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SB-174 Early childhood education: reimbursement rates.(2019-2020)

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Date Published: 03/20/2019 09:00 PM
SB174:v98#DOCUMENT

Amended  IN  Senate  March 20, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill No. 174


Introduced by Senator Leyva

January 28, 2019


An act to add Section 8265.3 to amend Sections 8265, 8266.1, 8357, and 8447 of the Education Code, relating to early childhood education.


LEGISLATIVE COUNSEL'S DIGEST


SB 174, as amended, Leyva. Early childhood education: reimbursement rates.

Existing law, the

(1) The Child Care and Development Services Act, Act establishes a system of childcare and development services for children up to 13 years of age, and requires the Superintendent of Public Instruction to implement a plan establishing assigned reimbursement rates, per unit of average daily enrollment, to be paid by the state to provider agencies for the provision of those services. Existing law requires the Superintendent to implement a plan that establishes reasonable standards and assigned reimbursement rates, which vary with the length of the program year and the hours of service. Existing law requires the reimbursement system to be submitted to the Joint Legislative Budget Committee.
This bill would require the Superintendent to implement a reimbursement system plan that establishes reasonable standards and assigned reimbursement rates that would vary with additional factors, including a quality adjustment factor to address the cost of staffing ratios, as provided. The bill would require the reimbursement system plan, including methodology, standards, county rate targets as provided, and the total statewide funding amount necessary to reach annual rate targets for all agencies to be annually submitted to the Joint Legislative Budget Committee, on or before November 10. The bill would require the plan to include a formula for annually adjusting reimbursement rates, as provided.
The bill would require the department, by July 1, 2020, to establish a reimbursement rate target for each contracting agency that meets specific quality standards based on specified elements, including quality adjustment factors for the age range of children proposed to be served by the contracting agency, as a multiplier, which the bill would also require the department to establish.
(2) Existing law requires reimbursement rates to be adjusted by specified adjustment factors for childcare and development programs and, for childcare and development providers serving children for less than 4 hours per day, requires the reimbursement factor to be 55% of the standard reimbursement rate.
This bill would instead require the above-described reimbursement factor to be 50% of the standard reimbursement rate.
(3) Existing law requires the cost of childcare services to be governed by regional market rates, as provided. Existing law requires the regional market rate ceilings to be established at the 75th percentile of the 2016 regional market survey for that region or the regional market rate ceiling that existed in that region on December 31, 2017, whichever is greater. Existing law requires reimbursement to license-exempt childcare providers to not exceed 70% of the family childcare home rate, as provided.
This bill would instead require the regional market rate ceilings to be established at the 85th percentile of the 2018 regional market survey for that region or the regional market rate ceiling that existed in that region on December 31, 2017, whichever is greater. The bill would require reimbursement to license-exempt childcare providers to instead not exceed 70% of the commensurate rate for both full-time and part-time care, as provided.
(4) The act also requires the department to contract with local contracting agencies for alternative payment programs for services provided throughout the state. Existing law requires alternative payment childcare systems to be subject to the rates established in the regional market rate survey of childcare providers for provider payments. Existing law requires the department to contract to conduct and complete a regional market rate survey no more than once every 2 years, as provided.
This bill would require the department to update the regional market rate survey methodology to include specified factors, including age ranges and hours of service, as provided.
The bill would require the department to create the Quality Counts California Pilot Reimbursement Program, intended to allow childcare providers to receive higher reimbursement rates, as provided. The bill would require the department to select up to 5 alternative payment childcare systems to participate in the pilot program, as provided.

