Child Care & Preschool Archives

Introduction

California children need a safe space to learn and grow while parents are at work, and the COVID-19 pandemic underscored just how essential child care is for the livelihood of workers and communities. California’s subsidized child care and development system has long been critical to the state’s economic infrastructure, helping families struggling to make ends meet cover the high cost of early care and education for their children.¹ But policymakers have never provided enough funding to offer care for all eligible families or to ensure providers and early educators are paid fair and just wages.²

State and federal dollars fund the state’s subsidized child care and development system that includes both child care programs and the California State Preschool Program. Due to chronic underfunding at the state and federal level, cash-strapped families and under-paid providers engaged in the state’s subsidized child care and development system did not have the resources to withstand the economic shock of the pandemic. This 5 Facts provides key details on how state and federal funding mitigated some of the impacts of the pandemic on California’s subsidized child care and development system and explains why policymakers should continue to invest ongoing resources in California’s families and providers.

1. Federal Policymakers Provided Significant One-Time Support for Child Care Providers and Families During the Pandemic

California has received more than $5 billion in federal relief funds during the pandemic to support under-paid child care providers and cash-strapped families who were not in a position to weather a health and economic crisis.³ These one-time relief dollars were on top of the state’s annual appropriation from the Child Care and Development Fund (CCDF) — the primary source of federal funding for subsidized child care.

The first round of federal pandemic relief for child care came from the Coronavirus, Aid, Relief, and Economic Security (CARES) Act, enacted in March 2020.⁴ California received $350 million, increasing federal funding for child care in California by 51% in the 2020 federal fiscal year over pre-pandemic levels.⁵

Federal policymakers provided additional child care relief in the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSA) in December 2020, of which California received an additional $964 million. Finally, the American Rescue Plan Act (ARPA) became law in March 2021, providing a total of $3.7 billion for child care relief efforts in California — 62% for provider stabilization and 38% to supplement CCDF funding.⁶ Combined, CRRSA and ARPA provided a total of $4.7 billion in child care relief funds to California in the 2021 federal fiscal year. This was a six-fold increase in federal child care dollars over pre-pandemic funding from the Child Care and Development Fund.

2. State Policymakers Have Utilized Roughly Half of Federal COVID-19 Child Care Relief Funds

Federal child care relief funding has been significant and essential to support child care providers and working parents. To date, state leaders have appropriated 48% — roughly $2.5 billion — of the federal funds to keep the underfunded subsidized child care and development system afloat.

More than one-third of the appropriated relief funds, or $891 million, has been used to support California families. Policymakers have utilized relief funding to provide emergency child care for essential workers and to expand subsidized child care spaces for families with low incomes. Policymakers also have waived family fees for subsidized care for a limited time to ease families’ financial burdens.⁷

Nearly two-thirds of the appropriated federal relief funds — $1.6 billion — has been allocated to support child care and preschool providers. Relief measures have included provider stipends for both subsidized and non-subsidized providers, rate increases and rate supplements to compensate for chronically low payment rates, pandemic supports to ease the cost of keeping doors open during the pandemic, and other investments in quality and support programs.

The administration has struggled to distribute the large amount of federal relief funds in a timely fashion, and some measures, such as waiving family fees for working parents and provider pandemic supports, will end on June 30, 2022, increasing economic hardship. More than half of the federal relief dollars remain unallocated.

3. Remaining One-Time Federal Relief Funds to Boost Provider Payment Rates and Provide Care for More Children

Roughly half of the $5.2 billion in one-time federal COVID-19 child care relief dollars remain unspent. The $2.7 billion in unspent funds includes both CRRSA and ARPA dollars — both of which can be used for a variety of purposes to supplement existing child care funding in California.⁸

The majority of unspent federal relief funding is ARPA dollars — both the stabilization funds and supplemental CCDF funds. Policymakers have signaled the intent to use these one-time ARPA dollars for provider payment rates through the 2023-24 state fiscal year and for subsidized child care spaces through the 2024-25 state fiscal year.⁹ State leaders have also indicated that the remaining $326 million in CRRSA will fund additional subsidized child care spaces in 2022-23 state fiscal year.¹⁰ The use of these federal child care relief funds in 2022-23 and beyond is not final until the governor signs the budget agreement for the fiscal year.

