SB 1110 revises and expands the statutory definitions used to administer California’s subsidized childcare and development programs. The bill codifies how reimbursements are calculated (an "assigned reimbursement rate" formula), clarifies which days count for attendance-based payments (including several types of excused absences and time when a space must be held during appeals), and enumerates allowable cost categories for contracting agencies and alternative payment programs.
The measure also defines what counts as administrative versus direct program costs (explicitly listing items such as cybersecurity insurance and invoicing), establishes part‑time and full‑time certification thresholds (fewer than 25 hours versus 25 or more hours per week), allows the department to implement the changes by all‑county letters pending formal regulations, and references cost‑based (alternative methodology) rate setting. For practitioners, SB 1110 changes what providers and local contractors can bill for, what the state must budget for, and how agencies must document and defend those costs.
At a Glance
What It Does
SB 1110 standardizes many definitions in the Child Care and Development statutes, sets an assigned reimbursement formula (contract dollars divided by minimum child days), expands reimbursable attendance rules to include specific excused absences and held spaces during appeals, and itemizes allowable administrative and direct program costs.
Who It Affects
Licensed centers and family childcare homes, alternative payment programs and other contracting agencies, county and state administrators who set and approve rates, and fiscal/compliance staff responsible for documentation and audits.
Why It Matters
By broadening what counts as reimbursable attendance and permissible costs, the bill increases revenue certainty for providers but also raises state and local budget exposure and administrative complexity. The temporary rulemaking route accelerates operational change but shifts some oversight from formal regulations to department guidance.
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What This Bill Actually Does
SB 1110 is largely a definitions and rate‑administration upgrade to the Child Care and Development statutes. Rather than rewriting program architecture, it clarifies terms and mechanics that determine how money flows from the state through contracting agencies to providers and families.
That includes a new statutory label for an "assigned reimbursement rate" and a formula for deriving it from contract dollars and minimum child‑day enrollment.
The bill explicitly expands what counts as reimbursable attendance. Providers may claim payment for a set of specified excused absences (illness, quarantine, medical appointments, court‑required visits with relatives, etc.) and for days when they must hold a space during an appeals process or while families are assumed to have abandoned care.
Those clarifications change the baseline for monthly attendance‑based reimbursements and disputes over whether a child’s absence reduces payment.SB 1110 also itemizes cost categories that contracting agencies and alternative payment programs may claim: capital outlay and startup/closedown costs for migrant programs; "cost" broadly defined to include state and local contributions to employee benefits and certain facility costs subject to a fair market rent cap; and separate lists for administrative/support costs (payroll, audits, IT and cybersecurity, communications, invoicing, research) and direct program/support costs (outreach, case management, attendance processing, appeals). The bill references federal cost‑based rate methods ("alternative methodology") as an option for setting payment rates.Two operational levers stand out.
First, the bill defines part‑time care as under 25 hours per week and full‑time as 25 hours or more, with those thresholds effective no later than March 1, 2024 and a mandate for the department to start rulemaking by July 1, 2026. Second, the department may temporarily implement the subdivision through all‑county letters and similar guidance before formal regulations are adopted, which accelerates implementation but limits administrative transparency compared with immediate rulemaking.
The Five Things You Need to Know
The bill defines an "assigned reimbursement rate" as the contract dollar amount divided by the contract's minimum child‑day average daily enrollment.
Attendance for reimbursement explicitly includes several excused absences (illness, quarantine, parental illness/quarantine, family emergency, medical/educational appointments, court‑required time with relatives) and days held while a family is in an abandonment or disenrollment appeal.
SB 1110 sets part‑time care at fewer than 25 certified hours per week and full‑time care at 25 or more hours per week, effective no later than March 1, 2024, and requires the department to begin rulemaking by July 1, 2026.
The statute itemizes allowable administrative costs to include cybersecurity insurance, software and maintenance, audits, payroll/benefits, communications, and grants/contract management.
If a memorandum of understanding (MOU) conflicts with the bill, the MOU controls except where it would require additional expenditures — those provisions must be funded in the annual Budget Act to take effect.
Section-by-Section Breakdown
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What "alternative payments" covers
This subsection defines "alternative payments" to include payments from one childcare agency to another or to parents who purchase care, clarifying that family‑choice voucher arrangements fall within the statute. Practically, this keeps voucher flows and interagency transfers within the same legal framework as other subsidized payments, so the same reimbursement and cost rules that follow in the statute apply to alternative payment arrangements.
Assigned reimbursement rate formula
The bill creates a statutory definition for "assigned reimbursement rate" and prescribes its derivation: divide the contract's total dollar amount by the contract's required minimum child‑day average daily enrollment. That makes the calculation explicit in statute rather than leaving it entirely to administrative practice, reducing ambiguity in how contract rates are presented and negotiated between the state and contracting agencies.
