Allocations Paid Outside of the CSPP Contract FAQs

1. What are the various allocations that have been paid outside of contract?

   The table below lists the allocations that have been paid outside of contract, as well as forthcoming allocations.
   

   Allocation	Authority	Fund Source	Payment Received by Contractor
   Rate Supplements	Assembly Bill (AB) 131, later amended by AB 185	Non-Local Educational Agencies (LEAs): American Rescue Plan Act (ARPA) and state General Fund LEAs: ARPA and Proposition 98 Contractors should refer to the allocation email sent by their Fiscal Analyst to determine the fund source of their allocation.	June 2023–August 2023
   Temporary Rate Increases	AB 110	Non-LEAs: ARPA LEAs: Proposition 98	Round 1: September 2023 Round 2: October 2023
   Transitional Subsidy Payments	Senate Bill (SB) 140	Non-LEAs: General Fund LEAs: Proposition 98	Payments to Contractors who provide service through Family Child Care Education Networks (FCCHEN): October 2023 All other Center Payments: In Fiscal Year (FY) 2023–24
   Cost of Care Plus Rates	SB 140	Non-LEAs: General Fund LEAs: Proposition 98	Quarterly Advances: January 2024–June 2025

   
   

2. What is the methodology for these allocations?

   The methodology is dependent on the specific allocation. Below are descriptions of the methodology used for each allocation.
   

   Rate Supplements

   Based on October 2021 enrollment data, which contractors submitted via the Child Development Management Information System (CDMIS), the California Department of Education (CDE) allocated rate supplements to fund the difference between the State preschool program reimbursement rates as of January 1, 2022 and reimbursement rates equivalent to the 85^th percentile of the 2018 Regional Market Rate (RMR) survey preschool rate.
   

   Temporary Rate Increases – Round 1

   These one-time, lump-sum payments are based on two allocations:
   

   1. A $1,442 per-child stipend to CSPP contractors and a 10 percent administrative cost allocation for contractors who operate a FCCHEN. Based on April 2022 enrollment data submitted via the CDMIS, the allocation was determined by multiplying the child count by the flat-rate $1,442 stipend amount. To determine the administrative cost allocation, the stipend allocation was multiplied by 10 percent only for those children being provided services in a FCCHEN. The base per-child allocation was added to the administrative cost allocation, resulting in the total allocation.
   2. An additional allocation to contractors who operate in counties where the FY 2022–23 contract reimbursement rate is established at the 75^th percentile of the 2018 RMR survey, intended to temporarily bring reimbursement rates to at least the 84^th percentile of the 2018 RMR survey.

   Temporary Rate Increases – Round 2

   This second round of temporary rate increases was provided to bring reimbursement rates to at least the 87^th percentile of the 2018 RMR survey. Round 2 temporary rate increase payments were issued as one-time, lump sum payments and included an allocation to fund the difference between reimbursement rates equivalent to the 84^th percentile of the 2018 RMR survey attained by the first round of temporary rate increases and reimbursement rates equivalent to the 87^th percentile.

   Transitional Subsidy Payments

   Pursuant to SB 140 (Chapter 193, Statutes of 2023), these one-time transitional subsidy payments are determined as follows:

   1. Two thousand five hundred dollars ($2,500) per each family childcare provider licensed to operate a small family daycare home.
   2. Three thousand ($3,000) per center or per each family childcare provider licensed to operate a large family daycare home.
   3. A 5-percent administrative fee to state preschool programs for distributing payments to providers or subcontractors.
      

