• In 2024, California is taking steps to change how it pays child care providers. People call this “rate reform.” This new way to pay providers will be based on providers’ costs, called an “alternative methodology.” This new way to pay providers is fairer than the current method, which lacks transparency, and it is an important step towards a fair, living wage.

• This will impact child care providers who deliver publicly-funded child care to children with subsidies. This includes family-friend-and-neighbor, family child care, and center providers. 
• Child Care Providers United (CCPU), the union representing family child care providers and family, friend, and neighbor providers in California, will negotiate in Autumn 2024 on how and how much to pay their members, as well as implementation requirements.
• Also, the California Department of Social Services has shared in a public meetings that the 2025-2026 state budget process will take place to account for payments to all child care providers and programs, including child care centers. 

• The State agreed to pay child care providers based on the cost of care. This new pay could begin after negotiations end and all other activities needed to implement the new policy are completed. 
• These other activities could include: submitting information to the federal government, developing guidance, training contractors, updating contracts and data systems, and allocating funding in the state budget.
• For states making this change to use an alternative methodology, the federal Administration for Children and Families has set a deadline of July 1, 2025 to notify them of providers’ new pay and a timeline for implementation. And the California Department of Social Services has stated in public hearings that they believe California won’t be ready to fully implement this new fairer wage until at least July 1, 2025. 

• The voices of child care providers brought about this transformative shift that we have all been waiting for. A strong team of child care providers worked with the State on the 2023 Child Care Providers United Union Agreement, which included the State agreeing to pay child care providers based on the cost of providing enriching care.  

• The State and CCPU agreed to a new way to pay child care providers known as a “alternative methodology.” This way is fairer because it is based on providers’ costs, like providers’ time, materials, rent/mortgage, etc. – all the costs associated with running an enriching child care program for California’s diverse children. There are so many costs that go into caring for children and/or running a child care program, so the State needs to pick all the different cost elements to include when defining the “cost of care.” 

• Researchers created a tool for California that uses data, such as child care provider surveys and focus groups, to estimate the cost of providing enriching child care in California. The estimate goes up and down based on the different costs the State chooses to include.
• Using this research, representatives from the Department of Social Services, the Department of Education, and CCPU will suggest which costs they think should go into the new minimum payment for child care providers, called the “base rate.” 

• We are currently waiting for the State to release a report that describes the different costs that they are including in the definition of the cost of care. Child care providers in public hearings and meetings have advocated for different costs to be included. Some of those are:
  • Living wage
  • Benefits
  • Sick and vacation
  • Rent/mortgage
  • Transportation
  • Health and safety
  • Repairs
  • Educational supplies
  • Prep/Planning time
  • Food
  • Dual Language Learner and inclusion supports
  • Family engagement
  • Professional development
  • Insurance

This depends on negotiations that begin in the fall of 2024 and how much California puts in the State Budget to fund this new pay for providers. The State has committed to paying providers based on the cost of care, but they have not committed to paying providers 100% of the cost of care.

This also depends on negotiations with child care providers and how much California puts into the State Budget. The State has not yet committed to a specific timeline.

There are many opportunities for child care providers to get involved. The two major ways are 1) attending public hearings and meetings about this issue and 2) contacting policymakers and state agencies who are involved and/or have influence. 

• Child care providers have always been fierce advocates for social and racial justice. Some ideas for how to advocate for pay include:
  • Share stories about all the costs that go into providing enriching care to children and running a sustainable business
  • Explain why California needs this change to fairer pay as soon as possible 
  • Highlight how fair pay would positively impact you, the children in your care, their families, and the greater community
  • Communicate exactly what you need – for example, “we need to be paid 100% of the cost of care as soon as possible.”

Child Care Providers United (CCPU) is the union representing family child care providers and family, friend, and neighbor providers in California. CCPU has the right to bargain for a contract with the Governor over child care-related items, including how and how much child care providers are paid. 

In the 2023 Union Agreement, the State promises to pay child care providers using a new method based on providers’ costs; this is called an “alternative methodology” or a “cost estimation model.” This new way to pay providers is fairer than the current method, which lacks transparency. The Agreement also outlines key steps the State must make to fully implement this new wage.

To get federal money for affordable child care, California must submit a Child Care Development Fund State Plan every three years to the federal government that explains how the state will meet the federal requirements and use the funds to best support families, children, and child care providers. This includes how and how much child care providers are paid. 

The State must submit its State Plan to the Federal Government by July 1, 2024; the Federal Government will need to approve it before contract negotiations on providers’ pay reopens between the Union and the State sometime in the fall. 

The process California is going through to change the way it pays child care providers

A new way for the State to pay child care providers based on the cost of providing care

Minimum amount the State must pay to child care providers

An additional amount on top of the minimum payment or “base rate” that the State pays to providers for unique costs. For example, providing care on weekends or overnight.

Largest federal funding source for affordable child care in California

How California tells the federal government it will use CCDF money for state-administered child care, including how and how much it will pay child care providers.