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SB-246 Early childhood education: reimbursement rates.(2021-2022)

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Date Published: 04/13/2021 09:00 PM
SB246:v96#DOCUMENT

Amended  IN  Senate  April 13, 2021
Amended  IN  Senate  March 17, 2021
Amended  IN  Senate  February 23, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 246


Introduced by Senator Leyva
(Coauthor: Senator Ochoa Bogh)

January 22, 2021


An act to amend Sections 8266.1, 8357, and 8447 of, and to amend, repeal, and add Sections 8265 and 8265.5 of, the Education Code, relating to early childhood education.


LEGISLATIVE COUNSEL'S DIGEST


SB 246, as amended, Leyva. Early childhood education: reimbursement rates.
(1) The Child Care and Development Services Act establishes a system of childcare and development services for children up to 13 years of age. Existing law, until July 1, 2021, requires the Superintendent of Public Instruction to implement a plan establishing assigned reimbursement rates to be paid by the state to provider agencies for the provision of those services. Commencing July 1, 2021, existing law transfers specified childcare programs, responsibilities, services, and systems, including those programs and duties described below, from the State Department of Education and the Superintendent to the State Department of Social 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 State Department of Social Services 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. By November 10, 2022, and annually thereafter, the bill would require the reimbursement system plan, including methodology and standards, to be submitted to the Joint Legislative Budget Committee. The bill would require that plan to include a formula for annually adjusting reimbursement rates. By July 1, 2022, and annually thereafter, the bill would require the department 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. The bill would also require all providers meeting quality standards, as specified, to be paid the quality adjustment factor, as specified. The
The bill would require the department, by January 1, 2024, to develop, or hire a contractor to develop, a modernized reimbursement formula based on the components outlined in the state’s Master Plan for Early Learning and Care, as specified. The The bill would also require the department, by January 1, 2024, to convene a working group to assess the existing quality standards for equity and accessibility to all provider types and settings, and would require the department to develop recommendations to be implemented with the new reimbursement base rate, as specified.
The bill would make these the above provisions subject to an appropriation by the Legislature.
(2) Existing law establishes adjustment factors for a provider agency’s reported child days of enrollment in order to reflect the additional expense of serving specified children, including an adjustment factor for infants and toddlers who are 0 to 36 months of age and are served in a child daycare center or family childcare home.
As of July 1, 2022, this bill would delete the above-described adjustment factor and would make conforming changes. The bill would add an adjustment factor for children who are served in a county experiencing a county state of emergency, or any county during a statewide state of emergency, based on the enrollment of children in the program, as specified.
(3) Existing law requires reimbursement rates to be adjusted by specified adjustment reimbursement 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. The bill would also require a crisis adjustment factor of 150% for childcare and development program providers serving children in a county experiencing a county state of emergency, or any county during a statewide state of emergency. emergency, based on the enrollment of children in the program.
(4) Existing law requires the cost of childcare services to be governed by regional market rates, and requires the regional market rate ceilings to be established at the 75th percentile of the 2016 regional market rate survey for that region or the regional market rate ceiling that existed in that region on December 31, 2017, whichever is greater. Existing law prohibits reimbursement to license-exempt childcare providers from exceeding 70% of the family childcare home rate.
Subject to an appropriation by the Legislature, for the 2021 calendar year, this bill would, among other things, instead require the regional market rate ceilings to be established at the 75th 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. Subject to an appropriation by the Legislature, commencing January 1, 2022, The bill would update the above formula to be based instead on the 2018 regional market rate survey. Subject to an appropriation by the Legislature, for the 2021 calendar year, and for the 2021–22 fiscal year, and annually thereafter, the bill would require the annual regional market ceilings to be established at no less than the 85th percentile of the 2018 regional market rate 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 provide that if there is no appropriation, the existing formula formula, as updated for 2018, to establish a regional market rate ceiling would apply. Subject to an appropriation by the Legislature, commencing January 1, 2022, and annually thereafter, the bill instead would prohibit reimbursement to license-exempt childcare providers from exceeding 70% of the commensurate rate for both full-time and part-time care.
(5) The act requires the department State Department of Education 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.
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.
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 State Department of Social Services shall 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.
(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, including standards and rates, shall be submitted to the Joint Legislative Budget Committee.
(4) The State Department of Social Services may establish any regulations the department 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 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 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 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) Childcare agencies funded at the lowest rates shall be given first priority for increases.
(e) The plan shall provide for expansion of child development programs at no more than the standard reimbursement rate for that fiscal year.
(f) The State Department of Social Services 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 department.
(g) Upon an appropriation in the annual Budget Act or another act for the express purpose of implementing Section 8265 of the Education Code, as added by Section 2 of the act that added this subdivision, this section shall become inoperative and shall be repealed January 1 of the following year.