The federal administration signaled urgency in utilizing child care relief funds for temporary measures to support cash-strapped families and under-paid subsidized providers who have faced enormous challenges during the pandemic. The CRRSA dollars and ARPA Stabilization funds must be spent by September 30, 2023.¹¹ ARPA supplemental CCDF funds must be spent by September 30, 2024.¹²

More in this series

See our Report: California’s Subsidized Child Care Providers Are Overdue for Pay Raise to learn how California providers and families suffer when subsidized child care is limited in their communities because of policymakers’ lack of investment.

4. Policymakers Have Expanded the Subsidized Child Care and Development System With One-Time Funds

Funding for the state’s subsidized child care and development system increased dramatically in the 2021-22 state fiscal year due in large part to one-time federal relief funds. In 2021-22, total funding for subsidized child care programs and the California State Preschool Program was $6.9 billion, but $2 billion of this total was one-time funding — 29% of overall support.

These one-time dollars are both federal relief funds and state funds, and have been used to support children, families, and providers in a number of ways, including payment rate increases and additional child care and preschool spaces for children. Policymakers plan to use remaining one-time federal relief funds to maintain these program expansions in coming years.¹³ Eventually, the state will have to commit significant, ongoing state dollars to avoid cuts to these vital supports for families and providers, but this will be difficult if policymakers face budget challenges.

Using one-time dollars to boost funding for the subsidized child care and development system is not unique to the pandemic. Since Governor Newsom took office, the state has increasingly relied on one-time dollars to support child care and preschool program expansions. Using one-time funding for ongoing programs and services undermines the fiscal foundation of the state’s subsidized child care and development system.

5. The 2021-22 Budget Builds on Investments from Prior Years but Still Falls Short of Equitable Funding Levels

Policymakers have incrementally invested in the state’s subsidized child care and development system to restore the devastating cuts made to child care programs and the California State Preschool Program as a result of the Great Recession — the state’s last economic crisis.¹⁴ State leaders continued this investment trend in the 2021-22 budget by utilizing one-time federal relief dollars and one-time and ongoing state funds to dramatically increase support for the state’s subsidized child care and development system.

Total funding for subsidized child care and the California State Preschool Program increased by more than one-third in 2021-22 (after adjusting for inflation), bringing overall funding to $6.9 billion. This boost in funding was driven by roughly $1.7 billion in one-time federal relief dollars included in the 2021-22 state budget. State policymakers also increased General Fund support for the subsidized child care and development system by 31% and special fund support by 59%. However, even with increased funding, resources still fall far short of the billions in additional support necessary to provide fair and just wages to providers and to increase access to early learning and care for families with low and moderate incomes in California.¹⁵

Conclusion

The COVID-19 pandemic has underscored just how vital child care is to children, families, communities, and the economy. In response to the crisis, California policymakers have invested state and federal dollars into the state’s chronically underfunded subsidized child care and development system to mitigate some of the devastating impacts of the pandemic. While total funding for subsidized child care and the California State Preschool Program increased dramatically, the use of one-time funds to expand these programs threatens the fiscal foundation of the system and California families’ and providers’ ability to sustain child care.

As the state and nation emerges from the pandemic, policymakers have the opportunity to use one-time federal pandemic relief funds as a down payment for a fiscally sound subsidized child care and development system. To do so, both the state and federal government must provide significant, ongoing resources. This will ensure that children have a safe place to learn and grow, working parents have access to affordable child care, and providers and early educators are paid fair and just rates.

