Bill Text: CA AB233 | 2015-2016 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Child care and development services: alternative payment programs: reimbursement rates.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2016-02-01 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB233 Detail]

Download: California-2015-AB233-Introduced.html

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BILL NUMBER: AB 233	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Lopez

                        FEBRUARY 4, 2015

   An act to amend Sections 8220, 8221.5, 8222, 8227.3, 8261, 8263,
8265, 8269, 8273, and 8385 of, to amend the heading of Article 16.5
(commencing with Section 8385) of Chapter 2 of Part 6 of Division 1
of Title 1 of, and to repeal Section 8225 of, the Education Code,
relating to child care.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 233, as introduced, Lopez. Child care and development services:
alternative payment programs: reimbursement rates.
   The Child Care and Development Services Act has a purpose of
providing a comprehensive, coordinated, and cost-effective system of
child care and development services for children from infancy to 13
years of age and their parents, including a full range of
supervision, health, and support services through full- and part-time
programs. The act requires the State Department of Education to
contract with local contracting agencies for alternative payment
programs that are intended to allow for maximum parental choice in
child care. The act, to provide maximum parental choice, authorizes
alternative payment programs to include certain things, including a
subsidy that follows the family from one provider to another, as
provided.
   This bill would, to provide maximum parental choice and access,
authorize alternative payment programs to also include an eligibility
determination process of not less than once every 12 months.
   The act requires certain child care providers to submit to the
alternative payment program a monthly attendance record or invoice,
as provided, and requires the record or invoice to be maintained by
the child care provider in the unaltered original form in which it
was created. The act requires the alternative payment program to
reimburse child care providers based on specified criteria, including
based on hours of service. The act prohibits contractors from being
required to track absences.
   This bill would delete the requirement that the child care
provider maintain the record or invoice in the unaltered original
form in which it was created. The bill would delete the requirement
that alternative payment programs reimburse child care providers
based on the specified criteria. The bill would delete the
prohibition on contractors from being required to track absences.
   The act requires an alternative payment program to reimburse a
licensed child care provider for child care of a subsidized child
based on the rate charged by the provider to nonsubsidized families,
if any, for the same services, or the rates established by the
providers for prospective nonsubsidized families. The act requires a
licensed child care provider to submit to the alternative payment
program a copy of the provider's rate sheet listing the rate charged,
among other things.
   This bill would instead require an alternative payment program to
reimburse a licensed child care provider for child care of a
subsidized child based on the rate charged by the provider to
nonsubsidized families. The bill would delete the requirement for the
licensed child care provider to submit to the alternative payment
program a copy of the provider's rate sheet, among other things.
   The act requires an alternative payment program to verify provider
rates no less frequently than once a year, as provided, and requires
the department to develop regulations for addressing discrepancies
in provider rate levels identified through this verification process.

