Analysis of the 2007-08 Budget Bill: Education

Child Care and Development

The state supports a variety of child care and development programs. It also supports activities and efforts to improve the quality and availability of these programs through community, parent, and provider education. Although the specific objective of each program is unique, collectively the programs aim to provide high-quality supervision and/or early education experiences to children from birth through age 12 (or longer for children with special needs). As shown in Figure 1, in 2007-08, the Governor proposes to spend $3.7 billion on these programs to provide services to an estimated 978,000 children.


Figure 1

California Child Care and Development Programs

2007-08 All Funds
(Dollars in Millions)







Child Care










    Stage 1c, d





    Stage 2d, e





    Stage 3















    General child care





    Other child care programs










Child Development





  State preschool





  After school programs










Growth and COLA





Support Programs





       Totals—All Programs






a  Except where noted otherwise, all programs are administered by the California Department of Education.

b  California Work Opportunity and Responsibility to Kids.

c  Administered by California Department of Social Services.

d  Does not include reserve funding.

e  Includes $15 million for centers run by California Community Colleges.

f   The bulk of the decline is due to the difference in the cost-of-living adjustment (COLA) rates
(5.92 percent in 2006-07 and 4.04 percent in 2007-08).


In the remainder of this write-up, we:

Child Care and Development Programs

As Figure 1 shows, approximately two-thirds of this budget is used for child care programs, 30 percent is for child development programs, and about 3 percent is for related support activities.

Child Care Programs

In general, child care programs are designed primarily to supervise children. The state programs serve children of families in the California Work Opportunity and Responsibility to Kids (CalWORKs) program as well as non-CalWORKs low-income families.

CalWORKs Guarantees Families Child Care. In exchange for engaging in work or work preparation activities, the state guarantees child care to CalWORKs recipients. Thus, the demand for CalWORKs child care is driven by CalWORKs’ caseload. CalWORKs child care is supported by state Proposition 98, federal Temporary Assistance for Needy Families (TANF), and federal Child Care and Development Fund (CCDF) monies. The program involves three stages of child care.

CalWORKs Stage 1. This stage begins when a participant enters the CalWORKs program. The child care component is administered by the Department of Social Services (DSS) through county welfare departments. It is funded completely with TANF monies. In 2007-08, the Governor’s budget includes slightly more than $500 million to serve more than 67,000 children in Stage 1 care.

CalWORKs Stage 2. The CalWORKs families are transferred to Stage 2 when the county determines that participants’ schedules become stable. Families remain eligible for Stage 2 as long as they are participating in CalWORKs and up to two years after the family stops receiving a CalWORKs grant. This stage is administered primarily by the California Department of Education (CDE) (although the California Community Colleges also have a small administrative role). It is funded with a combination of Proposition 98 and TANF monies. In 2007-08, the Governor’s budget includes over $450 million to serve more than 76,000 children in Stage 2 care (including about 3,000 children served in community college centers).

CalWORKs Stage 3. A family is eligible for Stage 3 when they have exhausted their two-year limit in Stage 2 (referred to as “timing out”)—as long as their income remains below 75 percent of the state median income level and their children are below age 13. Stage 3 also is administered by CDE. It is funded with a combination of Proposition 98 and CCDF grant monies. In 2007-08, the Governor’s budget includes almost $400 million to serve more than 62,000 children in Stage 3 care.

Non-CalWORKs Families Receive Child Care if Space Is Available. In addition to CalWORKs Stage 2 and 3, CDE administers general and targeted child care programs to serve non-CalWORKs, low-income children at little or no cost to the family. Because the number of eligible low-income families exceeds available child care slots, waiting lists for this care are common. (See the box on the next page for a brief description of the various types of non-CalWORKs child care.) These non-CalWORKs programs are funded with a combination of Proposition 98 and CCDF monies. In 2007-08, the Governor’s budget includes $1.1 billion to serve approximately 158,000 low-income, non-CalWORKs children.

Child Development Programs

Compared to child care programs, child development programs typically have a focus on early childhood education and enrichment. In California, CDE administers both preschool and after school programs for low-income and/or disadvantaged children.

