Dear Executive Directors, Child Care and Development Programs:
2019–20 Child Care and Development Contract Changes
The purpose of this letter is to inform contractors of changes to Child Care and Development contracts and reporting procedures beginning July 1, 2019. Please share this letter with your agency staff.
BUDGET ACT CHANGES
The Child Development and Nutrition Fiscal Services (CDNFS) Unit intends to process contract amendments as a result of the enacted 2019 Budget Act in the month of September 2019.
Standard Reimbursement Rate Increase
The Budget Act of 2019 (Assembly Bill (AB) 74, Chapter 23), includes increases to the Standard Reimbursement Rate (SRR) effective July 1, 2019 for General Child Care (CCTR), Migrant (CMIG), Handicapped (CHAN), and the California State Preschool Program (CSPP). Rates for each program include a 3.26 percent Cost of Living Adjustment (COLA). This increases the SRR for CCTR and CMIG contracts to $49.54. The SRR for CSPP contracts has been increased to $49.85 for full-day care, and $30.87 for part-day care.
Adjustment Factor Changes
The Budget Act of 2018 (AB 1808, Chapter 32) included a mid-year increase to adjustment factors for infants, toddlers, children with exceptional needs, and severely disabled children to reflect the additional expense of serving children who meet specified special criteria. Additionally, AB 1808 set the adjustment factors utilized for infants and toddlers in a family child care home setting equal to those utilized by a child day care center. These adjustment factor increases were effective January 1, 2019. Because this was a mid-year increase, the adjustment factors implemented for fiscal year (FY) 2018–19 were prorated, based on the average of the FY 2017–18 adjustment factors which are in effect through December 31, 2018, and the adjustment factors effective January 1, 2019.
In FY 2019–20, these prorated adjustment factors have been updated to reflect the full increase to the adjustment factors. The changes to the FY 2019–20 full-time adjustment factors can be found in the Table 1.
Table 1. FY 2019–20 Full-Time Adjustment Factors
|Adjustment Factor Category||FY 2019–20 CCTR Full-Time Adjustment Factor||FY 2019–20 CSPP Full-Time Adjustment Factor|
|Infants 0-18 Months||2.44||N/A|
|Toddlers 18-36 Months||1.8||N/A|
AB 2698 allows contractors to receive an additional adjustment of 0.05 for children served in classrooms where early childhood mental health consultation (ECMHC) services are provided, and are served in a California State Preschool Program (CSPP); infants and toddlers 0 to 36 months of age and are served in General Child Care Development Programs (CCTR); and children zero to five years of age and are served in a family child care home (FCCH) education network setting funded by a CCTR contract. With the change to the full-time adjustment factors indicated in Table 1, the ECMHC full-time adjustment factors have increased accordingly. The changes to the FY 2019–20 ECMHC full-time adjustment factors can be found in Table 2.
Table 2. FY 2019–20 Full-Time ECMHC Adjustment Factors
|Adjustment Factor Category||FY 2019–20 ECMHC CCTR Full-Time Adjustment Factor||FY 2019–20 ECMHC CSPP Full-Time Adjustment Factor|
|Infants 0-18 Months||2.49||N/A|
|Toddlers 18-36 Months||1.85||N/A|
Additionally, the part-day CSPP adjustment factors for exceptional needs and severely disabled have increased to reflect the additional expense of serving these children. Senate Bill 75 (Chapter 51, Statutes of 2019) added Education Code (EC) Section 8266.2 allowing the part-day CSPP adjustment factor for exceptional needs and severely disabled to be adjusted by 1.54 and 1.93, respectively. Prior to this change, the part-day adjustment factor for CSPP programs serving children for less than four hours per day were the same for every adjustment factor category. The FY 2019–20 part-day adjustment factors can be found in Table 3.
Table 3. FY 2019–20 CSPP Part-Day Adjustment Factors
|Adjustment Factor Category||FY 2019–20 CSPP Part-Day Adjustment Factor|
|Three Years and Older||0.6193|
|Limited and Non-English Proficient||0.6193|
|At Risk of Abuse or Neglect||0.6193|
The new adjustment factors are reflected on the FY 2019–20 Attendance and Fiscal reports (CDNFS 8501, CDNFS 8501MHCS, CDNFS 9500, and CDNFS 9500MHCS).
