1. family and parenting
2. children
3. daycare and preschool

Response to the Governor’s May Revise for Budget Year 2015-2016
May 18, 2015
On Thursday, May 14, 2015, Governor Brown released his Budget May Revision 2015-16
(“May Revise”). The May Revise updates the $113 billion spending plan the governor released in
January, using current information regarding California’s revenues. Incoming revenues are $3.4 billion
greater than the revenue estimates that Gov. Brown used in creating his January budget. In April
alone, tax receipts surpassed estimates by more than $1.8 billion. This economic recovery follows a
period during which California lost over one-third of its child care and development system. Following
more than $1 billion in cuts, California currently provides child care and early education opportunities
to roughly 90,000 fewer children than it did in 2007.
Notwithstanding unexpectedly high revenues, the May Revise maintains funding for
California’s child care and early education system at dangerously reduced levels. The governor’s new
spending plan reduces the growth factor and cost-of-living adjustment (“COLA”) for non-CalWORKs
child care programs. The May Revise adds $55 million dollars to the budget for child care programs,
but the additional funding largely reflects only incremental increases in the estimated caseload and
cost of providing child care in the CalWORKs child care program. It proposes small increases in child
care capacity and reimbursement rates to serve children with “exceptional needs” (certain children
with disabilities) in the California State Preschool Program (CSPP). It augments the Early Education
Program for Infants and Toddlers with Exceptional Needs, which identifies and provides early
interventions for children with exceptional needs from birth to age two. The Governor’s revised
budget earmarks current and anticipated increases in federal child care funds for purposes including
creation of an Infant and Toddler Quality Rating and Improvement System (QRIS) Block Grant. The
May Revise provides little to no funding to increase the availability of child care, decrease the number
of families on child care waiting lists, improve the quality of child care, or increase the Regional
Market Rates to child care providers and Standard Reimbursement Rates to state contractors.
I. Specific Provisions in the May Revise
The May Revise includes the following funding for child care programs:
State Preschool
General Child Care
Migrant Child Care
Alternative Payment
CalWORKs Stage II
CalWORKs Stage III
Resource & Referral
Children w/ Severe Disabilities
CA Child Care Initiative
Quality Services
Local Planning Councils
Total Proposed Child Care and Early Education Budget
$670.6 million
$570.4 million
$27.9 million
$189.2 million
$395.4 million
$265.5
$18.9 million
$1.6 million
$.2 million
$49.7 million
$3.4 million
$2,183.9 million
The budget reflects:







II.
An increase of $46.8 million to CalWORKs Stage 2 child care and an increase of $2 million to
CalWORKs Stage 3 child care to reflect increases in caseload and per-child cost of care.
A decrease of $7.2 million to capped Non-CalWORKs child care to reflect a COLA decrease and
a purported decrease in the population of 0-4 year-old children.
An increase in $12.1 million Proposition 98 general funding to provide access to an additional
2,500 children in CSPP, with a priority for serving children with exceptional needs.
$6 million to increase CSPP rates by 1 percent while requiring that CSPPs provide parents with
information about accessing local resources for screening and treatment of developmental
disabilities and teacher-training activities designed to improve outcomes for children with
exceptional needs.
$30 million in Proposition 98 funding to augment the existing Early Education Program for
Infants and Toddlers with Exceptional Needs
A net increase of $17.7 million federal Child Care and Development Funds (CCDF); establishes
the Infant and Toddler QRIS Block Grant with anticipated federal quality funds beginning in
October 1, 2016.
$2.4 million from the federal government to provide Early Head Start services to an additional
260 infants and toddlers in 11 northern counties
Recommendations
A.
Restore Child Care Programs to Proposition 98 Funding Formula
Proposition 98, passed by voter initiative in 1988, amended the California constitution to
establish education programs as a top priority for General Fund Spending, with a minimum funding
guarantee. The Proposition 98 funding formula included all Child Care and Development Services Act
(“CCDSA”) programs for 22 years, from 1989 until 2011. During the great recession, the Legislature
passed AB 114, which among other austerity measures, removed all state child care programs from
Proposition 98 guaranteed funding, with the exception of part-time CSPP and After School Education
and Safety programs.
