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Newsom Signs Legislation Investing $2 Billion in Publicly Funded Child Care

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A woman wearing a yellow shirt and black masks leans over a table with small children to draw on a piece of paper in front of a blonde haired child.
Teacher Martha Guarnizo works with her students to make art in the backyard at La Bamba daycare in San Francisco on April 20, 2023. (Beth LaBerge/KQED)

Gov. Gavin Newsom has signed a series of early education bills that will boost California’s publicly funded child care and preschool programs right as federal pandemic relief for child care providers runs out at the end of September.

The state is budgeting about $2 billion to cover a roughly 20% pay raise for providers who look after the children of parents with lower income — their first salary bump in five years — and extend a few pandemic-era policies that helped them keep their doors open.

By signing these bills, Newsom also signed off on establishing the nation’s first retirement fund for the union representing more than 40,000 family child care providers and continuing to pay for their health care and professional training.

“This is a pretty substantial investment acknowledging that early educator workers are underpaid, that they do need more funding, that they are a vital part of the workforce,” said Nina Buthee, executive director of the advocacy group EveryChild California.

The state is also extending a few pandemic-era policies that were initially funded by the federal government, including lowering, and in many cases eliminating, “family fees” that families with lower-income must pay to receive state-subsidized child care; and reimbursing providers based on enrollment rather than attendance.

Additionally, delinquent fees will be forgiven. For years, advocates have criticized these fees as inequitable and unaffordable. Families had to pay up to 25% of their income, or as much as $600 a month, per child. Advocates worried that if the state reintroduces the fees after waiving them during the pandemic, it would cause families to drop out of state-funded child care programs.

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These changes will help stabilize California’s beleaguered child care industry over the next 18 months, Buthee said, until broader reform takes hold to solve the shortage of child care in California. When the $24 billion in federal aid for the child care industry in all 50 states ends, an estimated 13,500 child care programs might close in California and child care could be disrupted for more than 84,000 children across the state, according to a report (PDF) by The Century Foundation. California hasn’t spent all the federal aid, and is issuing another round of stipends ranging from $500 to $3,000 before the end of November.

As part of its contract agreement with the union Child Care Providers United, the state has set a timeline for overhauling its reimbursement system so subsidized child care providers are more fairly paid.

These providers have long complained that the state was underpaying them by basing voucher rates on what parents were paying for child care at least five years ago. As a result, the payments failed to reflect the current costs of living and didn’t adequately cover the true cost of providing child care.

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Zonia Sanchez, a family child care provider from Palmdale who helped negotiate the new contract, said she looks forward to collaborating with the state to develop the new payment system.

“We are grateful to the legislature and governor for listening to us, a woman of color-led workforce, and working with us to enact this historic contract,” she said in a statement. “Truly transforming California’s child care system is the goal of this contract.”

The rate increases negotiated by the union will extend to all state-funded child care programs, Buthee said, adding that she hopes the changes will incentivize programs that might have hesitated to serve families who qualify for subsidies and enroll them.

“My hope — and the intention of a lot of these rate increases — is to be able to give a living wage to teachers and those individuals working directly with young children,” Buthee said.

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