Dear Executive Directors, Child Care and Development Programs:
2020–21 Child Care and Development Contract Changes for Alternative Payment Contractors
The purpose of this letter is to inform Alternative Payment contractors of changes to Child Care and Development contracts and reporting procedures beginning July 1, 2020. Please share this letter with your agency staff.
Budget Act Changes Affecting Alternative Payment Contractors
The 2020 Budget Act and Senate Bill (SB) 820 provide numerous changes affecting Alternative Payment (CAPP), Migrant Alternative Payment (CMAP), California Work Opportunity and Responsibility to Kids (CalWORKs) Stage 2 (C2AP) and Stage 3 (C3AP) contracts.
These changes include an allocation of $198 million in one-time federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funding and an ongoing appropriation of the $47.236 million to support additional slots in the CAPP program. This includes:
- $73 million to extend care for those enrolled in a CAPP or CMAP Emergency Childcare program
- $47.236 million to transition families that received temporary vouchers for Emergency Childcare into ongoing care.
- $62.5 million to reimburse providers based on the maximum authorized hours of care for children enrolled in a C2AP, C3AP, CAPP, or CMAP program.
- $6.86 million to provide reimbursement for waived family fees from July and August 2020 for families enrolled in a C2AP, C3AP, CAPP or CMAP program.
- $31.25 million to provide providers with a one-time stipend for providers serving children in a Stage 1, C2AP, C3AP, CAPP, or CMAP program.
- $31.25 million to reimburse providers for up to 14 non-operational days for providing short-term childcare to eligible children between September 1, 2020 and June 30, 2021 when a provider is closed due to the coronavirus (COVID-19) pandemic emergency Stage 1, C2AP, C3AP, CAPP, or CMAP.
The Child Development and Nutrition Fiscal Services (CDNFS) Unit notified contractors the week of September 14, 2020 via email of the amount of funds they would be receiving for items 1 through 5. In this email, CDNFS also informed contractors that the California Department of Education (CDE) was currently working on the method for allocating funds identified in item 6 and additional information is forthcoming.
Allocation of $73 million and $47.236 million for Emergency Childcare
The 2020 Budget Act appropriated $73 million in one-time federal CARES Act funding to extend child care services for essential workers, at-risk children, and children with disabilities or special health care needs whose Individualized Education Programs (IEP) or Individualized Family Service Plan (IFSP) includes early learning and care services.
The 2020 Budget Act also appropriated $47.236 million in on-going funding to transition families that received temporary vouchers for Emergency Childcare in Fiscal Year (FY) 2019–20 to ongoing childcare. These funds are to be used to enroll families in ongoing care that received temporary vouchers if they meet eligibility and need requirements specified in Education Code (EC) sections 8263 and 8263.1.3. Additional enrollment requirements can be found in Management Bulletin (MB) 20-15a.
The CDE released the Alternative Payment Emergency Childcare Survey on July 10, 2020 to all CAPP and CMAP contractors for the purpose of obtaining the necessary data to allocate these additional funds provided in the 2020 Budget Act. Allocation of these funds were based on the contractor’s survey responses, which included the total number of children enrolled in emergency childcare.
Allocation of $62.5 million for paying providers at the maximum authorized hours of care
The 2020 Budget Act appropriated $62.5 million to reimburse alternative payment providers through June 30, 2021, or until funding is exhausted; whichever is sooner. MB 20-15a outlines the directives for reimbursement to providers.
The CDE allocated these funds utilizing contractor responses received from the Survey to Assess Impacts of Coronavirus (COVID-19) on California Work Opportunity and Responsibility to Kids (CalWORKs) Stage 1, 2, 3, the California Alternative Payment (AP) Program, and the California Migrant Alternative Payment Program. Contractors received a proportionate share of the total cost to pay providers at the maximum authorized hours of care, based on July 2020 caseload, each contractor’s percentage of variable schedule children, and the average cost of care.
Allocation of Funds Received for July and August 2020 Family Fee Waivers
Pursuant to SB 820, the CDE will receive an additional $6.86 million for family fees that were waived for families enrolled in a C2AP, C3AP, CAPP, or CMAP program in the
months of July and August 2020. Allocation of these funds were based on prior year family fee data.
This allocation will be distributed as a subsequent amendment to the CAPP contract, while C2AP and C3AP contractors will not receive a contract amendment for this purpose, but will be augmented as necessary.