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1
Families are eligible for subsidized child care if the child who would receive care is under the age of 13; the family establishes an appropriate eligibility status, such as by having an income below the limit set by the state; and the family demonstrates a need for care, such as parental employment. Families generally must meet the same income guidelines applicable to child care to qualify for the California State Preschool Program, which is funded solely with state dollars. State law, however, allows up to 10% of families in the state preschool program to have incomes up to 15% above the income eligibility limit, but only after all other eligible children have been enrolled. The California State Preschool Program is a part-day program offered for roughly nine months of the year. Some children receive “wraparound” services that provide subsidized child care for the remainder of the day and throughout the entire year. To be eligible for the full-day California State Preschool Program, families generally must meet the same eligibility guidelines that are applicable to subsidized child care.
2
Kristin Schumacher, Exploring the Unmet Need for Subsidized Child Care and Development Programs in California (California Budget & Policy Center, February 2019), https://calbudgetcenter.org/resources/exploring-the-unmet-need-for-subsidized-child-care-and-development-programs-in-california/; and Kristin Schumacher and Erik Saucedo, California’s Subsidized Child Care Providers Are Overdue for a Pay Raise (California Budget & Policy Center, April 2022), https://calbudgetcenter.org/resources/californias-subsidized-child-care-providers-are-overdue-for-pay-raise/
3
Federal policymakers also provided pandemic relief funding for Head Start, a federal early care and education program. These relief dollars flowed directly to Head Start providers across California and were not appropriated in the state budget. See US Department of Health and Human Services, Office of Head Start, Program Instruction ACF-PI-HS-21-03 (May 4, 2021), https://eclkc.ohs.acf.hhs.gov/policy/pi/acf-pi-hs-21-03.
4
California Budget & Policy Center, Federal Fiscal Relief and COVID-19: Implications for Californians (April 2020), https://calbudgetcenter.org/resources/covid19-federal-fiscal-relief-california/.
5
State policymakers supplemented the CARES Act funding for child care with an additional $110 million in flexible CARES Act dollars allocated to states from the Coronavirus Relief Fund. See Department of Finance, Notification letter Section 11.90 – Child Care and Food Bank Support (October 19, 2020), https://dof.ca.gov/wp-content/uploads/budget/covid-19/covid-19-allocations/10-19-20_section_11-90-federal_coronavirus_relief_funds-child_care_and_food_bank_support-cc.pdf.
6
California Budget & Policy Center, American Rescue Plan Provides Assistance to Millions of Californians (March 2021), https://calbudgetcenter.org/resources/american-rescue-plan-provides-assistance-to-millions-of-californians/.
7
See Kristin Schumacher, Erik Saucedo, and Marcela Salvador, California Families Pay High Price for Subsidized Child Care (California Budget & Policy Center, March 2021), https://calbudgetcenter.org/resources/california-families-pay-high-price-for-subsidized-child-care/.
8
US Department of Health and Human Services, Office of Child Care, Information Memorandum CCDF-ACF-IM-2021-1 (April 14, 2021), https://www.acf.hhs.gov/occ/policy-guidance/ccdf-discretionary-funds-appropriated-crrsa-act-public-law-116-260-signed-law; US Department of Health and Human Services, Office of Child Care, Information Memorandum CCDF-ACF-IM-2021-2 (May 10, 2021), https://www.acf.hhs.gov/occ/policy-guidance/ccdf-acf-im-2021-02; and US Department of Health and Human Services, Office of Child Care, Information Memorandum CCDF-ACF-IM-2021-3 (June 10, 2021), https://www.acf.hhs.gov/occ/policy-guidance/ccdf-acf-im-2021-03.
9
Assembly Bill 131 (Committee on Budget, Chapter 116, Statutes of 2021), https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB131; and Senate Bill 129 (Skinner, Chapter 69, Statutes of 2021), https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220SB129.
10
Assembly Bill 131 (Committee on Budget).
11
US Department of Health and Human Services, Office of Child Care, Information Memorandum CCDF-ACF-IM-2021-1 and Information Memorandum CCDF-ACF-IM-2021-2.
12
US Department of Health and Human Services, Office of Child Care, Information Memorandum CCDF-ACF-IM-2021-3.
13
Assembly Bill 131 (Committee on Budget).
14
Kristin Schumacher, One-time Funding Boosts Dollars for Child Care and Preschool (California Budget & Policy Center, September 2018), https://calbudgetcenter.org/resources/one-time-funding-boosts-dollars-for-child-care-and-preschool/.
15
California Health & Human Services Agency, Master Plan for Early Learning and Care: Making California for All Kids (December 2020), 95-107, https://www.chhs.ca.gov/home/master-plan-for-early-learning-and-care/.

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California’s subsidized child care providers offer vital early learning and care for families struggling to make ends meet. Even as the COVID-19 pandemic continues, many providers and their staff have risked their health and safety to offer care for children of working parents. These early educators — primarily women and disproportionately women of color — deserve to be paid professional wages for essential work that helps children learn and grow while parents are working to support their families.

