California leaders, providers press for ‘cost of care’ rate reform while tentative union contract awaits ratification

SACRAMENTO — California officials, union leaders and childcare providers told members of the California State Assembly Select Committee on Child Care Costs on Thursday that the state needs to finish implementing a new “alternative methodology” for setting subsidy rates and fully fund the true cost of care if it wants to stop provider closures and expand affordable slots.

The discussion centered on a tentative three‑year agreement the state reached with Child Care Providers United (CCPU) on Aug. 8, which includes health benefits, retirement contributions, a cost‑of‑living adjustment to certain rate payments and a one‑time stabilization payment — but that agreement remains subject to formal ratification by both the union and the state.

Committee co‑chair Cecilia Aguiar‑Curry opened the hearing by saying the panel’s role is to “examine the current state of childcare and find solutions that improve access and affordability,” and invited testimony from parents, center directors and home‑based providers about how current reimbursement rules affect operations and families.

Calif. Department of Social Services Director Jennifer Troia described recent spending increases and reforms while urging faster follow‑through. “In the last five years, together, we have nearly doubled the total funding for childcare and development programs,” Troia said, citing growth from about $3.3 billion in 2019–20 to $6.4 billion in 2024–25 and an increase in the number of children served through subsidy from roughly 294,000 to 378,000.

Still, Troia and multiple witnesses said state policy should move away from market‑based reimbursement toward a rate‑setting approach that measures the actual cost of providing care — the so‑called alternative…