Contract Earnings Based On Enrollment Details: Updates from CDE and CDSS

Dear Members of the ECE Community,

On June 30, 2026, the pandemic-era "hold harmless" funding model officially sunsets. To guide programs through the upcoming shift to enrollment-based funding, both the California Department of Social Services (CDSS) and the California Department of Education (CDE) have issued bulletins: CDSS Child Care Bulletin (CCB) No. 26-15 and CDE Management Bulletin (MB) 26-06. It is vital you review these bulletins to help your own understanding and application to your particular contract(s). 

Because many of our members run multi-contract operations spanning both agencies, we have synthesized these updates into a clear roadmap of what was, what will be, what we know, and what we don't know yet.

What Was

• Before July 1, 2020: Direct service contract earnings were bound by a strict attendance calculation. Programs were reimbursed based on the lowest of their Maximum Reimbursable Amount (MRA), net program costs, or certified enrollment adjusted by actual attendance percentages plus a small 5% flex factor.

• July 1, 2020 – June 30, 2026: In response to the pandemic, the state enacted a temporary "hold harmless" model. Center-based contractors were reimbursed strictly at the contract MRA or net program costs, whichever was less, removing attendance and enrollment metrics entirely from final funding determinations.

What Will Be After July 1, 2026

• The Sunset of Hold Harmless: Starting July 1, 2026, this reimbursement model concludes permanently.

• After July 1: All programs will transition to an enrollment-based reimbursement model. Your final contract reimbursement will be determined by the lesser of three factors (for both CDE and CDSS Programs):

  1. The Maximum Reimbursable Amount (MRA) stated in your contract.

  2. Net reimbursable program costs.

  3. The product of your adjusted child days of enrollment for certified children multiplied by your contract rate.

• No More Attendance Penalties: Service earnings calculations will no longer drop if a child is absent. State reporting software is being reprogrammed to assume 100% attendance based on your actual certified enrollment slots. For instance, if your program experiences a 94% attendance rate, your service earnings calculations will still reflect 100% of that enrollment value.

What We Know

• CDSS Reporting (CCTR, CMIG, CHAN): Contractors operating General Child Care (CCTR), Migrant (CMIG), or Special Needs (CHAN) programs will continue to submit standard enrollment and fiscal reports through the existing Child Development Enrollment Attendance and Fiscal Reporting (CDPR) system. Emergency closure policies also remain available to protect reimbursements if outside forces compel a temporary site shutdown.

• CDE Reporting (CSPP): California State Preschool Program (CSPP) contractors face an elevated reporting requirement under MB 26-06. With each Enrollment, Attendance, and Fiscal report, CSPP contractors must electronically upload three specific documents: a general ledger reflecting CSPP transactions, a summarizing financial sheet (such as a balance sheet or profit and loss statement), and an enrollment/attendance register (e.g., Form CD 9400).

• CDE Compliance Reviews: The CDE will implement a quarterly random sampling mechanism to cross-verify monthly submissions against contractors' physical ledger data, aiming to verify alignment and direct technical assistance.

• FCCHEN Alignment: Both agencies are aligned regarding Family Child Care Home Education Network (FCCHEN) protections. FCCHEN providers under CCTR, CMIG, or CSPP contracts will receive 100% reimbursement based on families' maximum certified hours of care, regardless of actual child attendance, less standard allowable administrative expenses.

What We Don't Know

• CDE Ledger Details: While we know CDE requires a general ledger reflecting CSPP transactions, we do not know the exact file formats accepted, nor the precise structural guidelines for programs choosing to extract and submit only the CSPP-specific sections of their broader agency ledger.

• Submission Portal Mechanics: It remains unconfirmed exactly which software interface or digital pipeline CDE will deploy to collect these new monthly ledger and P&L file attachments, or how seamlessly it will integrate into existing reporting frameworks.

• Sampling Metrics: The exact selection criteria, evaluation metrics, or compliance thresholds CDE will use for its "quarterly random sampling" process have not been shared in detail.

What EveryChild California is Doing:

EveryChild CA is actively working with the community to understand where the largest gaps of information exist, where the largest concerns stand, and working with CDE and CDSS to gain clarification based on your input. We are working on assembling and updating our training material. We will announce a new event shortly, designed to provide TA on this topic. Please monitor this blog for updates.

Please send your own technical assistance questions and concerns to Adam North at adam@everychildca.org, so that we may include your voice in these discussions.