   This bill would delete these requirements and would require an
alternative payment program to develop a rate verification process.
   The act requires, when making referrals, every agency operating
both a direct service program and an alternative payment program to
provide at least 4 referrals, as provided, to a family.
   This bill would delete this requirement.
   The act authorizes alternative payment programs and providers
operating or providing services to maintain records in electronic
format only if the original documents were created in electronic
format.
   This bill would authorize alternative payment programs and
providers to maintain records in electronic format regardless of
whether they were created in electronic format. The bill would
require alternative payment programs to create and maintain specified
records, including parental job verification records.
   The act requires the Superintendent of Public Instruction to adopt
rules and regulations that do certain things, including provide for
a contract monitoring system, specify adequate standards of agency
performance, set forth standards for department site visits to
contracting agencies, and authorize the department to develop a
process that requires every contracting agency to recompete for
continued funding no less frequently than every 5 years.
   This bill would delete the requirement that the Superintendent
adopt rules and regulations relating to the above provisions.
   The act provides that a family enrolled in a state or federally
funded child care and development program whose services would
otherwise be terminated, as provided, may continue to receive child
development services, as provided.
   This bill would instead require that a family enrolled in a state
or federally funded child care and development program to be
considered eligible for services for 12 months from time of initial,
or annual, eligibility determination.
   Existing law provides that, if the basis of need as stated on the
application for services is seeking employment, the parent's period
of eligibility for child care and development services is limited to
60 working days during the contract period. The act authorizes the
Superintendent to extend this period for an additional 60 working
days, as provided.
   This bill would delete the Superintendent's authority to make this
extension.
   The act requires the Superintendent to implement a plan that,
among other things, establishes reasonable standards and assigned
reimbursement rates, as provided, and requires the Superintendent to
confer with applicant agencies when establishing the standards and
rates.
   This bill would require the applicant agencies to establish, as
applicable, full-time, part-time, and hourly rates and to establish
reimbursement rates that best meet the needs of the community, as
provided.
   The act authorizes the Superintendent to establish regulations
concerning conditions of service and hours of enrollment for children
in the programs.
   This bill would delete this authorization, among other changes.
   The act requires the Superintendent to adopt rules, regulations,
and guidelines to facilitate the funding and reimbursement
procedures.
   This bill would require the Superintendent to adopt these rules,
regulations, and guidelines to facilitate the funding and
reimbursement procedures for contractors operating centers, family
child care homes, or both, as well as for contractors who do not
operate a center, family child care home, or both. The bill would
require the contractors who do not operate a center, family child
care home, or both to establish a specified rate reimbursement
structure to meet a certified need for child care, as provided.
   The act requires the Superintendent to establish a fee schedule
for families using preschool and child care and development services.

   This bill would require the amount of the family fee to be
deducted from the reimbursement to a provider.
   The act requires the department, in consultation with the State
Department of Social Services and with fraud investigation experts,
as provided, to perform an error rate study to estimate the
percentage of errors relating to child care and development services.
The act requires the department to develop recommendations for the
prevention and elimination of child care fraud and programmatic
errors and the identification and collection of child care
overpayments. The act requires the department to report its
recommendations to the respective policy and fiscal committees of the
Legislature by April 1, 2005.
   This bill would delete these requirements.
   This bill would also make conforming and nonsubtantive changes.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 8220 of the Education Code is amended to read:
   8220.   (a)    Upon the approval of the State
Department of Education, funds appropriated for the purposes of this
chapter may be used for alternative payment programs to allow for
maximum parental choice. Various methods of reimbursement for
parental costs for child care may be utilized. All payment
arrangements shall conform to the eligibility criteria and the parent
fee schedule established pursuant to Sections 8263 and 8265.

   To 
    (b)     To  provide for maximum
parental choice  and access  , alternative payment programs
may include the following: 
   (1) An eligibility determination process of not less than once
every 12 months.  
   (a) 
    (2)  A subsidy that follows the family from one provider
to another within a given alternative payment program. 
   (b) 
    (3)  Choices,  whenever   when
 possible, among hours of service including before and after
school, evenings, weekends, and split shifts. 
   (c)
    (4)  Child care and development services according to
parental choice, including use of family day care homes, general
center based programs, and other state-funded programs to the extent
that those programs exist in the general service area and are in
conformity with the purposes and applicable laws for which those
programs were established, but excluding state preschool programs.
  SEC. 2.  Section 8221.5 of the Education Code is amended to read:
   8221.5.  (a) Child care providers authorized to provide services
pursuant to this article shall submit to the alternative payment
program a monthly attendance record or invoice for each child who
received services that, at a minimum, documents the dates and actual
times care was provided each day, including the time the child
entered and the time the child left care each day. The information
shall be documented on a daily basis.
   (b) The monthly attendance record or invoice shall, at a minimum,
be signed by the parent or guardian of the child receiving services
and the child care provider once per month to attest that the child's
attendance is accurately reflected. The verification of attendance
shall be made by signature at the end of each month of care and under
penalty of perjury by both the parent or guardian of the child
receiving services and the child care provider.
   (c) The monthly attendance record or invoice shall be maintained
by the child care provider  in the unaltered original format
in which it was created, which may be in paper form or electronic
format  .
   (d) The alternative payment program shall accept the monthly
attendance record or invoice as documentation of the hours of care
provided if the attendance record or invoice includes adequate
information documented on a daily basis, including, at a minimum, the
dates and actual times care was provided each day, including the
time the child entered and the time the child left care each day.
 The alternative payment program shall reimburse child care
providers based upon the following criteria:  
   (1) The hours of service provided that are broadly consistent with
certified hours of need.  
   (2) For families with variable schedules, the actual days and
hours of attendance, up to the maximum certified hours. 

