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Management Bulletin 12-07

Early Learning and Care Division

Subject: Disenrollment due to Maximum Reimbursable Amount Reduction

Number: 12-07

Date: July 2012

Expires: Until Rescinded

Authority: Chapter 21, Statutes of 2012 (Assembly Bill 1464);  Chapter 29, Statutes of 2012 (Assembly Bill 1497); and Chapter 38, Statutes of 2012 (Senate Bill 1016)

Attention: Executive Officers and Program Directors of All Child Care and Development Programs EXCEPT California State Preschool Programs and CalWORKs Stage 2


This Management Bulletin (MB) provides guidance to all child care and development contractors, except CalWORKs Stage 2 and California State Preschool Programs (CSPP), on the process for disenrolling families as a result of the reduction in contracted service levels from the implementation of 2012–13 Budget Bill (Chapters 21 and 29, Statutes of 2012).


Chapter 38, Statutes of 2012 (Senate Bill 1016) added Section 8263.3 to the California Education Code (EC). EC, Section 8263.3(a) requires the California Department of Education (CDE) to, effective July 1, 2012; reduce the contract Maximum Reimbursable Amounts (MRA) of the contracts for General Child Care Program, the Migrant Day Care Program, the Alternative Payment Program, the CalWORKs Stage 3 Program, and the Allowance for Handicapped Program. Contractors disenrolling families as a result of the reduction in funding must do so in priority order as described in EC, Section 8263.3(b).

Additionally, Senate Bill 1016 allows the CDE to implement these legislative changes through MB. It also exempts the CDE from using the due process provisions as described in the California Code of Regulations, Title 5 (5 CCR), Chapter 19. Nevertheless, families have a constitutional right to file an appeal at the local level, but only for the purpose of proving that factors considered by the contractor in determining priority for disenrollment were incorrect.


Contracts for fiscal year 2012–13 will be amended to reflect new contract MRA amounts in accordance with EC, Section 8263.3(a). 5 CCR, Section 18054, limits contract reimbursement to whichever one of the following is the least:

  • The contract MRA;
  • Reimbursable costs and expenditures; or
  • Service earnings.

NOTE: Contractors with a Reserve Account may be reimbursed based on service earnings that are in excess of reimbursable costs, but within the contract MRA and reserve account maximum limits.


These directives do NOT apply to CSPP contractors, instructions for disenrollment of CSPP will be addressed in a subsequent MB.

When reductions to service levels are necessary due to the reduction of the contract MRA, contractors will disenroll families in the following order:

  1. Families whose child(ren) are certified based on receiving child protective services or at risk of neglect, abuse, or exploitation, regardless of income, will be disenrolled last.
  2. All other families will be disenrolled highest income first, adjusted for family size. Contractors should use the most recently published income ranking table (MB 18-03 to determine family ranking based on most recent certification/recertification.
  3. Within each income rank, families should be disenrolled in the following order:
    • Families that do not have a child with an exceptional need will be disenrolled based on length of service. Families enrolled the longest will be disenrolled first.
    • After all families in (a) above have been disenrolled, families with children that have an exceptional need will be disenrolled based on length of service. Families enrolled the longest will be disenrolled first.

The CDE understands that for cost efficiency, some centers and preschools may elect to close entire classrooms or sites. Contractors considering this option should contact their Early Learning and Care Division (ELCD) Field Services Consultant at for the process by which these families are disenrolled.

Notice of Action

Contractors must issue a NOA: Termination of Services-due to 2012–13 Budget Bill (Chapters 21 and 29, Statutes of 2012) (Attachment A, [Link no longer available]) to all families who will be terminated from services due to the reduction in the budget. The effective date of the action must be at least 14 calendar days from the date the NOA is delivered and, if mailed, contractors must allow an additional 5 days. The NOA must include information on the factors used to determine the family’s disenrollment and the types of documents that the parent must submit with their appeal.

Contractors should issue the attached NOA (Attachment A). Contractors may use their own NOA forms; however, the NOAs must include all the information in Attachment A of this MB.

Appeal Process

A parent may appeal the action only on the grounds the factors considered by the agency to determine a family’s disenrollment are incorrect. Upon timely receipt of an appeal, the contractor must continue to provide services pending the appeal decision. 

The process for appeal is as follows:

  1. A parent must submit their appeal within 14 calendar days of when they received the NOA. When the NOA is mailed to the parent, the contractor must allow for mailing time and add 5 additional days for the parent to receive the NOA.
  2. Upon timely receipt of a parent’s appeal request, the effective date of the termination will be delayed until a final decision letter is issued.
  3. The contractor shall assign a staff person who was not involved in the most recent certification/recertification process to review the appeal and accompanying documentation.
  4. The contractor must review the documentation presented with the appeal and verify the validity of the documentation provided as described in Chapter 19 of 5 CCR.
  5. The contractor shall make a determination and issue a final decision within 10 calendar days of receiving the appeal request.
  6. The final decision will be in writing, and will be mailed or delivered to the parent(s).
  7. When the decision letter is delivered to the parent, the proposed action will become effective at the close of business on the date the parent receives the letter. When the decision letter is mailed, the proposed action will become effective five calendar days from the date on the decision letter.

The contractor’s decision is final; there will be no second level appeal to the CDE due to the directive in Senate Bill 1016.

Updated Information Not Reported to the Agency

The parent may provide information to the agency that should have been reported within five days of the change in circumstances of the family pursuant to 5 CCR, Section 18102. Should that occur the contractor should follow their usual and customary practice with regard to adherence to the regulatory requirement.

Questions regarding the information in this MB should be addressed to your assigned ELCD Field Services Consultant at or by phone at 916-322-6233.

This Management Bulletin is mandatory only to the extent that it cites a specific statutory and/or regulatory requirement. Any portion of this Management Bulletin that is not supported by a specific statutory and/or regulatory requirement is not prescriptive pursuant to California Education Code Section 33308.5.

Questions:   Early Education Division | 916-322-6233
Last Reviewed: Friday, May 20, 2022
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