Fiscal Year 2023–24 Final Budget Summary

Part-day contractors must follow priority order as listed below (new changes to priority are in bold italics):

1. The first priority for services shall be given to three-year-old or four-year-old children who are recipients of child protective services or who are at risk of being neglected, abused, or exploited and for whom there is a written referral from a legal, medical, or local social service agency.
   
2. Once the set aside for children with exceptional needs is filled, the second priority for services shall be given to all three- and four-year-old children with exceptional needs from families with incomes below the income eligibility threshold. This priority is for children with exceptional needs that are enrolling in CSPP after the percent of funded enrollment set aside pursuant to paragraph (1) of subdivision (c) of Education Code (EC) Section 8208, is filled.
   
3. The third priority for services shall be given to eligible three- or four-year-old children who are not enrolled in a state-funded Transitional Kindergarten program. This priority does not include children eligible based on having exceptional needs if they are from families with incomes above the income eligibility threshold. Children shall be enrolled in the following order:
   1. Eligible children with the lowest income according to the income ranking on the most recent schedule of income ceiling eligibility table shall be enrolled first.
   2. If two or more families have the same income ranking according to the most recent schedule of income ceiling eligibility table, the child that is identified as a dual language learner shall be enrolled first. If there are no children identified as dual language learners, the child that has been on the waiting list for the longest time shall be admitted first.
      

Note: Contractors must use the processes in Management Bulletin (MB) 23-03 to determine if a child is a dual language learner prior to prioritization.

4. The fourth priority, after all otherwise eligible children have been enrolled, shall be children from families whose income is no more than 15 percent above the income eligibility threshold. Within this priority category, priority shall be given to three- and four-year-old children with exceptional needs interested in enrolling beyond those already enrolled in the percent of funded enrollment set aside pursuant to EC Section 8208, then to four-year-old children before three-year-old children without exceptional needs.
   

After all otherwise eligible children have been enrolled in the first through fourth priority categories, the contractor may enroll children in the following order:

5. A CSPP site operating within the attendance boundaries of a qualified free and reduced-price meals school, in accordance with EC Section 8217, may enroll any three- and four-year-old children whose families reside within the attendance boundary of the qualified elementary school. These children shall, to the extent possible, be enrolled by lowest to highest income.
   
6. Transitional Kindergarten or kindergarten pupils enrolling in the CSPP for extended learning and care, pursuant to EC Section 48000(l).

Full-day contractors must follow priority order as listed below (new changes to priority are in bold italics):

1. The first priority for services shall be given to three-year-old or four-year-old children who are recipients of child protective services or who are at risk of being neglected, abused, or exploited and for whom there is a written referral from a legal, medical, or social service agency.
   
2. Once the set aside for children with exceptional needs is filled, the second priority for services shall be given to all three- and four-year-old children with exceptional needs from families with incomes below the income eligibility threshold. This priority is for children with exceptional needs that are enrolling in CSPP after the percentage of funded enrollment set aside pursuant to paragraph (1) of subdivision (c) of EC Section 8208, is filled.
   
3. The third priority for services shall be given to eligible three- or four-year-old children who are not enrolled in a state-funded Transitional Kindergarten program. This priority does not include children eligible based on having exceptional needs if they are from families with incomes above the income eligibility threshold. Children shall be enrolled in the following order:
   
   1. Within this priority category, eligible children with the lowest income according to the income ranking on the most recent schedule of income ceiling eligibility table shall be enrolled first.
      
   2. If two or more families have the same income ranking according to the most recent schedule of income ceiling eligibility table, the child that is identified as a dual language learner shall be enrolled first. If there are no children identified as dual language learners, the child that has been on the waiting list for the longest time shall be admitted first.
      

Note: Contractors must use the processes in MB 23-03 to determine if a child is a dual language learner prior to prioritization.

4. The fourth priority, after all otherwise eligible children have been enrolled, shall be children from families whose income is no more than 15 percent above the income eligibility threshold. Within this priority category, priority shall be given to three- and four-year-old children with exceptional needs interested in enrolling beyond those already enrolled in the percent of funded enrollment set aside pursuant to EC Section 8208, then to four-year-old children before three-year-old children without exceptional needs.

After all otherwise eligible children have been enrolled in the first through fourth priority categories, the contractor may enroll the children in the following order:

5. The contractor may enroll three- and four-year-old children from families that meet eligibility criteria without having a need for services. Within this priority, contractors shall enroll families in income ranking order, lowest to highest, and within income ranking order, enroll four-year-old children before three-year-old children.
   
6. A CSPP site operating within the attendance boundaries of a qualified free and reduced-price meals school, in accordance with EC Section 8217, may enroll any three- and four-year-old children whose families reside within the attendance boundary of the qualified elementary school. These children shall, to the extent possible, be enrolled by lowest to highest income.
   