Despite providers’ critical role in nurturing children and assisting families, state leaders have failed to consistently and adequately increase provider payment rates in recent years. Child care providers are unable to offer early educators adequate professional wages, struggle to keep pace with the rising statewide minimum wage, and can’t afford the increasing price of food and supplies if policymakers don’t provide routine and sufficient updates to payment rates. Ultimately, California providers and families suffer when subsidized child care is limited in their communities because of policymakers’ lack of investment.

Providers and families suffer when subsidized child care is limited in their communities because of policymakers’ lack of investment.

How Are Subsidized Child Care Providers Paid in California?

Subsidized child care providers are paid in one of two ways in California: 1) by accepting vouchers from families or 2) by contracting directly with the state. Providers who accept vouchers are reimbursed by the state based on the Regional Market Rate (RMR) Survey. The RMR survey — administered every two to three years — provides “rate ceilings” based on provider setting and the age of the child for all 58 California counties. The rate ceiling is the highest payment a provider can receive from the state for the care of a child. Providers that contract directly with the state are paid with a statewide rate called the Standard Reimbursement Rate, which has typically been adjusted for various factors such as the age of the child or disability status.

Payment Rates for Voucher-Based Child Care Providers Are Not Keeping Pace Across 58 Counties

California experienced strong revenue growth over the past five years, yet state leaders updated voucher-based payment rates for child care providers just twice since the 2016-17 state fiscal year. During this same period, the state law requiring annual increases to the statewide minimum wage went into effect, raising the wage by 40% from 2017 to 2022.¹

The rate ceilings for child care providers across all 58 counties generally have not kept pace with the rising minimum wage even after the most recent increase to payment rates included in the 2021-22 state budget agreement. In the state’s two most populous counties — Los Angeles and San Diego — payment rates for licensed centers caring for preschool-age children increased by half as much as the statewide minimum wage. Providers in some counties, such as Santa Barbara County, saw miniscule rate increases of less than 1%. And in 27 counties, due to weaknesses in the rate-setting methodology, licensed centers have not received a single rate increase for care for preschool-age children since the 2016-17 state fiscal year.²

State Rate for Contract Providers Doesn’t Match Rising Child Care Business Costs

Similar to voucher-based payment rates, policymakers also have not consistently updated the Standard Reimbursement Rate each year so that contract providers keep pace with rising staff costs and the increasing price of food and supplies. From 2016-17 to 2021-22, the Standard Reimbursement Rate has increased by just 28.2%, falling short of the 40% increase in the state minimum wage.³

Even though contract-based providers are required to meet more program standards than voucher-based providers do, the payment rate is lower than the Regional Market Rate ceiling in many counties, illustrating a key problem with the state’s bifurcated rate system. To correct for this, policymakers included a provision in the 2021-22 budget agreement to reimburse contract-based providers with either the Standard Reimbursement Rate or the rate for voucher-based providers, whichever is higher.⁴

Subsidized Child Care Providers Urgently Need a Pay Raise

Already operating on thin financial margins, child care providers have struggled during the pandemic with a loss of income and increased costs due to reduced enrollment, temporary closures, and enhanced health and safety requirements.⁵ Policymakers’ recent efforts to boost subsidized child care providers’ payment rates and to provide other one-time rate supplements are just the first step to fair and just payment rates. In addition to increasing payment rates, the 2021-22 budget agreement also required the governor’s administration and providers, parents, and other early childhood experts to begin work on a plan to replace the state’s bifurcated rate system with a unified, equitable system.⁶

But subsidized child care providers and the families they serve can’t wait. While a permanent solution is in the works, state leaders should provide another payment rate increase in the 2022-23 budget agreement to ensure child care providers can keep up with rising costs while continuing to offer invaluable care to children and families.

