Childcare.

Senator Arreguín, with Assembly Member Lee as a coauthor, advances a measure that reconfigures California’s childcare subsidy framework to broaden access to the third stage of assistance, broaden how attendance is counted for reimbursement, and move eligibility administration from county agencies to contracted providers. The core changes include extending income eligibility for the third stage toward a threshold of 85 percent of the state median income (adjusted for family size), expanding fee exemptions for certain families, and establishing a framework for counting attendance that covers medical and educational appointments and for holding space during disenrollment or appeals. The measure also contemplates a transition of third-stage administration away from county welfare departments to contracted entities, subject to transitional rules.

Key mechanisms and details accompany these changes. The attendance provision expands the reasons that can be counted toward reimbursement to include medical and educational appointments, in addition to existing justifications such as illness or family emergencies. It also authorizes contractors to claim attendance for days when a family is deemed to have abandoned care or is engaged in an appeal related to disenrollment. The bill introduces a definitional framework for part-time versus full-time care, with part-time care defined as fewer than 25 hours per week and full-time care as 25 hours or more, with a staged implementation that includes interim guidance by department letters until regulations are adopted, and a rulemaking deadline no later than mid-2026. It also preserves an across-the-board reimbursement reduction mechanism of 11 percent (or a proportionate amount as needed to stay within appropriations), while allowing considerations of contractor performance and service areas. Disenrollment priorities are codified to place higher-income families at the front of the queue up to the 85 percent threshold, with protections for families whose children are in protective services or at risk of neglect or abuse.

The measure amends fee-related provisions and third-stage administration to reflect a realignment of governance and eligibility. Family fee exemptions are extended to up to 24 months for families receiving child protective services or at risk of abuse, neglect, or exploitation, and CalWORKs cash aid recipients are exempt from family fees. Third-stage eligibility is expanded to include CalWORKs recipients and former recipients or diversion participants who meet the 85 percent threshold, while maintaining that the third stage shall be administered by contracted programs rather than county welfare departments, except in limited transitional circumstances for families previously served. The bill cross-references existing eligibility standards and regulations governing the third stage and other program components, signaling a staged regulatory and contracting process.

Implementation and policy context accompany these provisions. The changes are built on the existing Child Care and Development Services Act, with coordination between the department and education authorities and a transition plan that requires rulemaking and potential MOUs governing interagency arrangements. Interim administration may rely on guidance issued through department letters before regulations are adopted, but a formal rulemaking pathway is required by July 1, 2026. The measure maintains the statutory framework for budget-driven reductions in contract amounts and requires fiscal analysis to assess net costs and offsetting effects, given expanded eligibility and extended fee exemptions. Together, these provisions aim to shift administration toward contracted providers, broaden access for low-income families, and clarify attendance and eligibility rules within California’s childcare subsidy programs.