Wednesday, July 6, 2011


On Thursday, June 30, Governor Jerry Brown signed the main budget bill (SB 87) and about half of the related "trailer" bills, marking a rare on-time budget one day before the start of California's 2011/12 fiscal year. The signed budget includes cuts to public universities, reductions to the courts and closures of 70 parks, among other measures. Fortunately, for early childhood education, the budget includes the restoration of $200 million in child care funding that was initially passed by the Legislature on June 15. Below is a detailed description of the child care funding restorations in the approved state budget:

Child Care Funding Restorations included in the Approved 2011/12 Budget
  • Restores 10% Standard Reimbursement Rate cut to the Title V contracts
  • Rescinds the proposed 10% family fee increase
  • Reinstates child care services for 11- and 12-year old children
  • Reduces across the board contract reduction from 15% to 11% (in Education trailer bill - AB 114) Establishes the Early Learning Advisory Council (ELAC) into statute – ensuring its long-term presence
However, the 2011/12 budget does include the following changes and cuts to child care funding:

Child Care Funding Cuts included in the Approved 2011/12 Budget

  • Limits families to 48 months of cash assistance (down from 60 months)
  • Cuts the CalWORKs grant amount by 8%
  • Reduces Earned Income Disregard (income not counted in determining monthly grant amount)
  • Extends Short-Term Reforms (allocations effective since 2009/10)
  • Suspends the Cal-Learn Program
Child Care and Development:
  • Reduces the State Median Income (SMI) from 75% to 70%
  • Reduces the licensed exempt provider rate from 80% to 60%
  • Reduces the amount of funding focused on quality initiatives (including the Centralized Eligibility List, the License Exempt Project and the Child Care Initiative Project) 
The budget signed by the governor is balanced and it is based upon a relatively even mix of cuts and tax revenues, as well as a smaller amount of funding shifts and internal borrowing. But, there could likely be a future challenge during this fiscal year. This approved budget includes $4 billion in revenues projection; however, if these revenues do not materialize by December 15, a trailer bill AB 121 (budget trigger provisions) will generate additional cuts in education, corrections and safety-net programs, which would take effect January 1, 2012. For example, if revenues fall short by more than $1 billion, then there will be a $23 million loss in child care funding, resulting in a 4% across-the-board reduction.

Additionally, the 2011/12 Budget removes child care and development from the Proposition 98 funding formula, with the only exception being half-day state-funded preschool programs. As a result of this realignment, the State General Fund (non-98 portion) would support the rest of child care and development. For the 2011/12 budget, these programs are supported in the allocation to the California Department of Education (CDE). So, at least for now, CDE will continue to administer the child care subsidy programs. It is uncertain if in the future, child care might be administered by local (county) government oversight.