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1
Calculations are based on the minimum wage for employers with 25 employees or less. Senate Bill 3 (Leno, Chapter 4, Statutes of 2016), https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160SB3
2
Market rate surveys collect data on the tuition and fees that families can afford to pay for child care in a geographic area. These rates typically do not cover the true cost of care, as many providers supplement tuition and fees with other sources of revenue, such as grants or donations. See Bipartisan Policy Center, The Limitations of Using Market Rates for Setting Child Care Subsidy Rates (May 2020), 4-6, https://bipartisanpolicy.org/report/the-limitations-of-using-market-rates-for-setting-child-care-subsidy-rates/.
3
During this period, policymakers also increased the Standard Reimbursement Rate adjustment
factors for a number of higher-cost groups of children, such as infants or children with disabilities.
Many of these adjustment factors were eliminated in the 2021-22 budget agreement as part of the
transition to a single reimbursement rate system for subsidized child care providers. See Assembly
Bill 1808 (Committee on Budget, Chapter 32, Statutes of 2018),
https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180AB1808; and Assembly
Bill 131 (Committee on Budget, Chapter 116, Statutes of 2021),
https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB131.
4
Assembly Bill 131 (Committee on Budget).
5
Kristin Schumacher, California’s Economic Recovery Starts with Child Care (California Budget & Policy Center, February 2021), https://calbudgetcenter.org/resources/california-economic-recovery-starts-with-child-care/.
6
AB 131 (Committee on Budget).

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Overview

Child care is critical for working parents, but the high cost of care can be a challenge for families. A very small share of California families with low and moderate incomes receive care through the state’s subsidized child care and development system. Many of these families pay monthly fees into this system — fees that can be unaffordable for families who are living paycheck to paycheck.

Working parents should not have to face impossible choices each month about whether to pay for food, rent, or child care. Learn more about family fees and why policymakers must use state and federal dollars to waive fees, ensure child care providers are supported, and boost families’ economic security.

Infographic title: California Families Pay High Price for Subsidized Child Care

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More than 6 in 10 California children under the age of 12 live in families where all parents are working.¹ For this reason, child care providers are a critical component of the state and nation’s economic infrastructure, ensuring that children have a safe space to learn and grow while parents work. Many providers in California have stepped up to the challenge of delivering care and distance learning support for families during the COVID-19 pandemic and recession — particularly for children with parents who are essential workers. But the state’s child care system is on the verge of collapse.

Already operating on thin financial margins, child care providers are struggling with a loss of income due to reduced enrollment, while facing dramatically increased costs necessary to keep children and staff safe and healthy. Many providers report losing money and turning to personal savings and credit cards in order to sustain operations.² Since the pandemic began, many providers have closed their doors in California and thousands will not reopen.³ In addition, nearly 3 in 10 jobs in the child care industry have been lost during the crisis.⁴ These business owners and workers are primarily women and Black, Latinx, immigrant, and other workers of color. The loss of small businesses and jobs coupled with a decrease in child care supply for working families only exacerbates the economic toll of the pandemic on workers of color, women, and their communities.

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Child care providers are struggling with a loss of income due to reduced enrollment, while facing dramatically increased costs necessary to keep children and staff safe and healthy.

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Both the state and federal government have provided emergency funding to support child care providers and families this past year, but total support falls far short of the estimated level necessary to sustain this critical industry. The federal COVID relief package enacted in late 2020 included $10 billion in federal Child Care and Development Block Grant funds. California received $964 million of this funding. Policymakers and the administration must ensure that these one-time federal relief dollars are distributed equitably and without delay to avoid additional closures and layoffs as well as to support working families.

The state’s fiscal health is unexpectedly strong despite the current crisis. Policymakers should also invest one-time funds to help strengthen California’s child care infrastructure and dedicate ongoing funding to help families afford care and to pay providers fair rates. Even prior to the pandemic, 60% of Californians lived in a child care desert with limited access to child care providers.⁵ California’s economy cannot recover from the shocks of the COVID-19 pandemic until children have a safe place to learn and grow, working parents can return to their jobs, and providers are supported in sustaining the critical child care industry.

Support for this Fact Sheet was provided by First 5 California.

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COVID-19 has changed jobs, schools, and child care settings for Californians, and this has been particularly disruptive for children, families, and the child care providers who are essential to California’s economy and communities. In this presentation learn what funding early care and education programs received in the 2020-21 state budget and from federal relief in 2020, and the additional support providers, workers, and families – particularly Californians of color and families in low-income households – still need from state and federal policymakers in the ongoing pandemic.