   (3) For license-exempt providers that provide part-time services,
the actual days and hours of attendance, up to the maximum certified
hours.  
   (e) For purposes of reimbursement to providers through an
alternative payment program, contractors shall not be required to
track absences.  
   (f) 
    (e)  For purposes of this section, a monthly attendance
record or invoice is defined as documentation that includes, at a
minimum, the name of the child receiving services, the dates and
actual times care was provided each day, including the time the child
entered and the time the child left care each day, that is signed
under penalty of perjury by both the parent or guardian and the child
care provider, attesting that the information provided is accurate.

   (g) This section shall become operative on July 1, 2014. 

  SEC. 3.  Section 8222 of the Education Code is amended to read:
   8222.  (a) Payments made by alternative payment programs shall not
exceed the applicable market rate ceiling. Alternative payment
programs may expend more than the standard reimbursement rate for a
particular child. However, the aggregate payments for services
purchased by the agency during the contract year shall not exceed the
assigned reimbursable amount as established by the contract for the
year.  No   An  agency  may
  shall not  make payments in excess of the rate
charged to full-cost families. This section does not preclude
alternative payment programs from using the average daily enrollment
adjustment factor for children with exceptional needs as provided in
Section 8265.5.
   (b) Alternative payment programs shall reimburse licensed child
care providers in accordance with a biennial market rate survey
pursuant to Section 8447, at a rate not to exceed the ceilings
established pursuant to Section 8357.
   (c) An alternative payment program shall reimburse a licensed
provider for child care of a subsidized child based on the rate
charged by the provider to nonsubsidized  families, if any,
for the same services, or the rates established by the provider for
prospective nonsubsidized families. A licensed child care provider
shall submit to the alternative payment program a copy of the
provider's rate sheet listing the rates charged, and the provider's
discount or scholarship policies, if any, along with a statement
signed by the provider confirming that the rates charged for a
subsidized child are equal to or less than the rates charged for a
nonsubsidized child.   families.  
   (d) An alternative payment program shall maintain a copy of the
rate sheet and the confirmation statement.  
   (e) 
    (d)  A licensed child care provider shall submit to the
local resource and referral agency a copy of the provider's rate
sheet listing rates charged, and the provider's discount or
scholarship policies, if any, and shall self-certify that the
information is correct. 
   (f) Each 
    (e)    A  licensed child care provider
may alter rate levels for subsidized children once per year and
shall provide the alternative payment program and resource and
referral agency with the updated information pursuant to subdivisions
(c) and (e), to reflect any changes. 
   (g) 
    (f)  A licensed child care provider shall post in a
prominent location adjacent to the provider's license at the child
care facility the provider's rates and discounts or scholarship
policies, if any. 
   (h) An alternative payment program shall verify provider rates no
less frequently than once a year by randomly selecting 10 percent of
licensed child care providers serving subsidized families. The
purpose of this verification process is to confirm that rates
reported to the alternative payment programs reasonably correspond to
those reported to the resource and referral agency and the rates
actually charged to nonsubsidized families for equivalent levels of
services. It is the intent of the Legislature that the privacy of
nonsubsidized families shall be protected in implementing this
subdivision.  
   (i) The department shall develop regulations for addressing
discrepancies in the provider rate levels identified through the rate
verification process in subdivision (h).  
   (g) An alternative payment program shall develop a rate
verification process. 
  SEC. 4.  Section 8225 of the Education Code is repealed. 
   8225.  When making referrals, every agency operating both a direct
service program and an alternative payment program shall provide at
least four referrals, at least one of which shall be a provider over
which the agency has no fiscal or operational control, as well as
information to a family on the family's ability to choose a license
exempt provider. 
  SEC. 5.  Section 8227.3 of the Education Code is amended to read:
   8227.3.  (a) Alternative payment programs and providers operating
or providing services pursuant to this article may maintain records
in electronic  format only if the original documents were
created in electronic format. Records that may be created in
electronic format and maintained electronically include, but are not
limited to, the following:   format.  
   (1) Child immunization records.  
   (2) Parental job verification records.  
   (3) Parent income verification. 
   (4) Parent school or training verifications and attendance
records.  
   (b) Alternative payment programs shall create and maintain the
following records:  
   (1) Parental job verification records.  
   (2) Parent income verification.  
   (3) Parent school or training verifications and attendance
records.  
   (b) 
    (c)  Pursuant to Section 33421, the original records
shall be retained by each contractor for at least five years, or,
where an audit has been requested by a state agency, until the date
the audit is resolved, whichever is longer. 
   (c) Nothing in this 
    (d)     This  section 
requires   does not require  an alternative payment
program or provider to create records electronically.
  SEC. 6.  Section 8261 of the Education Code is amended to read:
   8261.  (a) The Superintendent shall adopt rules and regulations
pursuant to this chapter. The rules and regulations shall include,
but not be limited to, provisions  which   that
 do all of the following:
   (1) Provide clear guidelines for the selection of agencies when
child development contracts are let, including, but not limited to,
specification that  any   an  agency
headquartered in the proposed service area on January 1, 1985, will
be given priority for a new contract in that area, unless the
department makes a written determination that (A) the agency is not
able to deliver the level of services specified in the request for
proposal, or (B) the department has notified the agency that it is
not in compliance with the terms of its contract. 
   (2) Provide for a contract monitoring system to ensure that
agencies expend funds received pursuant to this chapter in accordance
with the provisions of their contracts.  
   (3) Specify adequate standards of agency performance. 

