Amended  IN  Assembly  March 21, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 596

Introduced by Assembly Member Reyes
(Principal coauthor: Senator Limón)

February 09, 2023

An act to add Section 10211.6 to the Welfare and Institutions Code, relating to early childhood. An act to amend Section 8252 of, and to amend, repeal, and add Section 8242 of, the Education Code, and to amend Section 10290 of, and to amend, repeal, and add Section 10280 of, the Welfare and Institutions Code, relating to early learning and care.


LEGISLATIVE COUNSEL'S DIGEST


AB 596, as amended, Reyes. Early childhood: childcare and education. Early learning and care: rate reform.
Existing law, the Early Education Act, among other things, requires the Superintendent of Public Instruction to administer all California state preschool programs, including, but not limited to, part-day and full-day age and developmentally appropriate programs for 3- and 4-year-old children. Existing law, the Child Care and Development Services Act, administered by the State Department of Social Services, establishes a system of child care and development services for children up to 13 years of age. Existing law requires the department, in collaboration with the State Department of Education, to implement a reimbursement system plan that establishes reasonable standards and assigned reimbursement rates, as specified. Existing law requires the state and Child Care Providers United - California to establish a Joint Labor Management Committee to develop recommendations for a single reimbursement rate structure that has specified characteristics, and requires the Joint Labor Management Committee to present those recommendations to the Department of Finance no later than November 15, 2022. Existing law also requires the department, in consultation with the State Department of Education, to convene a working group to assess the existing quality standards for childcare and development and preschool programs and the methodology for establishing reimbursement rates for those programs, and requires the working group to provide recommendations relating to specified topics to a specified Joint Labor Management Committee, the Department of Finance, and the Joint Legislative Budget Committee no later than August 15, 2022.
This bill would require the State Department of Social Services, in collaboration with the State Department of Education, to develop an alternative methodology for calculating subsidy rates for child care and development services and California state preschool program services that build upon and align with the recommendations of the working group and Joint Labor Management Committee, and that uses a cost estimation model, as specified. The bill would require the department to develop a transition methodology to implement the alternative methodology, and to seek preapproval from the United States Department of Health and Human Services to amend the state’s current Child Care and Development Fund State Plan to change its current methodology for determining childcare and development and preschool reimbursement rates to the alternative methodology. The bill would require the State Department of Social Services and the State Department of Education to implement the alternative methodology upon notice by the State Department of Social Services to the Legislature that it has adopted the alternative methodology.
Existing law requires the State Department of Social Services, in consultation with the State Department of Education, to establish a fee schedule for families using preschool and child care and development services and requires families who utilize those services to be assessed a family fee that is based on income, certified family need for full-time or part-time care services, and enrollment. Existing law prohibits those family fees from exceeding 10% of the family’s monthly income and prohibits family fees from being collected for the 2022–23 fiscal year.
The bill would require the State Department of Social Services, in consultation with the State Department of Education, to develop an equitable sliding scale for the payment of family fees, and would suspend the collection of family fees until the new equitable sliding scale is implemented.

Existing law requires the State Department of Social Services to administer the federal Child Care and Development Fund, and requires the department to develop an expenditure plan that sets forth the final priorities for childcare, as required by federal law. Existing law also requires the department, in consultation with the State Department of Education, to convene a working group to assess the existing quality standards for childcare and development and preschool programs and the methodology for establishing reimbursement rates for those programs, and requires the working group to provide recommendations relating to specified topics to a specified Joint Labor Management Committee, the Department of Finance, and the Joint Legislative Budget Committee no later than August 15, 2022.