Children with Disabilities in CSPP: Adjustment in Implementation Timeline

*Children with disabilities are also known as children with exceptional needs and are defined in EC Section 8205.

MB 23-02 will be updated now that the increase to the set aside for serving children with disabilities has been delayed in order to provide more time for programs to build capacity. New dates are as follows:

• July 1, 2025, for increasing to at least 7.5 percent of funded enrollment reserved for children with exceptional needs.
  
• July 1, 2026, for increasing to at least 10 percent of funded enrollment reserved for children with exceptional needs.

Note: The CDE strongly encourages contractors to continue working toward the 7.5 percent requirement during the extension.

SB 141, when signed into law, will make additional changes to the timeline for penalties. Under the provisions of SB 141, penalties for not meeting the set aside will be phased in as follows:

• 2026–27: Any agency not meeting the 5 percent set aside may be put on a conditional contract unless they have applied for and been approved for a waiver.
  
• 2027–28: Any agency not meeting the 7.5 percent set aside may be put on a conditional contract unless they have applied for and been approved for a waiver.
  
• 2028–29: Any agency not meeting the 10 percent set aside may be put on a conditional contract unless they have applied for and been approved for a waiver.

The CDE will be releasing further information about the waiver process at a later date.

The CDE will be releasing a management bulletin with further guidance, including fiscal information contractors will be required to report to the CDE during the hold harmless extension this fall after the signing of SB 140 into law.

Effective October 1, 2023:

• Family fees shall be no more than one percent of a family’s monthly income, and
  
• Families with incomes below 75 percent of the state median income shall have no family fees
  
• Family fee debt accrued but uncollected prior to October 1, 2023, may be forgiven and not collected

The CDE is working to develop an updated management bulletin for family fees with guidance for contractors to follow when family fee collection resumes beginning October 1, 2023. The CDE expects to release this guidance shortly, and in advance of the October 1, 2023, date.

Family fees must not be collected between July 1, 2023, and September 30, 2023, as family fees are waived during this time. For more information on this waiver, please refer to the email that the CDE sent on this email distribution list on May 30, 2023. If you do not have a copy of this email, please contact your Program Quality Implementation (PQI) regional consultant. The EED, PQI regional consultant directory web page can be accessed at https://www.cde.ca.gov/sp/cd/ci/assignments.asp.

In the meantime, CSPP contractors should continue to use the FY 2022–23 Family Fee Schedule provided in Management Bulletin 22-07 to assess family fees when completing the initial certification and recertification of CSPP families. This fee schedule can be accessed at https://www.cde.ca.gov/sp/cd/ci/mb2207.asp.

These temporary rate increases are funded by state Proposition 98 General Fund for local educational agencies (LEAs), while non-LEAs will receive federal American Rescue Plan Act (ARPA) of 2021 stabilization funds.

Contractors will receive a one-time lump-sum payment which will not be provided as an augmentation to the CSPP contract, but rather will be paid in a separate check sent directly to the contractor, known as an apportionment payment. Contractors can expect to receive their allocation within four to six weeks.

Temporary rate increases are based on two allocations:

1. A $1,442 per-child allocation to provide additional financial support to CSPP contractors. The CDE utilized April 2022 enrollment data submitted on the Child Development Management Information System (CDMIS) CDD-801A Report. CSPP contractors who operate through a family childcare home education network (FCCHEN) will be required to distribute $1,442 to family childcare providers for every child that was served by that provider in April 2022. Contractors who operate a FCCHEN and distribute the $1,442 per-child allocation to CSPP family childcare home providers will receive an additional 10 percent to cover administrative costs of issuing payments to the providers in the FCCHEN.
   
2. An additional allocation to contractors who operate in counties where the FY 2022–23 contract reimbursement rate is established at the 75th percentile of the 2018 Regional Market Rate (RMR) survey, intended to temporarily bring reimbursement to at least the 84th percentile of the of the 2018 RMR survey. These funds are intended to mitigate the 2022–23 cost-of-living adjustment that was only distributed to contractors whose FY 2022–23 contract reimbursement rate was based on the rate as of December 31, 2021. CSPP contractors who operate through a FCCHEN shall increase the payment to the provider accordingly.

Note: Not all contractors will receive an allocation for both purposes. A contractor will not receive allocation number one, if a contractor did not provide service in April 2022. Additionally, a contractor will not receive allocation number two if a contractor’s current reimbursement rate exceeds the 84th percentile. CSPP contractors will receive an email from their Early Education and Nutrition Fiscal Services (EENFS) fiscal analyst identifying the amount of funds they will receive for each purpose, the expected date of payment, and any additional guidance related to these funds.

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 California Code of Regulations, Title 5 (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 the 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).