Dear Executive Directors, Preschool Programs:
2021–22 Child Care and Development Contract Changes for Preschool Contractors
The purpose of this letter is to inform California State Preschool Program (CSPP) contractors of changes to contracts and reporting procedures beginning July 1, 2021. Please share this letter with your agency staff.
Transition of Child Development Programs to the California Department of Social Services
The Early Childhood Development Act of 2020 (Senate Bill (SB) 98, Chapter 24, Statutes of 2020) authorized the transfer of child care and development programs from the California Department of Education (CDE) to the California Department of Social Services (CDSS). As of July 1, 2021, CDSS administers CalWORKS Stage 2 (C2AP), CalWORKs Stage 3 (C3AP), Alternative Payment Program (CAPP), Childcare Initiative Project (CCIP), General Childcare and Development Program (CCTR), Family Childcare Home Education Networks (CFCC), Severely Disabled Program (CHAN), Health and Safety Training Activities (CHST), Local Childcare and Development Planning Councils (CLPC), Migrant Alternative Payment Program (CMAP), Migrant Childcare and Development Programs (CMIG), Migrant Special Services Program (CMSS), and Resource and Referral Program (CRRP).
The CDE will continue to administer, provide guidance, and support CSPP contractors and those who hold Prekindergarten and Family Literacy Support (CPKS) contracts. As a result of the transition, an updated analyst directory has been developed, which can be found in the Analyst Directory section of this letter.
Budget Act and Changes to Contract Amendment Process
The Child Development and Nutrition Fiscal Services (CDNFS) Unit has processed CSPP contract amendments as a result of the enacted 2021 Budget Act. These amendments were processed in late September or early October 2021. As a reminder, beginning in Fiscal Year (FY) 2021–22, the CDE has implemented a new contract process. To streamline the contract and payment process, Budget Act amendments to CSPP contracts will be processed as Allocation Letters. While Allocation Letter amendments will look similar to a contract amendment, they will not require a signature from the contractor. A copy of the executed amendment, including a contract face-sheet detailing fiscal changes, will continue to be provided by the CDE Contracts Office.
Assembly Bill (AB) 164 includes a Cost of Living (COLA) adjustment which is a 4.05 percent increase to the Standard Reimbursement Rate (SRR) effective July 1, 2021. The SRR for CSPP contracts is $51.87 for full-day programs and $32.12 for part-day programs. All contractors that previously had a rate less than the SRR will automatically receive the SRR effective July 1, 2021. This increase is incorporated into contract amendments processed in late September or early October 2021.
AB 131 Section 46 adds to Education Code (EC) Section 8242, and further revises contract rates. Commencing January 1, 2022, CSPP contractors will be reimbursed at the greater of the 75th percentile of the 2018 regional market rate survey, or the contract per-child reimbursement amount as of December 31, 2021. The CDE is working with the Department of Finance and State Legislature on implementing this change, and will provide updates on implementation in October 2021. Contractors with a rate increase as a result of this chapter will be informed of their new rate in advance of implementation, and will receive a subsequent contract amendment to incorporate the new rate into their contract(s).
American Rescue Plan Act (ARPA) One-Time Funding
AB 131 Section 264(c) provides one-time funding in the amount of $289 million in American Rescue Plan Act of 2021 (ARPA) funding for one-time rate supplements to support family childcare providers, including those who serve children through a CSPP family childcare home education network. The Child Care Providers United - California has discretion to determine how these rate supplement allocations will be determined which may include, but not be limited to, monthly rate supplements for family childcare providers or lump sum bonuses, subject to the review and approval by the state. The reimbursement rate supplements shall be implemented January 1, 2022 through December 31, 2023 and are to be allocated over a twenty-four-month period.
AB 131 Section 265 provides $123.76 million for one-time rate supplements to support CSPP contractors, which is a combination of ARPA funding, state general funds, and Proposition 98 funding. These funds have been provided in addition to those allocated for contract rate increases, and are also to address the inequities between the standard reimbursement rate and the regional market rate ceiling for center-based programs. The CDE, in consultation with the Legislature, will determine the methodology for allocating these funds which may include, but will not be limited to, monthly rate supplements or lump-sum bonuses. These funds are to be allocated over a twenty-four-month period.