Apportionment of the One-Time Provider Stipend
Senate Bill 820 provided an update to the 2020 Budget Act, which resulted in an allocation of $31.25 million for one-time provider stipends. Allocation of the one-time provider stipends will be issued as an apportionment payment and will not be incorporated in any alternative payment contract. Contractors can expect to receive their apportionment payment in the month of November. Funds provided via an apportionment payment to Local Education Agencies (LEAs) must be distributed through the County Treasurer, and LEAs should therefore contact their County Treasurer’s Office to coordinate the transfer of funds.
The CDE and the California Department of Social Services (CDSS) determined a flat-rate stipend amount for all childcare providers based on the number of subsidized children enrolled in each county and that county’s average cost of care across all CDE funded alternative payment programs and the CalWORKs Stage 1 program. The CDE utilized the most recent data available for this purpose, which was July 2020 data obtained in the CDNFS online data reporting system.
Contractors received the amount of funds they would receive for the purpose of providing flat-rate stipends to providers via email during the week of September 14, 2020. Of the total funds received, contractors may retain no more than five percent of the total allocation for administrative costs.
All providers within the same service county providing care to children enrolled through each agency should receive an equal per-child stipend amount. Therefore, if caseload differed for any county from what was originally reported on the July 2020 caseload report, contractors are required to recalculate the flat-rate per-child stipend using the following formula:
County’s Stipend Allocation ÷ County’s July 2020 caseload for all contract types = recalculated per-child stipend amount
|County’s Stipend Allocation for all contract types||$1,244,000|
|Updated Total Caseload for all contract types within service county||9,152|
|Updated per-child stipend amount ($1,244,000 / 9,152)||$135.93|
This recalculation will need to occur if the contractor received July 2020 attendance records after July 2020 data was submitted to the CDE. This recalculation formula ensures that all providers caring for children as of July 2020 will receive a stipend, despite the contractor receiving late attendance records. If a child is cared for by two providers, the child should be counted twice for the purpose of calculating the stipend; this ensures that both providers caring for the child in the month of July receive a stipend.
Stipend funding is expected to be issued to contractors in the month of November. As such, contractors should expect to utilize the July attendance records they have received as of the date they receive stipend funding when determining a final per-child allocation amount. Contractors may also consider their internal policies when determining the period of time in which they will include late attendance records for this purpose, as long as stipends are issued in a reasonable timeframe so to not delay the issuance of stipends for all other providers.
In all instances where July 2020 caseload data differs from the figures provided to the CDE, contractors must notify their fiscal analyst and submit a revision to their data within the AP/CalWORKs online reporting system.
Issuance of Stage 1 stipends will be administered in one of two ways. First, if a county contracts out the administration of Stage 1 to an AP contractor, the AP contractor will be required to issue the Stage 1 stipends. Second, if a county administers Stage 1 themselves, the stipends will be issued at the state level by a contractor working with CDSS. For the counties who work through AP contractors, the CDE will notify each AP contractor of their additional allocation for Stage 1 once the CDE receives final details from CDSS. Consistent with the instructions above, if the Stage 1 caseload differs from the data CDSS utilized to determine allocations, the recalculation requirement will apply to ensure that all providers receive a stipend and to ensure that the stipend amount is equal for all providers that hold an agreement with the AP contractor to provide childcare services to subsidized families. For the counties who administer Stage 1 themselves, CDSS will recalculate the flat-rate stipend based on provider level data collected from counties and distribute to providers through a contractor.
Allocation of the $31.25 million to reimburse providers for providing short-term childcare to eligible children when a provider is closed due to the COVID-19 pandemic
Senate Bill 820 allocates $31.25 million to reimburse state-subsidized childcare providers for providing short-term childcare, for up to 14 days, to eligible children when the primary provider is closed due to COVID-19. Pursuant to SB 820, contractors are required to report to the CDE the use of the 14 additional nonoperational days due to COVID-19 and associated costs. Therefore, effective September 1, 2020, all C2AP, C3AP, CAPP, and CMAP contractors will be required to report data associated with provider non-operation days for instances when a child received care from a secondary provider. This information will be utilized to reimburse providers with the $31.25 million provided in SB 820 until funding is exhausted. The data required by AP’s for this purpose is:
- Number of children requiring care from a secondary provider
- Sum of all days children received care from a secondary provider
- Total cost associated with paying secondary providers due to the primary provider’s closure
The CDNFS has revised reports to allow for this data collection beginning the September 2020 report due October 20, 2020.
CAPP Budget Act Amendments
Allocation of the funds identified in items 1 through 3 of the "Budget Act Changes Affecting Payment Contractors" section above were processed through a single Budget Act amendment. CDNFS released contract amendments to CAPP contractors related to items 1 through 3 on September 22, 2020.