This bill would provide that it is the intent of the Legislature to enact legislation that would establish a single regionalized state reimbursement rate system for childcare, preschool, and early learning services to achieve specified objectives. The bill would require the State Department of Education, on or before January 1, 2021, to create a plan for the single regionalized state reimbursement rate system described above and ensure that the plan’s methodology includes certain things, including that the state’s diverse early childhood education teachers and providers will be competitively compensated.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 8265 of the Education Code is amended to read:

8265.
 (a) The Superintendent shall implement a reimbursement system plan that establishes reasonable standards and assigned reimbursement rates, which vary with the regional reimbursement ceiling adopted pursuant to Section 8357, a quality adjustment factor to address the cost of staffing ratios pursuant to Section 8264.8, the length of the program year and year, the hours of service. service, and any additional adjustment factors pursuant to paragraphs (3) to (7), inclusive, of subdivision (c) of Section 8265.5.
(1) Parent fees shall be used to pay reasonable and necessary costs for providing additional services.
(2) When establishing standards and assigned reimbursement rates, the Superintendent shall confer with applicant agencies.
(3) The reimbursement system, system plan, including standards and rates, methodology, standards, county rate targets as established by the Superintendent pursuant to subdivision (g), and the total statewide funding amount necessary to reach annual rate targets for all agencies shall be annually submitted to the Joint Legislative Budget Committee. Committee, on or before November 10.
(4) The Superintendent may establish any regulations he or she the Superintendent deems advisable concerning conditions of service and hours of enrollment for children in the programs.
(b) Commencing July 1, 2018, the standard reimbursement rate shall be eleven thousand nine hundred ninety-five dollars ($11,995) and, commencing with the 2019–20 fiscal year, shall be increased by the cost-of-living adjustment granted by the Legislature annually pursuant to Section 42238.15. Commencing July 1, 2018, the full-day state preschool reimbursement rate shall be twelve thousand seventy dollars ($12,070) and, commencing with the 2019–20 fiscal year, shall be increased by the cost-of-living adjustment granted by the Legislature annually pursuant to Section 42238.15.
(c) The reimbursement system plan shall require agencies having an assigned reimbursement rate above the current year standard reimbursement rate to reduce costs on an incremental basis to achieve the standard reimbursement rate.
(d) (1) The reimbursement system plan shall provide for adjusting reimbursement on a case-by-case basis, in order to maintain service levels for agencies currently at a rate less than the standard reimbursement rate. Assigned reimbursement rates shall be increased only on the basis of one or more of the following:
(A) Loss of program resources from other sources.
(B) Need of an agency to pay the same child care childcare rates as those prevailing in the local community.
(C) Increased costs directly attributable to new or different regulations.
(D) Documented increased costs necessary to maintain the prior year’s level of service and ensure the continuation of threatened programs.
(2) Child care Childcare agencies funded at the lowest rates shall be given first priority for increases.
(e) The reimbursement system plan shall provide for expansion of child development programs at no more than the standard reimbursement rate for that fiscal year.
(f) The Superintendent may reduce the percentage of reduction for a public agency that satisfies any of the following:
(1) Serves more than 400 children.
(2) Has in effect a collective bargaining agreement.
(3) Has other extenuating circumstances that apply, as determined by the Superintendent.
(g) (1) Notwithstanding subdivision (c) of Section 8265.5, on or before July 1, 2020, the department shall establish a reimbursement rate target for each contracting agency that meets quality standards pursuant to Sections 8203, 8208, 8244, 8261, 8264.7, 8360, and 8360.1, and any regulations adopted thereunder, based on all of the following elements:
(A) The regional market rate ceilings for the contracting agency’s county, as applicable, pursuant to paragraphs (1) and (2) of subdivision (b) of Section 8357.
(B) The quality adjustment factor for the age range of children proposed to be served by the contracting agency, as a multiplier, specified in paragraph (3).
(C) The program year and hours of service reimbursement factor pursuant to Section 8266.1, if applicable.
(D) Additional adjustment factors for special circumstances or services, pursuant to paragraphs (3) to (7), inclusive, of subdivision (c) of Section 8265.5, if applicable.
(2) A contracting agency’s rate target shall not be less than that agency’s 2017 rate, by age range.
(3) The department, in order to meet the costs of providing quality standards pursuant to Sections 8203, 8208, 8244, 8261, 8264.7, 8360, and 8360.1, and any regulations adopted thereunder beyond those calculated in the regional market rate survey, shall establish quality adjustment factors for all of the following age ranges:
(A) For infants who are zero to 18 months of age, the adjustment factor shall be 1.23.
(B) For toddlers who are 18 to 36 months of age, the adjustment factor shall be 1.23.
(C) For preschoolers who are 36 months to six years of age, the adjustment factor shall be 1.23.
(D) Schoolage children who are 6 years of age and older, the adjustment factor shall be 1.03.
(4) The reimbursement system plan shall include a formula for annually adjusting reimbursement rates for each agency, based on all of the following:
(A) The annual Budget Act funding allocated for standard reimbursement rate increases pursuant to this section.
(B) An equitable distribution of standard reimbursement rate increases to agencies, by county, as an equal percentage of the county outstanding rate target, for purposes of meeting the targets identified pursuant to this subdivision.
(C) Funding allocated for cost-of-living adjustments, if applicable.