Over 100,000 Children Currently Served by State Preschool Each Year. State preschool programs are part-day developmental programs for 3- to 5-year-old children from low-income families. In addition to educational activities, the state preschool programs require some level of parental education or involvement, provide meals or snacks to children, and provide families with referrals to health and social services agencies. These programs are run by local educational agencies, community colleges, community-action agencies, and private nonprofit agencies. Providers contract directly with CDE and are reimbursed using the Standard Reimbursement Rate (SRR) for preschool (proposed to be $21.12 per child per day in 2007-08). Funding comes entirely from the state.

State Preschool Program Recently Expanded. State preschool is a three-hour development program available to low-income children. With the passage of Chapter 211, Statutes of 2006 (AB 172, Chan), the state expanded preschool funding by $50 million, adding approximately 12,000 slots. This brought total preschool funding in 2006-07 up to almost $400 million and total participation up to approximately 110,000 children. (We describe Chapter 211 in more detail later in this write-up.)

After School Programs Significantly Expanded in 2006-07. With the triggering of Proposition 49, after school programs also were expanded significantly in the current year. Proposition 49, approved by voters in 2002, required the state to increase funding for the After School Education and Safety (ASES) program by $426 million (for total 2006-07 funding of $548 million). In addition to the ASES program, after school activities are supported by the federally funded, state-administered 21st Century Child Learning Centers. In total, the Governor’s 2007-08 budget includes more than $676 million to provide after school services to approximately 500,000 children.

Types of Non-CalWORKs Child Care

There are various types of non-CalWORKs child care available to low-income families in California.

  • General Child Care. State licensed child care, in a center or Family Child Care Home (FCCH), providing supervision and child development services for children from birth through 12 years of age as well as older children with exceptional needs. Also includes campus child care for the children of parents enrolled in community college.
  • School Age Community Child Care Services (Latchkey). A safe environment with age and developmentally appropriate activities for school-age children during the hours when school is not in session.
  • Severely Handicapped Care. Available in the San Francisco Bay Area only. Child care, developmentally appropriate activities, and therapy for eligible children and young adults (with an authorizing plan from a special education program) from birth to 21 years of age.
  • Migrant Child Care. Child care in a licensed facility for children of agricultural workers. Hours and locations of care are structured around local agricultural activities. These programs are also required to reserve slots for children of migrant workers in anticipation of families moving.

Support Activities and Services

A small portion of total Proposition 98 and CCDF monies are used to fund programs that do not provide direct services to children but rather provide support services designed to improve program effectiveness. Some support programs are geared toward parents and providers. For example, resource and referral agencies provide information to parents and the community about child care available in the area and offer training to providers. By comparison, some are geared more toward government planning. For example, the county-based Local Planning Councils are responsible for assessing need, planning, and coordinating child care services within the county. The CDE also maintains a Centralized Eligibility (Wait) List. Other support programs collectively called “Quality Programs,” are intended to improve the quality and availability of child care. (We discuss these quality programs in more detail later in this chapter.) In sum, the Governor proposes to spend approximately $100 million on these support services in 2007-08.

Governor’s Stage 2 Child Care Proposal

Assuming the Governor’s fiscal outlook, we would recommend the Legislature adopt the Governor’s proposal to increase the state share of Stage 2 child care costs. This proposal is a reasonable option for achieving $269 million in General Fund savings to address the state’s structural shortfall. Based on our updated fiscal forecast, however, we recommend the Legislature take a series of other actions including not doing the Stage 2 shift in 2007-08.

The Governor proposes to achieve $269 million non-Proposition 98 General Fund savings by reducing federal TANF support and increasing Proposition 98 support for CalWORKs Stage 2 child care. The proposal allows TANF monies to cover CalWORKs costs that currently are covered by the state General Fund. That is, the basic purpose of the proposal is to free up General Fund monies, thereby decreasing the state’s structural shortfall.

Governor’s Proposal Achieves Sizeable General Fund Savings Without Risk. Since the initial implementation of Proposition 98, child care has been deemed a legal and appropriate Proposition 98 expenditure. Moreover, even since the inception of CalWORKs Stage 2 in 1997-98, the state has chosen to designate Proposition 98 monies to cover a portion of the associated costs. In short, the Governor’s proposal does not deviate from common practice. Additionally, as shown in Figure 2, the Governor’s proposal would result in a relatively modest increase in the state’s share of overall child care and development costs—increasing from 61 percent of overall costs in 2006-07 to 77 percent in 2007-08.

