Child Care Budget Deal Reached for 2016-2017 in California

On June 9th, the Conference Committee and the Governor agreed upon a child care and early learning package that promises to add $527 million to child care and early learning programs over the next four years, with $145 million allocated for 2016-17. The agreement will provide significant rate increases for child care providers in all settings, and an increased number of full-day preschool slots.

These increases reflect a steadfast commitment to child care by California legislators and legislative leadership in both houses, and by the Legislative Women’s Caucus (LWC), all of whom prioritized child care in this year’s discussions and budget.  Thousands of children and families will have better access to child care and early learning as a result.

Reimbursement Rates (all rate increases go into effect January 1, 2017)

  • Increases the reimbursement rate paid to providers by updating to the 75th percentile of the 2014 Regional Market Rate (RMR) survey, with a “hold harmless” provision.[1]
  • Increases the reimbursement rate paid to License-Exempt providers from 65% to 70% of the new RMR.
  • Increases the Standard Reimbursement Rate by 10%.

Long overdue rate increases will benefit a child care system that had not yet recovered from years of budget cuts and freezes, and seriously outdated reimbursement rates.  These rate increases will:

  • Make the rate structure more transparent and bring the state into compliance with federal law by using current market data to establish rates.
  • Expand parents’ child care options because more child care providers will accept the higher subsidies and parent co-pays will go down.
  • More fairly reimburse underpaid child care providers, almost 90 percent of whom earn less than $15 per hour.
  • Maintain the current number of child care slots, which is significant for parents currently receiving a subsidy.

Preschool Slots

  • Provides an additional 8,877 full-day, full-year State Preschool (CSPP) slots, over four years. Starting March 1, 2017, an additional 2,959 full day CSPP slots will be added each year.

One-time Expenditures

  • $248,000 for CDE to support workload associated with increased preschool slots provided in last year’s budget.
  • $1.4 million for workforce development and the apprenticeship program.

Repeal of the CalWORKs Maximum Family Grant Rule

Repeal of the CalWORKs MFG rule, which prohibited a grant increase when an additional child was born to a parent who was already receiving CalWORKs, has been a multi-year policy priority for the child care and early learning and legal services communities, and the LWC.  Repeal of the rule will further the Child Care Law Center’s vision of a future in which all children have a chance to reach their full potential, irrespective of the circumstances of a child’s birth.

[1] The two year “hold harmless” provision allows providers to continue to receive their current rate over the next two years if they would receive less under the new rate structure.  The total cost of this provision over two years is $53 million.