Childcare: alternative payment program.

Section 10228.3 was removed entirely. This section had prohibited alternative payment programs from disenrolling a family, transferring them to another contractor, or separating siblings when a newly eligible child (including a newborn) is added during the eligibility period. It also prohibited the department from moving families between contractors without mutual written agreement and required fiscal projection methodologies accounting for multiyear eligibility periods and cross-fiscal-year patterns.

Section 10268.1 was removed entirely. This section had required the department to provide an annual summary to the Legislature and Department of Finance (and publish it online) by September 1 of each year, detailing total funds allocated, expended, and unexpended statewide by program type for the prior fiscal year.

Several protective provisions from Section 10228.4 were removed: the prohibition on deferring approved transfers to a subsequent fiscal year, the prohibition on recapturing or reducing a contractor's allocation due to department administrative delays, the requirement that administrative delays cannot be the basis for denial, the requirement for publicly accessible information about transfer requests and aggregate amounts, and the requirement to consult with statewide networks of contractors.

Section 10228.2 was substantially weakened. The mandatory requirement that the department 'shall prioritize the full and timely expenditure' of childcare funds was replaced with a permissive provision allowing the department to 'may prioritize expenditure within the county before approving transfers outside the county.' All other obligations in this section (determining reasonable efforts were made, consulting with stakeholders) were changed from 'shall' to 'may,' making them discretionary rather than required.

Section 10228.4 was narrowed in who can request transfers and what they can request. The Senate version allowed 'a contractor, county, or other authorized alternative payment program' to submit requests about allocation adjustments, expenditure projections, documented overenrollment, or voluntary temporary transfers. The enrolled version limits requests to only contractors operating alternative payment programs, and only for voluntary temporary transfers related to unforeseen overenrollment causing contract overearning.

Section 10228.4 response requirements were simplified. The Senate version required a written response within 30 days including the department's determination and explanation, with three possible outcomes (approve, conditionally approve pending verification, or deny only if documentation showed overenrollment did not occur). The enrolled version requires only a 30-day acknowledgment of receipt and a 90-day written decision (approval with timeline or denial), removing the detailed conditional approval process and the restriction limiting denials to cases where verified documentation shows overenrollment did not occur.

Section 10228.4 was completely restructured. The Assembly version allowed broad requests for allocation adjustments, expenditure projections, documented overenrollment, or voluntary temporary transfers. The Senate version limits it to voluntary temporary transfers only, specifically for unforeseen overenrollment that causes overearning of the existing contract.

New eligibility requirement: only contractors who possess 'clear contracts' (as defined in Section 10397) and are in full compliance with all contractual funding terms, fiscal reporting requirements, regulatory requirements, statutory requirements, and other department-imposed requirements may submit a transfer request.

Response timeline changed from a single 30-calendar-day written decision to a two-step process: 30 calendar days for acknowledgment of receipt, then 90 calendar days for a written decision (approval or denial).

New operative date of October 1, 2027 added for Section 10228.4, delaying when the transfer provisions take effect.

Multiple mandatory 'shall' obligations on the department were weakened to permissive 'may' language in Section 10228.2, including the requirement to prioritize expenditure within the county of origin before approving outside transfers, the determination that reasonable enrollment efforts were made, and the consultation with contractors and stakeholders.

The department may impose conditions on requesting contractors, including requirements to pause enrollment, coordinate transfers to other contractors, or take other steps to minimize overearning by the requesting contractor.

The Assembly version's requirement for the department to conduct periodic fiscal reviews during each fiscal year (previously in Section 10228.4) was removed from the transfer section. The digest still references fiscal review requirements, suggesting they remain elsewhere in the bill.

The Assembly version's protections against recapture or penalty for administrative processing delays attributable to the department, and the prohibition on using administrative delays as a basis for denial, were removed from the narrowed transfer section.

Removed the legislative intent statement that the Legislature intends to enact legislation to reform childcare regulations, both from the digest and from Section 1 of the operative text. This narrows the bill's stated purpose away from broad regulatory reform toward the specific funding transfer mechanism.

Added a requirement in Section 10228.4(d) that the department send a copy of its written response to any funding transfer request to the local childcare planning council in which the requester is located, adding a layer of local oversight and transparency.

Section 10268.1(a) now requires the department to publish the annual fiscal summary on its internet website in addition to providing it to the Legislature and Department of Finance, increasing public access to childcare funding data.

The fiscal committee vote changed from 'no' to 'yes,' indicating the bill now has fiscal committee support, which is a significant procedural change for its legislative trajectory.

Coauthors Assembly Members Elhawary and Quirk-Silva and Senator Ochoa Bogh were added to the bill, broadening its coalition of supporters.

The bill expanded from a one-section statement of intent into four new Welfare and Institutions Code sections (10228.2, 10228.3, 10228.4, and 10268.1) with operative legal requirements for the Department of Social Services.

Section 10228.4 establishes a voluntary fund transfer process: contractors or counties may submit written requests at any time during the fiscal year for allocation adjustments, expenditure projections, documented overenrollment, or temporary fund transfers between providers. The department must respond in writing within 30 calendar days with its determination and a general explanation of the basis.

The department may only deny a funding transfer request if verified documentation demonstrates that overenrollment or projected service obligations did not occur during the fiscal year for which the request was made. Approved transfers cannot be deferred to a subsequent fiscal year, and the department cannot penalize a contractor's allocation due to its own administrative processing delays.

The department is prohibited from moving or reassigning a family to a different contractor or service area if the family is actively enrolled and receiving services, unless both the current contractor and the proposed receiving contractor mutually agree in writing to the transfer.

The department must utilize fiscal projection methodologies that account for multiyear eligibility periods, cross-fiscal-year enrollment patterns, reasonable attrition assumptions, and families in the eligibility determination or certification process who are anticipated to begin services.

Section 10228.3 prohibits an alternative payment program from disenrolling a family, transferring it to another contractor, or separating siblings receiving services solely as a result of enrollment balancing when a newly eligible child (including a newborn) is added to the family while it remains within its eligibility period.

Section 10228.2 requires the department to prioritize full and timely expenditure of state and federal childcare funds within the county or jurisdiction where they were originally allocated before approving transfers outside that county, and to document reasonable efforts to maximize enrollment before any out-of-county transfer.

The department may authorize use of unexpended alternative payment program funds in a subsequent fiscal year if those funds are reasonably attributable to families who were certified for services in the prior fiscal year but had not yet begun receiving care.

Section 10268.1 requires the department to provide to the Legislature and the Department of Finance by September 1 of each year a summary of childcare and development funds allocated, expended, and unexpended during the prior fiscal year, broken down by program type, posted on the department's website.

The department must maintain publicly accessible information regarding voluntary funding transfer requests, including timelines, aggregate transfer amounts, and general program impacts, consistent with confidentiality requirements.

The department is authorized to implement the new fund transfer provisions via all-county letters, childcare bulletins, or similar written instructions without going through full Administrative Procedure Act rulemaking, until regulations are adopted.