SEC. 2.

 Section 8266.1 of the Education Code is amended to read:

8266.1.
 Commencing with the 1995–96 fiscal year and each fiscal year thereafter, for the purposes of this chapter, reimbursement rates shall be adjusted by the following reimbursement factors for child care childcare and development programs with a standard reimbursement rate, but shall not apply to the Resource and Referral Programs set forth in Article 2 (commencing with Section 8210), the Alternative Payment Programs set forth in Article 3 (commencing with Section 8220), the part-day California state preschool programs set forth in Article 7 (commencing with Section 8235), the schoolage community child care childcare services programs set forth in Article 22 (commencing with Section 8460), or to the schoolage parent and infant development programs:
(a) For child care childcare and development providers serving children for less than four hours per day, the reimbursement factor is 55 50 percent of the standard reimbursement rate.
(b) For child care childcare and development program providers serving children for not less than four hours per day, and less than six and one-half hours per day, the reimbursement factor is 75 percent of the standard reimbursement rate. For childcare and development program providers operating under the At Risk Child Care Program set forth in Article 15.5 (commencing with Section 8350) and serving children for not less than four hours per day, and less than seven hours per day, the reimbursement factor is 75 percent of the standard reimbursement rate.
(c) For child care childcare and development program providers serving children for not less than six and one-half hours per day, and less than 10 and one-half hours per day, the reimbursement factor is 100 percent of the standard reimbursement rate. For childcare and development program providers operating under the At Risk Child Care Program set forth in Article 15.5 (commencing with Section 8350) and serving children for not less than seven hours per day, and less than 10 hours per day, the reimbursement factor is 100 percent of the standard reimbursement rate.
(d) For child care childcare and development program providers serving children for 101/2 hours or more per day, the reimbursement factor is 118 percent of the standard reimbursement rate.

SEC. 3.

 Section 8357 of the Education Code is amended to read:

