Lawmakers press administration for details on alternative childcare reimbursement methodology, July 1 deadline and bargaining status

Legislators on Senate Budget Subcommittee No. 3 pressed administration officials, LAO analysts and stakeholder representatives about the state's planned transition to a single alternative reimbursement methodology for state-subsidized childcare.

Edgar Cabral of the Legislative Analyst's Office summarized the statutory milestones: since 2021 the state has been transitioning away from a two-rate system (standard reimbursement rate and a county-based regional market rate) toward a single methodology that focuses on provider costs. The LAO highlighted that rates under the new methodology set on July 1, 2025, must be "no less than" the rates currently in effect and that if rates are not ready to implement, statute requires CDSS to submit a transition plan to the Legislature.

Jackie Barossio of CDSS said the agency is finalizing the selection-point values that feed the alternative methodology and that setting rates will be subject to the budget process and, for family childcare providers, to collective bargaining. CDSS said it will present selection-point values to the public Rate and Quality Advisory Panel and provide required quarterly implementation reports to the Legislature.

Members of the rate-and-quality work group and county contractors said they remain frustrated by lack of clarity on two issues: (1) the public release of the cost calculator and selection-point values that determine rates for center-based (nonbargained) contractors, and (2) whether cost-of-living adjustments (COLAs) are being distributed equitably across providers. Eric Sonnenfeld (Tulare County Office of Education, rate-and-quality work group) and LAO staff warned that the legislature may not receive final numbers in time to incorporate them into the June budget and suggested the Legislature consider setting aside funding now to cover potential costs.

Union witnesses representing family childcare providers (CCPU) urged rapid implementation of a cost-of-care model, said they had placed 12 proposals on the table in bargaining and reported no responses yet from the administration. Several parent and provider public commenters told the committee they are on long waitlists and fear provider closures if enrollment-based payments and rate reform are delayed.

Why this matters: The alternative methodology changes how California calculates what it pays providers and is central to the state's long-term plan to stabilize and expand childcare capacity. The statutory July 1, 2025 milestone, the LAO noted, also creates a timing conflict with the Legislature's June 15 budget deadline.

Questions the committee flagged: whether CDSS will provide a transition plan with specific milestones and whether the rate selection-point values for centers can be released now so the Legislature has time to act. LAO recommended the Legislature request a more detailed implementation roadmap with milestones and consider reserving funding in June to cover costs if final rates are not ready.

What CDSS said it will do: issue required quarterly implementation updates, present selection-point values at public panels, and provide additional information via the May Revision as material becomes available. CDSS cautioned that automation and program changes could take more than one year to complete after rates are set.