American Rescue Plan Act Allocations and Requirements
As provided by AB 131 and the 2021 Budget Act, recipients of the ARPA stabilization funding must complete a survey to ensure eligibility prior to receiving ARPA funding. CSPP recipients include:
- Individual CSPP Sites
- Family Childcare Home Education Network (FCCHEN) providers
For CSPP contractors with multiple sites, one survey must be completed for each individual site. Similarly, for CSPP contractors operating FCCHENs, one survey must be completed by each provider. CSPP contractors should notify providers of the availability of ARPA funds and the requirement to submit the survey to determine eligibility. This survey will determine eligibility for ARPA fund allocations, which include,
but are not limited to, the following:
- Rate increases
- Secondary provider payments when the CSPP FCCHEN providers were paid for non-operational days for other COVID-19 related closures
- Reimbursement to CSPP FCCHEN providers based on certified hours of care rather than attendance, including reimbursement at the maximum authorized hours for families enrolled with a variable and unpredictable schedule
To qualify for ARPA funding, an individual CSPP site or a family childcare home provider must be either:
- Open, or
- Temporarily closed due to a public health order, financial hardship, or other reasons related to the COVID-19 pandemic.
Additionally, the CSPP or CSPP FCCHEN provider must be either:
- Licensed, regulated, or registered on or before March 11, 2021, or
- Meet all currently required Child Care and Development Fund (CCDF) health and safety requirements, including the completion of comprehensive background checks.
The CDE’s ARPA webinar held on September 17, 2021, is posted on the ELCD COVID-19 webpage at: https://www.cde.ca.gov/sp/cd/re/documents/elcdarpawebinar0917.pptx. The responses to frequently asked questions (FAQ) will also be posted to the ELCD COVID-19 webpage in the near future. If contractors have questions about filling out the survey, please email ARPASurvey@cde.ca.gov. Please note that the survey questions were provided via the ELCD email distribution list for purposes of allowing CSPP contractors and CSPP FCCHEN providers to review the questions in advance of submitting the Snap Survey. The Snap Survey link was sent directly to Program Directors identified within the Child Development Management Information System (CDMIS) on September 24, 2021. The survey should not be submitted to the CDE in pdf form. If contractors need assistance completing the Snap Survey, please contact ARPASurvey@cde.ca.gov.
Stipends Administered by CDE for CSPP
The 2021 budget allocated $55 million for CSPP stipends. As outlined in AB 131 Section 263(b), stipends are a one-time per-child allocation which will equal $600 per subsidized child enrolled in the month of March 2021. CSPP contractors administering a FCCHEN will receive an additional five percent allocation for administrative costs related to the distribution of stipends to CSPP FCCHEN providers. The CDE will utilize 801A data submitted in CDMIS to determine stipend allocations.
CSPP contractors must complete the CDE ARPA Survey prior to receiving stipend funding. The CDE will begin to process stipend allocations for contractors that have responded to the ARPA survey as of September 30, and will continue to issue allocations on a monthly basis through the end of the calendar year. After the end of the calendar year, the CDE will assess how frequently allocations will continue to be issued.
Stipend funding is available for obligation by CSPP contractors until September 30, 2023, per the federal award provided by the Administration for Children and Families. Any funds not obligated or expended during the availability period may be carried over and may be obligated and expended during the succeeding fiscal year. Therefore, the CSPP has until September 30, 2024, to expend the funds. Contractors may only spend ARPA funds on the following:
- Personnel costs, benefits, premium pay, and recruitment and retention
- Rent or mortgage payments, utilities, facilities maintenance and improvements, or insurance
- Personal protective equipment, cleaning and sanitation supplies and services
- Training and professional development related to health and safety practices
- Purchases of, or updates to, equipment and supplies to respond to the COVID-19 pandemic
- Goods and services necessary to maintain or resume child care services
- Mental health supports for children and employees
Stipends Administered by CDSS for CSPP
CSPP contractors that are applying to receive ARPA funds from the CDSS must also complete an ARPA survey that is being administered by the CDSS. This includes contractors that are applying for stipends based on a CSPP’s licensed capacity; these stipends are being administered by the CDSS Community Care Licensing Division. Information about the licensed provider stipends and a link to the CDSS ARPA survey can be found here: https://www.cdss.ca.gov/inforesources/cdss-programs/community-care-licensing/child-care-licensing/licensed-stipends. Questions related to the licensed provider stipends funded by ARPA and distributed by CDSS should be directed to CCLlicensedstipends@dss.ca.gov.