Funding provided in the 2020 Budget Act must be used to support the priorities set forth in the 2020 Budget Act. CDNFS provided a breakdown of the allocations to each CAPP
contractor via email during the week of September 14, 2020. Contractors may use the email received from their fiscal analyst to determine how much funding was received for each purpose. On September 21, 2020, the CDE released an email to all subscribers on ELCD’s CAPP distribution list, notifying contractors that the CDE was aware that some CAPP contractors are projected to over-earn their FY 2020–21 contract due to the increase cost of school age children requiring full time care while attending school through distance learning during the COVID-19 pandemic. CDE has been discussing this issue with the Department of Finance and the Legislature, which resulted in flexibility on using a portion of the emergency child care funds provided to transition families into ongoing care to support the increased cost of care due to school age children receiving full time care. Please refer to the FY 2020–21 CAPP Projected Over-Earnings section of this letter for more information.
CAPP contractors will receive a separate amendment for family fee waivers for the months July and August 2020 Amendments will be processed once the CDE has been provided the funds to do so.
C2AP and C3AP Budget Act Amendments
Initial C2AP and C3AP contract maximum reimbursable amounts are determined annually based on proposals in the May Revise. Contractors received their FY 2020–21 initial C2AP and C3AP contracts, which included a ten percent reduction to each contractor’s projected provider payments, to align with the May Revise proposal of a ten percent reduction to the Regional Market Rate (RMR) ceiling. The 2020 Budget Act did not include the ten percent reduction to the RMR ceilings and therefore, CDNFS restored the ten percent reduction and processed Budget Act amendments to all C2AP and C3AP contracts the week of September 7, 2020. Administrative and support allowance for FY 2020–21 will be based on the Budget Act MRA.
C2AP and C3AP contractors will also receive a subsequent amendment to reimburse providers based on a child’s maximum certified hours of care, until funds are exhausted. These amendments will be processed mid-October. Contractors must determine when funds have been exhausted to reimburse providers based on the maximum certified hours of care to ensure that expenditures related to the allocations provided to reimburse providers at the maximum certified hours of care do not exceed the amounts allocated for this purpose.
CAPP and CMAP Data Collection
On August 3, 2020, the Early Learning and Care Division (ELCD) released MB 20-15, notifying all Alternative Payment contractors of the new data collection requirements for non-CalWORKs Alternative Payment programs. Prior to FY 2020–21, and pursuant to EC Section 8359(a), only C2AP and C3AP contractors were required to submit monthly caseload and fiscal reports to CDNFS.
Senate Bill 98 added EC Section 8227.8, requiring CAPP and CMAP contractors to report monthly caseload and fiscal data to CDNFS. Beginning with the July 2020 reporting period, and regardless of a contractor’s contract status, contractors are required to report county-by-county caseload, expenditures, unit costs, family fees, and other key costs of care variables requested by the CDE to aid in emergency response. This includes caseload data associated with emergency childcare enrollments, as well as caseload data associated with ongoing enrollments.
The CDE has updated the caseload report form currently used by C2AP and C3AP contractors to include a section for CAPP and CMAP caseload reporting. Monthly Caseload and Fiscal Reports will be submitted electronically at https://www2.cde.ca.gov/cdfs/ and are due by the 20th of the month following the report month.
Please note, contractors who provide services in more than one county are required to submit and certify a separate caseload report for each county in which services are provided. Each report shall include a certification of the person authorized by the contractor that the information contained in the report is correct and complete.
Family Fees in FY 2020–21
Senate Bill 820 waived all family fees for all families enrolled in an early learning and care program for the months of July and August 2020 and provided additional funding to support the waiver of family fees in July and August 2020. Between September 1, 2020 and June 30, 2020, family fees are waived only for families where all children in the family enrolled in care remain at home for early learning and care distance learning or are sheltering-in-place.
The CDNFS attendance and fiscal reports have been revised to allow CDE to collect information on the amount of family fees waived. All contractors will be required to report the amount of family fees collected and the amount of family fees that were assessed but waived for families sheltering in place or receiving distance learning, beginning with the September 2020 report period, due on October 20, 2020. Reporting fees according to this directive will ensure the CDE is reimbursing contractors accurately.
Contractors will report the amount of family fees collected on the line Family Fees Collected for Certified Children (September – June). Contractors are reminded that family fees reported on this line must be based on the amount of fees the contractor expects to collect in the report month, regardless of when the revenue is actually received.