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During this unprecedented health and economic crisis, many subsidized child care providers in California have stepped up to the challenge of providing early learning and care for families with low and moderate incomes – particularly for children with parents who are essential workers. While the state and federal government have both provided emergency funding to support subsidized child care providers, total support falls far short of the estimated level necessary to sustain child care providers. In addition, the Governor’s May Revision would cut provider payment rates by 10%. These rate cuts could be detrimental for child care providers who were already underpaid and operating on thin margins prior to the COVID-19 pandemic. Now, during this crisis, providers are faced with dramatically higher costs due to smaller class sizes, increased staffing per child, and the added expense of keeping facilities clean as they care for and educate children.

Subsidized child care providers are paid in one of two basic ways: by contracting directly with the state or by accepting vouchers from families. Providers who accept vouchers are reimbursed based on the Regional Market Rate (RMR) Survey, which provides “rate ceilings” for all 58 California counties by the type of care and the age of the child. The rate ceilings in use in the 2019-20 state fiscal year are based on the 75th percentile of the 2016 survey. In theory, this should allow families to access 75 out of every 100 providers in their county. However, because the state is currently using an outdated survey, families are able to access far fewer providers.

A 10% decrease to the current, outdated rate ceilings would further restrict families’ access to care. For example, in Los Angeles County where one-quarter of children eligible for subsidized child care live, the proposed rate ceiling for full-time, center-based care for an infant would be $1,435 per month, which means that families would have access to just 54% of providers in their community based on the most recent survey from 2018. Across California, the proposed rate ceilings for many counties would fall far short of the 75th percentile benchmark from the most recent survey.

Providers that contract directly with the state are reimbursed with a statewide rate called the Standard Reimbursement Rate, which is adjusted based on different factors such as the age of the child. Contract-based providers have to meet quality standards, in addition to meeting the health and safety standards that voucher-based providers are held to. Given the additional standards required by the state, a higher rate should be provided for contract-based providers. However, in 14 counties contract-based centers caring for preschool-age children are paid at a monthly rate that is less than vouchers for center-based providers. One reason for this is because policymakers have not consistently increased the Standard Reimbursement Rate each year, and this key payment rate has lost value over time. A 10% cut would erase some of the gains made after the Great Recession in boosting the Standard Reimbursement Rate.

Child care providers’ ability to offer subsidized care depends, in part, on the state’s reimbursement rates. When providers are not paid at a level that allows them to operate their businesses, attract and retain qualified staff, and afford materials and supplies to educate children, they may be unable to offer care to families with low incomes. Some may be forced to permanently close their doors.

While the May Revision proposes to use $125 million in federal emergency funds to provide one-time stipends to subsidized providers, the value of these stipends will likely fall far short as compared to the long-term loss in income due to the Governor’s proposed 10% payment rate cut. In the meantime, California could lose an invaluable number of child care providers and diminish families’ access to care.

Child care providers are offering early learning and care for thousands of California children and are playing an outsized role as essential workers who ensure that other vital workers in our communities can go to work. Policymakers should use all available funds to stabilize subsidized child care providers by providing stipends for increased costs as proposed in the May Revision and maintaining provider payment rates. This is critical to helping providers survive the COVID-19 crisis, supporting families with low incomes who must leave their homes to work, and aiding the state’s economic recovery.

Support for this work is provided by First 5 California.

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As California grapples with the COVID-19 pandemic, it’s been essential workers in hospitals, grocery stores, agricultural fields, and many other core services that have helped ensure the health and safety of our communities. But essential workers can’t go to work – no matter how vital their jobs – without a safe space for their children to learn and grow. This presentation by Senior Policy Analyst Kristin Schumacher covers research on the state’s essential workers, industries, and occupations – conducted in partnership with the UC Berkeley Labor Center. You’ll also learn how many children in California had parents who were considered essential workers and the number of children who were income-eligible for subsidized care with parents working in essential jobs.

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View PDF version of this Fact Sheet.

The neighborhood a child grows up in can shape their long-term success, affecting their economic mobility as adults.[1] While Governor Newsom has pledged to create a “California for All,” currently opportunities for children are not evenly distributed across the state. Policymakers who aim to boost opportunity and improve children’s life-long prospects can strategically invest in subsidized child care and development programs that serve families with low and moderate incomes by targeting areas that have been left behind.