Direct Deposit for CSPP and CPKS Payments
AB 128 appropriated funding for the CDE to establish direct deposit of contract payments for CSPP and CPKS contractors. The CDE is currently working with a third-party vendor to implement direct deposit for CSPP and CPKS contract payments. While a third-party vendor will be assisting with this process, CSPP contractors will not experience any change in how they are informed of payments; payment amounts and payment status will continue to be visible in the Child Development Accounting Reporting Information System (CPARIS), and CDNFS analysts will continue to be the point of contact for all questions related to CSPP payments. Additional instructions and guidance, including a webinar, will be announced in October 2021.
FY 2021–22 CSPP Hold Harmless for Attendance
AB 131, Section 263, specifies that for FY 2021–22, CSPP contractors are to be reimbursed the lesser of 100 percent of the contract Maximum Reimbursable Amount (MRA) or net reimbursable program costs. In order to be reimbursed pursuant to the limits defined in AB 131, CSPP contractors must meet one of the criteria outlined within the policy section of Management Bulletin (MB) 21-11, which can be found at https://www.cde.ca.gov/sp/cd/ci/mb2111.asp. Please reference MB 21-11 for further details on reopening requirements as they relate to FY 2021–22 contract funding.
To address the increased cost of providing care caused by the COVID-19 pandemic, as well as simultaneous reduced attendance, AB 131 provides fiscal relief to CSPP contractors. FY 2021–22 contract reimbursement is based on the lesser of:
- Contract Maximum Reimbursable Amount (MRA); and
- Net Reimbursable Program Costs
The chart below illustrates an example of the change in the reimbursement calculation between previous years and FY 2021–22.
Contract Reimbursement Calculation Comparison
|Period of Performance||Maximum Reimbursable Amount (MRA)||Service Earnings||Net Reimbursable Expenses||Contract Reimbursement|
|Prior to FY 2020–21||$750,000||$700,000||$745,000||$700,000|
|FY 2020–21 and FY 2021–22||$750,000||$700,000||$745,000||$745,000|
In this example, the contractor will be reimbursed $745,000 to cover the cost of operating the program. Contractors should assess total expected program costs in FY 2021–22 as compared to the MRA and adjust expenditures as needed. Contractors must be aware that contract reimbursement per AB 131 is for FY 2021–22 only, and should therefore not enter into any ongoing agreements that would cause them to over-expend the FY 2022–23 contract. In addition, contractors must adhere to all relevant pre-approval purchase requirements set forth in the funding terms and conditions of the contract.
In addition to the change in the contract reimbursement calculation, CSPP contractors must adhere to specific criteria in order to be eligible for reimbursement under the hold harmless provision. The criteria to be eligible for reimbursement outlined in MB 21-11 requires contractors (a) must open to provide in-person education services for enrolled families in accordance with the contracting agency’s FY 2021–22 approved program calendar, and remain open and provide services through the FY 2021–22 program year; or (b) not provide in-person services by the start date of the contracting agency’s FY 2021–22 approved program calendar, due to local or state public health orders or guidance related to the COVID-19 pandemic and specific to early education or childcare that prevents the program from reopening; or (c) open for in-person services in accordance with the contracting agency’s FY 2021–22 approved program calendar, with any future days of closure being due to a local or state public health order or guidance related to the COVID-19 pandemic and specific to early education or childcare.
