BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Carol Liu, Chair
2013-2014 Regular Session
BILL NO: AB 2125
AUTHOR: Ridley-Thomas
AMENDED: May 23, 2014
FISCAL COMM: Yes HEARING DATE: June 25, 2014
URGENCY: No CONSULTANT:Lynn Lorber
SUBJECT : Child care reimbursement rates.
SUMMARY
This bill requires the Superintendent of Public Instruction
to review the plan that establishes standards and assigned
reimbursement rates for child care and development
programs, and to submit recommendations for a single
reimbursement system that reflects the actual current cost
of child care based on the most recent regional market rate
survey.
BACKGROUND
The California Department of Education (CDE) administers
child care and development services through two systems:
1) Direct contract with the CDE. Providers must meet
health and safety standards of Title 22 and Title 5
requirements including higher staff qualifications and
provide an educational component of; providers are
reimbursed at the Standard Reimbursement Rate (SRR).
2) Voucher program administered through Alternative
Payment Programs (reimbursements to private sector
child care providers chosen by the parent). Providers
must meet the health and safety standards of Title 22,
and are reimbursed using the Regional Market Rate
(RMR).
Current law:
Both Title 22 and Title 5 programs
Establishes eligibility for child care and development
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services administered by the California Department of
Education (CDE) and requires the Superintendent of Public
Instruction (SPI) to adopt rules and regulations on
eligibility, enrollment and priority for services.
(Education Code � 8263).
Title 5 programs
Requires the SPI to implement a plan that establishes
reasonable standards and assigned reimbursement rates,
which vary with the length of the program year and the
hours of service.
Requires the SRR to be $3,523 per unit of average daily
enrollment for a 250-day year, increased by a
cost-of-living adjustment granted by the Legislature
beginning July 1, 1980. (EC � 8265)
Title 22 programs (Stage 2 and 3 CalWORKs and Alternative
Payment programs)
1) Requires the cost of child care services provided for
CalWORKs recipients to be governed by the RMR.
Specifies that recipients of child care services shall
be allowed to choose the child care services of
licensed child care providers or child care providers
who are, by law, not required to be licensed, and the
cost of that child care shall be reimbursed by
counties or agencies that contract with the CDE if the
cost is within the RMR. (EC � 8357)
2) Defines "RMR" as care costing no more than 1.5 market
standard deviations above the mean cost of care for
that region. Establishes the RMR ceilings at the 85th
percentile of the 2005 RMR survey for that region.
Requires the CDE to contract to conduct and complete a
RMR survey no more than once every two years,
consistent with the federal regulations, with the a
goal of completion by March 1.
(EC � 8357 and � 8447)
ANALYSIS
This bill requires the Superintendent of Public Instruction
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to review the standard reimbursement rates and submit
recommendations for a single reimbursement system.
Specifically, this bill:
1) Requires the Superintendent of Public Instruction
(SPI) to review the plan that establishes reasonable
standards and assigned reimbursement rates.
2) Requires the SPI to submit, to the Legislature and the
Governor, recommendations for a single reimbursement
system that reflects the actual current cost of child
care based on the most recent regional market rate
survey.
3) Requires the SPI to review the plan and submit the
recommendation by January 1, 2016.
4) Sunsets the provisions of this bill on January 1,
2017.
STAFF COMMENTS
1) Rate structure . California has established two
methodologies for determining the reimbursement rates
for child care and development services:
a) Regional Market Rate (RMR). The California
Department of Education (CDE) administers a
voucher program that enables eligible families to
choose the child care provider, which may be a
licensed center, licensed family child care home,
or licensed-exempt provider (must meet Title 22
requirements but does not hold a license with the
Department of Social Services, such as a
relative). The voucher program is administered
by Alternative Payment Programs (APPs) selected
by the CDE. Voucher payments reimburse child
care providers at a rate of up to the 85th
percentile of the child care rates charged by
private providers in the area.
The RMR is determined by the RMR survey and very
depending on the geographical location of the
provider. The RMR is based on a survey of
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licensed centers and family child care homes
measuring child care rates of similar
socio-economic conditions. Rate ceilings are
established for each county according to
estimates of the 85th percentile of rates for the
various types of child care settings. The county
rate ceilings are differentiated by the age of
the child (infant, preschool, school age),
full-day or part-day care, and frequency of care
(days per week). Families may choose a child
care provider that charges a rate above the RMR,
but the provider would only be reimbursed at the
RMR. Current law requires the RMR survey to be
updated every two years. The Budget Act has, for
the past several years, based the RMR on the 2005
survey, thereby providing a lower rate than if
based on the most recent survey.
b) Standard reimbursement rate (SRR). Child
care and development providers that contract
directly with CDE must meet Title 5 requirements
in addition to those of Title 22 (have units in
Early Childhood Education, provide an educational
component to child care). Title 5 providers are
reimbursed using the SRR, which is a specific
rate established in statute. From fiscal years
2007-08 through the 2013-14, the SRR has been
$34.38 per child per day for full-day care and
$21.22 per child per day for part-day care, or a
maximum of $8,595 per year based on 250 days of
operation.
2) Budget . The 2014 K-12 Education Omnibus Budget
trailer bill, SB 858 (Committee on Budget and Fiscal
Review) increases the statutory SRR from $3,523 to
$9,024.75 per unit of average daily enrollment for 250
days, beginning with the 2015-16 school year. The
$3,523 was prescribed in statute years ago; the Budget
Act adjusts the dollar amount annually.