   (4) 
    (2)  Establish reporting requirements for service
reports, including provisions for varying the frequency with which
these reports are to be submitted on the basis of agency performance.

   (5) 
    (3)  Specify standards for withholding payments to
agencies that fail to submit required fiscal reports. 
   (6) Set forth standards for department site visits to contracting
agencies, including, but not limited to, specification as to the
purpose of the visits, the personnel that will perform these visits,
and the frequency of these visits which shall be as frequently as
staff and budget resources permit. By September 1 of each year, the
department shall report to the Senate Education, Senate Health and
Human Services, Assembly Education, and Assembly Human Services
Committees on the number of visits conducted during the previous
fiscal year pursuant to this paragraph.  
   (7) Authorize the department to develop a process that requires
every contracting agency to recompete for continued funding no less
frequently than every five years. 
   (b) The Superintendent shall consult with the State Department of
Social Services with respect to rules and regulations adopted
relative to the disbursal of federal funds under Title XX of the
federal Social Security Act.
   (c) For purposes of expediting the implementation of state or
federal legislation to expand child care services, the Superintendent
may waive (1) the regulations regarding the point qualifications
for, and the process and scoring of, interviews of contract
applicants pursuant to Section 18002 of Title 5 of the California
Code of Regulations, or (2) the time limitations for scheduling and
notification of appeal hearings and their results pursuant to Section
18003 of Title 5 of the California Code of Regulations. The
Superintendent shall ensure that the appeal hearings provided for in
Section 18003 of Title 5 of the California Code of Regulations are
conducted in a timely manner.
   (d) (1) Child care and development programs operated under
contract from funds made available pursuant to the federal Child Care
and Development Fund, shall be administered according to Division 19
(commencing with Section 17906) of Chapter 1 of Title 5 of the
California Code of Regulations, unless provisions of these
regulations conflict with federal regulations. If state and federal
regulations conflict, the federal regulations shall apply unless a
waiver of federal regulations is authorized.
   (2) For purposes of this section, "Child Care and Development Fund"
has the same meaning as in Section 98.2 of Title 45 of the Code of
Federal Regulations.
  SEC. 7.  Section 8263 of the Education Code is amended to read:
   8263.  (a) The Superintendent shall adopt rules and regulations on
eligibility, enrollment, and priority of services needed to
implement this chapter. In order to be eligible for federal and state
subsidized child development services, families shall meet at least
one requirement in each of the following areas:
   (1) A family is (A) a current aid recipient, (B) income eligible,
(C) homeless, or (D) one whose children are recipients of protective
services, or whose children have been identified as being abused,
neglected, or exploited, or at risk of being abused, neglected, or
exploited.
   (2) A family needs the child care services (A) because the child
is identified by a legal, medical, or social services agency, or
emergency shelter as (i) a recipient of protective services or (ii)
being neglected, abused, or exploited, or at risk of neglect, abuse,
or exploitation, or (B) because the parents are (i) engaged in
vocational training leading directly to a recognized trade,
paraprofession, or profession, (ii) employed or seeking employment,