Staff Training Days for Center-Based Programs
AB 2626 added EC Section 8272.1 allowing center-based child care contractors to utilize state funding to schedule up to two professional development days, per contract period, on topics including procedures for emergencies in child development programs, licensing regulations relating to child development programs, recognition and reporting of suspected abuse of children in child development programs, managing challenging behaviors and preventing expulsion of children, and addressing items on the program’s Quality Rating and Improvement System plan. While staff training days have always been a reimbursable expense per EC 8208(ae), AB 2626 allows the California Department of Education (CDE) to reimburse expenses associated with professional development without requiring contractors to meet the service requirement for their contract.
For more information regarding the new reporting requirements and reimbursement procedures, please refer to the “2019–20 Implementation of Staff Training Days for Center-Based Programs” letter dated July 25, 2019. Further information regarding the reimbursable expenses related to staff training can be found in Management Bulletin 19-05.
New Funding Structure for Non-Local Educational Agencies (LEA) CSPP Contractors
The Budget Act of 2019 created a new fund source for non-LEA state preschool contracts, changing the funding structure for all non-LEA CSPP contracts. Previously, non-LEA CSPP contractors operating a full-day program were funded with Proposition 98, state general funds, and federal funds, while those non-LEA CSPP contractors operating only a part-day program were fully funded with Proposition 98 funds. Beginning FY 2019–20, all non-LEA CSPP contracts will be funded with state general funds. Contract amendments changing the funding structure of the contract were sent to all non-LEA CSPP contractors the first week of July.
Update to CCTR/CSPP Transfer Requests
During the year, a contractor may find its projected services or needs have changed, requiring a transfer of funds between their CCTR and CSPP contracts. Although non-LEA CSPP contracts have a new funding structure, non-LEA CCTR and CSPP contractors will still have the ability to transfer between their CCTR and CSPP contracts. However, transfers between contracts can only be requested for the current year; permanent transfers can no longer be requested.
There are two periods for non-LEA contractors to submit transfer requests: (1) January 1–15, 2020 and (2) May 1–15, 2020.
Transfer requests are to be submitted to Child Development and Nutrition Fiscal Services, with attention to the fiscal analyst:
California Department of Education
Child Development and Nutrition Fiscal Services
1430 N Street, Suite 2213
Sacramento, CA 95814
An original signature is required for all transfer requests; however, an unsigned advance copy of the request may be submitted electronically to the fiscal analyst assigned to your agency.
If a significant portion of the contract Maximum Reimbursable Amount is being requested to transfer, the Early Learning and Care Division (ELCD) may require a Program Narrative Change form. The Program Narrative Change form should describe any changes to the number of sites operated by the contractor, any changes to the age group of children served by the contractor, and/or any significant changes in the provision of full-day versus part-day services. The Program Narrative Change form (CD–3704A) can be found on the CDE website at https://www.cde.ca.gov/sp/cd/ci/cddforms.asp. For further information or instructions on completing this form, please contact your ELCD Field Services Consultant.
For further information or instructions on completing these letters, please see the instructions document attached to the transfer request letter or contact your assigned fiscal analyst.
As a reminder, LEAs and Community College Districts (CCDs) CSPP contracts are funded entirely by Proposition 98 funding. This change in the appropriation for State Preschool began in FY 2015–16 and remains in FY 2019–2020. LEAs and CCDs therefore cannot transfer funds between CCTR and CSPP contracts.
Changes to the FY 2019–20 Funding Terms and Conditions (FT&Cs)
Effective FY 2019–20, the limits of the equipment bidding and preapproval requirements have been updated. Specifically, for FY 2019–20, all equipment purchases, replacement and improvements that meet either of the following criteria must have at least three bids or estimates:
- The per-unit cost equals or exceeds $5,000, including tax;
- The sum of all items related to the purchase exceeds $10,000, including tax.
Additionally, all equipment and equipment replacement purchases that meet either of the following criteria shall be approved in writing in advance by the CDE:
- The per-unit acquisition cost equals or exceeds the lesser of the capitalization level established by the contractor for financial statement purchases, or $5,000, including tax;
- The sum of all items related to the purchase exceeds $10,000, including tax, when considering all components necessary to perform the intended purpose of the equipment.
