April 1, 2007
This report fulfills the requirement of the 2006-07 Budget Act Supplemental Report, dated June 28, 2006, requiring the California Department of Education (CDE) to provide a report addressing the issue of unspent child care funding.
Despite the goal of the California Department of Education to utilize all available funds and provide services to eligible children and families, there is a basic lack of congruence between the amount of funds available for services and the amount of funds earned by the existing pool of CDE contractors. The source of any unspent child care funding is made up of two broad categories, 'unearned' balances and 'unallocated' balances. Although the funds are not always spent in the year of appropriation as "authorized," the unearned funds in the year of appropriation are utilized as authorized, or in subsequent years for child care and development services.
Analysis of earnings data indicate that the majority of the problem is based on a relatively few number of agencies that experience difficulty and time delays while developing facilities to house children’s services. Many agencies under earn by a small margin. Program costs have increased while the rate of reimbursement has not kept pace. CDE contractors are not able to respond with flexibility and speed to emerging community needs. The ability to fully expend all allocated funds within the authorized time limits is hampered by the current request for application and budget change processes. An external factor that impacts CDE's ability to disburse funds is the lack of timely response from agencies.
Recommendations to Appropriate Fiscal and Policy Committees include the provision of budget authority to:
- Hire additional staff to support the fund application process and provision of focused technical assistance to marginal agencies.
- Reassign contract funds when relinquishment and termination situations arise mid-year.
- Establish a process to adjust contracts mid-year without penalty.
- Initiate, improve, and update CDE systems for tracking, monitoring, and accepting reports and funding applications online.
- Apply the COLA on an ongoing, regular basis to increase the reimbursement rate for both state preschool and general child care program contracts.
- Change the definition of migrant agricultural worker eligibility to accommodate those workers who continue to work in the agricultural settings, but do not move their families.
- Reinstate the 2 percent cap on center based reserve to allow unspent funds to be redirected to agencies that can use additional funding.