CDPI Update on State Budget
05/28/2010 -
Child Development Policy Institute (CDPI)
INFORMATION BULLETIN
DATE: May 27, 2010
FROM: Tim Fitzharris, Ph.D.
Legislative Advocate
Assembly Rejects Governor's January Child Care Proposals; Senate Does, Too. Kinda.
The last CDPI Bulletin reported that both houses rejected the Governor's May Revision proposals to eliminate Child Care and CalWORKs. That action brings us back to the Governor's January proposal which would make targeted reductions for a "savings" of some $200 million in subsidy funding and a new Licensing proposal suggested in April.
Yesterday, Assembly Budget Subcommittee #2 on Education Finance took up that proposal; this afternoon, the full Senate Budget & Fiscal Review Committee did as well. Below, I list the major Child Care and Development actions. In a second, following article, I will lay out other relevant decisions by the fiscal committees.
The Assembly Rejects
The Assembly Subcommittee #2 voted to:
REJECT the Governor's January Child Care proposals, including (1) lowering the income eligibility ceiling from 75% to 60% of the State Median Income (a reduction of $54.4 million in savings) and (2) lowering the maximum reimbursement rate (RMR) from the 85th percentile to the 75th percentile of the 2005 RMR survey and lowering the maximum reimbursement for license-exempt providers to 70% of reduction ($132 million in savings).
REJECT the Governor's January Child Care proposal to reduce CalWORKs Stage 3 child care by one-third ($123 million in Prop 98 savings).
APPROVE additional staff for the CDE to support the Early Learning Quality Improvement System Advisory Committee (ELQIS) and Advisory Council on Early Learning Childhood Education and Care (ELAC). There is no State General Fund support here; these bodies are supported by a 3-year, $2 million First Five CA grant.
REJECT the Governor's request for new statutory language that requires provider/family overpayments to be recovered, specific consequences for failure to reduce error rates, fines and penalties for fraud, and specific collection methods. The LAO was directed to work a possible alternative.
APPROVE several "technical adjustments," including (1) a $4.4 million decrease in 21st Century Community Learning Centers local assistance funding due to availability of carry-over funding; (2) an extension of time for the completion of the Child Care Characteristic Study from September 1, 2010, to March 1, 2011, due to the delay in contracting; (3) slight increases for CCDBG quality earmarks for school-age care, R&R, and Infant and Toddler; (4) a $3.9 million increase for Stage 3 child care ($2.1 million of on-going federal funds and $1.8 million in one-time federal funds available from prior years); (5) a slight increase of one-time funds from CCDBG appropriated to the 2010 federal fiscal year; and (6) an extension by six months of the San Francisco child care pilot program to align it with the fiscal year (no additional funds).
In a related but separate action, Assembly Subcommittee #1 on Health and Human Services REJECTED the Administration's new licensing proposal for annual visits (biennial for family child care homes), using a compliance protocol. The feeling was that it should be vetted more, and perhaps go through a policy committee hearing.
The Senate "Rejects"
The Senate Budget & Fiscal Review voted on the Governor's proposal to (1) reduce income eligibility limit, (2) reduce the RMR ceiling for licensed and license-exempt providers, (3) reduce Stage 3 funding by $123 million, and (4) the Plan to Recover Improper Payments as a package. The motion appeared to be a rejection of the Governor's specific proposals; but it wasn't as clear a rejection as the Assembly subcommittee had passed. The intent was to get the issues to Conference Committee for further discussion and compromise.
Senator Denise Ducheny (D-San Diego), the Budget Committee Chair, said, "We're working on options. There should be placeholder language about capturing overpayments and reviewing family fees." Later in the hearing - when explaining the motion to a late-arriving Senator - she said, "The motion is to send it all to Conference Committee for options for cost containment without elimination." The motion passed 8-2.
Some Differences
The Democrats in both houses are putting a Budget solution together which, obviously, differs significantly from the Governor's solution. Perhaps unfairly simplified, the former is a "revenues-oriented Budget;" the latter, a "cuts-oriented Budget." Some say the extremes have now been "marked," and we'll see how (and when) the middle ground can be found downstream.
I need to underline here that there are differences between the Democrats' approaches, too. The Senate Majority released their revenue proposal - projecting some $4.9 billion in income options - one day before the Assembly. The Speaker and Budget Chair yesterday released a major revenues and swap-out proposal - called The California Jobs Budget - which they said closes the $17.9 billion shortfall and ends the year with a $1 billion reserve. The Assembly plan would shift funds and fund sources in a manner, they propose, can be adopted by a simple majority vote (read, bypass the Republicans).
