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 methodology. Troia described a recently negotiated tentative agreement that would advance steps toward implementing that methodology, unified rate structures and “additional progress” on benefits and stabilization payments; she cautioned the agreement is tentative and pending ratification.

Alexa Frankenberg, executive director of Child Care Providers United, said the union’s tentative agreement “secures providers’ hard‑won benefits, increases current rates, provides the one‑time stabilization payments, and other significant improvements,” but added that “there is more work ahead” to link rates to providers’ true costs, pay for non‑contact hours (prep, cleanup), provide paid time off and better support providers in emergency or disaster conditions.

Providers on the panel gave concrete cost examples that lawmakers said illustrated the gap between reimbursement and actual expenses. Anita Vicini, a licensed family childcare provider from Tuolumne County, said her July check for 14 full‑time subsidized children was $12,276.42 while her listed monthly expenses (housing $2,701; utilities $1,462; groceries $2,600; transportation $1,280; an employee working three days a week $2,800; business expenses $1,239) totaled $12,082 — leaving only a small surplus that does not cover emergencies or build reserves.

Center owner Frisha Moore of Moore Learning Preschool said she lost about 30 preschool children this summer to free transitional kindergarten (TK) and that infant tuition she charges private pay families is $1,900 a month while a cited subsidy rate covers $1,572, leaving families with an additional co‑pay and centers struggling to cover infant costs. “To keep them from leaving, I often offer a scholarship to cover their co‑pays even though it cuts into my already negative bottom line,” Moore said.

Independent researchers attending the hearing framed the problem as structural and long‑standing. Laura Pryor, research director at the California Budget & Policy Center, told the committee that even with recent funding increases the state serves a small share of eligible children — an estimated 14 percent in 2023 — and that provider wages remain far below comparable K‑8 teacher pay.

Public Policy Institute of California economist Sarah Bone said limited access to affordable care depresses workforce participation, especially for mothers of young children, and noted research showing that poverty among families with preschoolers would be about 24 percent lower if subsidized care were available to all those children.

Committee members asked state staff and witnesses for timelines and concrete next steps. Frankenberg and Troia said the parties will form a joint labor‑management committee to recommend a rate structure and amounts for base and enhanced rates, and Frankenberg said the group aims to deliver final recommendations by Nov. 30 to inform 2026 budgeting and investments. Troia also noted a planned one‑time stabilization payment to be issued by Jan. 1, 2026, under the tentative agreement and said the state is working to consolidate CalWORKs childcare stages and unify reimbursement structures.

Lawmakers and providers repeatedly warned that without a durable restructuring of rates and stronger supports for the workforce — including meaningful wage increases, paid time off and benefits — the state risks continued closures, shrinking infant capacity and fewer affordable slots for parents. Providers said low pay pushes qualified educators to other sectors and that family‑based providers are disproportionately harmed: state data cited at the hearing suggested subsidy rates cover a smaller share of cost for family childcare than for center care in many regions.

The hearing did not produce a formal vote. Rather, it concluded with committee members directing staff to continue policy work, with both lawmakers and provider leaders emphasizing the need for fixed timelines and clear deliverables for the alternative methodology and any implementation steps.

If the joint labor‑management committee meets its Nov. 30 deadline and the tentative agreement is ratified, the state will move from short‑term pandemic and one‑time supports toward the more structural rate reforms providers say are needed to stabilize care. Until then, providers and families told the committee they face immediate financial and operational pressure.

Quotes from the hearing: "This agreement is tentative and pending formal ratification by both parties." — Jennifer Troia, director, California Department of Social Services. "For us, cost of care is not a concept or a theory. It is dollars and cents." — Alexa Frankenberg, executive director, Child Care Providers United. "My check was $12,276.42 for 14 full time children in my care. My monthly expenses ... add up to $12,082." — Anita Vicini, licensed family childcare provider, Tuolumne County.

Looking ahead The committee asked state staff to continue implementation planning and to return with more specifics on timelines and rate design choices. Provider and parent groups asked legislators to keep the deadline pressures tight and to build accountability into any labor‑management committee work so that the state’s next budget cycle can reflect the committee’s recommendations.