Early Learning and Care Division
Subject: Electronic banking option for provider reimbursement in Alternative Payment Programs (APPs)
Number: 18-09(a)
Date: December 2018
Expires: Until Rescinded
Authority: Assembly Bill (AB) 603, Chapter 706, Statutes of 2017; California Education Code (EC), section 8227.2
Attention: Executive Directors and Program Administrators of California Alternative Payment Programs (APPs), including California Work Opportunity and Responsibility to Kids (CalWORKs) Stage 2 (C2AP), CalWORKs Stage 3 (C3AP), Migrant Alternative Payment Program (CMAP), and Family Child Care Home Networks (FCCHN)
Purpose
The purpose of this Management Bulletin (MB) is to notify all California Department of Education (CDE), Early Learning and Care Division (ELCD) Alternative Payment Programs (APPs), including California Work Opportunity and Responsibility to Kids (CalWORKs) Stage 2 (C2AP), CalWORKs Stage 3 (C3AP), Migrant Alternative Payment Program (CMAP), and Family Child Care Home Networks (FCCHN) of a new law taking effect July 1, 2019, that will require APP contractors to establish a program of electronic banking for reimbursements made to their providers.
This MB supercedes MB 18-09.
Background
The Child Care and Development Services Act requires the CDE, ELCD to contract with agencies to provide alternative payment programs for early learning and care services for eligible children from infancy to 13 years of age. The act also authorizes alternative methods for reimbursing the providers for early learning and care services.
The California Code of Regulations, Title 5, Section 18226, requires APP contractors to develop and implement a plan for timely reimbursements to providers.
In October 2017, California’s Governor signed Assembly Bill (AB) 603, Chapter 706, Statutes of 2017, which added California Education Code (EC) Section 8227.2 requiring all APP contractors to establish an electronic payment program for their providers by July 1, 2019.
Additionally, AB 603 added EC Section 8227.7, which requires all APP contractors to provide written notification to the providers when there are changes to the family’s early learning and care services. The CDE will release clarification on this provision in a separate MB at a later date.
Directive
On or before July 1, 2019, all APP contractors must set up an electronic reimbursement program for their licensed and license-exempt providers so that reimbursement to the provider may be electronically transmitted to the financial institution of the provider’s choice. It is optional for the providers to participate in this method of reimbursement. The electronic reimbursement program must include, but is not limited to, direct deposit, and may include alternative methods of electronic reimbursement such as a pay card issued by the APP contractor. The APP cannot require the providers to use direct deposit or other form of electronic reimbursement to receive their reimbursements.
When the APP makes the reimbursement to the early learning and care provider, electronically or otherwise, they must provide a description of the reimbursement to the provider, including the child served and the month of service covered by the reimbursement. Agencies should begin reviewing their policies to ensure that by July 1, 2019, their policies are in line with these directives.
The CDE is aware that, prior to this legislation, some APPs were already requiring their providers to receive their reimbursements by electronic transfer. Assembly Bill 603 states that those agencies which had policies in place requiring that providers be reimbursed via direct deposit or other form of electronic reimbursement prior to the effective date of the legislation, July 1, 2019, may continue to require those affected providers to continue to receive reimbursement in such manner. However, any new providers starting after July 1, 2019, must be given the option of receiving reimbursement by an electronic form of reimbursement payment.
Note: Any fees assessed by a provider's financial institution for electronic banking would be incurred by the provider; the fees would not be paid by the APPs.
If you have any questions regarding the information in this MB, please contact your assigned Early Learning and Care Field Services Consultant. A list of consultants can be found on the CDE Consultant Regional Assignments web page at https://www.cde.ca.gov/sp/cd/ci/assignments.asp 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.