The differences between the two houses exist every year, and that's why there is a conference committee to resolve them. Proposition 98 funding is always a conference item anyway. Expect negotiations, trades, fund shifts, broken deals, accusations and grandstanding, and dissatisfaction with the final compromise by all sides.
What does this mean?
What does this mean for Child Development? Notwithstanding the rejection of most January and May Revise child care proposals, "this cake ain't cooked." There WILL be significant cuts coming in the final Budget. "It ain't over, 'til it's over!"
The Proposition 98 Package and the Differences between the Houses
Today, the same two committees voted on Proposition 98 funding in lengthy hearings. Assumption of revenues underlie the different approaches taken by the houses.
The Assembly version presumes the success of the Speaker's Budget revenues package (the California Jobs Budget). The proposed alternative restores the proposed cuts to Education and Child Care. Here are the details:
2009-10
Funds schools at the 2009-10 July Budget funding level, with minor workload adjustments, providing a total of $50.2 billion. Of this amount, $500 million is provided in one-time funding. This funding level is $300 million higher than the Governor proposes to provide for 2009-10. This funding assumes settle-up payments of $1.7 billion.
Approves the Governor's May Revise proposal to withdraw $250 million in General Fund prepayments for the K-12 QEIA program in 2009-10 and restores payments in 2010-11.
2010-11
Funds the Proposition 98 minimum guarantee at $54.3 billion. To meet this minimum guarantee, $3.9 billion for K-12 education and $1.4 billion for child care is provided from Jobs and Economic Security Fund. This overall funding level provides $5.9 billion more than the Governor's proposed funding level of $48.4 billion.
Highlights of the K-12 and child care adjustments:
Restores the Governor's proposed reduction of $1.5 billion to school district and county office of education revenue limits.
Restores the Governor's proposed reduction of $1.4 billion to child care programs. (The Child Care elimination automatically adjusts the Guarantee up $1.2 billion.)
Pays down the "education credit card" by providing $1.3 billion to pay off all prior year mandate claims.
Rejects the $207 million negative COLA proposal.
Provides $51.0 million for the Emergency Repair Program (ERP) to satisfy 2008-09 Budget Act commitments.
Partially restores revenue limit reductions from prior years.
Community College Adjustments:
Approves $48 million in Quality Education Investment Act (QEIA) funds for CTE Pathways, but rejects the $20 million General Fund augmentation for CTE Pathways.
Approves $10 million General Fund restoration for Extended Opportunity Programs and Services (EOPS).
Approves $10 million General Fund restoration for Part-Time Faculty Compensation.
Rejects moving CTE Pathways out of the flex item and rejects moving EOPS, Basic Skills, and Fund for Student Success in the flex item.
Rejects the $23 million negative COLA proposal, increasing the Apportionments items by over $22 million.
Provides approximately 2 percent enrollment growth, or $91 million.
Restores $35 million for prior year reductions to student support/categorical programs.
Restore an additional $38 million in prior reductions to Apportionments.
Provides $100 million from the Jobs and Economic Security Fund for the Economic and Workforce Development Program. This program advances the state's economic growth and global competitiveness through education, training, and business development.
Assemblymember Wesley Chesbro (D-Santa Rosa) said, "This is an honest Proposition 98 Budget, needed in a bad economy." Assemblymember Julia Brownley (D-Woodland Hills) said, "This is job creation in both the short- and long-term. I'm proud to support it." Assemblymember Sandre Swanson (D- Oakland) said, "It's important for us to take a stand that reflects our values and priorities."
Across the hallway in the Senate, the Budget Committee did not assume new revenues and, in effect, put most K-14 issues in the Conference Committee for resolution. I've already explained that the Child Care and Development issues will be in Conference Committee.
Here are some other Prop 98 decisions made this afternoon in the Senate:
After School (Proposition 49-ASES) - Put on ballot for voter approval. If passed, put in categorical "flex item" and treat like all other categorical programs.
Current year program savings primarily from Class Size Reduction ($340 million from CSR and $176 million from Revenue Limit and other adjustments).
Revenue Limit Reductions - Restore $800 million (because Child Care was put back in)
COLA - Reject the negative COLA (except for applying to the Deficit Factor) (Restore to zero in Rev Limit and Categoricals, but allow negative COLA apply to DF.)
K-3 Class Size Reduction - added to the K-12 cut/flex program ($382 million in 2010-11)
Budget Year savings Shift - Accept Gov's proposal to shift $321.7 million in one-time funds to the Economic Impact Aid program in order to achieve General Fund savings.
Emergency Repair - $25 million in one-time funds for 125 shovel-ready school projects.
