Early Education

Budget Provides $5.5 Billion for Early Education Programs. Of this amount, $2.2 billion is for preschool and Transitional Kindergarten programs, $3 billion is for other child development programs, and $304 million is for support programs. As Figure 1 shows, the 2020-21 Budget Act reduces these programs by a total of $102 million (2 percent) from the revised 2019-20 level. Proposition 98 and Non-Proposition 98 General Fund were reduced by $144 million and $445 million, respectively. These decreases were partially offset by increases in federal funds ($443 million) and Proposition 64 funds ($44 million).

Figure 1

Child Care and Preschool Budget

(Dollars in Millions)

	2018‑19 Actual	2019‑20 Reviseda	2020‑21 Enacted	Change From 2019‑20
	2018‑19 Actual	2019‑20 Reviseda	2020‑21 Enacted	Amount	Percent
Expenditures
CalWORKs Child Care
Stage 1	$291	$367	$486	$118	32.3%
Stage 2b	563	585	579	‑5	‑0.9
Stage 3	442	523	640	117	22.3
Subtotals	($1,295)	($1,475)	($1,705)	($230)	(15.6%)
Non‑CalWORKs Child Care
Alternative Payment Program	$427	$536	$701	$165	30.8%
General Child Carec	412	522	523	2	0.3
Bridge program for foster children	41	54	58	4	7.1
Migrant Child Care	40	45	45	—d	0.1
Care for Children With Severe Disabilities	2	2	2	—	—
Subtotals	($922)	($1,158)	($1,329)	($171)	(14.7%)
Preschool Programse
State Preschoolf	$1,342	$1,431	$1,272	‑$159	‑11.1%
Transitional Kindergarteng	867	883	878	‑5	‑0.6
Preschool QRIS grant	50	50	50	—	—
Subtotals	($2,259)	($2,364)	($2,200)	(‑$164)	(‑7.0%)
Support Programs	$144	$642	$304	‑$338	‑52.6%
Totals	$4,620	$5,640	$5,538	‑$102	‑1.8%
Funding
Proposition 98 General Fund	$2,082	$1,857	$1,712	‑$144	‑7.8%
Non‑Proposition 98 General Fund	1,461	2,376	1,931	‑445	‑18.7
Proposition 64 Special Fund	—	80	125	44	54.9
Federal CCDF	755	931	1,277	346	37.1
Federal TANF	311	382	476	94	24.5
Federal Title IV‑E	10	13	17	4	29.2
aReflects Department of Social Services’ revised Stage 1 estimates, Department of Finance’s revised estimates for Stage 2 and Stage 3, and 2019‑20 Budget Act appropriation for all other programs. bDoes not include $9.5 million provided to community colleges for certain child care services. cGeneral Child Care funding for State Preschool wraparound care shown in State Preschool. dLess than $500,000. eSome CalWORKs and non‑CalWORKs child care providers use their funding to offer preschool. fIncludes $1.2 million each year used for a family literacy program offered at certain State Preschool sites. gReflects preliminary LAO estimates in 2019‑20 and 2020‑21 as enrollment data are not yet publicly available.
QRIS = Quality Rating and Improvement System; CCDF = Child Care and Development Fund; and TANF = Temporary Assistance for Needy Families.

Decreases Amount Provided for Slots. The budget includes a $47 million reduction for child care and preschool slots. Figure 2 shows a decrease in State Preschool slots offset by a net increase of both ongoing and temporary slots for the Alternative Payment (AP) Program. The budget plan makes $161 million in ongoing reductions to State Preschool ($130 million Proposition 98 General Fund and $31 million non-Proposition 98 General Fund). Most of these funds are previous augmentations that were never awarded to State Preschool providers. The budget also includes a net increase of $114 million for AP slots. The largest component is $73 million one time to provide additional care for families previously using temporary emergency child care for essential workers and at-risk populations. The budget also provides a $47 million increase for ongoing AP slots which will be prioritized to provide ongoing care for children previously served with temporary emergency child care vouchers. These increases are somewhat offset by a $6 million decrease in Proposition 64 funds available for AP slots.

Figure 2

Changes in Child Care and Preschool Spending

2020‑21 (In Millions)

Change	General Fund		Proposition 64	Federal	Total
Change	Proposition 98	Non‑Proposition 98	Proposition 64	Federal	Total
Slots
Reduces State Preschool slots	‑$130	‑$31	—	—	‑$161
Adds temporary AP slots starting July 1, 2020	—	—	—	$73	73
Adds ongoing AP slots starting July 1, 2020	—	—	—	47	47
Decreases AP slots	—	—	‑$6	—	‑6
Subtotals	(‑$130)	(‑$31)	(‑$6)	($120)	(‑$47)
Other
Rescinds infrastructure and workforce development funds	—	‑$413	—	‑$45	‑$458
Provides federal CARES Act funds for 2019‑20 COVID‑19 expenses	—	—	—	152	152
Makes CalWORKs caseload and average cost‑of‑care adjustments	—	53	—	94	146
Reimburses voucher providers for authorized hours of care instead of child care used	—	—	—	63	63
Provides stipends for voucher providers	—	—	—	31	31
Provides an additional 14 paid non‑operation days for voucher providers	—	—	—	31	31
Waives family fees for July and August	$1	1	—	9	11
Adjusts Transitional Kindergarten for attendance and LCFF funding rate	‑5	—	—	—	‑5
Plans to shift child care programs to DSS	—	2	—	—	2
Shifts fund source for General Child Care slots	—	‑50	$50	—	—
Makes conforming and technical changes	‑10	‑6	—	‑12	‑28
Subtotals	(‑$14)	(‑$413)	($50)	($323)	(‑$55)
Totals	‑$144	‑$445	$44	$443	‑$102
AP = Alternative Payment; CARES = Coronavirus Aid, Relief, and Economic Security; COVID‑19 = coronavirus disease 2019; LCFF = Local Control Funding Formula; and DSS = Department of Social Services.