CSPP contractors should review their previously approved operational days on their FY 2021–22 program calendar to verify compliance with this section. Contractors that do not meet the reopening criteria as described above and in MB 21-11 must submit a revised FY 2021–22 program calendar and a program narrative change to their assigned Early Learning and Care (ELCD), Program Quality Implementation (PQI) office Regional Consultant in order for CDNFS to properly fund the contractor for the reimbursable period of operation. The chart below is to assist contractors on how to report days of operation on the CDNFS enrollment, attendance, and fiscal report in the CPARIS, as well as to assist contractors in determining whether or not a revised program calendar and program narrative change must be submitted to the ELCD.
|CDNFS Report Field||Period of Performance||Criteria||Reporting Instructions|
|Days of Operation||
July 1, 2021 – June 30, 2022
|(a) Physically open and providing in-person services for children and families||Include within report|
|Days of Operation||July 1, 2021 – June 30, 2022||(b) Not physically open due to written local or state public health guidance or orders||Include within report|
CSPP will not be funded if they do not meet the criteria for (a) or (b). If they do not meet these criteria, they must submit a revised program calendar to ELCD, and CDNFS will revise the contract to reduce the days of operation and prorate the MRA accordingly. Contractors will not report days of operation for this time period.
In instances where a revised program calendar must be submitted to the ELCD, the contract will be amended to prorate the contract’s MRA based on the number of days the contractor meets the criteria for reimbursement. The chart below illustrates an example for how a prorated MRA will be calculated.
In this example, the contractor had an original MRA of $750,000. However, the contractor was closed for 126 days without a public health order or guidance. Therefore, the FY 2021–22 MRA will be revised and reimbursement will be capped at the revised MRA of $365,850.
|Categories||Original Contract Terms||Revised Contract Terms|
|Days Closed without a public health order||0||126|
|Days of Operation (Days physically open and providing in-person services for children)||246||120 (Original Contract MDO - Days Closed without a public health order)|
|Percentage of days eligible to be funded (Days of Operation /original contract MDO)||100%||48.78%|
|MRA (Original MRA x Percentage of days eligible to be funded)||$750,000||$365,850|
CSPP contractors must reimburse their subcontractors in the same manner, without regard to enrollment or attendance, so long as the subcontractor meets the requirements set forth in MB 21-11, which can be accessed at https://www.cde.ca.gov/sp/cd/ci/mb2111.asp.
FY 2021–22 Enrollment and Attendance Reporting
Contractors should refer to the Data Reporting Requirements: Attendance, Enrollment, and Expenditure Reporting section of MB 21-11 for specific information on how to report days of operation, days of enrollment, and days of attendance in FY 2021–22. The charts below can further assist contractors with how to report days of enrollment and days of attendance on the CDNFS enrollment, attendance, and fiscal report in CPARIS.
|CDNFS Report Field||Period of Performance||Criteria||Reporting Instructions|
|Days of Enrollment||
July 1, 2021 – June 30, 2022
|(a) Physically open and providing care||Include within report|
|Days of Enrollment||July 1, 2021 – June 30, 2022||(b) Not physically open due to written local or state public health guidance or orders||Include within report|
Programs will not be funded if they do not meet the criteria for (a) or (b). If they do not meet these criteria, contractors will not report the days of enrollment during this time.
Contractors may use the chart below to determine how to report attendance in FY 2021–22. Please note that, while children sheltering in place and/or distance learning due to a temporary closure or capacity restrictions in response to a local or state public health order or guidance related to the COVID-19 pandemic and specific to early education or childcare, may be included as an excused absence in a contractor’s internal policies, these days of attendance do not constitute as a day of attendance for the purposes of CDNFS attendance reporting. For this reason, contractors may find it useful to develop a new attendance code in order to track activity for these children separately. Conversely, children who quarantine due to a positive COVID-19 test, or exposure to someone who has tested positive for COVID-19, may fall under the excused absence policy. These absences do constitute a day of attendance for the purposes of CDNFS attendance reporting, provided the child is expected to return to in-person services once the quarantine ends.