CCDSA programs have always played a vital role in supporting children’s cognitive
development and family stability which are critical to their success in school. State and federal
initiatives including the recent Child Care and Development Block Grant Act of 2014, as well as Head
Start and Race to the Top Early Learning Challenge grants, are working to improve the quality of early
learning experiences in CCDSA programs and to bring them into greater alignment with K-12
education goals. Proposition 98 funding is projected to grow to $68.4 billion in 2015‑16, an increase
of $2.7 billion compared to the level expected in January. Restoring all CCDSA programs within
Proposition 98’s minimum funding guarantee will increase and stabilize funding for programs that
already fulfill important Proposition 98 goals, and support state and federal efforts to improve the
programs in ways that will help the programs do even more to advance later school success.
2
B.
Oppose the Governor’s Cuts To Non-CalWORKs Child Care, and Implement the
Legislative Women’s Caucus’s Proposal For Reinvestment
The May Revise proposes to cut capped, non‑CalWORKs Programs by $7.2 million ($3.1
million Proposition 98 General Fund and $4.1 million non‑Proposition 98 General Fund) to reflect a
reduction in the COLA from 1.58 percent at the January Budget to 1.02 percent at the May Revision,
and a net decrease of $2.5 million ($1.1 million Proposition 98 General Fund and $1.4 million non‑
Proposition 98 General Fund) to reflect a purported change in the population of 0‑4 year‑old
children. The governor’s proposal to reduce the COLA follows years in which budget trailer bill
language prevented child care and development programs from receiving a COLA.
In addition to reducing the COLA adjustment, the May Revise would continue to use grossly
antiquated child care reimbursement rates. Until FY 2014-15, California still based voucher payment
on Regional Market Rate (RMR) survey data from 2005. Effective January 1, 2015, the state updated
the RMR survey data used, but then applied a “deficit factor” that resulted in modest to no increases
depending on the county and the category of care.1 The governor’s proposed budget maintains the
deficit factor. The median increase last year in voucher-based reimbursement rates for the one of the
most expensive forms of care, infant care at licensed child care centers, following nearly a decade
without any rate increase, was only $131 a month. For infant care at licensed family child care homes,
where the majority of infant care is available, the median increase was zero percent, as the rate
increased in fewer than half of California counties.2 Contracted centers saw a five percent increase in
the Standard Reimbursement Rate (SRR) last year, and would get a modest increase once again
through the Governor’s 2015-16 proposed budget, the SRR for FY2015-16 would still be nineteen
percent lower than it was in 1980-81, after adjusting for inflation.
Because of changes in eligibility rules during the recession, and the prioritization of lower
income families over higher income ones within the child care priority system, families must be
extraordinarily low income to obtain and keep child care through CalWORKs or to successfully move
off wait lists into non-CalWORKs child care. When the RMR is inadequate, these families are offered
the impossible choice between substandard child care, or copayment of the difference between a
higher quality child care provider’s fee and the voucher reimbursement, which then depletes the
money the family has available to pay for basic necessities. The low SRR damages the availability and
quality of contracted child care. The low SRR makes it impossible for contracted child care providers
to invest in quality improvements, retain skilled staff, and even just to keep their doors open. The
combination between outdated rates, an increasing minimum wage, and the Child Care Development
Block Grant Act of 2014 present California with a potentially disastrous situation in which nonCalWORKs child care providers will have to meet significantly higher quality standards than child care
providers in the private market, and will share their challenge of meeting increased staffing costs, but
will be uniquely constrained by badly outdated payment rates. Our system cannot continue to offer
1
In Los Angeles County, family child care home providers are currently only reimbursed $45.80 per
day for full-time care of children birth to 24 months, and $42.48 per day for full-time care of children
two to five years old.