(iii) seeking permanent housing for family stability, or (iv)
incapacitated.
   (b) Except as provided in Article 15.5 (commencing with Section
8350), priority for federal and state subsidized child development
services is as follows:
   (1) (A) First priority shall be given to neglected or abused
children who are recipients of child protective services, or children
who are at risk of being neglected or abused, upon written referral
from a legal, medical, or social services agency. If an agency is
unable to enroll a child in the first priority category, the agency
shall refer the family to local resource and referral services to
locate services for the child.
   (B) A family who is receiving child care on the basis of being a
child at risk of abuse, neglect, or exploitation, as defined in
subdivision (k) of Section 8208, is eligible to receive services
pursuant to subparagraph (A) for up to three months, unless the
family becomes eligible pursuant to subparagraph (C).
   (C) A family may receive child care services for up to 12 months
on the basis of a certification by the county child welfare agency
that child care services continue to be necessary or, if the child is
receiving child protective services during that period of time, and
the family requires child care and remains otherwise eligible. This
time limit does not apply if the family's child care referral is
recertified by the county child welfare agency.
   (2) Second priority shall be given equally to eligible families,
regardless of the number of parents in the home, who are income
eligible. Within this priority, families with the lowest gross
monthly income in relation to family size, as determined by a
schedule adopted by the Superintendent, shall be admitted first. If
two or more families are in the same priority in relation to income,
the family that has a child with exceptional needs shall be admitted
first. If there is no family of the same priority with a child with
exceptional needs, the same priority family that has been on the
waiting list for the longest time shall be admitted first. For
purposes of determining order of admission, the grants of public
assistance recipients shall be counted as income.
   (3) The Superintendent shall set criteria for, and may grant
specific waivers of, the priorities established in this subdivision
for agencies that wish to serve specific populations, including
children with exceptional needs or children of prisoners. These new
waivers shall not include proposals to avoid appropriate fee
schedules or admit ineligible families, but may include proposals to
accept members of special populations in other than strict income
order, as long as appropriate fees are paid.
   (c) Notwithstanding any other law, in order to promote continuity
of services, a family enrolled in a state or federally funded child
care and development program  whose services would otherwise
be terminated because the family no longer meets the program income,
eligibility, or need criteria may continue to receive child
development services in another state or federally funded child care
and development program if the contractor is able to transfer the
family's enrollment to another program for which the family is
eligible before the date of termination of services or to exchange
the family's existing enrollment with the enrollment of a family in
another program, provided that both families satisfy the eligibility
requirements for the program in which they are being enrolled
  shall be considered eligible for services for 12
months from time of initial, or annual, eligibility determination
. The transfer of enrollment may be to another program within
the same administrative agency or to another agency that administers
state or federally funded child care and development programs.