- These updates can be found in the FY 2019–20 FT&Cs. Contractors seeking prior approval should contact their ELCD consultant.
Regional Market Rate Reimbursement Ceilings
The Budget Act of 2019 maintains the current Regional Market Rate (RMR) ceilings at the greater of either the 75th percentile of the 2016 RMR Survey, or the RMR ceiling as it exists on December 31, 2017, whichever is higher. Additionally, the license-exempt child care provider ceilings remains at 70 percent of the established Family Child Care Home ceiling. The RMR ceilings can be found at https://www3.cde.ca.gov/rcscc/.
Alternative Payment Slots
The Budget Act of 2019 provides approximately $93 million in state and federal funding for additional alternative payment slots. Of this amount, approximately $80 million is provided by the passage of Proposition 64. Access to these special funds requires a transfer from the Department of Health Care Services (DHCS) to the CDE.
The Budget Act of 2018 provided an additional 2,100 slots beginning September 1, 2018. The Budget Act of 2019 appropriated an additional $3.166 million to fund the 2,100 slots for a full year.
As the CDE awaits the transfer of funds from DHCS, all other additions to the 2019 alternative payment allocation will be distributed through contract amendments in September 2019. Once the Proposition 64 funds are available for expenditure, an additional amendment will be processed. CDE anticipates the second amendment to alternative payment contracts to be completed in October 2019.
TWO-DAY FISCAL TRAINING FOR CENTER-BASED CONTRACTORS
CDNFS is conducting four two-day fiscal trainings open to all center-based child development contractors in Fall 2019. This two-day training includes presentations from various units throughout CDE, specifically CDNFS, the Early Learning and Care Division, Nutrition Services Division, and Audits and Investigations Division. This training focuses on fiscal compliance and how to maximize contract reimbursement.
Trainings will be conducted in four regions across California, specifically Glenn County, Madera County, Orange County, and Sacramento County. Space is limited to two attendees per agency, and one program staff and one fiscal staff is recommended, with reservations on a first come, first serve basis.
Contact your fiscal analyst for more information.
ATTENDANCE AND FISCAL REPORTS
Updated Report Forms
Current year Attendance and Fiscal Reports must be submitted on the report forms provided at the following link https://www.cde.ca.gov/fg/aa/cd/cdnfsforms19.asp. If an agency utilizes attendance and fiscal reporting software that generates the report, the generated report must match the most recently updated version of the report form. Be aware that these forms are updated annually. As stated above, the adjustment factors for various special criteria have been updated and will be reflected on relevant forms. Note that the section to report infants and toddlers served in family child care homes has been removed from form CDNFS 9500 because those children are now receiving the same reimbursement as those served in a child day care center and should be reported in the appropriate age and time base category.
As a reminder, reports are not considered complete unless all required fields have been filled out. When completing the report forms, enter the full name of your agency, the contract number, the report month, the county number, and the name of your assigned fiscal analyst. Those fields will automatically populate on the other pages of the reports once they have been entered.
Contractors are reminded of the importance of accurate reporting. Data reported on CDNFS report forms must adhere to all applicable laws, regulations, and the funding terms and conditions of the contract. It is recommended that all child development programs periodically review and update written policies and procedures related to enrollment, attendance, income and expenditure reporting. The beginning of a fiscal year is also a good time to review cost allocation plans and equipment inventory records. Additionally, it is recommended that clear written procedures are developed to ensure accurate reporting to the CDNFS, which may include a procedure for data reconciliation.
Contractors may submit revised reports throughout the contract period. However, a revised report must be complete in order to be accepted. Revised reports must include all pages, corrected data columns, a new original signature, and a comment explaining what data was revised. Incomplete or unsigned reports will not be accepted.
When correcting errors from a prior reporting period, adjustments on the revised report must be made to the “Cumulative Prior Period” column; adjustments to a prior period should not be made in the “Current Period” column.
All expenses related to child development programs that are reimbursable to the contract should be reported on CDNFS report forms. This includes salaries, operating expenses, and supplies. CDNFS calculates projections based on data provided by programs and the omission of expenses could lead to a cash flow shortage for your program. We encourage a thorough review of program expenses to ensure that all reimbursable expenses are being reported appropriately on CDNFS report forms.
