September 30, 2011
Dear Director of Alternative Payment Child Care Programs:
Subject: Administrative and Support Cost Percentage and Maximum Reserve Account Balance
The maximum allowable administrative and support percentage has been reduced to 17.5% for Alternative Payment and CalWORKs contracts (Education Code Section 8223). The Family Child Care Home Education Networks allowable percentage remains at 30%. The maximum reserve amount for an Alternative Payment (AP) Reserve Account may not exceed two percent of the sum of the amounts allowed for administrative and support services, or $1,000, whichever is greater (Education Code Section 8450).
The reduction in the allowable administrative and support percentage for Alternative Payment and CalWORKs contracts will consequently reduce the reserve account maximum balance. Contractors are encouraged to determine their maximum reserve amount and utilize any excess reserve funds in FY 2011–12. Excess funds held in reserve will be billed at the time of FY 2011–12 contract closure. Remember to consider any interest earned on reserve funds in FY 2011–12, which will further increase your balance.
An example is provided below to help determine maximum allowed administrative and support for each contract type for the purposes of determining the AP reserve account maximum balance.
Contract |
MRA |
Admin & Support Percent |
Maximum Admin & Support Amount |
|---|---|---|---|
C2AP1XXX |
$3,813,442 |
17.5% |
$667,352 |
C3AP1XXX |
$1,788,964 |
17.5% |
$313,069 |
CAPP1XXX |
$1,223,191 |
17.5% |
$214,058 |
CFCC1XXX |
$804,618 |
30% |
$241,385 |
| $1,435,864 |
To determine the maximum reserve balance, multiply the sum of the maximum administrative and support amounts by two percent.
Maximum Admin & Support Amount |
Two Percent |
Maximum Reserve Amount |
|---|---|---|
$1,435,864 |
2% |
$28,717 |
If in the example above, the contractor’s FY 2011–12 reserve account ending balance is $30,000, the contractor is encouraged to use at least $1,283 ($30,000 minus $28,717) of reserve funds to cover excess expenses in any of their Alternative Payment contracts.
Please contact your Fiscal Analyst if you have any questions. The analyst directory can be found at http://www.cde.ca.gov/fg/aa/cd/faad.asp.
Sincerely,
Original signed by Phyllis A. Savage
Phyllis A. Savage, Staff Services Manager III
Fiscal and Administrative Services Division
Child Development and Nutrition Fiscal Services
PS:acj