Governor’s Proposal Would Fully Fund Child Care Without Cutting K-12 Programs. Not only does the Governor’s proposal achieve sizeable General Fund savings, it does so without cutting either child care or K-12 education. Indeed, under the Governor’s budget, K-12 education would receive a healthy increase in Proposition 98 spending—including $1.9 billion for a 4 percent cost-of-living adjustment—and no K-12 programs would be eliminated or reduced as a result of the proposal.

If Budget Outlook Worsens, Governor’s Proposal Would Not Be Enough to Address Structural Shortfall. In the “Proposition 98 Update” section of this chapter, we discuss in detail our updated fiscal forecast. The bottom line is that the budget outlook has worsened and the Legislature likely will need to find additional budget solutions. Thus, in the “Proposition 98 Priorities” section of this chapter, we recommend the Legislature take a series of actions to reduce Proposition 98 spending in both the current and budget years. The current-year actions we recommend would generate one-time General Fund savings of about $600 million. By reducing Proposition 98 spending in 2006-07, the minimum guarantee for 2007-08 would drop by a comparable amount. At this lower level, there would not be enough growth in the guarantee to cover baseline adjustments and accommodate the proposed increase in Proposition 98 support of child care. Consequently, under this scenario, we would recommend that the Legislature not adopt the child care funding shift. The Governor’s proposal, however, would remain a viable budget solution in future years.

In short, we have no legal, policy, or fiscal concerns with the Governor’s proposal to increase the state’s share of child care costs as a way to achieve General Fund savings. If the budget outlook worsens, we think this proposal simply will not go far enough. As a result, we recommend the Legislature take an entirely different set of actions that would generate more General Fund savings.

Expanding Child Development Programs for Low-Income Children

In the “Proposition 98 Roadmap” section of this chapter, we discuss our fiscal forecast for the next five years—over which time we project Proposition 98 will grow by substantially more than is needed to cover existing program costs. In that section, we provide data showing a large achievement gap between low-income and higher-income students. To help address this achievement gap, we suggest the Legislature consider expanding early childhood education opportunities for low-income children. Specifically, the Legislature could invest in preschool (including wrap around child care) for low-income 3- and 4-year olds and parent education and home visit services for low-income families with children up to age two. Below, we provide data on the number of children currently in state preschool programs and summarize research findings relating to the effects of preschool, particularly for low-income children.

As shown in Figure 3, slightly more than 40 percent of California’s 3- and 4-year olds currently attend preschool. Approximately one-third of children from households earning less than $33,000 per year are estimated to attend preschool. While some families may choose not to send their children to preschool even if it were available, the current preschool attendance rate is at least partly the result of limited supply. Currently, more than 34,000 children who meet eligibility requirements for state preschool are on CDE’s wait list.


Figure 3

Preschool Participation in California


California Population

In State Preschool

In Other Preschool (Private or Head Start)

Total in Preschool

Percent in Preschool

Three-year olds






Four-year olds













Source: Total state preschool numbers provided by the California Department of Education for the 2005-06 school year. All
other figures come from the RAND Corporation and Policy Analysis for California Education 2005 data or are extrapolated from that data.


Returns From Investment in Targeted Preschool Programs. Research shows that high-quality preschool programs for disadvantaged children can have substantial benefits. In particular, research shows that disadvantaged children who participate in preschool programs have higher reading achievement, are less likely to repeat the same grade, less likely to use special education, and more likely to complete high school than disadvantaged children who do not attend preschool. In addition, research shows that disadvantaged children who attend preschool are less likely to become involved in the juvenile justice system and have higher adult employment rates and income earnings.

Expansion of Preschool Requires More Support Services, Additional Physical Capacity, and Better Ways to Measure and Monitor Quality. In our “Proposition 98 Roadmap“ write-up, we suggest to the Legislature that one priority should be a significant expansion of state preschool slots by 2011-12. An expansion of preschool as large as this would require planning and preparation. Even if funding were available today, not enough preschool facilities or providers are available to meet demand. Before any major expansion of the program, we recommend developing better measures of program quality as well as creating stronger incentives to improve program quality on an ongoing basis. We think these refinements are needed so that greater quantity is not provided at the expense of quality.