This bill would require the department to apply to the United States Department of Health and Human Services to amend the state’s current Child Care and Development Fund State Plan to change its current methodology for determining childcare development and preschool reimbursement rates to an alternative methodology that is consistent with the recommendations of the above-mentioned working group.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares all of the following:
(a) The Legislature, through the passage of Assembly Bill 131 in 2021, required the State Department of Social Services, in consultation with the State Department of Education, to convene and create the Rate and Quality Workgroup to assess the methodology for establishing subsidy payment rates for childcare and development and preschool programs and to make related recommendations.
(b) The workgroup submitted two reports to the Legislature recommending that the state create a single subsidy payment rate structure that addresses quality standards for equity and accessibility while supporting positive learning and developmental outcomes for children.
(c) It is the intent of the Legislature that this act implements the recommendations of the workgroup to create a new subsidy payment rate structure for childcare and development and preschool programs.

SEC. 2.

 Section 8242 of the Education Code is amended to read:

8242.
 (a) The department, in collaboration with the State Department of Social Services, shall implement a reimbursement system 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) The department may establish any regulations deemed advisable concerning conditions of service and hours of enrollment for children in the programs.
(b) (1) (A) Commencing July 1, 2021, the standard reimbursement rate shall be twelve thousand nine hundred sixty-eight dollars ($12,968).
(B) Commencing July 1, 2021, the standard reimbursement rate for part-day California state preschool programs shall be five thousand six hundred twenty-one dollars ($5,621).
(2) Commencing in the 2022–23 fiscal year, the standard reimbursement rates described in paragraph (1) shall be increased by the cost-of-living adjustment granted by the Legislature annually pursuant to Section 42238.15.
(c) (1) Commencing January 1, 2022, contractors who, as of December 31, 2021, received the standard reimbursement rate established in this section shall be reimbursed at the greater of the following:
(A) The 75th percentile of the 2018 regional market rate survey.
(B) The contract per-child reimbursement amount as of December 31, 2021, as increased by the cost-of-living adjustment pursuant to paragraph (2) of subdivision (b).
(2) In accordance with federal requirements for Child Care Stabilization Grants appropriated pursuant to the federal American Rescue Plan Act of 2021 (Public Law 117-2), contractors shall provide information via a one-time application or survey in advance of receiving American Rescue Plan Act funds. The department shall specify the timeline and format in which this information shall be submitted, and the information shall include, but not be limited to, all of the following:
(A) Address, including ZIP Code.
(B) Race and ethnicity.
(C) Gender.
(D) Whether the provider is open and available to provide childcare services or closed due to the COVID-19 public health emergency.
(E) What types of federal relief funds have been received from the state.
(F) Use of federal relief funds received.
(G) Documentation that the provider met certifications as required by federal law.
(3) Rate increases shall be subject to federal usage limitations and federal and state program eligibility requirements.
(d) This section shall become inoperative on the date the department notifies the Legislature that the department has adopted the alternative methodology described in subdivision (d) of Section 10280 of the Welfare and Institutions Code, as amended by the act that added this subdivision, and, as of January 1 of the following year, is repealed.

SEC. 3.

 Section 8242 is added to the Education Code, to read:

8242.
 (a) The department, in collaboration with the State Department of Social Services, shall implement the alternative methodology for calculating subsidy payment rates for California state preschool program services provided under this chapter.
(b) This section shall become operative on the date the department notifies the Legislature that the department has adopted the alternative methodology described in Section 10280 of the Welfare and Institutions Code, as added by the act that added this section.

SEC. 4.

 Section 8252 of the Education Code is amended to read:

8252.
 (a) The Superintendent shall use the fee schedule developed in conjunction with the State Department of Social Services for families using full-day preschool services pursuant to this chapter, including families receiving services pursuant to subdivision (a) of Section 8211.
(b) Families shall be assessed a single flat monthly fee for all state subsidized early childhood services received, including California state preschool program services and services received through childcare and development programs administered by the State Department of Social Services, pursuant to Section 10290 of the Welfare and Institutions Code.
(c) 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.
(d) Family fees shall be assessed at initial enrollment and reassessed at recertification.
(e) Family fees shall be used by contractors to pay reasonable and necessary costs for providing additional services.
(f) 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.
(g) Notwithstanding any other provision of this article, family fees shall not be collected for the 2021–22 fiscal year pursuant to Section 263 of the act that added this subdivision.
(h) (1) Notwithstanding any other law, family fees shall not be collected for the 2022–23 fiscal year.
(2) Contractors shall reimburse providers operating within a family childcare home education network for the full amount of the certificate or voucher without deducting family fees.
(i) Notwithstanding any other law, family fees shall not be collected until the new equitable sliding scale is established and implemented pursuant to Section 10290 of the Welfare and Institutions Code.

