Assembly subcommittee presses administration over May Revision child care cuts and prospective-pay prep

Assembly Budget Subcommittee No. 2 on Human Services heard detailed presentations and public testimony on the governor's May Revision proposals for California's child care system on May 14, 2025, pressing the administration over cuts to cost-of-living adjustments and reductions to a foster-youth bridge program while seeking detail on new funds for prospective provider payments.

The discussion centered on funding in the May Revision and implementation steps. "Today we'll focus on the May revision which includes $6,800,000,000 in total funding in 20 four-twenty 5 for Child Care and Development," Jennifer Troy, director of the California Department of Social Services, told the subcommittee, listing follow-up automation and administrative requests tied to a federally required shift to prospective payments.

Why it matters: Subcommittee members and child care advocates told the panel that cuts or delays to rate increases and support programs risk losing providers and reducing access for families, while the administration argued that some reductions align funding with expected utilization and that other line items are investments to meet federal requirements.

Key details from the administration and fiscal analysts

- Funding and slot counts: The May Revision continues funding intended to maintain roughly 46,000 newly added child care slots since 2021–22 and preserve existing rate levels tied to the department's "cost of care plus" payments. The administration characterized many items as alignment to actual utilization rather than service eliminations.

- Prospective payments and implementation: Federal rules now require states to move to prospective (beginning-of-month) payments for providers. Troy said the state has a federal waiver through August 2026 but is budgeting "$43,800,000 to support administrative costs for local agencies, 8,200,000 to support automation costs, and 6 state positions to support the workload to prepare for the change," and an additional $21,800,000 in one-time federal funds for start-up automation related to a single rate structure.

- Suspension of COLA and bridge funding cut: The May Revision proposes suspending the 2025–26 statutory cost-of-living adjustment (COLA) for child care and preschool (estimated state general fund savings cited by the administration) and reducing funding for the Emergency Child Care Bridge program for foster youth by $42.7 million. Troy said the bridge reduction is intended to "align with utilization and not to disenroll any children who are currently in the program."

- Analytic concerns and oversight requests: Dylan Ocasio of the Legislative Analyst's Office said the LAO is reviewing proposals and recommended rejecting proposed exemptions from department-level technology review on automation projects: "We do recommend rejecting that particular language," he said, and urged additional legislative oversight and reporting requirements for rate-reform and prospective-payment automation costs.

Public testimony and provider concerns

Dozens of providers, local advocates and child care organizations testified during the public comment period, saying the May Revision undermines progress toward provider pay reform and leaves fire- and flood-impacted providers without adequate supports. Felisa Wright, a family child care provider who lost her home and business in the Eaton Fire, described ongoing displacement and denials of federal or small-business assistance: "I lost everything in the Eaton fire," she said, urging the state to provide affordable housing, streamlined reopening processes and financial help for providers.

Provider coalitions and advocacy groups asked the legislature to preserve the COLA, adopt the alternative methodology for rate-setting into statute, and restore or continue funding to meet previously stated goals such as the promised 200,000 additional subsidized child care slots. Alicia Hatfield of Every Child California called for the legislature to "codify the alternative methodology and statute, and direct the administration to begin rate setting based on its outputs." Several speakers urged enrollment-based reimbursement (payments based on enrollment, not daily attendance) to stabilize provider revenue when families face housing or health instability.

Diverging priorities and next steps

Committee members pressed the administration for greater detail on the prospective-payment automation budget and for assurances that the Emergency Child Care Bridge reductions would not cause immediate disenrollments. Several members of the subcommittee and the legislative women's caucus urged restoring the COLA and seeking alternatives to across-the-board cuts.

The administration and analysts said some items in the May Revision are intended to prepare systems for federal compliance rather than immediate service reductions; the LAO asked the legislature to require more transparent reporting and to consider phasing reforms or targeted alternatives if savings must be found.

The subcommittee recessed after a broad exchange; members and advocacy groups signaled they will continue negotiations as the budget process unfolds.

Ending note: Advocates asked the Legislature to reject cuts that would reduce provider pay or access, while the administration argued it was balancing fiscal pressure and federal compliance work. The subcommittee kept child care on its priority list for further hearings and follow-up on automation details and disaster-recovery supports for providers.