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Other Budget Issues

Last Updated: 5/20/2010
Budget Issue: Child care quality improvement funds and community care licensing.
Program: California Department of Education
Finding or Recommendation: Redirect $4.3 million in federal child care block grant quality funds from other quality activities to community care licensing of child care facilities. Save like amount of state General Fund (non-Proposition 98).
Further Detail

Child Care Licensing Is Federally Approved "Quality Improvement"Activity. As a condition of receiving federal child care block grant funds, the state must spend a certain amount of the grant on improving the quality of child care. To meet this requirement, each year the state uses federal child care funds to support about 40 activities that typically include professional development, stipends for child care providers, and activities related to health and safety. A portion of these federal quality funds are also used to support licensing inspections of child care centers and family child care homes.

Licensing Currently Supported By State General Fund, Federal Funds, and Fees. Child care licensing activities are handled by the Department of Social Services' Community Care Licensing Division (CCLD).  As shown in the following chart, in recent years some federal child care quality funds have been used to support child care licensing activities.


Federal Child Care Quality Funding For Child Care Licensing Activities 
(in millions)        
  2008-09 2009-10 2010-11 Governor's Proposal 2010-11 LAO Alternative
Federal child care quality funds 2.7 8 8 12.3

Recommend Using Federal Funds to Cover Additional Licensing Costs, Saving $4.3 Million in General Fund. In 2009-10, the state achieved General Fund savings by increasing the share of licensing costs supported by federal funds from $2.7 million to $8 million. We recommend funding an additional $4.3 million in licensing costs with federal child care quality funds, to generate a like amount of additional state General Fund savings.

Legislature Would Need to Reprioritize Among Other Quality Activities. Shifting an additional $4.3 million to support licensing would mean reducing or ceasing one or more of the other child care quality activities the state is currently undertaking by a like amount. Because the Legislature may wish to make other changes to the quality budget we are not recommending specific programs for reduction or elimination at this time. (In a separate but related recommendation, we suggest the Legislature reduce overall spending on quality improvement activities by $6.2 million, down to the federal minimum requirement.) Once the Legislature decides upon an overall child care quality spending amount, we would be happy to assist in developing a prioritized menu of activities.