2
In Los Angeles County, child care centers are reimbursed $73.79 per day for full time care of
children brith to 24 months, and $53.95 per day for full-time care of children two to five years old.
3
parents high quality, or even basic access to, child care without significantly updating rates paid to
child care providers.
The May Revise decreases the growth factor to child care programs based on a purported
decrease in the number of 0-4 year old children. Before the 2011 elimination of funding for
centralized eligibility lists (CELs), more than 193,000 California children were on the waiting list for a
subsidized child care or state preschool slot, and 63 percent were ages zero to five. The current
number of eligible children on local waiting lists has been estimated at almost 300,000. Given the
number of young children waiting for child care and early education, a reduction based on a
purported decrease in this demographic makes little sense.
The Child Care Law Center supports the Legislative Women’s Caucus call for $600 million
reinvestment, evenly allocated between rates and slots.
C.
Budget To Meet The Demands of the Child Care Development Fund Reauthorization
The Child Care Development Fund (CCDF) is the largest source of federal funding to states to
increase the availability, affordability, and quality of child care. CCDF funds made up one-quarter of
California’s child care and preschool budget for 2014–15. The Child Care and Development Block
Grant (CCDBG) is the federal law that authorizes the CCDF and governs state spending of CCDF funds.
On November 19, 2014, President Barack Obama signed the CCDBG Act of 2014. The CCDBG Act of
2014 reauthorizes the CCDF, with many new rules that state programs using CCDF funds must follow.
Some of these rules are effective immediately, while others will become effective over the next
several years. Reauthorization of the CCDF will improve the state subsidized child care system for
low-income children, but it will also impose substantial costs on it. The law mandates increased
quality through training and monitoring requirements for almost all state subsidized child care
providers, including those exempt from child care licensing. It includes family-friendly administrative
policies such as a 12-month period of deemed eligibility, and supports use of current rate data, and
delinking reimbursement from occasional absences to bring subsidized child care payment practices
more in line with the unsubsidized child care market. These provisions will help programs budget for
fixed costs and investments to improve quality, and families stay stable in care. The Child Care Law
Center recommends funding for CCDF Reauthorization implementation, so that changes in federal
law will benefit parents, rather than resulting in their losing their subsidized child care. The Child Care
Law Center further recommends trailer bill language to implement the law’s 12-month eligibility
requirement.
D.
Eliminate Budget Act Language To Help Streamline the CalWORKs Child Care
Program and Assist CalWORKs Families on Wait Lists for Child Care
The Child Care Law Center has proposed an amendment to Senate Bill 69 (the Budget Act of
2015) that eliminates the language that prevents parents and children from receiving Stage 3 child
care unless they are transitioning directly from Stage 1 or Stage 2. Our recommendation will help
CalWORKs families who never received the child care they need due to the challenges of navigating a
gauntlet of changes to the CalWORKs program. It will reduce pressure on the wait list for nonCalWORKs child care. And, it will move the CalWORKs child care program toward its statutory
4
purpose to support families who exit cash aid so long as they continue to be low-income, need child
are for an eligible reason, and Stage 3 funding is available to provide child care to them.
The Child Care Law Center’s proposed amendment addresses the problem of the many
parents who previously participated in CalWORKs are now on wait lists for non-CalWORKs child care.
New welfare-to-work rules under the 24 month clock in effect since 2013, and work exemptions in
effect between 2009 and 2015, created confusion about which CalWORKs families were eligible for
child care for what activities. As a result, many CalWORKs families never or only briefly received child
care during this period, and now have been timed out for more than two years, making them
ineligible for Stage 1 or Stage 2, and thus for any CalWORKs child care. The budget language that
prevents these families from obtaining CalWORKs child care hurts families seeking non-CalWORKs
child care, as it adds families who should be receiving CalWORKs child care to crushing wait lists for
non-CalWORKs child care. The governor’s proposed cuts to non-CalWORKs child care would further
exacerbate these wait lists.
The Child Care Law Center believes all children have the right to safe, educational, and nurturing child
care while their parents work to support their families. For more information: www.childcarelaw.org
5