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<ns0:Id>20250AB__198197AMD</ns0:Id>
<ns0:VersionNum>97</ns0:VersionNum>
<ns0:History>
<ns0:Action>
<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-13</ns0:ActionDate>
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<ns0:ActionText>AMENDED_ASSEMBLY</ns0:ActionText>
<ns0:ActionDate>2026-03-20</ns0:ActionDate>
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<ns0:ActionText>AMENDED_ASSEMBLY</ns0:ActionText>
<ns0:ActionDate>2026-03-26</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Aguiar-Curry</ns0:AuthorText>
<ns0:Authors>
<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Aguiar-Curry</ns0:Name>
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<ns0:Title> An act to amend Section 10227.6 of the Welfare and Institutions Code, relating to childcare, and declaring the urgency thereof, to take effect immediately.</ns0:Title>
<ns0:RelatingClause>childcare, and declaring the urgency thereof, to take effect immediately</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Subsidized childcare: reimbursement rates: reporting.</ns0:Subject>
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<ns0:DigestText>
<html:p>Existing law requires the State Department of Social Services, in collaboration with the State Department of Education, to implement a reimbursement system plan that establishes reasonable standards and assigned reimbursement rates for subsidized childcare and development services, and to develop and conduct an alternative methodology for ratesetting, as specified.</html:p>
<html:p>Existing law requires the Governor and the Legislature to, by no later than July 1, 2025, establish reimbursement rates based on the alternative methodology, as specified. Existing law requires the department to provide quarterly updates from October 1, 2024, to July 1, 2027, inclusive, on the implementation of the new reimbursement rates set under the alternative methodology. If the new reimbursement rates do not take effect on July 1, 2025, existing law also requires the
department to provide the Legislature with a timeline for transitioning from the rates that are in effect on July 1, 2025, to the new established rates.</html:p>
<html:p>This bill would instead, under those circumstances, require the department to provide the Chairperson of the Joint Legislative Budget Committee with the department’s anticipated timeline for the above-described rate transition. The bill would also require the quarterly reports described above to continue until the new reimbursement rates set under the alternative methodology are fully implemented.</html:p>
<html:p>This bill would declare that it is to take effect immediately as an urgency statute.</html:p>
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<ns0:VoteRequired>TWO_THIRDS</ns0:VoteRequired>
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<ns0:FiscalCommittee>YES</ns0:FiscalCommittee>
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<ns0:ImmediateEffect>YES</ns0:ImmediateEffect>
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<ns0:Urgency>YES</ns0:Urgency>
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<ns0:Bill id="bill">
<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
<ns0:BillSection id="id_45EB0DB4-77FA-4B3B-B3FD-987A3C1285AC">
<ns0:Num>SECTION 1.</ns0:Num>
<ns0:Content>
<html:p>This act shall be known, and may be cited, as the True Cost of Child Care Act.</html:p>
</ns0:Content>
</ns0:BillSection>
<ns0:BillSection id="id_465176C4-106C-4BA3-990E-C1ED349DA067">
<ns0:Num>SEC. 2.</ns0:Num>
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
The Legislature finds and declares all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The Legislature passed, and the Governor signed to enact, the Building a Better Early Care and Education System Act in 2019, codifying that family childcare providers have the right to form, join, and participate in a provider organization of their
choosing to represent them and bargain on matters related to their employment terms and conditions.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Pursuant to the process established by the Building a Better Early Care and Education System Act, childcare providers organized and elected a statewide union, known as Child Care Providers United (CCPU), representing over 70,000 home-based childcare providers, which has successfully negotiated three contracts with the State of California.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The rate of pay for providers negotiated between the state and CCPU is informed by the rate methodology established in state law and funded in the state budget, and the current rate methodology is largely understood to leave providers significantly underpaid, leaving families without access to adequate, quality, reliable
childcare in the locations, languages, and other necessities to meet families’ needs.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The Legislature has determined that the state should use a new alternative methodology. This methodology will apply the actual cost of care to calculate how subsidy payments are made to early childhood educators with one goal being to stabilize and improve childcare options for families.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
California is committed to advancing racial, economic, geographic, and gender equity across its publicly funded systems, including early learning and care.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
Federal regulations allow states to use a cost estimation model. This model can replace a market rate survey to better reflect the true cost of high-quality childcare. It includes adequate
compensation for the workforce, investments in health and safety, and compliance with licensing requirements.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
California’s existing market-rate methodology significantly underestimates the actual cost of care, with a recent study from the state showing that providers earned just 30 percent of the cost of care in 2024. In a broken market where rates are set based on what families can pay as opposed to what it actually costs to provide quality, developmentally appropriate care reliance on regional market surveys perpetuate historic inequities by embedding disparities in family income, neighborhood wealth, and access to private tuition into the state’s reimbursement structure.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
The early care and education workforce is almost exclusively female and predominantly people
of color, including many recent immigrants, first-generation college students, and working mothers. An estimated 43 percent of early educators turn to public safety-net support to meet the basic needs of their family.
