Our communities are stronger when every family has the child care they need. For too long, women of color have shouldered the expenses of the state child care system. Their health and well-being—and their families’—have suffered as a result.
For our full analysis of child care in the state budget, please read our 2023 Child Care Legislative Roundup.
Thanks to the leadership of Parent Voices, Child Care Providers United, and key advocates, the State Budget this year will begin to right these wrongs.
The State Budget for FY 23-24, signed into law by Governor Newsom:
- Fully covers child care costs for families, by eliminating fees for everyone earning 74% or less of the State Median Income.
- Increases child care providers’ pay by roughly 20% over two years.
- Establishes a retirement fund for providers.
- Charts a course to reforming child care payments permanently by 2025.
These policy reforms through the state budget process, especially in light of economic uncertainty this year, will transform the lives of families and child care providers, and begin to undo the harm of historically racist child care policies.
Overview of child care in the state budget for FY 23-24
Family Fee Reform
The Budget eliminates family fees for parents earning 74% of the State Median Income or less, and fully covers those fees when paying child care providers.
This policy applies to all state-contracted child care and development programs, child care vouchers, and California State Preschool Programs.
Families will be able to afford their basic necessities and gain economic stability with this change. For example:
- Before, a family of three earning $44,000 per year would have paid $1,900 a year in child care fees.
- Now, their fees are zero.
Only families enrolled earning 75% or more of the State Median Income will pay fees for publicly-funded child care or preschool.
- Before: a single mom with two kids, earning $73,000 a year, would have paid $6,457 a year in child care fees to the state of California.
- Now: Her fees will be $648.
California is the first state to fully cover the cost of child care for families in publicly-funded child care. This was made possible in part by an Executive Order by President Biden; a change in federal rules was necessary to exempt families from paying child care fees.
Child Care Payment Rates
The Budget adds $1.36 billion over two years to increase payment rates to child care providers, contribute to retirement and health plans, and create a path to reforming child care payment rates.
The State Budget also increases payment rates to the California State Preschool programs.
Finally, the State Budget provides a pathway for a full reform of child care payment rates over the next two years.
It was important to child care providers to increase the child care payment rates this year, even though a full overhaul is in the future. The long injustice of underpaying and undervaluing their work had to end.
Here are some of the key reforms and funding increases to child care payment rates*:
- Increases to payment rates for providers caring for children in publicly-funded child care*
- Retirement contributions for child care providers*
- Health plan contributions*
- Additional funds for training and continuing education
- Two-year extension to pay child care providers based on family enrollment instead of attendance (also known as “hold harmless”)
- Fairer compensation for child care providers who give before-and-after school care with a full time rate for 25 hours a week
- Create an alternative methodology instead of a market rate survey to set child care rates subject to federal approval by 2025-2026
- Until an alternative methodology is implemented, amending the payment policy for providers with children with full-week or full-month care to support higher reimbursement
- License-exempt child care providers are not required to submit rate sheets
*The contract with these provisions will become final after Child Care Providers United’s membership ratifies the agreement with the State later this summer.
Women of color and the families most impacted led the advocacy
Child Care Providers United, a joint partnership of both SEIU and AFSCME, represents family child care providers and license-exempt providers. The union won the right to bargain for a contract with the Administration over child care related-items including: payment and payment procedures for state-funded early care and education programs, reimbursement rates, professional development and training, and contributions to a organization-administered benefit trust fund.
Members of CCPU organized the largest-ever rally in the Capitol in June to demonstrate the broad support for their bargaining demands. Following the rally, they held vigils in front of the Governor’s Mansion every night for a week.
Similarly, members of Parent Voices made tremendous personal sacrifices to explain to state policymakers how the child care family fee policy prevented them and their children from succeeding. Read more about their campaign here.
This post is intended to provide general information. We believe it is accurate as of July 15, 2023, but the law changes often.