SEC. 5.

 Section 10280 of the Welfare and Institutions Code is amended to read:

10280.
 (a) The department, in collaboration with the State Department of Education, shall implement a reimbursement system 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 department and the State Department of Education shall confer with applicant agencies.
(3) The reimbursement system, including standards and rates, shall be submitted to the Joint Legislative Budget Committee.
(4) The department may establish any regulations deemed advisable concerning conditions of service and hours of enrollment for children in the programs.
(b) Commencing July 1, 2021, the standard reimbursement rate shall be twelve thousand eight hundred eighty-eight dollars ($12,888) and, commencing with the 2022–23 fiscal year, shall be increased by the cost-of-living adjustment granted by the Legislature annually pursuant to Section 42238.15 of the Education Code.
(c) (1) Commencing January 1, 2022, contractors who, as of December 31, 2021, received the standard reimbursement rate established in this section shall be reimbursed at the greater of the following:
(A) The 75th percentile of the 2018 regional market rate survey.
(B) The contract per-child reimbursement amount as of December 31, 2021.
(2) In accordance with federal requirements for Child Care Stabilization Grants appropriated pursuant to the federal American Rescue Plan Act of 2021 (Public Law 117-2), contractors shall provide information via a one-time application or survey in advance of receiving American Rescue Plan Act funds. The department shall specify the timeline and format in which this information shall be submitted, and information shall include, but not be limited to, all of the following:
(A) Address, including ZIP Code.
(B) Race and ethnicity.
(C) Gender.
(D) Whether the provider is open and available to provide child care childcare services or closed due to the COVID-19 public health emergency.
(E) What types of federal relief funds have been received from the state.
(F) Use of federal relief funds received.
(G) Documentation that the provider met certifications as required by federal law.
(3) Rate increases shall be subject to federal usage limitations and federal and state program eligibility requirements.
(d) (1) The department, in collaboration with the State Department of Education, shall develop an alternative methodology for calculating subsidy payment rates for services provided under this part and California state preschool program services administered by the State Department of Education, in accordance with both of the following:
(A) The alternative methodology shall build on the recommendations of the working group established pursuant to Section 10280.2, and shall be aligned with the recommendations of the Joint Labor Management Committee established pursuant to Section 10280.2.
(B) The alternative methodology shall use a cost estimation model that includes all of the following:
(i) Program models will meet the current statutory and regulatory requirements for each program.
(ii) Staff salaries and benefits.
(iii) Training and professional development.
(iv) Curricula and supplies.
(v) Group size and ratios.
(vi) Enrollment levels.
(vii) Facilities and other costs.
(viii) Family engagement.
(2) The department shall develop a transition methodology to implement the alternative methodology by increasing the various rates from their current level to the alternative methodology level over time as funds are appropriated for these purposes in the annual Budget Act. Commencing in the 2027–28 fiscal year, the department shall fully implement the alternative methodology.
(3) Any funding provided in the Budget Act of 2023 to increase reimbursement rates shall be distributed using the transition methodology described in paragraph (2) until the alternative methodology described in paragraph (1) is adopted.
(4) Funding and subsidy payments shall be based on enrollment of certified children with the contract rates set using the alternative methodology.
(5) The department shall review and update the alternative methodology every three years.
(6) The department shall seek preapproval from the United States Department of Health and Human Services to amend the state’s current Child Care and Development Fund State Plan to change its current methodology for determining childcare and development and preschool subsidy payment rates to an alternative methodology, as described in this section.
(e) This section shall become inoperative on the date the department notifies the Legislature that the department has adopted the alternative methodology described in subdivision (d), and, as of January 1 of the following year, is repealed.