SB 858 also requires the CDE, beginning January 1, 2015, to
implement the RMR schedules based upon the 85th
percentile of county aggregates, as determined by the
Regional Market survey conducted in 2009. Beginning
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January 1, 2015, the RMR schedule is to be reduced by
13 percent. If a ceiling for a county is less than
the ceiling provided for that county before January 1,
2015, the CDE is to use the ceiling from the RMR
survey conducted in 2005.
3) LAO report . The LAO issued a report on April 4, 2014,
"Restructuring California's Child Care and Development
System," found, among other things, that the RMR is
higher than the SRR in 19 counties. The LAO's report
recommends:
a) Reimburse vouchers based on high-, medium-,
and low-cost areas.
b) Provide higher subsidy for those programs
required to have developmental component.
c) To start, set reimbursements at the 70th
percentile of most recent survey.
d) Moving forward, align rates with standards.
http://lao.ca.gov/reports/2014/education/child-care/res
tructuring-child-care-system-040414.pdf
4) Author's amendments . The author wishes to amend this
bill as follows:
a) Delete the requirement that the SPI review
the existing plan, and instead require the SPI to
develop a plan. Staff recommends this amendment
be rejected as it conflicts with amendments
adopted by the Assembly Appropriations Committee.
b) Clarify that the recommendations are to be
based on the plan. Staff recommends this
amendment be rejected.
c) Specify that the single reimbursement system
varies with the length of the program year and
the hours of service. Staff recommends this
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amendment be rejected as this language is current
law.
d) Requires the plan to conform to all of the
following elements:
i) Parent fees are to be used to pay
reasonable and necessary costs for providing
additional services. Staff recommends this
amendment be rejected as this language is
current law.
ii) When establishing standards and
assigned reimbursement rates, the SPI is to
confer with applicant agencies. Staff
recommends this amendment be rejected as
this language is current law.
iii) The reimbursement rates are to be
based on the biannual regional market rate
survey and include existing ceiling for
Title 22 centers, family child care
settings, and licensed-exempt providers at
the 85th percentile and establish a rate for
state-contracted programs above the rate set
for Title 22 programs. Staff recommends
this amendment be modified to refer to the
most recent RMR survey (rather than the
biennial survey), remove reference to a
specific percentile and instead simply state
that rates for Title 5 programs should be
above those for Title 22 programs.
iv) A provision for the expansion of
the new single reimbursement system in
concurrence with budget allocations for
rates for programs at no more than the
reimbursement rate for that fiscal year.
v) Additional recommendations of the
SPI.
e) Require the SPI to establish a committee of
members of the SPI's existing Early Learning and
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Educational Support Stakeholder Group to assist
in the development of the plan. Staff recommends
this amendment be modified to require the SPI to
consult with members of the existing stakeholder
group identified below.
f) Require the committee to include, at a
minimum, representatives from Title 5 centers,
Alternative Payment Programs, Resource and
Referral programs, family child care provider
unions, and parents. Staff recommends this
amendment be modified to require the SPI to
consult with these members of the existing
stakeholder group.
g) Require the SPI, in consultation with the
committee, to develop a timeline and
implementation plan for the single reimbursement
rate structure including a plan and process for
budget and legislative approval. Staff
recommends this amendment be modified to require
the SPI to instead provide recommendations for a
timeline and implementation plan.
5) Adjusting the rate structure . This bill requires the
SPI to review the plan that establishes the standards
and assigned reimbursement rates, and make
recommendations for a single reimbursement system for
both Title 22 and Title 5 providers that is based on
actual current costs based on the most recent RMR
survey. This bill does not allow the SPI to change
the rate structure or adjust reimbursement rates.
This bill requires the SPI to make recommendations,
rather than develop a new plan, for a rate structure
that merges both the RMR and SRR into one
reimbursement system. The goal is to simplify the
structure while preserving the differentiation between
Title 22 and Title 5 rates to reflect the different
quality of the programs. Implementation of the SPI's
recommendations would be incumbent upon the
Legislature and Governor.
6) Fiscal impact . According to the Assembly
Appropriations Committee, the current version of this
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bill would impose unknown administrative costs to the
California Department of Education, likely in the
range of $60,000 to $100,000 to review reimbursement
rates and make recommendations.
7) Related legislation . SB 1123 (Liu) makes numerous
substantial changes to Title 5 child care programs,
including recasting and revising child care services
for children ages 0-3 as "Strong Start" services and
requires all child care programs to employ at least
one teacher per classroom by July 1, 2019. SB 1123 is
scheduled to be heard in the Assembly Education
Committee on June 25.
8) Prior legislation . ACR 45 (Weber, Chapter 75, 2013)
urges the California State Legislature and the
Governor to restore budget funding to early care and
education programs and to support efforts to fund and
implement the Quality Rating and Improvement System
and other programs that support early care and
education.
AB 2286 (Bonilla, 2012) would have increased the
infant/toddler rates. AB 2286 was held in the
Assembly Appropriations Committee.
SUPPORT
California Alternative Payment Program
California Association of Urban League Executives
California Child Care Resource and Referral Network
California Child Development Administrators Association
Child Care Alliance of Los Angeles
Child Care Resource Center
Compton Unified School District
Greater Sacramento Urban League
Los Angeles County Education Foundation
Los Angeles County Office of Education
OPPOSITION
None on file.
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