Child Care Funding Reform Fall 2022

The Honorable Gavin Newsom  
Governor 
State of California 
State Capitol Building 
Sacramento, California 95814 

 

CA Must Adopt and Invest In Recommended Rate Reforms and Mixed Delivery to Address our Child Care Crisis 

Dear Governor Newsom, 

As you prepare to release the first budget for your second term, the undersigned organizations urge you to adopt the cost-based reimbursement model and multi-year transition plan to address the child care crisis and transform child care and early learning in California to ensure young children and families can thrive.  

These plans were developed as a result of the work of the Rate and Quality Workgroup, established under AB 131, which culminated this past August in two comprehensive reports (linked here and here) summarizing their work that assessed the methodology for establishing rates and the existing quality standards for early care and education (ECE) programs. The Rate and Quality Workgroup engaged in deep and meaningful conversations and technical analysis on the structural challenges plaguing the viability of the child care and early learning sector. There was expansive engagement from parents and caregivers, ECE professionals, researchers, experts, advocates, and community leaders. There has never been more consensus about the need, and most importantly, around the clear technical assessment of the marker by which California can sustain, elevate, and move our child care sector forward. 

The report provides recommendations to correct the cost structure for the state’s ECE programs. The time has come to move California ahead and adopt the cost-based model via a multi-year transition plan. 

We call upon your administration to take swift action in the proposed 2023-24 Fiscal year January Budget to make meaningful investments in child care reimbursement rates and implement long discussed reimbursement rate reform to ensure child care access and availability for all working families in California.  

We urge you to do the following in your proposed January 2023-24 budget: 

• Adopt child care reimbursement rate reforms and increases in provider compensation including a shift from a market rate to a cost based model through a robust contract agreement with the Child Care Providers Union and commensurate increases throughout the child care system, including an increase in current-year rates to at least the level set in the 2021 Market rate survey (30% increase), but applying that percentage equitably across all California providers which covers the full cost of care eliminating the need for family fees; and  
• Provide financial support to the full system of care – from birth through school age care – to support the mixed delivery child care system, inclusive of Family Child Care Providers, Head Start, California State Preschool and Community Based Centers, all of which offer full day and full year services that meet the diverse needs of families in every community in California.  

Without immediate action, more and more children will be left behind. There are currently hundreds of empty early childhood classrooms because providers cannot hire teachers to staff them. Hundreds of family child care homes have been forced to close due to a lack of sufficient funding. These are child care slots that have been allocated for in the budget but will not be utilized because of the antiquated cost model and despite a huge need for child care and early learning. Parents and caregivers, particularly the most marginalized, are left to make increasingly difficult choices. Many must sacrifice family income or choose less safe or unstable care options, all of which increases overall family stress – something well understood by you and your Administration’s Roadmap for Resilience, which includes 95 mentions of the importance of quality child care settings in preventing lifelong negative impacts of ACEs on children and their families.  

Family child care and center-based child care programs are struggling to find qualified staff for the wages they can pay and are overwhelmed with the rising costs to keep their doors open. The US Department of Labor estimates over 100,000 workers have not returned to the child care workforce (NYTimes). In California, we are seeing dark classrooms in our center based child care programs as they are unable to recruit or retain workforce at the current reimbursement levels leaving parents without opportunities for child care for their children (KQED, Sac Observer, KCRA). 

Inclusion of these key investments in the January Budget Proposal will signal to California parents, small businesses, and industry alike, that the Newsom Administration takes seriously the needs of working women and people who are raising children and respects the hard-working individuals of the child care industry who stepped up for California when it needed them most.  

Without making this critical down-payment in the budget now for a robust mixed delivery system, the economy will continue to be negatively impacted as workers cannot find safe, stable, and nurturing environments for their children so that they can participate in the workforce. Numerous business surveys cite child care problems as a top three workforce challenge. Robust child care and early learning are an integral part of a thriving California. 

 Sincerely, 

The Undersigned Organizations