   Cost of Care Plus Rates

   Pursuant to SB 140, allocations are based on a per-child rate amount dependent upon the region in which the family children provider or center is located, as well as a 10-percent administrative fee to state preschool programs for distributing payments to providers or subcontractors. The regions and per-child amounts are:

   Region	Counties	Monthly Per-Child Allocation Amount
   Central	Fresno, Inyo, Kern, Kings, Madera, Mariposa, Merced, Monterey, Sacramento, San Benito, San Joaquin, San Luis Obispo, Stanislaus, and Tulare	$140
   Northern	Alpine, Amador, Butte, Calaveras, Colusa, Del Norte, El Dorado, Glenn, Humboldt, Lake, Lassen, Mendocino, Modoc, Mono, Nevada, Placer, Plumas, Shasta, Sierra, Siskiyou, Sutter, Tehama, Trinity, Tuolumne, Yolo, and Yuba	$141
   Southern	Imperial, Orange, Riverside, San Bernardino, San Diego, Santa Barbara, and Ventura	$160
   Los Angeles	Los Angeles only	$171
   Bay Area	Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Santa Cruz, Solano, and Sonoma	$211

3. What is the timeframe to pass the various allocations on to providers and subcontractors?

   For CSPP contractors who provide services through family childcare providers operating in their FCCHEN or who subcontract with centers, there are specific timelines for passing along payments authorized by SB 140 to providers and subcontractors. Specifically:

   Transitional Subsidy Payments

   • For contractors operating a FCCHEN, pursuant to Section 10(c) of SB 140 and the union agreement, funds must be distributed to the family childcare providers no later than November 30, 2023.
   • For contractors who provide services through subcontractors, funds must be distributed to subcontractors promptly. The CDE recommends these payments be made to centers who are subcontractors no later than 21 calendar days following receipt of funds.

   Cost of Care Plus Rates

   • For contractors operating a FCCHEN, pursuant to Education Code section 8223.5 and the union agreement, funds must be distributed to the family childcare providers within 21 calendar days of the provider’s submission of daily sign-in and sign-out sheets, as referenced in California Code of Regulations, Title 5 (5 CCR) Section 17818.
   • For contractors who provide services through subcontractors, funds must be distributed to subcontractors each month promptly following the last day of the month in which services are rendered. The CDE recommends these payments be made to centers who are subcontractors no later than 21 calendar days following the last day of the month in which services are rendered.

4. What is the deadline to spend these funds?

   Beyond the allocation timeframes stated in Question 3 for passing on transitional subsidy payments and cost of care plus rates to providers and subcontractors, there is no deadline to expend any of the allocations funded by state Proposition 98 funds or General Fund.

   Contractors in receipt of ARPA funds should refer to the California Department of Social Services’ (CDSS) FAQs related to ARPA, as the CDSS is the agency responsible for administering the ARPA grant, to confirm the expenditure date. These FAQs include a question on when funds should be spent by and can be found at https://cdss.ca.gov/inforesources/child-care-and-development/arpa-frequently-asked-questions .
   
   While there is no deadline to expend the funding from these various allocations, the CDE highly encourages contractors to use these funds immediately to support CSPP program expenses and support immediate program needs, including addressing workforce challenges (including compensation); serving children with disabilities, dual language learners, and children with behaviors that are challenging to adults; and upcoming Classroom Assessment Scoring System (CLASS) implementation.

5. What are allowable uses of these funds?

   The allowable uses of the funds from these various allocations will depend on the fund source or the intent of the allocation. Below are descriptions of the allowable uses for the various allocations.

   Allowable Uses of Rate Supplements and Temporary Rate Increases

   Allocations funded with State Proposition 98 funds and the General Fund may be used for any allowable expense that are reimbursable under a contractor’s CSPP contract. Contractors should review the Contract Terms and Conditions (CT&C) for more information on costs that are considered reimbursable and nonreimbursable.
   
   Any allocations funded with ARPA must be used for one or more of the following purposes:

   • 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, or training.
   • Professional development related to health and safety practices.
   • Purchases of or updates to equipment and supplies to respond to COVID-19.
   • Goods and services necessary to maintain or resume childcare services.
   • Mental health supports for children and employees.