</html:p>
<html:p>
(9)
<html:span class="EnSpace"/>
Chronic underpayment has led to workforce instability, program closures, and less access to care for working families. These impacts are especially felt in low-income communities, rural areas, and communities of color.
</html:p>
<html:p>
(10)
<html:span class="EnSpace"/>
Childcare deserts are most prevalent in low-income communities, rural areas, tribal communities, and communities of color, where the market fails to generate rates sufficient to sustain licensed and license-exempt providers serving subsidized families.
</html:p>
<html:p>
(11)
<html:span class="EnSpace"/>
As part of
developing the alternative methodology, the State Department of Social Services was required to consult early childhood educator stakeholders. This includes Child Care Providers United, the bargaining representative for licensed and license-exempt family childcare providers receiving state subsidies. The goal was to inform the development of a cost-based rate model.
</html:p>
<html:p>
(12)
<html:span class="EnSpace"/>
Despite this statutory direction and extensive stakeholder engagement, a rate structure based on the actual cost of care is nowhere near completion. This delay prevents much-needed stabilization of the childcare sector.
</html:p>
<html:p>
(13)
<html:span class="EnSpace"/>
Adopting a true cost of care methodology is needed to support the childcare workforce, help families in the state’s subsidized childcare system, and protect the state’s economy.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Therefore, it is the intent of the Legislature to enact the statutory changes to implement a childcare reimbursement methodology based on the actual cost of care and to ensure its timely implementation.
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<ns0:Num>SEC. 3.</ns0:Num>
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Section 10227.6 of the
<ns0:DocName>Welfare and Institutions Code</ns0:DocName>
is amended to read:
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<ns0:Num>10227.6.</ns0:Num>
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<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
It is the intent of the Legislature to use an alternative methodology, as defined in subdivision (ak) of Section 10213.5, to inform the setting of reimbursement rates for subsidized childcare.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Reimbursement rates are subject to agreement and codification by the Legislature.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The department, in collaboration with the State Department of Education, shall develop and conduct an alternative methodology. The department shall begin the process of data collection and analysis pursuant to developing an alternative methodology by July 1, 2023, and consult with the State Department of Education on data collection,
analysis, and methodology for preschool programs. The alternative methodology shall build on the recommendations of the working group established pursuant to Section 10280.2 and shall be aligned with the recommendations of the Joint Labor Management Committee established pursuant to subdivision (a) of Section 10280.2.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
No later than February 15, 2024, the department, in collaboration with the State Department of Education and the Joint Labor Management Committee established pursuant to subdivision (a) of Section 10280.2, using information from the cost estimation model, shall define elements of the base rate and any enhanced rates to inform the state’s proposed single-rate structure and rates. These elements shall be subject to the mandated public engagement state plan process and legislative review. The department shall report to
the Senate Health and Human Services budget subcommittees, Assembly and Senate Education budget subcommittees, and the Legislative Analyst’s Office on progress made to conduct an alternative methodology and cost-estimate model.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
No later than May 15, 2024, the department shall report on the status of the draft Child Care and Development Fund state plan to the Senate Health and Human Services budget subcommittees, Assembly and Senate Education budget subcommittees, and the
Legislative Analyst’s Office on the state’s proposed single-rate structure to be submitted to the United States Department of Health and Human Services, Administration for Children and Families.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
No later than July 1, 2024, the department shall submit necessary information to support use of a single-rate structure using the alternative methodology to the United States Department of Health and Human Services, Administration for Children and Families in the Child Care and Development Fund
state plan or an amendment to the state plan. The department shall provide a copy of the Child Care and Development Fund state plan or amendment to the state plan submitted to the United States Department of Health and Human Services, Administration for Children and Families to the Senate Health and Human Services budget subcommittees, Assembly and Senate Education budget subcommittees, and the Legislative Analyst’s Office no later than July 10, 2024.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Within 60 days of federal approval of the single-rate structure utilizing the alternative methodology in the state plan, the department, in collaboration with the State Department of Education, shall provide the Assembly Committee on Budget, the Senate Committee on Budget and Fiscal Review, and the Legislative Analyst’s Office with a report that
outlines the implementation components for the approved single-rate structure. For a period of 30 days, the Legislature shall have the opportunity to review and provide feedback regarding draft guidance for implementation of policies. The report shall include all of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The department’s plan to set new reimbursement rates under the alternative methodology by no later than July 1, 2025.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The estimated costs and estimated timelines associated with the implementation components of the approved single-rate structure, including, but not limited to, state operations resources, technology and infrastructure changes, and any regulatory or statutory changes necessary to implement the approved single-rate structure.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The department shall, from October 1, 2024,
until the new reimbursement rates set under the alternative methodology are fully implemented, provide the Assembly Committee on Budget, the Senate Committee on Budget and Fiscal Review, and the Legislative Analyst’s Office with quarterly updates on the implementation of the new reimbursement rates set under the alternative methodology. The quarterly updates shall include any changes to the information provided in the report described in paragraph (1).