SEC. 6.

 Section 10280 is added to the Welfare and Institutions Code, to read:

10280.
 (a) The department, in collaboration with the State Department of Education, shall implement an alternative methodology for calculating subsidy payment rates for services provided under this part and California state preschool program services administered by the State Department of Education, in accordance with both of the following.
(1) The alternative methodology shall build on the recommendations of the working group established pursuant to Section 10280.2, and shall be aligned with the recommendations of the Joint Labor Management Committee established pursuant to Section 10280.2.
(2) The alternative methodology shall use a cost estimation model that includes all of the following:
(A) Program models will meet the current statutory and regulatory requirements for each program.
(B) Staff salaries and benefits.
(C) Training and professional development.
(D) Curricula and supplies.
(E) Group size and ratios.
(F) Enrollment levels.
(G) Facilities and other costs.
(H) Family engagement.
(b) The department shall implement a transition methodology to implement the alternative methodology by increasing the various rates from their current level to the alternative methodology level over time as funds are appropriated for these purposes in the annual Budget Act. Commencing in the 2027–28 fiscal year, the department shall fully implement the alternative methodology.
(c) Funding and subsidy payments shall be based on enrollment of certified children with the contract rates set using the alternative methodology.
(d) The department shall review and update the alternative methodology every three years.
(e) This section shall become operative on the date the department notifies the Legislature that the department has adopted the alternative methodology described in this section.

SEC. 7.

 Section 10290 of the Welfare and Institutions Code is amended to read:

10290.
 (a) The department, in consultation with the State Department of Education, shall establish a fee schedule for families using preschool and child care and development services pursuant to this part including families receiving services pursuant to paragraph (1) of subdivision (b) of Section 10271. 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 single flat monthly fee per family. The schedule shall differentiate between fees for part-time care and full-time care.
(c) Using the most recently approved family fee schedule pursuant to subdivision (e) of Section 10436, families shall be assessed a single flat monthly fee for all state-subsidized services, including California state preschool program services administered by the State Department of Education, 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 recalculation of a family fee shall occur if attendance varies from enrollment unless a change in need for care is assessed.
(d) The department shall design the new family fee schedule based on the most recent census data available on state median family income in the past 12 months, adjusted for family size, according to the methodology provided in subdivision (c) of Section 10271.5. The revised fees shall not exceed 10 percent of the family’s monthly income. The department shall first submit the adjusted fee schedule to the Department of Finance for approval.
(e) 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 shall not be included in total countable income for purposes of determining the amount of the family fee.
(f) Family fees shall be assessed at initial enrollment and reassessed at update of certification or recertification.
(g) 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.
(h) Notwithstanding any other provision of this chapter, family fees shall not be collected for the 2021–22 fiscal year pursuant to Section 263 of the act that added this section.
(i) Notwithstanding any other provision of this chapter, family fees shall not be collected for the 2022–23 fiscal year.
(j) During the 2022–23 fiscal year, contractors shall reimburse subsidized childcare providers for the full amount of the certificate or voucher without deducting family fees.
(k) Notwithstanding any other law, the department, in consultation with the State Department of Education, shall develop an equitable sliding scale for the payment of family fees, and family fees shall not be collected until the new equitable sliding scale is implemented.

SECTION 1.Section 10211.6 is added to the Welfare and Institutions Code, to read:
10211.6.

The department shall apply to the United States Department of Health and Human Services to amend the state’s current Child Care and Development Fund State Plan to change its current methodology for determining childcare and development and preschool reimbursement rates to an alternative methodology that is consistent with the recommendations of the working group established pursuant to Section 10280.2.