Despite California's Record Budget Surplus, No Easy Solutions For Longstanding Child Care Challenges

Gov. Gavin Newsom’s latest spending proposal funds more public school seats for 4-year-olds and extends policies that helped prop up child care providers during the pandemic.

Advocates say the state isn’t investing enough into the long-term stability of an underfunded child care and early education system.

“The system has been built on inequity, disinvestment [and] how do we spend the least amount possible,” said Max Arias, chair of the union representing about 40,000 child care providers in the state. “It's never been built around quality, access for everyone.”

Newsom doesn’t have the final word on the budget or how the state will spend a record $97.5 billion surplus. The California State Assembly and Senate have their own plans and a June 15 deadline to come to an agreement.

With that in mind, here are a few things that are included in the $300.6 billion spending plan:

Continuing COVID-19 Policies To Support Child Care

Newsom proposes spending $157 million to continue waiving fees that low-income families pay for subsidized child care until June 2023.

The policy is estimated to save 40,000 families up to $595 a month.

California started waiving the fees during the pandemic and that policy was set to expire at the end of June.

Another pandemic-era change was paying providers based on their enrollment, instead of attendance, for those working with low-income families who qualify for subsidized care. This helped stabilize child care providers’ income when kids were more likely to be absent because of their parents’ shifting work conditions, concerns over COVID-19, or illness.

The governor proposes continuing that practice another year, which would cost the state an estimated $114 million.

Increased Access To Public School For 4-Year-Olds

Newsom adjusted the amount of money for increasing the number of transitional kindergarten (TK) spots from $639.2 million to $614 million. In the upcoming school year, students who turn 5 years old between September 2 and February 2, 2023 will be eligible to enroll in TK.

More Money For Birth Workers

California will soon offer people who get their health insurance through Medicaid an option for more support during childbirth.

One challenge to rolling out the new Medi-Cal benefit has been figuring out how much to pay doulas for their services. At one point, the state proposed a $450 flat rate, which doulas said was too low given they can spend up to 12 hours with a client during delivery alone.

Newsom proposes increasing that rate to $1,094 per birth, which will cost the state an estimated $10.8 million a year.

But What About That Giant Surplus?

Of the $97.5 billion surplus, about half — $49.2 billion — is readily available. Newsom proposes putting 99% of it into one-time spending.

“A one-time infusion of dollars into any program will offer some stability, but the fact is that many programs and services that children and families rely on need ongoing funding for stability and long term planning and budgeting,” said Kristin Schumacher, senior policy analyst at the California Budget and Policy Center.

A few examples of long-term investments include providing pay increases, health insurance and retirement plans for child care workers, boosting the payments for the state’s paid family leave program and helping families pay for child care.

Schumacher said one factor in the governor’s decision is a 40-plus-year-old policy that limits how much money state and local governments can spend.