|Attendance Scenarios ||Attendance Reporting July 1, 2021 – June 30, 2022|
|Child is participating in distance learning activities due to a temporary classroom closure caused by COVID-19||Do not report the day of attendance|
|Child is sheltering in place, with no intention of participating in in-person care, due to COVID-19||Do not report the day of attendance|
|Child is not attending due to capacity limitations related to COVID-19||Do not report the day of attendance|
|Child is receiving in-person services ||Report the day of attendance for any child that was expected to physically attend the program. |
|Child has an excused absence ||Report excused absences as a day of attendance for children expected to be in attendance on any given day, but the child did not attend. Excused absence policies in accordance with CCR 5 18066 should continue to be followed for children receiving in-person services. Excused absences include family emergency and illness of the child or parent, which also includes a positive COVID-19 case in the family, with the expectation that the child will return to in-person care|
Non-COVID-19 Emergency Closures
Any CSPP contractors that are unable to operate and that close all sites and/or classrooms due to a non-COVID-19 related emergency may request a closure credit for any reduction in days of operation. Approved emergency closure credits must be reported on CDNFS enrollment, attendance, and fiscal reports in order for the CSPP to be reimbursed for the days of closure. Information on emergency closure requests and the reimbursement process is contained in MB 21-10 and can be found here: https://www.cde.ca.gov/sp/cd/ci/mb2110.asp. Non-COVID-19 related emergencies include circumstances beyond a contractor’s control, including, but not limited to earthquakes, floods, or fires, as well as incomplete repairs and renovations that have been authorized by the Department
FY 2021–22 Family Fee Waivers, Reporting, and Reimbursement
AB 131 waived family fees for all families enrolled in a CSPP from July 1, 2021 through June 30, 2022.
Although family fees are being waived for FY 2021–22, contractors are still required to assess the appropriate family fee. This requirement is to ensure that contractors report the correct family fee amount(s) being waived and that families are aware of the updated fee that will be applicable July 1, 2022. Contractors shall use the 2021–22 Family Fee Schedule that can be found here https://www.cde.ca.gov/sp/cd/ci/documents/famfeeschedulejuly2021.xlsx, and indicate the assessed family fee on the Notice of Action (NOA). The NOA should also include that the family fee has been waived through June 30, 2022 and that the payment of family fees will resume on July 1, 2022.
Family Fee Reporting Requirements
Contractors must report the amount of family fees that were assessed and waived between July 1, 2021 and June 30, 2022 on the line Waived Family Fees for Certified Children.
Family Fee Reimbursement
In years that family fees are not waived, family fees are in lieu of contract payments, which reduces the amount of contract funds that the CDE will reimburse. Since AB 131 provides additional funds to cover family fees for FY 2021–22, contractors will receive reimbursement for the waived family fees reported on this line that would have otherwise been collected from the family. Contractors should review MB 21-12 at https://www.cde.ca.gov/sp/cd/ci/mb2112.asp for further directives and guidance regarding family fee waivers in FY 2021–22.
An allocation for family fee waivers is provided within the Budget Act amendments that were sent to contractors by the CDE Contracts Office in late September or early October 2021. FY 2021–22 allocations were based on June 2021 data submitted in CPARIS. Data submitted throughout FY 2021–22 will be monitored by CDNFS to identify shortfalls in current year funding.
CSPP-CCTR Transfer Requests
During the year, a contractor may find that projected services or funding needs have changed, requiring a transfer of funds between their CSPP and CCTR contracts. Although administration of CCTR programs has shifted to the CDSS, contractors will still have the ability to transfer between their CCTR and CSPP contracts. Transfers between contracts can only be requested for the current fiscal year.
As a reminder, LEAs and Community College District (CCD) CSPP contracts are funded entirely by Proposition 98 funding. This change in the appropriation for CSPP funding began in FY 2015–16 and remains in effect. LEAs and CCDs therefore cannot transfer funds between CCTR and CSPP contracts.
If a significant portion of the contract’s MRA is being requested to transfer, the 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 CSPP services. The Program Narrative Change form (CD–3704A) can be found on the CDE website at https://www.cde.ca.gov/sp/cd/ci/documents/elcd3704amay2021.pdf. For further information or instructions on completing this form, please contact your assigned ELCD, PQI office regional Consultant.
There are two periods for non-LEA contractors to submit transfer requests: (1) January 1 – 15, 2022 and (2) May 1 – 15, 2022. Transfer requests must be submitted in the CPARIS.
For further information or instructions on completing the request, please contact your assigned CDNFS fiscal analyst.