Two new lines have been added to the CDNFS Fiscal Reports entitled, Waived Family Fees for Certified Children (July and August) and Waived Family Fees for Certified Children (September – June). For FY 2020–21, all contractors must report the amount of family fees that were assessed, but waived between July 1, 2020 and August 31, 2020, on the line Waived Family Fees for Certified Children (July and August). Family fees that were assessed, but waived between September 1, 2020 and June 30, 2021, will be reported on the line Waived Family Fees for Certified Children (September – June).
If revisions to a prior period are necessary, contractors must reflect the revisions in the prior period of the September 2020 report. For example, if a contractor reported family fees in the month of July or August 2020, the September report should indicate “0” in the prior period family fees collected field.
Family fees are in lieu of contract payments, which reduces the amount of contract funds that the California Department of Education provides as reimbursement to the contractor. Since SB 820 provides additional funds to cover family fees for July and August 2020, contractors will receive reimbursement for the waived family fees reported on this line that would have otherwise been paid by the family.
Pursuant to SB 820, reimbursement for family fee waivers beyond August 2020, for families receiving ELC distance learning or sheltering in place, is contingent on receiving additional federal funds. Contractors should review MB 20-19 for further directives and guidance regarding family fee waivers in FY 2020–21.
Alternative Payment Projections and Management of Contract Funds
In April 2020, ELCD released MB 20-06, and subsequently MB 20-06a, in response to the state declared State of Emergency related to the coronavirus and the Governor issued Executive Orders (EO) N-33-20, EO N-45-20 and EO N-47-20. Pursuant to the guidance in MB 20-06 and MB 20-06a, CAPP, CSPP, CCTR, and CFCC contractors could enroll families in Emergency Childcare until June 30, 2020, if they are one of the following:
- Deemed to be an “essential worker”, as defined above.
- Identified as a member of an at-risk population, which includes:
- Children who are receiving CPS or who have been deemed to be at-risk of abuse, neglect, or exploitation.
- Children eligible through the Emergency Childcare Bridge Program for Foster Children (authorized by California Welfare and Institutions Code Section 11461.6).
- Families experiencing homelessness as defined in Section 11434(a)(2) of Title 42 of the United States Code, known as the McKinney-Vento Homeless Assistance Act.
- Children of domestic violence survivors.
- Families with children with disabilities or special health care needs whose Individual Education Plans (IEPs) or Individual Family Service Plans (IFSPs) include ELC services.
On May 29, 2020, the Governor issued EO N-66-20, allowing families who are enrolled in Emergency Childcare through either a CCTR, CSPP, CFCC, or a CAPP contract, to receive services through June 30, 2020, or for 60 calendar days following the date of the child’s enrollment, whichever is longer, subject to available funds. As identified in the Alternative Payment Program Funding section above, for FY 2020–21, CAPP and CMAP contractors received additional funding to provide Emergency Childcare services for essential workers and other designated populations for an additional ninety (90) days, in addition to the sixty (60) calendar days specified in EO N-66-20, and possibly longer if a contractor has not exhausted its funds.
CDNFS projection worksheets are provided to contractors monthly to assist in monitoring the contract. The CDNFS system-generated projection worksheet is designed with an assumption of consistent enrollment, and does not take temporary or short-term care into account, which can create significant fluctuations in the percentage of contract earnings calculated on the worksheet. While contractors can still rely on this worksheet to identify expected monthly reimbursement amounts, contractors should rely on internal projections to monitor contract funds in FY 2020–21.
Emergency Childcare enrollment should be monitored separately from all other enrollments. Funding provided for temporary emergency childcare is one-time funding. Contactors must therefore be aware when their funding allocation for this purpose has been exhausted.
Families enrolled from emergency childcare into ongoing care will likely be enrolled between the first two quarters of the 2020–21 fiscal year. Contractors must determine the number of children they can enroll on an annual basis with their funding allocation and ensure that the annualized cost of enrollments does not exceed their allocation specific to transferring families into ongoing care.
Funding provided to reimburse providers at the maximum authorized hours of care must also be tracked to ensure payments to providers does not exceed the funding allocated for this purpose. Contractors must consider the difference between paying providers based on actual hours of care and paying providers based on the maximum certified hours of care when monitoring this allocation.