Categorical Flexibility - Accept LAO recommendation to move Home-to-School and K-3 CSR into categorical and two out (Cal-SAFE child care but not student support into CDD, and supplemental services for HS exit exam).
CDE State Operations - Adopt LAO recommendation to eliminate $5.3 million and 70 staff positions "because CDE is no longer monitoring categorical programs." (ED. NOTE: The Department told the Subcommittee that categorical flexibility-related staff reductions have already been made. The additional CDE staff reductions proposed by the LAO will reduce the department's ability to execute non-categorical duties (like contracting child development and after school funds). A related issue: There will be a major loss of State staff expertise in the various categorical programs, creating a major problem when/if the flexibility program sunsets. "We'd have to start from scratch," said one Education advocate at the hearing.)
Some Other Child Care-Related Budget Actions
Both committees accepted the May Revision's proposals to:
Accept CalWORKs and CalWORKs child care stages caseload adjustments for FY 2010-11.
Reduce Migrant Child Care by $3.5 million because funding is currently underutilized (recoup unspent funds).
Increase federal funds in Stage 3
Increase federal funds for child care quality activities (school-age care, R&R, and infant & toddler earmarks)
Allow CDE use of more funding ($503,000 from $2 million First 5 CA grant) and 3 staff positions to support ELQIS and ELAC activities.
A time extension for the completion of the Child Care Characteristic Study from September 1, 2010 to March 1, 2011.
A time extension for the San Francisco Individualized Child Care Subsidy Plan Pilot Project to June 30, 2011.
I'm not sure, but I think a Senate proposal for a $1 million re-direction from existing Quality Improvement funds and 3 staff for preschool assessment/effectiveness evaluation study may be in Conference. The issue was "held open" for a different funding source, and for ELQIS data subcommittee recommendations.
The Legislative Analyst May Be Key in Conference Committee
"The Legislative Analyst Compromise" may be a descriptor that we will hear often when the Child Care items come up in Conference Committee. Today, in the Senate Budget & Fiscal Review Committee, the LAO was already laying out some of the elements of a possible Proposition 98 package. Here are some of the highlights from the LAO briefing paper:
Develop Strategy for Building 2010-11 K-14 Budget
Make targeted reductions first.
If additional savings needed, consider revenue limit and flex item reductions.
Couple reductions with more flexibility.
Take opportunities to achieve non-Proposition 98 savings.
Act now to save money later.
On the Targeted Reductions list, the LAO proposes, among other things, doing the following:
Child care eligibility ceilings - Reduce from 75 percent to 60 percent of state median income for both CalWORKs and non-CalWORKs programs. Of non-CalWORKs savings, re-direct $55 million to expand access to lowest income families. Results in net loss of about 4,200 CalWORKs slots and 9,000 non-CalWORKs slots. (-$80 million)
Child care reimbursement rates - Reduce license-exempt rates from 90 percent to 70 percent of licensed rates. Affects CalWORKs Stage 2 and 3 as well as non-CalWORKs Alternative Payment programs. (-$45 million)
Child care quality activities - Reduce spending on quality activities to minimum federal requirement. (-$7 million)
Migrant child care - Align funding with program need. (-$4 million)
On the Additional Flexibility list, the LAO proposes, among other things, doing the following:
Add three programs to flex item - K-3 Class Size Reduction, Home-to-School Transportation, and After School Safety and Education
Align CDE staffing levels with flex decisions - Cut $5.2 million and eliminate 70 positions
On the Non-Proposition 98 reduction options list, the LAO proposes, among other things, doing the following:
Child care reimbursement rates - Reduce license-exempt rates from 90 percent to 70 percent of licensed rates. Reflects CalWORKs Stage 1 savings. (-$35.0 million)
California Department of Education state operations - Reduce by 70 positions to align staffing with categorical program responsibilities. (-$5.2 million)
Child care licensing Fund with federal child care quality dollars - Achieves General Fund savings for licensing activities conducted by the Department of Social Services. ($4.3 million)
So, you can see that we're not out of the woods yet. My advice: Don't let up on your advocacy.
Now, 185 organizations have signed on to the "oppose the cuts" statement of the Campaign to Save Child Care. Leaders and advocates are coordinating, and will begin to target the Field's and parents' efforts. The Fight has just begun!
CDE Contracts Information
Good news. Given the Legislature's rejection of Child Care and Development elimination, the CDE is now planning to "roll contracts" ASAP, by program type and based on the Governor's January Budget proposal for FY 2010-11. Adjustments will be made later in the contract year. Contact your fiscal consultant for more information.
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