SEC. 2.

 Section 8265 is added to the Education Code, to read:

8265.
 (a) The State Department of Social Services 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, the hours of service, and any additional adjustment factors as described under 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 department shall confer with applicant agencies.
(3) By January 1, 2024, the department shall develop, or hire a contractor to develop, a modernized reimbursement formula based on the components outlined in the state’s Master Plan for Early Learning and Care, including, but not limited to, adjustments for market, program quality, child needs and characteristics, and state of emergency declarations.
(4) By January 1, 2024, the department shall convene a working group to assess the existing quality standards (Subchapter 12 (commencing with Section 18270) of Chapter 19 of Division 1 of Title 5 of the California Code of Regulations) for equity and accessibility to all provider types and settings. The department shall develop recommendations to be implemented with the new reimbursement base rate. These changes shall be aligned with appropriate competencies for early childhood workers, including, but not limited to, experience, education, and environmental settings, to be implemented in alignment with the new reimbursement formula.

(4)

(5) By November 10, 2022, and annually thereafter, the reimbursement system plan, including methodology, standards, county rate targets as established by the department pursuant to this section, and the total statewide funding amount necessary to reach annual rate targets for all agencies shall be submitted to the Joint Legislative Budget Committee.

(5)

(6) The department may establish any regulations the department deems advisable concerning conditions of service and hours of enrollment for children in the programs.
(b) Commencing January 1, 2022, the State Department of Social Services shall adopt an interim standard reimbursement rate based on the 2018 regional market rate survey of eleven thousand nine hundred ninety-five dollars ($11,995) and, commencing with the 2024–25 fiscal year, implement the new base rate, which shall be annually increased by the cost-of-living adjustment granted by the Legislature 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 annually increased by the cost-of-living adjustment granted by the Legislature 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. 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 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) 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 department 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 department.
(g) (1) Notwithstanding Section 8265.5, on or before July 1, 2022, and annually thereafter, 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 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, as described under Section 8265.5, if applicable.
(E) A short-term crisis adjustment factor of 1.5 under any state of emergency declarations made by local or state officials.
(2) A contracting agency’s rate target shall not be less than that agency’s 2022 rate, by age range, pursuant to Section 8265.5.
(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 0 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) For schoolage children who are six years of age and older, the adjustment factor shall be 1.03.
(4) All providers, regardless of type, meeting quality standards specified in paragraph (3) shall be paid the quality adjustment factor, including family child care home education networks.
(5) 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.
(h) This section shall become operative on or after July 1, 2022, upon an appropriation in the annual Budget Act or another act for the express purpose of implementing this section.

SEC. 3.

 Section 8265.5 of the Education Code is amended to read:

