A Critical Gap: Contract Earnings for Center-Based Programs Have Not Been Addressed

One issue that has not received the attention it deserves is how center-based programs actually earn against their contracts. Currently, there is no mechanism that accounts for the real-world enrollment fluctuations that center-based programs experience, fluctuations that are often outside of a provider's control. As the state moves beyond the hold-harmless, this gap becomes increasingly consequential.

We are calling on the Legislature to apply a 15 percent flex factor to contract enrollment for center-based programs post hold-harmless. This means reimbursement should be calculated based on the lessor of: the contract's Maximum Reimbursable Amount (MRA); the net reimbursable program costs; or the product of adjusted child days of enrollment for certified children times the contract rate, plus up to 15 percent of the MRA, in no case exceeding the MRA itself. If enrollment falls below 100 percent for three consecutive years, the department may review the contractor's capacity and align the MRA to identified service needs accordingly.

This framework is a practical and fair solution. It gives center-based programs the breathing room they need to sustain operations while maintaining accountability to the state. Without this flexibility, providers face the impossible task of hitting enrollment targets in a system still recovering from years of disruption,  and risk losing contract value through no fault of their own.

This language was removed from SB 1110, and that matters. Your voice is needed now.

California has spent years building its early care and education system, and providers have been at the center of that effort. Now is not the time to leave center-based programs without a safety net as hold harmless ends.

We are urging every provider, program director, and early learning advocate to call your legislator today. Tell them how important a flex factor for center-based programs is to your community, your families, and your ability to keep your doors open.

And specifically, please reach out to Senator Becker and let him know directly how much this issue means to you. His leadership on this can make a real difference. Share your story. Tell him what a 15 percent flex factor would mean for your program, your staff, and the children and families you serve.

Call. Email. Make your voice heard. The future of your program may depend on it.