Santa Ana officials say why they abandoned a $7M grant for child care facilities

For the first time since giving up a nearly $7 million state grant for child care programming in May, Santa Ana’s city management publicly presented the reason why, saying they couldn't afford the ancillary costs associated with the money.

The decision raised questions about how the city gave up on the contract that would have created seven child care facilities and served more than 500 of Santa Ana’s most vulnerable youth, and why it failed to inform the City Council before doing so.

Santa Ana was awarded $6.7 million by the state in 2023 for child care and development programming. The money would pay for new staff, licensing, training, program equipment, community engagement and state-required facility upgrades. That includes maintaining the overall operation of the program.

“If we ever have a grant of this size, any decisions that should be made should be made here at the dais, publicly,” City Councilmember Johnathan Ryan Hernandez said. “Especially when it comes to millions of dollars.”

What did the city say?

Assistant City Manager Kathryn Downs told the City Council on Tuesday that the contract was relinquished because the city could not handle the state’s complex requirements.

“These concerns included compliance with a series of federal regulations, as well as California Title 5 and Title 22 regulations addressing educational requirements and health and safety issues,” Downs said.

She said the city didn’t have an expert on navigating California’s stringent regulations. According to city records, parks and recreation staff were in the process of hiring a site director who would have had that expertise to regulate and license the city’s facilities.

“There was a plan to bring experts onto staff to help navigate the implementation of this program, and additional resources,” Downs said. “The reality of it is that that's placing a lot of trust in a new staff member to stand up something for the city that comes with complex compliance issues and significant liability if you fail to do so.”

She said the upfront price of the program would have cost the city millions of dollars.

City records and the state’s funding terms and conditions say the city would have been reimbursed for “costs that are reasonable and necessary to the performance of the contract,” which includes startup costs.

In November 2024, the City Council unanimously approved a $915,583 contract with the state as the first round of funding to jumpstart the program.

“With some of the compliance issues such as providing different bathrooms for adults and children with different-sized fixtures … I just don't see how that initial award of $915,000 would have been sufficient for the capital, facilities and equipment that we needed to start up the program,” Down said.

The city would have had to build one restroom for adults, one for children and one that was gender-neutral, Mayor Valerie Amezcua said at the meeting. When asked how much it would cost to build two restrooms at all seven facilities, Downs said the city was looking at $10 million.

But Councilmember Jessie Lopez disputed those costs and said smaller restrooms are required by law for facilities serving toddlers. Santa Ana's program was intended for kids between the ages of 5 and 12, which means the requirements were only for individual locking stalls and not specialized fixtures.

Downs also said the clock was ticking because the state required the city to set up facilities by May 12, which she said was an unrealistic deadline.

But Lopez said only one facility had to be set up with at least one participant enrolled, and the city had the opportunity to request an extension.

When asked for clarification by LAist, Santa Ana spokesperson Paul Eakins declined to comment any further on the grant issue.

Why and who are applauding the decision?

Meanwhile, Amezcua and Councilmember Thai Viet Phan thanked the city for giving up on the $7 million.

“I would love to have had this in the city, but I think we need to be prepared,” Amezcua said. “It could possibly have cost us millions of dollars that we do not have.”

The city is facing a $35 million budget deficit in the next four years.

“We don't have the capacity for this,” Amezcua said. “I appreciate you guys, Mr. City Manager and your team, returning this and saying, 'Thank you, but no thank you.'"

Money comes with strings, Phan added.

“I think that with something like this, it's just so far outside the realm of something that we typically do,” Phan said. “It's not just an after-school program to keep kids off the street; it's an entirely new department that we essentially would have to set up.”

Why are some council members disappointed?

Lopez said affordable child care and youth programs are a priority for her office.

“I think it's important for everybody in this chamber to understand that even if 5-year-olds or 10 year-olds don't have lobbyists,” Lopez said. “It is our responsibility to ensure that we do anything and everything that we can to provide the services that they need to live a fulfilling and fruitful life.”

Also at issue, Lopez added, was the lack of communication between the full City Council and the city manager’s office.

“You're saying you communicated this decision to every member of this council, and we have a different recollection of that,” Lopez said. “I just want to make sure that moving forward … when your staff is receiving a directive from this council … that there is going to be an open line of communication.”

Councilmember Benjamin Vazquez said the funds could have been a helpful investment in the city’s centers and urged staff not to let this action deter them from applying for other grants.

“All our staff, thank you for the work that you do, and looking out for grants and swinging for the fences,” Vazuez said. “Think big and go out and get our grants, and we'll support you as much as we can from the dias, and we do appreciate your work.”

A request for comment to the city’s Parks and Recreation Department was also declined by Eakins.