Expanded attendance rules for reimbursement
This section lists specific excused absences that still count for reimbursement and allows contractors to claim days when they are required to hold a child's space during abandonment or disenrollment appeals. Operationally this increases the number of paid days relative to a strict present‑only model and establishes a clear, enumerated basis for payment in absence disputes — but it also creates new documentation and appeals processes for providers and contractors to follow.
Broad cost definition and fair market rent cap
SB 1110 defines "cost" to include typical operational expenditures and explicitly allows state and local contributions to employee benefits and certain facility costs (lease payments, depreciation, loan payments) but caps those facility costs at fair market rents. The statute also uses a "reasonable and necessary" standard to qualify costs. The combination permits a wide set of costs while reserving a statutory ceiling for facility charges, which agencies and auditors will need to operationalize in contracts and claims.
Part‑time/full‑time thresholds and temporary implementation
The bill sets thresholds for part‑time (<25 hours/week) and full‑time (≥25 hours/week) certification, makes those thresholds effective no later than March 1, 2024, and authorizes the department to use all‑county letters and bulletins to implement the change until formal regulations are adopted. It also requires the department to open rulemaking by July 1, 2026. This creates an expedited administrative path to change program operations while preserving a later formal rulemaking process.
Administrative and support services costs — enumerated items
The statute lists what counts as administrative/support costs, including payroll, audits (federal single audit), facility and IT management, cybersecurity insurance, communications, invoicing and reporting, and program evaluation. By specifying these line items, the bill narrows disputes over what is allocable to administration but also invites contracting agencies to document and justify necessarily higher overhead in areas like cybersecurity and IT.
Direct program and support costs — operational activities
This subsection catalogs direct program activities that are reimbursable: outreach and enrollment, family needs assessments, individualized case management, customer‑service monitoring, attendance collection and payment processing, technical assistance, and parental appeals. That list ties reimbursement to specific program functions, making the scope of allowable service delivery costs clearer for alternative payment programs and auditors.
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Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Licensed childcare centers and family childcare home providers — gain clearer grounds to claim reimbursement through expanded attendance rules and a formal assigned reimbursement formula that can improve revenue predictability.
- Alternative payment programs and local contracting agencies — receive explicit statutory authority to claim a wider range of administrative and direct program costs (including IT and cybersecurity), reducing ambiguity about allowable expenditures.
- Children with exceptional needs and migrant program participants — see statutory recognition through tailored definitions (exceptional needs, closedown costs for migrant programs) which preserves funding categories and administrative attention.
- Parents and families using vouchers — benefit from clarified alternative payment definitions and the explicit inclusion of time‑holding during appeals, which reduces the risk of sudden loss of subsidized slots while disputes proceed.
Who Bears the Cost
- California's administering department and state budget — face greater fiscal exposure because broader attendance rules and allowable cost categories can increase aggregate payments and contract amounts.
- Contracting agencies and county administrators — must build stronger documentation, accounting, and IT capacity to justify new administrative and direct program costs (including cybersecurity and audit compliance).
- Providers and programs in low‑capacity communities — may shoulder the implementation burden (tracking excused absences, appeals documentation) and could need upfront funds for IT and administrative upgrades to capture allowable costs.
- Auditors and compliance officers — will need to expand audit scopes and develop standards for "reasonable and necessary" costs and the application of fair market rent caps, increasing oversight workload and potential conflict with contractors.
Key Issues
The Core Tension
The central dilemma is stability versus fiscal and administrative discipline: the bill strengthens revenue certainty for providers and clarifies reimbursable activities (supporting access and retention), but those gains come at the cost of higher state spending risk, tougher audit and documentation demands, and potential inconsistency in how broadly "reasonable" costs are accepted across contracting agencies.
SB 1110 trades clearer revenue entitlements for increased fiscal and administrative complexity. Enumerating excused absences and allowing payment while holding spaces during appeals stabilizes provider income but raises the state's recurring payment obligations; absent offsetting budget changes, that increases pressure on the department and the Legislature to fund higher contract totals.
The statute's inclusion of new allowable administrative items (notably cybersecurity insurance and software) acknowledges modern expenses but shifts the immediate burden of investment onto contracting agencies that must document and justify those costs during audits.
Several implementation questions remain. The "reasonable and necessary" cost standard and the fair market rent cap will require definitional guidance to avoid inconsistent application across counties; without granular guidance, contractors will face uneven audit outcomes.
Allowing the department to implement via all‑county letters accelerates change but reduces stakeholder input compared with immediate formal rulemaking, and the bill's retroactive‑style effective date for the part‑time/full‑time thresholds (no later than March 1, 2024) risks operational confusion unless the department issues clear transition rules. Finally, the MOU carve‑out that defers to negotiated agreements except where they require additional appropriations creates a layered control structure that could block or delay expenditures that the statute otherwise contemplates.
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