May 2017

Child Care and Preschool

Summary of Child Care and Preschool Recommendations

Issue May Revision Proposal LAO Recommendation
Standard Reimbursement Rate (SRR) Provides $161 million to increase SRR by total of 11 percent beginning July 1, 2017. Adopt. May Revision proposal implements budget agreement.
Regional Market Rate (RMR) Provides $42 million to increase RMR to the 75th percentile of the 2016 regional market survey beginning January 1, 2018. Includes hold harmless provision. Modify. Reject hold harmless provision. With freed up funding, consider adding new slots or increasing all rates to a higher percentile of the 2016 regional market survey.
Cost-of-Living Adjustment (COLA) Includes $29 million to provide COLA for non-CalWORKs child care and preschool programs. Adopt. May Revision proposal funds statutory COLA.
State Preschool Slots Provides $8 million for 2,959 full-day State Preschool slots at LEAs, beginning April 1, 2018. Modify. Allow both LEAs and non-LEAs to apply for additional full-day State Preschool slots. 
CalWORKs Child Care Reduces funding by $64 million due to changes in caseload and average cost of care. Modify. Adopt LAO caseload and average cost of care estimates for CalWORKs Stage 2. Results in $15 million non-Proposition 98 General Fund savings.
Quality Improvement Activities Does not include sufficient funding to meet federal spending requirement on quality improvement activities.  Modify. Increase quality improvement spending by $7 million to meet federal requirement. Add to recommended county-level quality improvement block grant.
State Preschool and Transitional Kindergarten Alignment Makes modest changes to January preschool alignment proposals.  Reject. Take holistic rather than piecemeal approach to fixing poorly designed system.
LEA = local education agency