   (d) In order to promote continuity of services, the Superintendent
may extend the 60-working-day period specified in subdivision (a) of
Section 18086.5 of Title 5 of the California Code of Regulations for
an additional 60 working days if he or she determines that
opportunities for employment have diminished to the degree that one
or both parents cannot reasonably be expected to find employment
within 60 working days and granting the extension is in the public
interest. The scope of extensions granted pursuant to this
subdivision shall be limited to the necessary geographic areas and
affected persons, which shall be described in the Superintendent's
order granting the extension. It is the intent of the Legislature
that extensions granted pursuant to this subdivision improve services
in areas with high unemployment rates and areas with
disproportionately high numbers of seasonal agricultural jobs.
 
   (e) 
    (d)  A physical examination and evaluation, including
age-appropriate immunization, shall be required before, or within six
weeks of, enrollment. A standard, rule, or regulation shall not
require medical examination or immunization for admission to a child
care and development program of a child whose parent or guardian
files a letter with the governing board of the child care and
development program stating that the medical examination or
immunization is contrary to his or her religious beliefs, or provide
for the exclusion of a child from the program because of a parent or
guardian having filed the letter. However, if there is good cause to
believe that a child is suffering from a recognized contagious or
infectious disease, the child shall be temporarily excluded from the
program until the governing board of the child care and development
program is satisfied that the child is not suffering from that
contagious or infectious disease. 
   (f) 
    (e)  Regulations formulated and promulgated pursuant to
this section shall include the recommendations of the State
Department of Health Care Services relative to health care screening
and the provision of health care services. The Superintendent shall
seek the advice and assistance of these health authorities in
situations where service under this chapter includes or requires care
of children who are ill or children with exceptional needs. 

   (g) 
    (f)  The Superintendent shall establish guidelines for
the collection of employer-sponsored child care benefit payments from
a parent whose child receives subsidized child care and development
services. These guidelines shall provide for the collection of the
full amount of the benefit payment, but not to exceed the actual cost
of child care and development services provided, notwithstanding the
applicable fee based on the fee schedule. 
   (h) 
    (g)  The Superintendent shall establish guidelines
according to which the director or a duly authorized representative
of the child care and development program will certify children as
eligible for state reimbursement pursuant to this section. 
   (i) 
    (h)  Public funds shall not be paid directly or
indirectly to an agency that does not pay at least the minimum wage
to each of its employees.
  SEC. 8.  Section 8265 of the Education Code is amended to read:
   8265.  (a) The Superintendent shall 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.
   (1) Parent fees shall be used to pay reasonable and necessary
costs for providing additional services.
   (2) When establishing standards and assigned reimbursement rates,
the Superintendent shall confer with applicant agencies. 
Applicant agencies shall comply with both of the following: 

   (A) Applicant agencies shall establish, as applicable, full-time,
part-time, and hourly rates.  
   (B) Applicant agencies shall establish reimbursement rates that
best meet the needs of the community, that are consistent with
certified hour of care, and that do not exceed market rate ceilings.

   (3) The reimbursement system, including standards and rates, shall
be submitted to the Joint Legislative Budget Committee. 
   (4) The Superintendent may establish any regulations he or she
deems advisable concerning conditions of service and hours of
enrollment for children in the programs. 
   (b) The standard reimbursement rate shall be nine thousand
twenty-four dollars and seventy-five cents ($9,024.75) per unit of
average daily enrollment for a 250-day year, and commencing with the
2015-16 fiscal year, shall be increased by the cost-of-living
adjustment granted by the Legislature annually pursuant to Section
42238.15. 
   (c) The plan shall require agencies having an assigned
reimbursement rate above the current year standard reimbursement rate
to reduce costs on an incremental basis to achieve the standard
reimbursement rate.  
   (d) 
    (   c)  The plan shall provide for adjusting
reimbursement on a case-by-case basis, in order to maintain service
levels for agencies currently at a rate less than the standard
reimbursement rate. Assigned reimbursement rates shall be increased
only on the basis of one or more of the following:
   (1) Loss of program resources from other sources.
   (2) Need of an agency to pay the same child care rates as those
prevailing in the local community.
   (3) Increased costs directly attributable to new or different
regulations.
   (4)  (A)    Documented increased costs necessary
to maintain the prior year's level of service and ensure the
continuation of threatened programs. 
   Child 
    (B)     Child  care agencies funded at
the lowest rates shall be given first priority for increases.