As in any year, contractors should also consider any other fluctuations in enrollments or provider payments that will impact their contract earnings, and adjust internal projections accordingly. Given that CDNFS projection worksheets assume consistent enrollment, temporary emergency childcare enrollments as well as temporarily reimbursing providers as the maximum authorized hours of care will cause the worksheet to over-project earnings. Projected contract earnings have a direct impact on reimbursement to the contractor. Contractors will therefore likely receive apportionment payments in excess of the contractor’s projected need for funds in any given period, particularly the last two quarters of the fiscal year. Given this, contractors must be aware of potential over-payments, as contractors will be invoiced for over-payments during contract closure in the following year.
FY 2020–21 CAPP Projected Over-Earnings
On September 21, 2020, the CDE released an email to all subscribers on ELCD’s CAPP distribution list notifying CAPP contractors that the CDE was aware that some CAPP contractors are projected to over-earn their FY 2020–21 contract due to the increased cost of school age children requiring full time care while attending school through distance learning during the COVID-19 pandemic. The CDE has been discussing this issue with the Department of Finance and Legislature, and the email provided communication to CAPP contractors that there was additional flexibility provided on any unused portion of the emergency childcare funds provided to transfer families into ongoing care.
As contractors transition eligible families from Emergency Childcare into on-going care, contractors should determine the number of children that can be enrolled for a full year with the allocation provided, in order to ensure that contractors do not over-enroll. The contractor should also determine which month children will be enrolled into ongoing care, and how much of their allocation will not be needed in FY 2020–21 due to the timing that children are transferred into ongoing care.
As a result of CDE’s conversations with the California Department of Finance and the Legislature, once the contractor determines the number of eligible families to be enrolled into on-going care, any unused portion of their $47.236 million allocation may be used to support the increased cost of care of existing enrollments in FY 2020–21. This flexibility in utilizing a portion of the contractor’s allocation to support the increased cost of care of existing enrollments only applies to the $47.236 million allocation. Contractors must continue to utilize all other funds provided in the 2020 Budget Act as they were intended.
Allocation to transfer children into ongoing care: $1,425,000
Average Cost of Care (ACC): $950
Determine the number of emergency childcare enrollments that can be transferred into ongoing care for a full year (Allocation/ACC/12 months): $1,425,000/$950/12 = 125
In this example, the contractor must determine which month these children will be enrolled into ongoing care. If, for example, these children are enrolled into ongoing care December 1, 2020, the contractor will not expend the equivalent of five months of their $1,425,000 allocation. This amount is approximately $593,750 [(5/12) x $1,425,000]. The contractor may utilize the remaining $593,750 to support the increase costs of previous enrollments.
Contactors who are projected to over-earn the FY 2020–21 CAPP contract should notify their ELCD field consultant and CDNFS Fiscal Analyst, if they have not already done so.
CAPP Multi-Year Contracting
Effective January 1, 2018, Assembly Bill (AB) 1106 and AB1808 amended EC Section 8220.1, extending the time period for 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 contractors 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 2020–21: a 2019–21 contract, or CAPP9, and a 2020–21 contract, or CAPP0.
The need for a contract period extension was based on June 2020 report data and determined in July 2020. CAPP9 contractors that received an amendment to extend the contract period to June 30, 2021 must fully expend and report to the 2019–21 CAPP9 contract before reporting to the 2020–21 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 CAPP9 report and CAPP0 report in order to fully expend the CAPP9 contract prior to expending the CAPP0 contract.
Contractors who are under-earning their CAPP9 contract due to unspent Emergency Childcare funds can continue to report to the CAPP9 until the funds associated with the FY 2019–20 Emergency Childcare augmentation are fully expended. Contractors may begin to report to the CAPP0, prior to fully expending the CAPP9, when the CAPP9 under-earnings are specifically due to unused Emergency Childcare funding. In this instance, contractors can report those expenses related to the regular CAPP services to the CAPP0 at the same time they are reporting Emergency Childcare expenses on the CAPP9 contract. Contractors who fully expend both the original MRA and the Emergency Childcare funds can begin reporting expenses for all services to CAPP0. CDNFS has developed a worksheet that can be utilized by contractors to assist with reporting in any of these instances.
Regional Market Rate Reimbursement Ceilings
The 2020 Budget Act 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 remain at 70 percent of the established Family Child Care Home ceiling. The RMR ceilings can be found at http://www3.cde.ca.gov/rcscc/.
Contractors are reminded of the importance of accurate reporting. Caseload and expenditure data submitted to CDNFS 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.
All expenses related to child development programs that are reimbursable to the contract should be submitted to CDNFS. 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.
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 CDNFS aims to release the CDNFS Fiscal Handbook in the Fall.
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.
Andrea Johnson, Staff Services Manager III
Child Development and Nutrition Fiscal Services
Fiscal and Administrative Services Division