologies for determining the
rates for child care and development program payments.
1)Regional Market Rate (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 selected by the CDE. Child care licensed
providers must comply with Title 22 regulations (health and
safety standards) developed by the California Department of
Social Services and 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 RMR survey
is a survey of licensed centers and family child care homes
measuring child care rates of similar socioeconomic
conditions, rather than geographic proximity, creating ''price
profiles" of similar zip codes. Ceilings are established for
each county according to estimates of the 85th percentile of
child care rates for groups of centers and family child care
homes. These county market rate ceilings are differentiated
by the age of the child (infant, preschool, school age),
full-time or part-time care, and frequency of care. 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
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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 require the survey to be
updated every two years. However, due to budgetary reasons,
the current RMR is based on the 2005 survey.
2)Standard Reimbursement Rate (SRR): In addition to Title 22
regulations, child development programs and preschools that
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) under Title 5 regulations
developed by the CDE and receive the SRR. 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.
Previous versions of this bill attempted to increase the rates
by eliminating the standard rate established through the SRR and
instead use the RMR at the 100th percentile, and increasing both
rates by updating the RMR survey to the most recent survey. The
current version of the bill instead requires the SPI to review
the rates and submit recommendations to the Legislature and the
Governor for a single reimbursement system that reflects the
actual current cost of child care based on the most recent RMR
survey.
The SRR has been the same since FY 2007-08, while the state
Legislature has placed greater emphasis on increasing the
quality of early childhood and development programs. The low
SRR reimbursement has caused contractors to cease the provision
of services to low-income families. According to the LAO, in a
report titled, "Restructuring California's Child Care and
Development System," the RMR is higher than the SRR in 19
counties. Consequently, 224 providers have terminated contracts
with the CDE over the last few years, typically due to
insufficient funding. The availability and access to quality
subsidized early education services are reduced in a community
if the CDE is unable to locate another provider to take the
slots.
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The LAO recently issued a report recommending a restructure of
the child care and development system. Among other
recommendations, the LAO proposes to change the fee structure so
that they are more uniform by high, medium or low-cost counties
based on the 70th percentile of the 2012 RMR survey.
Analysis Prepared by : Sophia Kwong Kim / ED. / (916) 319-2087
FN: 0003813