Reserve Account Changes
The EC section 8336 includes that all contractors are encouraged to develop and maintain a reserve within the child development fund, derived from earned but unexpended funds. The maximum allowable amount to be retained in the center-based reserve prior to FY 2021–22 was 15 percent of the sum of all center-based contract types that the contractor holds. Due to the transition of CCTR, CMIG and CHAN to the CDSS, effective FY 2021–22, reserve accounts must be split into two accounts: one for the CSPP and one for CCTR, CMIG and CHAN contract types. Reserve account balances maintained in the CSPP reserve may only be used for eligible CSPP expenditures.
The EC section 8336 has also been amended to remove the requirement that 10 percent of the reservable amount must be utilized on professional development for the CSPP. Therefore, CSPP contractors may now utilize their total reserve balance for any allowable CSPP expense.
The CDNFS will provide additional direction on the implementation of these changes in the near future.
CPARIS Reminders for FY 2021–22
Monthly or quarterly enrollment, attendance, and fiscal reports must also be submitted through the CPARIS. In addition to CSPP and CPKS contractors, CCTR, CMIG, CHST, CCIP, and CLPC contractors will continue to report their monthly or quarterly enrollment, attendance, and fiscal reports online through the CPARIS.
CPARIS can be accessed through https://www2.cde.ca.gov/cparis/logon.aspx.
Contractors may refer to the CPARIS User Manual provided at the following link https://www.cde.ca.gov/fg/aa/cd/documents/cparisusermanual.docx for further information and instructions on online reporting, including instructions related to adding new users to the system, viewing payment data, and submitting report data.
Additionally, contractors may reference the CPARIS FAQs regarding logging in, passwords, adding new users, user roles, and reporting. The FAQs can be found at https://www.cde.ca.gov/fg/aa/cd/cparisfaqs.asp as well as on the home page of the CPARIS. If additional assistance is needed, contractors may email CPARIS Support at email@example.com.
Reporting Requirements and Reminders
Enrollment, attendance and fiscal data provided to CDNFS must adhere to all applicable laws, regulations, and the funding terms and conditions of the contract. It is recommended that CSPP contractors review written policies and procedures related to enrollment, attendance, income and expenditure reporting no less than annually, and update procedures as frequently as necessary. The beginning of a fiscal year is also a good time to review cost allocation plans and equipment inventory records. Additionally, clearly written procedures should be developed to ensure accurate reporting to the CDNFS, which may include a procedure for data reconciliation.
All federal and state funds allocated for the CSPP are subject to audit, including pandemic relief funding provided in the form of stipends. All income and expenditures must be appropriately tracked by contractors, which includes maintaining records for payments to FCCHEN providers, and all purchase orders or receipts must be maintained to verify appropriate use of funds.
All expenses related to preschool programs that are reimbursable to the contract should be reported within the CPARIS. 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 the program. We encourage a thorough review of program expenses to ensure that all reimbursable expenses are being reported appropriately to CDNFS via CPARIS.
It is required that costs are accrued and reported as such. Costs are then projected by CDNFS to determine payment. 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.
Child Development Enrollment, Attendance, and Fiscal Reporting and Reimbursement Procedures
The Child Development Attendance and Fiscal Reporting and Reimbursement Procedures handbook is in the process of being revised for FY 2021–22. Contractors will be notified via the ELCD email distribution list when the FY 2021–22 handbook is posted to the CDNFS webpage.
As part of the transition of child care and development programs to the CDSS, the CDNFS analyst directory has been updated. Please refer to the CDNFS analyst directory at https://www.cde.ca.gov/fg/aa/cd/faad.asp for fiscal analyst county assignments by department, effective October 11. Due to the COVID-19 pandemic, fiscal analysts are primarily teleworking and contractors are therefore encouraged to email their fiscal analyst, rather than leaving a voicemail, in order to receive a timelier response.
The CDE, CDNFS understands that contractors may need additional support throughout the fiscal year due to the COVID-19 pandemic. As the legislature and administration continue to address impacts of the COVID-19 pandemic, and as the CDE implements these efforts, CDNFS encourages contractors to reach out for assistance in navigating changes to reimbursement and reporting requirements.
If you have any questions about a specific contract, or need clarification about any topic covered in this letter, please contact your assigned CDE or CDSS fiscal analyst.
Andrea Johnson, Staff Services Manager III
Child Development and Nutrition Fiscal Services
Fiscal and Administrative Services Division