Below, we recommend some steps the Legislature can take this year to accommodate a preschool expansion over the next several years. These recommendations are minor changes that do not increase operating expenditures in the budget year. They would, however, help lay the foundation and facilitate the future expansion of quality preschool.

Wrap Around Child Care

In 1997-98, California began allowing state preschool providers to offer general child care before and after preschool programs (referred to as “wrap around” child care). Such providers operate as a state preschool part of the day but follow general child care rules and regulations for the remainder of the day. Providers are reimbursed for the state preschool portion of the day and the wrap around portion of the day at the applicable SRRs. The proposed 2007-08 SRRs are $21 per day per child for preschool and $13 per day per child for wrap around care (for a maximum full-day reimbursement rate of $34).

Wrap Around Care Provided to Few Children Statewide. State preschool and wrap around programs serve children from low-income families ages 3 through 5. In 2005-06, just over 6,000 children received wrap around care. This equates to approximately 5 percent of all children in state preschool programs. According to the latest estimates, more than 31,000 eligible, low-income 3- and 4-year olds are currently on the CDE waiting list for wrap around care.

Funding Provided in 2006-07 to Expand Preschool and Wrap Around Child Care. Chapter 211 appropriated $50 million of ongoing Proposition 98 monies to expand state preschool programs in targeted neighborhoods. This expansion will provide up to 12,667 new preschool slots in the enrollment areas of low-performing elementary schools. Additionally, the bill appropriated $5 million in one-time monies for wrap around services for children in these preschool classes. This modest expansion will allow up to 1,094 children to receive wrap around care for one year. This is about a 17 percent increase in the number of funded wrap around slots.

New Programs Are More Restrictive. In an attempt to target funds to certain children, Chapter 211 placed additional requirements on providers. In the box on the next page, we discuss the differences between the Chapter 211 programs—commonly referred to as Pre-Kindergarten and Family Literacy (PKFL) programs—and the standard preschool and wrap around programs. The PKFL programs will operate as a state preschool, adhering to many of the existing program requirements, and will be reimbursed at the same per child rates as state preschool. Eligibility for PKFL programs, however, is more restricted than for state preschool.

New Programs More Restrictive Than Existing Programs

Chapter 211 established the Pre-Kindergarten and Family Literacy (PKFL) program, with the intent to expand state preschool and wrap around child care services. However, it added various restrictions that essentially result in new programs targeting specific geographic areas. The table below compares standard state preschool and wrap around child care to the newly created Chapter 211 programs.

Approve New Ongoing Monies for Wrap Around Care Without Restrictions

We recommend the Legislature approve the $5 million in new ongoing monies that the Governor’s budget provides for wrap around child care. We recommend approving the proposal because such care promotes preschool attendance among low-income children, which, in turn, has been shown to result in significant long-term benefits. Instead of limiting the ongoing funds for Pre-Kindergarten and Family Literacy (PKFL) wrap around care, we recommend, however, that the Legislature designate the funding for the much larger standard wrap around child care program. This would still allow PKFL providers to receive slots but would reduce administrative burden and ensure the monies are used as quickly and effectively as possible.

The Governor’s budget proposal provides $5 million in new ongoing monies to support wrap around care for children participating in the new PKFL programs. Effectively, the Governor’s budget does not expand wrap around child care but instead converts the approximately 1,100 slots funded with one-time monies in 2006-07 into ongoing slots.

Wrap Around Child Care Shown to Promote Preschool Attendance. Because wrap around child care operates on the general child care schedule (before and after school and all day on school holidays) and is provided at the preschool site, it promotes preschool attendance of children from low-income families by allowing their parents to maintain employment. Research indicates that a successful expansion of preschool (especially targeting low-income students) typically requires a proportionate expansion of wrap around child care. In essence, an investment in wrap around child care is an investment in preschool.

New Eligibility Restrictions Increase Administrative Burden. The unique specifications of the new PKFL programs requires CDE to issue a separate request for applications and to appropriate and track PKFL funds separately from the standard state preschool and wrap around child care programs. This not only creates ongoing work in tracking and reporting for state staff and providers but can reduce the potential impact of the funds. For example, because of the special PKFL requirements, little, if any, of the funds will be used in 2006-07—even though some 30,000 low-income children are on waiting lists for wrap around care.

