• 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, by offering more transparency and getting us closer to a fair, sustainable wage.
• In 2025, state policymakers will decide on the full cost of providing enriching care in California and a new payment for child care providers based on that full cost. These decisions will be discussed in collective bargaining negotiations between Child Care Providers United and the state, and through the budget process with the Legislature for center-based providers as they are not represented by the Union. 
• When providers will start getting their new wage is also a decision that has to be made.
• The state may end up choosing not to pay providers 100% of the full cost of care or the state might delay paying providers the new 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, is negotiating with the Governor on how much to pay their members and when the new payments will begin.
• Center-based providers are not represented by CCPU, but how much the state pays them must include their feedback. This is being done through the state budget process, focus groups, and public meetings, including the Rate and Quality Advisory Panel meetings. 
• The state will use feedback from center-based providers and other interested/involved groups, as well as their discussions and decisions with CCPU to help them decide the cost of care for center-based providers and how much to pay them.

• 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 requires states to notify them of providers’ new pay and a timeline for implementation by July 1, 2025. 
• The California Department of Social Services has stated in public hearings and in their most recent implementation report to the Legislature that they believe California will not be ready to begin paying providers this new fairer wage on July 1, 2025, because of the time it will take to complete necessary activities for implementation of the new policy.
• If the state does not decide what providers’ new pay is by July 1, 2024, the California Department of Social Services must provide the Legislature with a timeline and plan for implementation. Also, if providers are not paid based on the full cost of care by July 1, 2024, then the state must pay child care providers a temporary wage that cannot be lower than the wage they are being paid in 24-25. This temporary wage may also be discussed at the bargaining table with Child Care Providers United.

• The collective action 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. Providers have also been advocating for fair pay from the state for many decades.

• The State and Child Care Providers United (CCPU) agreed to a new way to pay child care providers known as an “alternative methodology.” This way is fair because it is based on providers’ costs, like providers’ time, materials, rent/mortgage, etc. – all the costs associated with running a thriving child care program for California’s diverse children. There are so many costs that go into caring for children and/or running an enriching child care program. 
• The state currently has an approved list and definitions for the various costs that go into providing enriching care, but it has not yet been decided what the exact dollar amount is for each cost. 
• The state still must make a decision about each cost that goes into the full cost of care so they can decide how much providers should be paid. You might hear these called “selection points.” For example, the state knows that providers attend professional trainings so any costs related to these trainings should be covered in the state’s minimum payment to providers. However, the state has not decided on how many hours of training the minimum payment will cover. 
• These types of decisions will determine how much providers will be paid by the state and they must be made with child care providers’ feedback. This is being discussed right now in collective bargaining negotiations between CCPU and the state, and they will be discussed through the budget process with the Legislature for center-based providers as they are represented by the Union. 

• 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 Child Care Providers United published a report in March 2024 that describes the various costs that go into providing enriching care, like child care providers’ time, salary, and materials. 
• This approved list and description of costs is the starting point for deciding on the full cost of care as well as the state’s minimum payment to providers who provide publicly funded child care.

• In March 2024, Child Care Providers United, the California Department of Social Services, and the California Department of Education released an approved list and description of the types of costs that go into providing enriching care. They agreed that the full cost of care and the new minimum payment (“base rate”) to providers should cover costs related to:
  • Administration/office
  • Child health
  • Child education and development
  • Staff benefits (like health insurance, retirement contributions, and paid time off)
  • Dual language learner supports
  • Education program
  • Family engagement
  • Inclusion
  • Mandatory staffing expenses
  • Facilities
  • Operating a sustainable program
  • Planning time
  • Ratios and group size
  • Salaries
  • Staffing patterns
  • Professional trainings

This group also agreed on paying providers an additional amount (“enhanced rate”) if the child they are caring for who has a subsidy is: 

1. Getting extra support from the provider for developmental delays, disabilities, and/or other special needs
2. Being cared for over the weekends or late into the evening or early morning by the provider
3. Being transported to and from the child care or other locations by the provider

• This depends on collective bargaining negotiations and decision-making through the state budget process.  It also depends on final approval by the Legislature and how much money policymakers put in the state budget to fund this new wage 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 depends on collective bargaining negotiations and decision-making through the state budget process. It also depends on final approval by the Legislature and how much money policymakers put in the state budget to fund this new wage for providers. 

• The state has not yet committed to a specific timeline. The California Department of Social Services has stated in public hearings and in their most recent implementation report to the Legislature that they believe California will not be ready to start paying providers this new fairer wage on July 1, 2025, because of the time it will take to complete necessary activities for implementation of the new policy.

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. 

Family child care providers and family, friend, and neighbor providers can also contact Child Care Providers United about ways to engage with union-specific efforts and actions.  

This is a list of places where the state has said child care providers and other interested parties (like families) can share their feedback about paying providers more fairly:

• Rate and Quality Advisory Panel public meetings 
• Early Childhood Policy Council public meetings 
• Focus groups organized by CDSS
• Public comment email available at singleratestructure@dss.ca.gov

Child care providers can also stay informed by signing up for our email updates.

• 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 on July 1, 2025.”

• Child Care Providers United (CCPU) is the union representing family child care providers and family, friend, and neighbor providers (who are exempt from child care licensing) 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-based model.” This new way to pay providers is fairer than the current method and offers more 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 submitted its State Plan to the federal government on July 1, 2024, which included the state’s commitment to pay providers based on their actual costs. The federal government approved it on November 8, 2024. 

• The state must submit a report by July 1, 2025 to the federal government that details how much the state plans to pay providers based on the full cost of care and an implementation timeline. This includes the minimum payment the state will pay child care providers and what percent of the full cost of care this will cover. The federal government then must approve California’s new wage for providers.

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

The 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 and services. For example, providing care on weekends or overnight.

Decisions that must be made to determine the exact dollar amount for each type of cost that goes into the full cost of care. For example, the state knows that providers attend professional trainings and there are specific costs associated with attending these trainings, but the state has not yet decided how many hours of training and how much the associated costs are when calculating the full cost of care.

Largest federal funding source for publicly funded child care in California. The state must comply with CCDF requirements to receive this federal funding.

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. The State Plan also explains how and whether the state is meeting CCDF requirements.