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
Beginning October 1, 2025, and through July 1, 2027, inclusive, the department shall update the Legislature not more frequently than quarterly, to the extent information is available or reported to the department by contractors, regarding progress on implementation of prospective payment and paying based on enrollment, in keeping with the goals set for funds appropriated pursuant
to Provision 19 of Item 5180-101-0001 of the Budget Act of 2025 and with subparagraph (i) of paragraph (2) of subdivision (m) of Section 98.45 of Subpart E of Part 98 of Subchapter A of Subtitle A of Title 45 of the Code of Federal Regulations.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The Governor and the Legislature shall, by no later than July 1, 2025, establish reimbursement rates based on the alternative methodology. Provider reimbursement rates shall not be reduced from the reimbursement rates that were in effect on June 30, 2024, pursuant to Sections 10280 and 10374.5 of this code and Section 8242 of the Education Code, inclusive of the cost of care plus rates established pursuant to subdivision (b) of Section 10277.1 and subdivision (b) of Section 10277.2.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
If the new
reimbursement rates established pursuant to subdivision (i) do not take effect on July 1, 2025, the department shall provide the Chairperson of the Joint Legislative Budget
Committee with the department’s anticipated timeline for transitioning from the rates that are in effect on July 1, 2025, to the new rates established pursuant to subdivision (i).
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Any temporary reimbursement rates established as part of the transition timeline required by paragraph (1) shall be, at
minimum, equivalent to the reimbursement rates established pursuant to Sections 10280 and 10374.5 of this code and Section 8242 of the Education Code, inclusive of the cost of care plus rates established pursuant to subdivision (b) of Section 10277.1 and subdivision (b) of Section 10277.2.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
The single-rate structure shall apply to all programs funded by the State Department of Social Services under Chapter 3 (commencing with Section 10225), Chapter 6 (commencing with Section 10235), Chapter 7 (commencing with Section 10240), Chapter 8 (commencing with Section 10250), Chapter 9 (commencing with Section 10260), Chapter 21 (commencing with Section 10370), and Chapter 2 (commencing with Section 11461.6) of Part 2, and the State Department of Education under Chapter 2 (commencing with Section 8200) of Part 6 of Division 1 of
Title 1 of the Education Code.
</html:p>
<html:p>
(
<html:i>l</html:i>
)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Except as required by subdivision (n), it is the intent of the Legislature, beginning July 1, 2025, to cease using a regional market rate survey pursuant to Section 10436, and instead use an alternative methodology, as defined in subdivision (ak) of Section 10213.5, for the purpose of informing the setting of future childcare rates.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
It is the intent of the Legislature that:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Reimbursement rates are set pursuant to statute and informed by the alternative methodology, as defined in subdivision (ak) of Section 10213.5.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Under the single-rate structure, all programs described in
subdivision (k) shall be reimbursed under a unified structure that takes into account a common set of rate elements.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Rate levels shall be informed by the costs associated with meeting health and safety requirements and program requirements.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Base rates shall be administered as a per-child amount, and programs shall be able to claim reimbursement for services they deliver consistent with enhanced rates, if any.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
Rates shall vary based on all of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Geography.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Type of care setting.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Regulatory requirements
applicable to each type of care setting.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
Time categories.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
Child age.
</html:p>
<html:p>
(m)
<html:span class="EnSpace"/>
Commencing July 1, 2026, rates for all programs described in subdivision (k) shall receive the cost-of-living adjustment granted by the Legislature annually pursuant to Section 42238.15 of the Education Code as a minimum annual rate increase for all subsidized childcare providers.
</html:p>
<html:p>
(n)
<html:span class="EnSpace"/>
If the United States Department of Health and Human Services, Administration for Children and Families does not approve the alternative methodology developed pursuant to this section, the department shall develop and conduct a survey of the market rates for childcare services.
</html:p>
<html:p>
(o)
<html:span class="EnSpace"/>
If the provisions of this section are in conflict with the provisions of a memorandum of understanding reached pursuant to Section 10426, the memorandum of understanding shall be controlling without further legislative action, except that if such provisions of a memorandum of understanding require the expenditure of funds, the provisions shall not become effective unless approved by the Legislature in the annual Budget Act.
</html:p>
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<ns0:Num>SEC. 4.</ns0:Num>
<ns0:Content>
<html:p>This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:</html:p>
<html:p>In order to prevent further delays transitioning to the new systems for setting reimbursement rates for subsidized childcare programs, it is necessary for this act to take effect immediately.</html:p>
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