Rescinds One-Time Infrastructure and Workforce Development Grant Funding. To achieve additional savings, the budget plan also rescinds $458 million in unspent funds from initiatives included in the 2019-20 budget. This includes $263 million non-Proposition 98 General Fund intended to help child care providers construct or renovate facilities and $195 million ($150 million non-Proposition 98 General Fund and $45 million federal funds) to improve and expand child care and preschool workforce training.

Supports Higher CalWORKs Child Care Costs. The budget package provides $146 million ongoing for expected cost increases in California Work Opportunity and Responsibility to Kids (CalWORKs) child care. Of this increase, $118 million is an increase in Stage 1, primarily due to coronavirus disease 2019 (COVID-19) related caseload increases. The rest of the increase is due to caseload increases in Stage 3, offset by decreases in caseload and cost-per-case in Stage 2.

Allocates Federal CARES Act Funds. Trailer legislation allocates $350 million in one-time funding provided in H.R. 748, the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This funding is allocated for the following activities:

$152 million for 2019-20 expenses related to COVID-19.
$73 million to extend temporary emergency vouchers (as mentioned above).
$62.5 million to pay voucher based providers for a child’s authorized hours of care instead of the amount of care used. (This holds voucher providers harmless if a child temporarily does not attend child care.)
$31.3 million for stipends for voucher providers, to be primarily distributed based on the number of subsidized children enrolled.
$31.3 million to provide an additional 14 paid non-operation days for voucher providers.

Includes Plan to Expend Future Federal Funds. Trailer legislation specifies how an additional $300 million in federal funds would be allocated in the event that additional funds become available during the 2020-21 fiscal year. To the extent allowed under future federal law, trailer legislation requires the California Department of Education (CDE) to allocate funding in the following order:

$30 million to waive family fees for families not receiving in-person care.
$35 million for granting voucher providers an additional 14 paid non-operation days (to the extent funding already provided in the budget is insufficient to cover costs).
$100 million for temporary AP voucher slots available through June 30, 2021.
$30 million for temporary State Preschool and General Child Care slots, available for up to two years.
$15 million for reopening grants for child care providers.
$90 million for stipends to child care providers.

Temporarily Waives Certain Family Fees. The budget provides $11 million in federal funds to waive family fees for July and August 2020. Trailer legislation also waives family fees at any point during the fiscal year for families not receiving in-person care. As discussed above, the cost of the waived family fees will be covered if additional federal funds become available during the 2020-21 fiscal year.

Shifts Child Care Programs to the Department of Social Services (DSS). Trailer legislation shifts administration of state child care programs and initiatives from CDE to DSS beginning July 1, 2021. The programs shifting to DSS include CalWORKs Stages 2 and 3, AP, General Child Care, Migrant Child Care, Care for Children with Severe Disabilities, the Child and Adult Care Food Program, and the Head Start State Collaboration Office. Trailer legislation also shifts numerous support programs to DSS, including Resource and Referral, Local Planning Councils, and quality improvement projects. State Preschool will continue to be administered by CDE. The budget provides DSS with $2 million one-time General Fund to plan for the administrative shift.

Permanently Removes Negative Statutory Growth Adjustment. Trailer bill legislation modifies the statutory growth adjustment made to certain child care and preschool programs based on the projected birth-through-four population. In years where the birth-through-four population declines, the statutory adjustment to these child care and preschool programs will be zero (holding the number of slots available flat). Previously, a negative adjustment was applied in these circumstances, resulting in slot reductions.

Sets Temporary Reimbursement Flexibility and Distance Learning Requirements for Direct Contract Providers. Trailer legislation provides reimbursement flexibility in 2020-21 for direct contract providers that opened to begin the school year or were closed due to local or state public health guidance. For providers that meet these conditions, reimbursement will be the lesser of the contract amount or program costs. Typically, provider reimbursement is also generally based on the attendance of eligible children. To receive this reimbursement flexibility, a provider that is closed due to local or state public health guidance must provide distance learning services to children enrolled in its programs and submit a distance learning plan to the CDE.

Temporary Changes to Attendance Record Requirements. Trailer legislation allows voucher providers to submit attendance records during the 2020-21 fiscal year without a parent signature if the parent is unable to sign due to the COVID-19 pandemic. Typically, providers are required to submit attendance records with a parent signature to receive reimbursement.