Governor Brown’s May Revise of 2017-18 Budget Proposal Regarding Child Care

Keeps Reimbursement Rates and Preschool, but Fails to Align Family Income With New Minimum Wage

On May 11, Governor Brown released the May Revise of his proposed Budget for California for 2017-2018. The May Revise notes an additional $2.5 Billion in revenues above the January projections. The May Revision therefore keeps $210 Million in child care funding that was promised as the second installment in last year’s multi-year budget agreement. This includes:

  • $160.3 Million to increase the Standard Reimbursement Rate (SRR) for child care programs that contract directly with the state.
    • $60.7 Million for the 10% SRR increase scheduled to go into effect as of July 1, 2017.[1] ($17M General Funds; $43.7M Proposition 98);
    • $92.7 Million to fund a 6% increase for State Preschool and other direct-contracted child care programs, beginning July 1, 2017 ($32M General Funds; $60.7 Proposition 98)
  • $42.2 Million to increase the Regional Market Rate reimbursement rates to the 75th percentile of the most recent 2016 survey, beginning January 1, 2018. Programs would be held harmless through December 31, 2018 for any reductions caused by the new rates. Click here to see the 2016 Survey.
  • $23.5 Million for an additional 2,959 full day State Preschool slots, to be administered by Local Education Agencies.

Two funding reductions in the May Revise offset the full cost of the rate and slot increases described above:

  • Continuing the trend of recent years, a $31 Million decrease in funding for CalWORKs Stage 2 and Stage 3 to reflect lower than estimated caseload and revised cost per case ($18.1M CalWORKs Stage 2 and $12.8 M CalWORKs Stage 3); and
  • $19 Million in additional, one-time carryover Child Care Development Block Grant (CCDBG) funds.

Funds Not Included To Align New Minimum Wage

Governor Brown did not include funding to update family income guidelines for subsidized child care, which have not been revised since 2007 and are based on 2005 State Median Income data. Because of these outdated income guidelines, many parents who earn the new minimum wage working full time are losing their affordable child care.

 

Proposal to Exempt Some Preschools from Title 22 Health and Safety Protections

The May Revision repeats Governor Brown’s January proposal to exempt Local Education Agency (LEA)- administered preschools operating on school grounds from Title 22 Child Care Licensing Program health and safety standards, which currently apply to all programs serving 3 and 4-year olds. The proposal extends Transitional Kindergarten standards (designed to serve 5-year olds born after September 1), to 3- and 4-year-olds attending California State Preschool.

Research points to significant developmental differences between these age groups, and child care licensing provides a foundation of health and safety provisions specific to the needs of children younger than five. Critical provisions unique to child care licensing include:

  • Initial inspection of the physical surroundings, with an emphasis on potential hazards to very young children;
  • Regular, unannounced inspections focused on health and safety.
  • Parent (consumer) access to review the history of a facility prior to and throughout their child’s enrollment through the transparency website;
  • Confidential, on-line complaint process, which triggers an inspection within ten (10) days;
  • Sanitary and adequate toilet facilities;
  • Safe, age-appropriate play structures.

 

These health and safety protections are not duplicated under Title 5 or other laws applicable to K-12 school facility construction or operations. In response to criticism that the hasty budget process does not allow sufficient time to adequately vet this complex policy proposal, the May Revise continues the proposal to adopt this Trailer Bill language, but delays implementation until December 31, 2018.

The Assembly and Senate Budget Subcommittees will be holding additional hearings in response to the May Revision this week and through May 24, 2017.  Early care and education will be heard in the Assembly Subcommittee No. 2 on Education Finance on May 16, 2017 starting at 9:00.  Here is a link to the agenda.  The Senate Budget Subcommittee 1 on Education also meets Tuesday May 16, 2017 starting at 10:00.

The Child Care Law Center will continue to keep you informed of the child care budget as we move into the final days of the budget process for 2017-18.

 

[1] The SRR increase of 10% was scheduled to take effect on January 1, 2017.  In order to align with contract periods, CDE chose to put a 5% increase into effect as of July 1, 2016, with the remaining 5% increase to go into effect July 1, 2017.  The proposed pause would have delayed this remaining 5% increase until 2018-19.