All Low-Income Children Should Be Eligible for New Ongoing Slots. We believe the $5 million in new ongoing funds can be more efficiently used if they are available to any otherwise eligible low-income child. That is, we think the Legislature should designate the new funding for the standard wrap around child care program. (Under this approach, PKFL providers still could apply for slots.) By expanding the standard wrap around child care, the Legislature ensures a timely fund release and offering of services to approximately 1,000 low-income, disadvantaged children currently on the state waiting list for wrap around care.

Child Development Facilities

In this section, we discuss the state’s existing child care facility programs and recommend improvements. These recommendations are intended to ensure that existing facility programs are well administered and effective. We think such refinements are important for maintaining existing program capacity and are especially critical if the Legislature chooses to expand future capacity.

The CDE currently offers two programs intended to help child care and preschool providers purchase and maintain facilities. The Child Care Facilities Revolving Fund (CCFRF) is a loan program intended to increase program capacity. It does this by helping providers purchase portable facilities and make major renovations and repairs to existing facilities. By comparison, the Facilities Renovation and Repair (FRR) program is not intended to increase capacity but rather sustain existing capacity. It does so by awarding grants to existing providers for minor repairs needed to meet health and safety requirements.

The CCFRF Program. Chapter 299, Statutes of 1997 (AB 1578, Migden), established the CCFRF loan-to-purchase program. The program provides no-interest loans of up to $150,000 per portable facility. Loan recipients have an initial three years to use the loan and then ten years to repay it. Loan repayments are made to the fund, such that there is a revolving income stream (in addition to any monies the state might provide into, or take out of, the fund through the annual budget process). Since the fund’s inception, the state has awarded 590 CCFRF contracts—equating to roughly the same number of portable facilities—for a potential increase in capacity of over 20,000 program slots.

The FRR Program. The FRR fund provides grants of up to $1,000 for minor renovation and repair of existing buildings. Most of these projects are intended to meet health and safety requirements and/or comply with Americans with Disabilities Act (ADA) requirements. Recipients have up to two years to spend the grants. There is no income source for this program other than annual budget appropriations. Historically, all monies appropriated are expended in the same year.

Approve Proposal to Transfer CCFRF Monies to FRR Program

Given the large carryover balances in the Child Care Facilities Revolving Fund (CCFRF) program and high demand for the Facilities Renovation and Repair (FRR) program, we recommend the Legislature approve the Governor’s proposal to use up to $5 million from CCFRF for the FRR program.

For the second consecutive year, the Governor proposes using up to $5 million in existing CCFRF monies for FRR grants. Given the large carryover balances in the CCFRF program and high demand for the FRR program, we recommend approving this proposal.

Large Carryover Balances in CCFRF Program. The CCFRF has consistently carried a healthy balance over recent years. The fund balance so routinely exceeds demand that the Legislature has reverted funds from CCFRF to support other K-12 programs four times since 2002—for a total reversion of $93.2 million. Heading into 2007-08, CDE estimates that CCFRF will have a beginning balance of almost $52 million. The CCFRF has sufficient monies available in 2007-08 to award all anticipated loans (even those expected due to the implementation of Chapter 211) and still use $5 million in support of the FRR program.

High Demand for FRR Grants. While the CCFRF program has a large carryover balance and no waiting list, the FRR program consistently has a long waiting list. For example, in 2005, the last time applications were accepted for FRR grants, requests for funding were three times greater than available monies (374 applications were received and 132 grants were awarded). The CDE is expecting a similar response when applications for the $7.5 million available for FRR grants in 2006-07 are accepted in spring 2007. Given such high demand, the Legislature authorized in 2006-07 the spending of up to $5 million in CCFRF monies for FRR grants. We recommend it do the same thing for 2007-08.

Reexamine CCFRF’s Major Renovation and Repair Program

We recommend the Legislature direct the California Department of Education (CDE) to report at spring budget hearings on the status of the Child Care Facilities Revolving Fund’s major renovation and repair loan program. Specifically, we recommend CDE explain why the program has not yet been implemented and present options for expediting that process. As one of these options, we recommend the Legislature consider shifting program administration back to CDE’s School Facilities Division.

In 2001, the Legislature authorized the use of CCFRF loans for major renovations and repairs. It did so because many providers already own facilities but either are not able to use all existing capacity because of needed repairs or else could expand capacity with major renovations. Additionally, these major renovation and repair (MRR) projects tend to be both cheaper and faster than new construction projects.