According to a Budget Center analysis of federal survey data, an estimated 2 million children from birth through age 12 were eligible for subsidized child care and development programs in California in 2017 — roughly 1 in 3 children across the state (32.2%).[2] The share of children eligible by county varied dramatically, with the highest shares of eligible children living in counties in the Central Valley — a region with some of the state’s highest poverty rates.[3] Kings County had the highest share, with more than half of all children in the county eligible for subsidized care (50.9%). (See Map below.) More than half of the children in the county group of Colusa, Glenn, Shasta, Tehama, and Trinity were also eligible (50.2%).[4] Conversely, the counties with the lowest share of eligible children were in and around the San Francisco Bay Area and Lake Tahoe, where the cost of living is significantly higher.[5] San Mateo County had the lowest share of eligible children, with 14.9% of children in the county eligible for subsidized care. [6] Because the cost of living is considerably higher in these counties, many families with incomes too high to qualify for subsidized care may still struggle to afford early care and education for their children.

The five counties with the largest number of eligible children were all located in Southern California: Los Angeles (539,900), San Bernardino (154,000), San Diego (149,600), Riverside (147,900), and Orange (136,900). (See Table below.) Collectively, these five counties accounted for more than half of all children birth through age 12 eligible for subsidized child care and development programs in the state. Los Angeles County alone accounted for more than 1 in 4 eligible children in California (26.6%).

Of the 2 million children eligible for subsidized care in California in 2017, just 1 in 9 children were enrolled in a program that could accommodate families for more than a couple hours per day and throughout the entire year (228,100).[7] The share of eligible children enrolled in a state program also varied across the state. (See Table below.) For example, in Orange County just 1 in 16 eligible children were enrolled in a subsidized program (6.1%). Riverside County also had a large number of eligible children but a very low share enrolled in a state program (7.3%). In contrast, due in part to a long history of prioritizing early care and education at the local level, nearly half of all eligible children were enrolled in a subsidized program in San Francisco (49.5%).[8]

Governor Newsom has signaled the intent to increase families’ access to the state’s subsidized child care and development system by proposing to boost funding for this system in the next fiscal year, including dollars for child care facilities, workforce development, and additional spaces for children. With a Governor focused on children and families, policymakers have an opportunity to invest new funding in the 2019-20 budget in an intentional fashion, targeting counties and even neighborhoods were the need is particularly acute. A child’s opportunity to escape poverty is often influenced by where they grow up. By strategically investing in areas throughout the state where children and families do not have as many opportunities, the Administration can ensure that “California for All” reaches those with the greatest need.

This analysis is the fourth part of a multiphase effort to analyze subsidized child care and development programs in California. Other phases of this work have examined the total unmet need for subsidized child care and unmet need across different age groups and by race and ethnicity. Support for this Fact Sheet was provided by First 5 California.

[1] Raj Chetty, et al., The Opportunity Atlas: Mapping the Childhood Roots of Social Mobility (Opportunity Insights and US Census Bureau: October 2018).

[2] Income eligibility is based on initial certification levels, which is 70% of state median income. Families are eligible for subsidized child care if the child who would receive care is under the age of 13; the family establishes an appropriate eligibility status, such as by having an income below the limit set by the state; and the family demonstrates a need for care, such as parental employment. Families generally must meet the same income guidelines applicable to child care to qualify for the California State Preschool Program (CSPP), which is funded solely with state dollars. State law, however, allows up to 10 percent of families in the state preschool program to have incomes up to 15 percent above the income eligibility limit, but only after all other eligible children have been enrolled. The CSPP is a part-day program offered for roughly nine months of the year. Some children receive “wraparound” services that provide subsidized child care for remainder of the day and throughout the entire year. To be eligible for the full-day CSPP, families generally must meet the same guidelines regarding eligibility status that are applicable to subsidized child care. See Kristin Schumacher, Millions of Children Are Eligible for Subsidized Child Care, but Only a Fraction Received Services in 2017 (California Budget & Policy Center: January 2019).

[3] “Central Valley” refers to both the San Joaquin Valley and the Sacramento Valley. For poverty rates by county, see Esi Hutchful and Sara Kimberlin, Incomes Grew and the Official Poverty Rate Dropped in California in 2017, But Millions Still Struggle With Extremely Low Incomes (California Budget & Policy Center: September 2018).