8357.
 (a) The cost of child care childcare services provided under this article shall be governed by regional market rates. Recipients of child care childcare services provided pursuant to this article shall be allowed to choose the child care childcare services of licensed child care childcare providers or child care childcare providers who are, by law, not required to be licensed, and the cost of that child care childcare shall be reimbursed by counties or agencies that contract with the department if the cost is within the regional market rate. For purposes of this section, “regional market rate” means care costing no more than 1.5 market standard deviations above the mean cost of care for that region. It is the intent of the Legislature to reimburse child care childcare providers at the 85th percentile of the most recent regional market rate survey.
(b) The regional market rate ceilings shall be established at the greater of either of the following:
(1) The 75th percentile of the 2016 85th percentile of the 2018 regional market rate survey for that region.
(2) The regional market rate ceiling that existed in that region on December 31, 2017.
(c) Reimbursement to license-exempt child care childcare providers shall not exceed 70 percent of the family child care home rate the commensurate rate, such as hourly, daily, weekly, and monthly, for both full-time and part-time care established pursuant to subdivision (b).
(d) Reimbursement to child care childcare providers shall not exceed the fee charged to private clients for the same service.
(e) Reimbursement shall not be made for child care childcare services when care is provided by parents, legal guardians, or members of the assistance unit.
(f) A child care childcare provider located on an Indian reservation or rancheria and exempted from state licensing requirements shall meet applicable tribal standards.
(g) For purposes of this section, “reimbursement” means a direct payment to the provider of child care childcare services, including license-exempt childcare providers. If care is provided in the home of the recipient, payment may be made to the parent as the employer, and the parent shall be informed of his or her the parent’s concomitant legal and financial reporting requirements. To allow time for the development of the administrative systems necessary to issue direct payments to providers, for a period not to exceed six months from the effective date of this article, a county or an alternative payment agency contracting with the department may reimburse the cost of child care childcare services through a direct payment to a recipient of aid rather than to the child care childcare provider.
(h) Counties and alternative payment programs shall not be bound by the rate limits described in subdivisions (a) and (b), when there are, in the region, no more than two child care childcare providers of the type needed by the recipient of child care childcare services provided under this article.
(i) (1) Notwithstanding any other law, reimbursements to child care childcare providers based upon a daily rate may only be authorized under either of the following circumstances:
(A) A family has an unscheduled but documented need of six hours or more per occurrence, such as the parent’s need to work on a regularly scheduled day off, that exceeds the certified need for child care. childcare.
(B) A family has a documented need of six hours or more per day that exceeds no more than 14 days per month. In no event shall reimbursements Reimbursements to a childcare provider based on the daily rate over one month’s time shall not exceed the childcare provider’s equivalent full-time monthly rate or applicable monthly ceiling.
(2) This subdivision shall does not limit providers from being reimbursed for services using a weekly or monthly rate, pursuant to subdivision (c) of Section 8222.

SEC. 4.

 Section 8447 of the Education Code is amended to read:

8447.
 (a) The Legislature hereby finds and declares that greater efficiencies may be achieved in the execution of state subsidized child care childcare and development program contracts with public and private agencies by the timely approval of contract provisions by the Department of Finance, the Department of General Services, and the department and by authorizing the department to establish a multiyear application, contract expenditure, and service review as may be necessary to provide timely service while preserving audit and oversight functions to protect the public welfare.
(b) (1) The Department of Finance and the Department of General Services shall approve or disapprove annual contract funding terms and conditions, including both family fee schedules and regional market rate schedules that are required to be adhered to by contract, and contract face sheets submitted by the department not more than 30 working days from the date of submission, unless unresolved conflicts remain between the Department of Finance, the department, and the Department of General Services. The department shall resolve conflicts within an additional 30 working day time period. Contracts and funding terms and conditions shall be issued to child care childcare contractors no later than June 1. Applications for new child care childcare funding shall be issued not more than 45 working days after the effective date of authorized new allocations of child care childcare moneys.
(2) Notwithstanding paragraph (1), the department shall implement the regional market rate schedules based upon the county aggregates, as specified in Section 8357 and the annual Budget Act.
(3) It is the intent of the Legislature to fully fund the third stage of child care childcare for former CalWORKs recipients.
(c) With respect to subdivision (b), it is the intent of the Legislature that the Department of Finance annually review contract funding terms and conditions for the primary purpose of ensuring consistency between child care childcare contracts and the child care childcare budget. This review shall include evaluating any proposed changes to contract language or other fiscal documents to which the contractor is required to adhere, including those changes to terms or conditions that authorize higher reimbursement rates, modify related adjustment factors, modify administrative or other service allowances, or diminish fee revenues otherwise available for services, to determine if the change is necessary or has the potential effect of reducing the number of full-time equivalent children that may be served.
(d) Alternative payment child care childcare systems, as set forth in Article 3 (commencing with Section 8220), shall be subject to the rates established in the Regional Market Rate Survey of California Child Care Providers Childcare Providers, pursuant to subdivision (g), for provider payments. The department shall contract to conduct and complete a regional market rate survey no more frequently than once every two years, consistent with federal regulations, with a goal of completion by March 1.
(e) By March 1 of each year, the Department of Finance shall provide to the department the state median income amount for a four-person household in California using the methodology provided in subdivision (c) of Section 8263.1. The department shall adjust its fee schedule for child care childcare providers to reflect this updated state median income; however, no changes based on revisions to the state median income amount shall not be implemented midyear.
(f) Notwithstanding the June 1 date specified in subdivision (b), changes to the regional market rate schedules and fee schedules may be made at any other time to reflect the availability of accurate data necessary for their completion, provided these documents receive the approval of the Department of Finance. The Department of Finance shall review the changes within 30 working days of submission and the department shall resolve conflicts within an additional 30 working day period. Contractors shall be given adequate notice before the effective date of the approved schedules. It is the intent of the Legislature that contracts for services not be delayed by the timing of the availability of accurate data needed to update these schedules.
(g) (1) The department shall contract to conduct and complete a regional market rate survey no more frequently than once every two years, with a goal of completion by March 1.
(2) The department shall update the regional market rate survey methodology to include:
(A) Age ranges and hours of service ranges pursuant to Section 8265.
(B) Direction for the survey to mitigate the impact of contractors located in deep-poverty census tracts on the market profile or county rate.
(h) The department shall create a Quality Counts California Pilot Reimbursement Program. It is the intent of the Legislature that the pilot program allow childcare providers subject to rates under this section to receive higher reimbursement rates, consistent with Section 8265, and to meet higher quality standards for child development, consistent with Sections 8203, 8208, 8244, 8261, 8264.7, 8360, and 8360.1, and any regulations adopted thereunder.
(1) The department shall establish and measure quality standards consistent with Sections 8203, 8208, 8244, 8261, 8264.7, 8360, and 8360.1, and any regulations adopted thereunder for childcare providers participating in the pilot program. These quality standards shall be met for pilot participation.
(2) The department shall select up to five alternative payment program childcare systems, as set forth in Article 3 (commencing with Section 8220), to participate in the pilot program. The department shall select alternative payment program childcare systems to participate that represent the broad geographic diversity of the state.
(3) Each alternative payment program childcare system selected by the department to participate in the pilot program shall allow licenced childcare providers serving at least a majority of children receiving subsidized childcare services pursuant to Article 3 (commencing with Section 8220) and Article 15.5 (commencing with Section 8350) to participate.