Additionally, it is required that costs are accrued and reported as such. Costs are projected by CDNFS to determine payment and the effect of reporting costs on a cash basis is an under- or over-payment. To ensure proper cash flow, and to remain in compliance with the funding terms and conditions of the contract, it is imperative that programs accrue their costs.
ALTERNATIVE PAYMENT (CAPP) CONTRACTS
CAPP Multi-Year Contracting
Effective January 1, 2018, AB 1106 and AB1808 amended EC Section 8220.1, extending the time period for California Alternative Payment Program (CAPP) contractors to expend funds allocated in a given fiscal year. To implement this change, under-earned CAPP contracts were amended to extend the period of the contract from one fiscal year to two fiscal years, allowing under-earning agencies to fully expend the contract Maximum Reimbursable Amount (MRA) in the upcoming year. The extension of these contracts results in two active contracts that overlap in FY 2019–20: a 2018–20 contract, or CAPP8, and a 2019–20 contract, or CAPP9.
The need for a contract period extension was based on June 2019 report data and determined in July 2019. If a revised June 2019 results in the need for a contract period extension, programs will be contacted by their CDNFS analyst.
CAPP contractors that receive an amendment to extend the contract period to June 30, 2020 must fully expend and report to the 2018–20 CAPP8 contract before reporting to the 2019–20 CAPP9 contract. A worksheet has been created to help agencies identify which active contract the expenses for a given report month should be reported. Under earning agencies will receive this worksheet via email from their CDNFS fiscal analyst. The worksheet suggests how to split the expenditures between the CAPP8 report and CAPP9 report in a way which completely earns the CAPP8 contract and identifies the remaining expenditures to be reported to the CAPP9 contract.
FINANCIAL INFORMATION SYSTEM FOR CALIFORNIA (FI$Cal) AND INITIAL APPORTIONMENTS
The CDE began transacting in the new statewide accounting system, FI$Cal, during FY 2018–19. As the CDE experienced beginning FY 2019–20, additional time is required by the State Controller’s Office to set up child development budgets, causing up to a ten-day delay in processing initial apportionments. Therefore, most child development contractors will not receive their initial apportionments until the end of July of each fiscal year. Moving forward, contractors should determine what expenses they incur in the month of July and prepare to cover these costs in the short term, as this represents the new normal for initial apportionments.
CHILD DEVELOPMENT ATTENDANCE AND FISCAL REPORTING AND REIMBURSEMENT PROCEDURES
The Child Development Attendance and Fiscal Reporting and Reimbursement Procedures is a handbook to aid child development contractors in understanding the attendance and fiscal reporting and reimbursement procedures. This handbook is updated annually and has been referenced for short as the Greenbook. Beginning FY 2019–20, this handbook will no longer be referenced as the Greenbook and will now be referenced as the CDNFS Fiscal Handbook. CDNFS aims to release the CDNFS Fiscal Handbook annually in the Fall.
VOLUNTARY AND TEMPORARY TRANSFER OF FUNDS
EC Section 8275.5 allows for a Voluntary and Temporary Transfer (VTT) of funds between over-earning contractors and under-earning contractors with like contract types (i.e. CCTR to CCTR) in order to fully utilize child care and development funding. Contractors will self-identify as an over- or under-earner and submit a transfer request that includes an amount of contract funding they expect to be able to temporarily release or accept.
Contract types that are eligible to participate in VTTs are as follows: CAPP, CCTR, CSPP, CMIG, CMAP, Family Child Care Homes (CFCC), and CHAN. Requests should be submitted to the Local Planning Council (LPC) designee or an LPC subcommittee group who will facilitate the transfer of funds between contractors and submit requests to the CDE.
The first opportunity to request a VTT will be between November 1 and November 15, 2019; the final opportunity will be between May 1 and May 15, 2020.
Please be aware that some analyst county assignments have changed. Please refer to the analyst directory at https://www.cde.ca.gov/fg/aa/cd/faad.asp for fiscal analyst county assignment and contact information.
If you have any questions about a specific contract or need clarification about any topic covered in this letter, please contact your assigned CDNFS analyst.
Corey Khan, Staff Services Manager II
Child Development and Nutrition Fiscal Services
Fiscal and Administrative Services Division