[4] Estimates for certain counties were deemed unreliable due to data limitations. The following counties have been grouped to improve the reliability of the data: 1) Alpine, Amador, Calaveras, Inyo, Madera, Mariposa, Mono, and Tuolumne; 2) Colusa, Glenn, Shasta, Tehama, and Trinity; 3) Del Norte, Humboldt, Lassen, Modoc, Nevada, Plumas, Sierra, and Siskiyou; 4) El Dorado and Placer; 5) Lake and Mendocino; 6) Marin, Napa, and Sonoma; 7) Monterey, San Benito, San Luis Obispo, and Santa Cruz; and 8) Sutter, Yolo, and Yuba.

[5] See Sara Kimberlin and Amy Rose, Making Ends Meet: How Much Does It Cost to Support a Family in California? (California Budget & Policy Center: December 2017).

[6] The income eligibility limit does not vary across the state, but a number of counties either have a pilot or are in the process of getting state approval for a county pilot to set income limits at a higher level. For example, San Mateo County and the City and County of San Francisco both have permanent pilots, which sets the income eligibility limit at 85% of state median income (SMI). Statewide the income eligibility limit is 70% of SMI, which is used for every county in this analysis.

[7] The 228,100 figure reflects children enrolled in the full-day CSPP or in one of the following subsidized child care programs: Alternative Payment Program; CalWORKs Stages 1, 2, or 3; Family Child Care Home Network; General Child Care; and the Migrant Child Care and Development Program. Enrollment is for children from birth through age 12 in October 2017. This analysis also includes the full-day CSPP, which consists of part-day preschool and “wraparound” child care, because it accommodates many — although not all — families’ work schedules throughout the year, and thus approximates the experience that a child would have in a subsidized child care program. In contrast, this analysis excludes roughly 97,000 children who were enrolled in the part-day CSPP, without access to wraparound child care, in October 2017. This is because most families with low and moderate incomes likely need wraparound care in order to supplement the CSPP’s part-day, part-year schedule. This analysis reports enrollment data for a single month — as opposed to a monthly average for 2017 — because the CDE does not typically separate part-day and full-day CSPP enrollment when reporting monthly averages for a single fiscal year. The CDE also states, “Caution should be used when interpreting monthly averages as some programs do not operate at full capacity throughout the entire year (e.g., State Preschool) while other programs have seasonal fluctuations in enrollment (e.g., Migrant Child Care).” Finally, the data are for October 2017 because the CDE’s point-in-time reports are only available for the month of October. See Kristin Schumacher, Millions of Children Are Eligible for Subsidized Child Care, but Only a Fraction Received Services in 2017 (California Budget & Policy Center: January 2019).

[8] San Francisco was the first city in the United States to pass a “Children’s Amendment.” Passed in 1991, this measure dedicated local funding to early care and education, among other programs and services for children. Voters in San Francisco also approved additional funding for a “Preschool for All” program in 2004. See San Francisco Office of Early Care & Education, San Francisco Citywide Plan for Early Care and Education (2016).

COVID-19

Child Care & Preschool

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Moving Beyond Relief for California Child Care

Introduction

1. Federal Policymakers Provided Significant One-Time Support for Child Care Providers and Families During the Pandemic

2. State Policymakers Have Utilized Roughly Half of Federal COVID-19 Child Care Relief Funds

3. Remaining One-Time Federal Relief Funds to Boost Provider Payment Rates and Provide Care for More Children

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4. Policymakers Have Expanded the Subsidized Child Care and Development System With One-Time Funds

5. The 2021-22 Budget Builds on Investments from Prior Years but Still Falls Short of Equitable Funding Levels

Conclusion

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Providers and families suffer when subsidized child care is limited in their communities because of policymakers’ lack of investment.

How Are Subsidized Child Care Providers Paid in California?

Payment Rates for Voucher-Based Child Care Providers Are Not Keeping Pace Across 58 Counties

State Rate for Contract Providers Doesn’t Match Rising Child Care Business Costs

Subsidized Child Care Providers Urgently Need a Pay Raise

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Overview

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