SECTION 1.

(a)The Legislature finds and declares both of the following:

(1)Research shows that access to quality early care and education programs is crucial to children, families, and the future success of the state.

(2)Early care and education programs provide young children with valuable early learning and child development experiences that prepare them for school and a successful future. With access to quality childcare and early learning, families can go to work and provide for their children’s needs, knowing that their children are safe, nurtured, and learning.

(b)In recognizing the benefits of quality early care and education to a child’s lifelong well-being and to the path of families to self-sufficiency, it is the intent of the Legislature to enact legislation that would build a strong foundation for our early care and education system so it can optimally serve the unique needs of California’s families and young children.

SEC. 2.Section 8265.3 is added to the Education Code, to read:
8265.3.

(a)It is the intent of the Legislature to enact legislation that would establish a single regionalized state reimbursement rate system for childcare, preschool, and early learning services that would achieve all of the following:

(1)Compensate all teachers and providers for the true cost of providing care by reimbursing them at rates that reflect the economic diversity of California.

(2)Recognize the costs of meeting varying standards and regulations.

(3)Strengthen the ability of the state’s mixed delivery system to provide quality early learning options.

(b)On or before January 1, 2021, the department shall create a plan for the single regionalized state reimbursement rate system described in subdivision (a) and ensure that the plan’s methodology includes all of the following:

(1)The state’s diverse early childhood education teachers and providers will be competitively compensated.

(2)Quality will be incentivized by giving teachers, childcare providers, and early learning programs access to financial incentives to engage in continuing education, ongoing professional learning, quality improvement efforts, and the implementation of higher quality standards as a means of improving child outcomes.

(3)Policymakers will understand funding levels and the needs of parents, and community members will understand the differences in program content and the costs associated with providing high-quality childcare, preschool, and early learning services.