   (e) 
    (   d)  The plan shall provide for expansion of
child development programs at no more than the standard
reimbursement rate for that fiscal year. 
   (f) 
    (e)  The Superintendent may reduce the percentage of
reduction for a public agency that satisfies any of the following:
   (1) Serves more than 400 children.
   (2) Has in effect a collective bargaining agreement.
   (3) Has other extenuating circumstances that apply, as determined
by the Superintendent.
  SEC. 9.  Section 8269 of the Education Code is amended to read:
   8269.   (a)    The Superintendent  of
Public Instruction  shall adopt rules, regulations, and
guidelines to facilitate the funding and reimbursement procedures
 , for contractors operating centers, family child care homes, or
both,  required by this chapter. 
   (b) (1) The Superintendent shall adopt rules, regulations, and
guidelines to facilitate the funding and reimbursement procedures for
contractors that do not operate a center, a family child care home,
or both.  
   (2) Contractors not operating a center, a family child care home,
or both, shall establish, as applicable, a full-time, part-time, and
hourly rate reimbursement structure to meet a certified need for
child care.  
   (3) Reimbursement to the provider shall be the amount the provider
charges unsubsidized families for the same hours of child care, or
the maximum subsidy amount. 
  SEC. 10.  Section 8273 of the Education Code is amended to read:
   8273.  (a) The Superintendent shall establish a fee schedule for
families using preschool and child care and development services
pursuant to this chapter, including families receiving services
pursuant to paragraph (1) of subdivision (b) of Section 8263. It is
the intent of the Legislature that the new fee schedule shall be
simple and easy to implement.
   (b) The family fee schedule shall retain a flat monthly fee per
family. The schedule shall differentiate between fees for part-time
care and full-time care. 
             (c) The amount of a family fee shall be deducted from
the reimbursement to a provider.  
   (c) 
    (   d)  Using the most recently approved family
fee schedule pursuant to subdivision (f) of Section 8447, families
shall be assessed a flat monthly fee based on income, certified
family need for full-time or part-time care services, and enrollment,
and shall not be based on actual attendance.  No 
 A  recalculation of a family fee shall  not  occur
if attendance varies from enrollment unless a change in need for
care is assessed. 
   (d) 
    (e)  The Superintendent shall design the new family fee
schedule based on the state median income data that was in use for
the 2007-08 fiscal year, adjusted for family size. The revised family
fee schedule shall begin at income levels at which families
currently begin paying fees. The revised fees shall not exceed 10
percent of the family's monthly income. The Superintendent shall
first submit the adjusted fee schedule to the Department of Finance
for approval. 
   (e) 
    (f)  The income of a recipient of federal supplemental
security income benefits pursuant to Title XVI of the federal Social
Security Act (42 U.S.C. Sec. 1381 et seq.) and state supplemental
program benefits pursuant to Title XVI of the federal Social Security
Act (42 U.S.C. Sec. 1381 et seq.) and Chapter 3 (commencing with
Section 12000) of Part 3 of Division 9 of the Welfare and
Institutions Code shall not be included in total countable income for
purposes of determining the amount of the family fee. 
   (f) 
    (g)  Family fees shall be assessed at initial enrollment
and reassessed at update of certification or recertification.