8265.5.
 (a) In order to reflect the additional expense of serving children who meet any of the criteria outlined in subdivision (c), the provider agency’s reported child days of enrollment for these children shall be multiplied by the adjustment factors listed below.
(b) (1) Except as provided in paragraph (2), the adjustment factors described in subdivision (c) shall apply to a state preschool program and those programs for which assigned reimbursement rates are at or below the standard reimbursement rate. In addition, the adjustment factors shall apply to those programs for which assigned reimbursement rates are above the standard reimbursement rate, but the reimbursement rate, as adjusted, shall not exceed the adjusted standard reimbursement rate. The adjustment factors shall apply to those state preschool programs for which assigned reimbursement rates are above the state preschool reimbursement rate, but the reimbursement rate, as adjusted, shall not exceed the adjusted state preschool reimbursement rate.
(2) The adjustment factors described in paragraphs (5) and (6) of subdivision (c) shall apply only for full-day preschool programs and those part-day preschool programs for which assigned reimbursement rates are at or below the standard reimbursement rate.
(c) Notwithstanding any other law, commencing January 1, 2019, the adjustment factors shall be as follows:
(1) For infants who are 0 to 18 months of age and are served in a child daycare center or a family childcare home, the adjustment factor shall be 2.44.
(2) For toddlers who are 18 to 36 months of age and are served in a child daycare center or a family childcare home, the adjustment factor shall be 1.8.
(3) For children with exceptional needs who are 0 to 21 years of age, the adjustment factor shall be 1.54.
(4) For severely disabled children who are 0 to 21 years of age, the adjustment factor shall be 1.93.
(5) For children at risk of neglect, abuse, or exploitation who are 0 to 14 years of age, the adjustment factor shall be 1.1.
(6) For limited-English-speaking and non-English-speaking children who are two years of age through kindergarten age, the adjustment factor shall be 1.1.
(7) For children who are served in a California state preschool program, infants and toddlers who are 0 to 36 months of age and are served in general childcare and development programs, or children who are 0 to 5 years of age and are served in a family childcare home education network setting funded by a general childcare and development program, where early childhood mental health consultation services are provided, pursuant to Section 8265.2, the adjustment factor shall be 1.05.
(8) For children who are served in a county experiencing a county state of emergency, or any county during a statewide state of emergency, the crisis adjustment factor shall be 1.5.
(d) Use of the adjustment factors shall not increase the provider agency’s total annual allocation.
(e) (1) Days of enrollment for children who meet more than one of the criteria outlined in paragraphs (1) to (6), inclusive, of subdivision (c) shall not be reported under more than one of the categories specified in those paragraphs.
(2) Notwithstanding paragraph (1), for children for whom an adjustment factor is applied pursuant to any of paragraphs (1) to (6), inclusive, of subdivision (c), and who are additionally eligible for the adjustment factor established in paragraph (7) of subdivision (c), reported child days of enrollment shall be multiplied by the sum of the applicable adjustment factor under paragraphs (1) to (6), inclusive, of subdivision (c) and 0.05.
(f) The difference between the reimbursement resulting from the use of the adjustment factors outlined in subdivision (c) and the reimbursement that would otherwise be received by a provider in the absence of the adjustment factors shall be used for special and appropriate services for each child for whom an adjustment factor is claimed.
(g) This section shall become inoperative on July 1, 2022, and, as of January 1, 2023, is repealed.

SEC. 4.

 Section 8265.5 is added to the Education Code, to read:

8265.5.
 (a) In order to reflect the additional expense of serving children who meet any of the criteria outlined in subdivision (b), the provider agency’s reported child days of enrollment for these children shall be multiplied by the adjustment factors listed below.
(b) Notwithstanding any other law, the adjustment factors shall be as follows:
(1) For children with exceptional needs who are 0 to 21 years of age, the adjustment factor shall be 1.54.
(2) For severely disabled children who are 0 to 21 years of age, the adjustment factor shall be 1.93.
(3) For children at risk of neglect, abuse, or exploitation who are 0 to 14 years of age, the adjustment factor shall be 1.1.
(4) For limited-English-speaking and non-English-speaking children who are two years of age through kindergarten age, the adjustment factor shall be 1.1.
(5) For children who are served in a California state preschool program, infants and toddlers who are 0 to 36 months of age and are served in general childcare and development programs, or children who are 0 to 5 years of age and are served in a family childcare home education network setting funded by a general childcare and development program, where early childhood mental health consultation services are provided, pursuant to Section 8265.2, the adjustment factor shall be 1.05.
(6) For children who are served in a county experiencing a county state of emergency, or any county during a statewide state of emergency, the crisis adjustment factor shall be 1.5. 1.5 based on the enrollment of children in the program.
(c) Use of the adjustment factors shall not increase the provider agency’s total annual allocation.
(d) (1) Days of enrollment for children who meet more than one of the criteria outlined in paragraphs (1) to (4), inclusive, of subdivision (b) shall not be reported under more than one of the categories specified in those paragraphs.
(2) Notwithstanding paragraph (1), for children for whom an adjustment factor is applied pursuant to any of paragraphs (1) to (4), inclusive, of subdivision (b), and who are additionally eligible for the adjustment factor established in paragraph (5) of subdivision (b), reported child days of enrollment shall be multiplied by the sum of the applicable adjustment factor under paragraphs (1) to (4), inclusive, of subdivision (b) and 0.05.
(e) The difference between the reimbursement resulting from the use of the adjustment factors outlined in subdivision (b) and the reimbursement that would otherwise be received by a provider in the absence of the adjustment factors shall be used for special and appropriate services for each child for whom an adjustment factor is claimed.
(f) This section shall become operative on July 1, 2022.

