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 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 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 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 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, 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. 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, 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 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.