After Six Years, CDE Still Has Not Implemented Program. After six years, the MRR program still is not in operation. The CDE claims this is because of limited staff resources and legal complexities that relate to safeguarding the state’s interests. Given these issues, CDE has yet to create the needed regulations.

Legislature Should Reexamine Program. We recommend the Legislature require CDE to testify at spring hearings on the current status of the implementation of the MRR program. The CDE should explain its delay in implementing the program and present options for improving the program and/or speeding implementation. As part of the Legislature’s consideration of options for refining the program, we recommend it assess the benefit of shifting program responsibility from CDE’s Child Development Division to its School Facilities Planning Division. (When the CCFRF program was first created, it was administered by the School Facilities Division.)

Child Care and Development Quality

Despite spending over $3.7 billion a year on subsidized care and child development programs for more than 900,000 children and their families, the state currently does not uniformly measure and assess program quality. Lacking both a clear definition of quality and an agreed-upon method for measuring it, the Legislature cannot meaningfully assess the effectiveness of the state’s existing network of child care and development programs. These issues of program quality become even more important when considering program expansions.

California Is Concerned About Quality but Efforts Are Not Coordinated

Although many public and private organizations in California are involved in operating, coordinating, and regulating child care and development programs, no common definition of program quality exists. Instead, organizations tend to use and apply different definitions of program quality and standards.

State Agencies Apply Different Standards. Among state agencies, the Community Care Licensing Division (CCL) of DSS enforces minimum child care licensing standards, primarily in the areas of health and safety. The DSS also administers the Title 22 subsidized child care program, for which providers, whether licensed or license-exempt, are expected to adhere to a set of standards. In contrast, CDE administers the Title 5 program for which providers, all of whom are licensed, must adhere to Title 5 standards. These Title 5 standards are typically more stringent than either CCL licensing standards or Title 22 standards.

Nonstate Agencies Apply Different Standards. In addition to these state agencies, many federal, local, and private child care and development organizations working in California have their own definitions of program quality and standards. Head Start—the federal early childhood education program—and First 5—a state and federally funded local program—each has unique definitions of quality. Additionally, numerous organizations review child care providers—including the National Association for the Education of Young Children, which offers highly coveted program accreditation. Somewhat ironically, because of the confusion surrounding program quality and standards, many local councils have tried to coordinate quality efforts in their area, and, in doing so, have developed their own definitions of quality. This means California does not have a widely agreed-upon definition of quality or standards.

No Way to Measure Quality, No Information for Parents to Use in Assessing Quality. As described in our report, Developing Safety and Quality Ratings for Child Care (January 2007), no consistent, comparable information about the quality of child care providers is publicly available statewide. Neither CCL, DSS, nor CDE publicly disseminate any ratings or assessments of provider quality. The CCL health and safety inspection results are available only if parents call CCL and request results for specific providers. Similarly, CDE conducts quality assessments of Title 5 providers but uses the information for internal purposes only and the assessment results are not available to parents.

No Incentives for Providers to Improve Quality, No Rewards for Those That Achieve High Quality. California currently uses two rate structures to reimburse providers. Title 22 providers are compensated using a regional market rate (RMR), whereas Title 5 providers are compensated according to SRR. (The RMRs vary greatly by region, age of the child, and type of provider. Currently, the rates range from $23 per child per day in the lowest cost region to $56 in the highest cost region. By comparison, SRR for 2007-08 is $34 per child per day throughout the state.) Neither of the current rate structures reimburses providers for actual costs or rewards them for providing a higher-quality program. Thus, a low-quality program receives the same compensation as a high-quality program. (For more information on how providers are reimbursed, please refer to the child care sections of the Analysis of the Budget Bill for 2005-06 and 2006-07.)

No Way to Evaluate Effectiveness of Quality Funds. The federal CCDF program requires states to spend not less than 4 percent of aggregate spending on activities designed to improve the quality and availability of child care. In response to this requirement, California currently spends a total of roughly $100 million each year for more than 40 “quality improvement” programs. Between 2001 and 2003, CDE hired outside consultants to evaluate 11 of these programs (at a total cost of $3.4 million). Although these evaluations try to determine if the program is meeting its stated objectives and provide some recommendations for specific program improvements, they do not assess whether the program actually is “improving the quality and availability of child care.” This again is because the state does not have clear goals against which the programs can be measured. In short, despite investing approximately $700 million in “quality activities” over the past seven years, California cannot determine whether the quality and availability of child care has improved over that time.