SEC. 5.

 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 purposes of this chapter, reimbursement rates shall be adjusted by the following reimbursement factors for 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 childcare services programs set forth in Article 22 (commencing with Section 8460), or to the schoolage parent and infant development programs:
(a) For childcare and development providers serving children for less than four hours per day, the reimbursement factor is 50 percent of the standard reimbursement rate.
(b) For 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 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 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 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 childcare and development program providers serving children for 10 and one-half hours or more per day, the reimbursement factor is 118 percent of the standard reimbursement rate.
(e) For childcare and development program providers serving children in a county experiencing a county state of emergency, or any county during a statewide state of emergency, the crisis adjustment factor shall be 150 percent of the standard reimbursement rate. rate based on the enrollment of children in the program.

SEC. 6.

 Section 8357 of the Education Code is amended to read:

8357.
 (a) The cost of childcare services provided under this article shall be governed by regional market rates. Recipients of childcare services provided pursuant to this article shall be allowed to choose the childcare services of licensed childcare providers or childcare providers who, by law, are not required to be licensed, and the cost of that 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 childcare providers at the 85th percentile of the most recent regional market rate survey.
(b) (1) The regional market rate ceilings shall be established at the greater of either of the following:
(A) The 75th percentile of the 2018 regional market rate survey for that region.
(B) The regional market rate ceiling that existed in that region on December 31, 2017.
(2)  Upon an appropriation by the Legislature for the express purpose of this paragraph, and during the 2021 calendar year, the 2021 regional market rate ceilings shall be established at the greater of the 75th percentile of the 2021 regional market no less than the 85th percentile of the 2018 regional market rate survey for that region or the regional market rate ceiling that existed in that region on December 31, 2017. 2017, whichever is greater.
(3) Upon an appropriation by the Legislature for the express purpose of this paragraph, commencing January 1, 2022, with the 2021–22 fiscal year, and annually thereafter, the regional market rate ceilings shall be established at no less than the 85th percentile of the 2018 regional market rate survey for that region or the regional market rate ceiling that existed in that region on December 31, 2017, whichever is greater.
(4) Notwithstanding paragraphs (2) and (3), and if there is no appropriation, the regional market rate ceilings shall be established pursuant to paragraph (1).
(c) (1) Reimbursement to license-exempt childcare providers shall not exceed 70 percent of the family childcare home rate established pursuant to subdivision (b).
(2) Notwithstanding any other law, upon an appropriation by the Legislature for the express purpose of this paragraph, commencing January 1, 2022, and annually thereafter, license-exempt childcare providers shall not exceed 70 percent of the commensurate rate, including hourly, daily, weekly, and monthly, for both full-time and part-time care established pursuant to subdivision (b).
(d) Reimbursement to childcare providers shall not exceed the fee charged to private clients for the same service.
(e) Reimbursement shall not be made for childcare services when care is provided by parents, legal guardians, or members of the assistance unit.
(f) A 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 childcare services, including license-exempt 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 their 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 childcare services through a direct payment to a recipient of aid rather than to the 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 childcare providers of the type needed by the recipient of childcare services provided under this article.
(i) (1) Notwithstanding any other law, reimbursements to 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 childcare.
(B) A family has a documented need of six hours or more per day that exceeds no more than 14 days per month. 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 not limit childcare providers from being reimbursed for services using a weekly or monthly rate, pursuant to subdivision (c) of Section 8222.

SEC. 7.

 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 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 childcare contractors no later than June 1. Applications for new childcare funding shall be issued not more than 45 working days after the effective date of authorized new allocations of 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 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 childcare contracts and the 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 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, pursuant to subdivision (g), for provider payments.
(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 childcare providers to reflect this updated state median income, and 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 time 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 both of the following:
(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.