   Allowable Uses of Transitional Subsidy Payments and Cost of Care Plus Rates

   CSPP contractors who provide preschool services through a FCCHEN or a subcontractor are required to pass these payments to family childcare providers and/or subcontracting agencies. CSPP contractors may retain a five percent administrative fee for distributing transitional subsidy payments to providers and/or subcontractors and a ten percent administrative fee for distributing cost of care plus rate allocations to providers and/or subcontractors.
   
   Transitional subsidy payments or cost of care plus rate allocations retained by the CSPP contractor may be used for any allowable expense that would be reimbursable under the CSPP contract. Contractors should review the CT&C for more information on costs that are considered reimbursable and nonreimbursable.

6. Can these funds be used for employee compensation?

   Given the various workforce challenges CSPP contractors have shared, the CDE urges CSPP contractors to consider using these funds to provide compensation to employees. However, contractors should be aware that 5 CCR Section 17806(o) prohibits contractors from providing bonuses to employees, unless the bonus is part of a collective bargaining agreement. As an alternative, pursuant to Code of Federal Regulations, Title 2, Section 200.430(f), contractors may provide future incentive compensation to employees if the overall compensation is determined to be reasonable and such costs are paid or accrued pursuant to an agreement entered into in good faith between the contractor and employee before the services were rendered. An example of entering into an agreement before services are rendered could be an agreement made between the contractor and employees in July before incentive payment is provided for the month of August or later month(s).

7. Do funds have to be used for the specific classrooms the children were enrolled in at the time that funds were distributed? Example: One CSPP classroom has more certified children enrolled than another classroom. May the funds be spent equally across all the CSPP classrooms?

   The funds do not have be used for specific classrooms and can be spent equally across all CSPP classrooms. The allocations were based on point-in-time data, but the intent is to use the funds in support of your CSPP program.

8. How are the funds from these various allocations to be reported?

   Funds from the various allocations shall be used in support of your CSPP. As such, funds should be reported on the Enrollment, Attendance and Fiscal reports in the same manner as other funding received to support the CSPP. These funds are restricted income and should be reported only when the associated expenditures are also reported. Specifically:

   • ARPA funds should be reported under “Restricted Income: ARPA.”
   • State General Fund and Proposition 98 funds should be reported under “Restricted Income: Other Revenue.”

   
   Transitional subsidy and cost of care plus rate payments made to family childcare providers should be reported under “Direct Payments to Providers (FCCH only).” Transitional subsidy and Cost of Care Plus Rate payments made to subcontractors should be reported under “Direct Payments to Subcontractors." Reporting for all other expenditures will depend on what the funds are expended on. Expenditures will be reported under the appropriate categories based on how the funds are spent. Expenditures do not need to be identified separately from regular contract expenses; however, contractors should internally account for these funds separately.

9. For purchases that exceed the purchase thresholds, is an Equipment Purchase Approval Request required?

   Yes, an Equipment Purchase Approval Request is required if the purchase exceeds the thresholds stated in the annual CT&C. Since these funds are to be used in support of your state preschool program and will be reported on the Enrollment, Attendance, and Fiscal reports, they are subject to the same requirements as contract funds.

10. Can these funds be used to purchase a facility? What are other allowable costs related to facilities?

    No, these funds cannot be utilized to purchase a facility. Funding from the various allocations paid outside of contract are subject to the same requirements as contract funds. Pursuant to 5 CCR Section 17805(h) and the annual CT&C, buildings are only reimbursable as depreciation or use allowance. Additionally, pursuant to 5 CCR Section 17806(h) and the CT&C, interest that is part of a lease purchase agreement is generally an allowable expense.

    For questions on allowable costs related to facilities that are specific to your program, please contact your Program Quality Implementation (PQI) office Regional Consultant.

Resources

For programmatic questions regarding the information in these FAQs, please contact your assigned Early Education Division (EED) PQI office Regional Consultant.

For fiscal questions regarding the information in these FAQs, please contact your assigned Early Education and Nutrition Fiscal Services (EENFS) fiscal analyst.