   (g) 
    (h)  It is the intent of the Legislature that the new
family fees shall be cost neutral to the state and generate roughly
the same amount of revenue as was generated under the previous family
fee schedule.
  SEC. 11.  The heading of Article 16.5 (commencing with Section
8385) of Chapter 2 of Part 6 of Division 1 of Title 1 of the
Education Code is amended to read:

      Article 16.5.   Fraud And Overpayments  
Best Practices 


  SEC. 12.  Section 8385 of the Education Code is amended to read:

   8385.  (a) (1) The department, in consultation with the State
Department of Social Services, county fraud investigators, and other
fraud investigation experts, shall perform an error rate study to
estimate the percentage of errors, including, but not limited to,
overpayments and fraud, in determinations of eligibility, the need
for child care pursuant to paragraph (2) of subdivision (a) of
Section 8263, family fees, and reimbursement payments to child care
providers, including, but not limited to, authorized hours of care
and the use of adjustment factors, in programs operated pursuant to
Article 3 (commencing with Section 8220) and Article 15.5 (commencing
with Section 8350). The study shall include, but not be limited to,
an analysis of a statistically valid, random, sample of family files
and reimbursement payments that have been processed over a specified
time. Each payment from the sample shall be audited to determine
whether it was correctly paid or paid in error. Those payments
identified as being paid in error shall be classified based on the
type of the error that occurred, including, but not limited to,
administrative errors, overpayment caused by providers, overpayments
caused by parents, provider fraud, and beneficiary fraud.
   (2) In conducting the compliance reviews required by regulations
of the Superintendent pursuant to Section 8261 for programs operated
pursuant to Article 8 (commencing with Section 8240), the department
shall survey a statistically valid sample of files for the program
and identify and report the errors, by category, resulting from that
survey.
   (3) The department shall report in writing to the Governor, the
Chair of the Joint Legislative Budget Committee, the chairs of the
fiscal committees for both houses of the Legislature, and the
Department of Finance, information regarding the error rate study by
April 1, 2005. The report shall include, but not be limited to, all
of the following:
   (A) The results of the error rate study.
   (B) Fraud and overpayment reduction targets that have been
established based on the data from the error rate study.
   (C) The timeframe for achieving the targets.
   (D) Recommendations developed pursuant to subdivision (b).
   (b) The department shall develop recommendations for the
prevention and elimination of child care fraud and programmatic
errors and the identification and collection of child care
overpayments. The recommendations shall include, but not be limited
to:
   (1) Precise definitions of what constitutes child care fraud and
overpayments.
   (2) A consistent statewide system to identify fraud and
overpayments.
   (3) A consistent statewide system of standards for fraud
prevention, intervention, and overpayment collection that is applied
to all child care program provider categories.
   (4) Statewide fraud and overpayment measures that will be reported
annually by the department.
   (5) Standards for independent financial compliance audits,
including provisions to ensure that small programs are not unduly
burdened.
   (6) Consistent statewide mechanisms for due process for parents.
   (7) Consistent statewide mechanisms for dispute resolution for
child care programs and providers.
   (8) Assessment of the cost-effectiveness of prevention and
intervention activities.
   (9) Equitable treatment of all consumers of subsidized child care.

   (10) Consideration of the need to minimize new barriers to family
access to child care.
   (11) A survey of best practices from both California agencies and
providers and from other states.
   (c) In developing its recommendations, the department shall place
priority on prevention of fraud and overpayments, and shall consider
existing best practices for doing so. The department shall make any
identified best practices available on its Web site by March 1, 2005.

   (d) The department shall consult with representatives of the State
Department of Social Services, the Legislative Analyst's Office, the
Department of Finance, staff from the appropriate policy and fiscal
committees of each house of the Legislature, and other interested
parties including, but not limited to, child care consumers and
providers, representatives from county welfare departments, district
attorneys, county special investigative units, and legal advocacy
organizations representing consumers in developing these
recommendations.
   (e) The department shall report its recommendations directly to
the respective policy and fiscal committees of the Legislature by
April 1, 2005.


   (f) 
    8385.   On or after July 1, 2005, all child care
contracts entered into by the  State Department of Education
  department for means-tested child care programs,
including, but not limited to, the programs described in Article 3
(commencing with Section 8220), Article 8 (commencing with Section
8240), and Article 15.5 (commencing with Section 8350), shall require
implementation of best practices  identified pursuant to
subdivision (c)  .