A Child Care and Development Quality Plan

We recommend the Legislature convene a working group of relevant stakeholders and direct it to create a strategic child care and development quality plan by March 1, 2008.

Academic research as well as the experience of 13 other states suggests that a child care and development quality plan is a critical first step toward improving program quality. Thus, we recommend the Legislature convene a working group to develop a comprehensive integrated plan for achieving long-term improvement in child care and development programs. Consistent with the lessons learned by other states, we recommend such a plan include clear objectives, highly publicized measurements of success, and provider support programs aligned to program standards. We recognize that developing such a plan would be an intensive task requiring significant input and time and that full implementation of that strategic plan would realistically take several years. We think beginning the planning process now is important for spurring improvement in existing programs and becomes even more important if the state decides to undertake any significant program expansions over the next few years.

An Inclusive, Collaborative Group Likely to Yield More Enduring Plan. We recommend the working group include staff from CCL, DSS, CDE, legislative staff, and the administration as well as representatives from local agencies, parents, providers, and advocacy groups. Inclusion of all these parties would promote familiarity, understanding, buy-in, and acceptance of the final plan. Such an inclusive working group also would combine state-level experts—those knowledgeable of state standards and regulations—with providers and parents—those with real world experience operating and using child care and development programs. Thus, such a group would be more likely to balance the needs of state and local groups. Moreover, such a broadly representative group would be better able to align quality expectations and standards across programs and agencies. For instance, preschool expectations could be more easily aligned with kindergarten curriculum standards.

Plan Should Be Based on Proven Best Practices Tailored to California’s Unique and Diverse Needs. The working group could benefit from the wealth of quality definitions, measurement and rating systems, incentive programs, and other best practices that have already been researched and tested across the country. The group, for example, could build on the frameworks used by the 13 other states that have developed quality rating systems, CDE’s Desired Results program, and/or the regional quality rating programs in Los Angeles and San Francisco.

Key Elements of a Plan

Below we describe of the key elements of a child care and development quality plan.

Define Program Quality. Any quality plan should include a clear definition of quality. Specifically, the working group should define the factors of quality to be assessed (for example, health and safety, academic curriculum, staff/child interactions, and parental involvement). The working group also should define tiered levels of quality for each factor. This would allow the state to distinguish among providers and establish clear goals for providers aiming to improve their programs.

Develop Method for Measuring and Rating Quality. Any quality plan should develop a method by which to regularly and consistently measure quality and publicize information about those measures. Thus, the working group should propose a method for measuring each of the quality factors it has identified and defined. In selecting a method, the working group should consider available resources, the cost-effectiveness of each method, and the ability of parents and the community to easily understand and use the resulting information. The working group also should consider when to update the data, how to synthesize it for public consumption, and how to release it such that information sharing is maximized. (For a more detailed discussion of measuring and rating quality, please see our report Developing Safety and Quality Ratings for Childcare, January 2007.)

Create Stronger Incentives for Providers to Improve Quality. A quality plan should create incentives, including appropriate reimbursement and rewards, for different levels of quality. We think the working group should consider creating one reimbursement system for all child care and development providers that compensates providers based on cost and quality. We recommend the reimbursement rate be tiered—with providers offering higher-quality services receiving higher compensation. The working group should build on the extensive work already done in this area. Over 30 states already have tiered reimbursement rate structures tied to quality.

Reevaluate Use of Quality Improvement Monies. Lastly, a plan should identify appropriate uses of state funds to support program quality. Specifically, the working group should review how the state is spending its quality improvement monies. Once quality has been defined and performance measures developed, the working group should assess the existing programs against them and determine if any program changes or funding reallocations are needed.

In sum, California has neither a common definition of program quality nor a means to measure it. As a result, parents have difficulty obtaining information on provider quality, providers have difficulty knowing how to improve, and the state has difficulty assessing and rewarding quality improvements. In response to these shortcomings, we recommend the Legislature convene a working group to create a child care and development plan that would define, measure, publicize, and reward program quality.

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