Dear County and District Superintendents and Executive Directors of Center-Based Child Care and Development Programs:

Fiscal Year 2012–13 RATE INCREASE APPLICATION

California Education Code (EC) Section 8265(d) allows a rate increase for an agency on a case-by-case basis in order to maintain service levels for agencies currently at a rate less than the Standard Reimbursement Rate (SRR). Increases approved through this application will be retroactive to July 1, 2012. Your agency may apply for a rate increase if your contract rate for your center-based child development contract has a daily rate less than $34.38, and secondly meets one or more of the following:

• Loss of program resources from other sources.

An agency must clearly demonstrate how the loss of supplemental funds or in-kind contributions will affect the program. Copies of correspondence from the funding source(s) documenting the reduced funding must be submitted. The loss of in-kind contributions must be quantified with a dollar amount.

• Need of an agency to pay the same child care rates as those prevailing in the local community.

An agency must clearly demonstrate how their current contracted rate has, in the past, had an adverse effect on the quality of care offered by the contractor. The lesser of the agency’s documented requested contracted rate, the SRR, or the Reimbursement Ceilings for Subsidized Child Care will be used to determine the maximum rate allowed.

• Increased cost directly attributable to new or amended regulations.

An agency must clearly demonstrate that it will experience a cost increase as a direct result of one or more provisions of a new or amended regulation. To be considered under this criterion, an agency must identify and describe how each new or amended regulation will increase cost.

• Increased costs necessary to maintain the prior year’s level of service and ensure the continuation of the program.

An agency must clearly demonstrate that it will experience a cost increase that threatens the ability to maintain the prior year’s service level. To be considered under this criterion, an agency must provide documentation of each cost increase.

In all cases, an agency must clearly demonstrate that the current year’s projected costs have increased and thereby threaten continuation of the existing program. Copies of prior and current year documentation for all areas of increased costs must be attached.

Documentation must reflect a complete audit trail for increased costs. For example, applications based on labor cost increases must be documented by board-adopted salary schedules for Fiscal Years (FYs) 2011–12 and 2012–13, listing of the appropriate staff on the salary range or step, and the number of staff affected. Board minutes can indicate that the FY 2012–13 salary increase is contingent on the approval of the rate increase application. Any worksheets or calculations that help clarify and/or justify the amount requested should also be included.

If your agency is eligible and wishes to apply for a rate increase, please complete the attached application (CDFS 3104) and return it with an original signature to the Child Development Fiscal Services (CDFS) unit by December 31, 2012. Because an original signature is required, no faxed applications will be accepted. Applications and all supporting documentation must be received by the deadline to be considered. Extensions will not be granted.

Applications will be evaluated based upon the information and documentation submitted, as well as an analysis of the agency’s historical earnings, and expenditure data gathered through the annual CDFS contract review process. If available information does not clearly support the amount being requested, that portion of the request for a rate increase will be denied. Due to the unavailability of additional contract funding to support rate increases, approved increases in contracted reimbursement rates will result in a reduction of child days of enrollment levels for that contract. The contract service level will not be allowed to decrease below the current level of services being projected in FY 2012–13.

If you have questions about this application process, please contact Bob Wills, Fiscal Analyst, by phone at 916-323-7394, or by e-mail at bwills@cde.ca.gov.

Sincerely,

Original signed by Phyllis A. Savage

Phyllis A. Savage, Staff Services Manager III
Child Development/Nutrition Fiscal Services
Fiscal and Administrative Services Division

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