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A Policy analysis of California's subsidized child care system
California has been facing a severe fiscal crisis for several years. The challenge before elected officials is providing services and balancing the budget. As the Governor and the Legislature work to solve a projected $26 billion budget deficit for fiscal year 2011-12, cuts to programs will be necessary. The California Department of Education has been successfully implementing and managing child care programs for over 60 years. These programs allow families to work, receive training, become contributing members of society and break the cycle of generational welfare while providing safe, quality, child care options for the care of their children. The goal of fiscal cuts to the system is to reduce expenditures with minimal impact to children and families receiving services. These programs, which are funded with both state and federal dollars are being critically evaluated to determine the cost effectiveness and the value of the service to all Californians. This paper will review potential program changes that achieve the goals of cutting expenditures with minimal impact to the number of children and families receiving services. Each alternative has individual merit, but must be critically evaluated. Two strategies to reduce costs and preserve services are proposed for implementation of the 2011-12 fiscal year. Maintain the reduction in administrative rates from 19% to 17.5% of the contract amount. While this cut is difficult for contracting agencies to absorb, it achieves the goal of cost savings with minimal impact to children. The second strategy is to streamline and simplify the Regional Market Rate tool that establishes ceilings or caps on the amount of payment made in the alternative payment subsidized child care programs. The tool establishes provider ceilings for traditional hours of care from 6 a.m. to 6 p.m. and non-traditional hours of care from 6 p.m. to 6 a.m. and weekends. The tool is cumbersome for contractors, child care providers and families to understand. Results of a federal audit found that 25% of files in the sample had payment errors. Simplification of the RMR tool would streamline and simplify the process, resulting in fewer errors or audit findings and result in cost savings.
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