FY 2026-27 State Budget Signed: California’s Budget and SB 150 Take Effect Today

Governor Gavin Newsom signed California’s 2026-27 State Budget and SB 150, the primary Early Care and Education (ECE) budget trailer bill, on June 29, 2026. Today, July 1, 2026, these measures take effect, marking the beginning of the new fiscal year and establishing the funding and policy changes that will shape California’s publicly funded early care and education system.

Although California entered this budget cycle facing significant fiscal uncertainty, stronger-than-expected tax revenues, driven in part by growth in the technology and artificial intelligence sectors, allowed state leaders to avoid many of the deepest proposed reductions. The final budget also relies on targeted tax changes and delayed spending reductions to address future budget deficits while preserving investments in key public services.

For California’s early care and education community, the final budget expands child care access, strengthens family eligibility protections, increases provider flexibility, invests in emergency preparedness and infrastructure, and makes numerous policy changes that providers should begin implementing today. However, the budget also continues a troubling trend by providing no Cost-of-Living Adjustment (COLA) for CSPP and CDSS-administered subsidized child care programs for the fourth consecutive year.

As Senate President pro Tempore Monique Limón stated:

“Today’s budget agreement reflects our commitment to protect core programs and address our short and long-term financial future by building up our rainy day fund and making responsible budgeting choices. I am also proud that the Senate was able to secure critical funding for child care slots, safeguard access to care, and take significant steps towards ensuring large corporations pay their fair share. Thank you to the Governor and Speaker of the Assembly for their partnership to deliver a strong foundation for our future.”

Below is a summary of the most significant budget and policy changes affecting publicly funded early care and education programs.

Reimbursement Rates

Effective today, July 1, 2026, California State Preschool Program (CSPP) and General Child Care (CCTR) reimbursement officially transitions to enrollment-based funding.

Contract reimbursement will be based on the least of the following:

• The maximum reimbursable amount stated in the contract.

• Net reimbursable program costs.

• The product of the adjusted child days of enrollment for certified children multiplied by the contract rate.

• See details in the bulletins listed below. 

  • CDE MB: Click here - https://www.cde.ca.gov/sp/cd/ci/mb2606.asp 

  • CDSS CCB: Click here - https://www.cdss.ca.gov/Portals/9/Additional-Resources/Letters-and-Notices/CCBs/2026/CCB_26-15.pdf?ver=RouaHR9eLEE%3d 

Additional reimbursement changes include:

• The Cost-of-Living Adjustment (COLA) for both CSPP and CDSS-administered subsidized child care programs is suspended for 2026-27. This is the fourth consecutive year without a COLA.

• In lieu of a direct COLA, the budget provides a percentage increase to the monthly, per-child Cost of Care Plus payment beginning July 1, 2026. The Department of Finance will determine the percentage increase at a later date.

• Resource and Referral Programs and Local Planning Councils will receive the 2.009% COLA directly.

• The Regional Market Rate survey cycle changes from every two years to every three years.

Eligibility Expansions - CSPP

SB 150 expands access to California State Preschool by:

• Adding children of local educational agency (LEA) employees, including school district, county office of education, and community college district staff, as the fourth enrollment priority, lowest income first, for both part-day and full-day CSPP. Additional implementation guidance is expected.

• Explicitly making families participating in a CalWORKs program activity eligible for full-day CSPP.

• Expanding Neighborhood Eligibility to include families with a parent or guardian employed within the attendance boundary of a qualifying school district where the CSPP program is located, in addition to families who reside there.

24-Month Continuous Eligibility - CSPP

Families retain their 24-month eligibility when:

• A child is temporarily disenrolled from CSPP.

• A child is transferred to another CSPP program.

• A child is voluntarily disenrolled during the certification period.

A family’s income at initial enrollment determines ongoing eligibility throughout the certification period, regardless of income increases. Families are no longer required to report increases in income during the eligibility period.

The California Department of Education must implement these provisions through Management Bulletins by January 1, 2027, and initiate formal rulemaking by December 31, 2028.

Family Fees - CSPP and CDSS Programs

Beginning January 1, 2027:

• Contractors must reimburse CSPP and CDSS subsidized child care providers for the full certificate or voucher amount without deducting family fees.

• Contractors must collect family fees directly from families.

• Programs that currently deduct family fees at the provider level will need to update their billing and collections procedures.

• CDSS will provide technical assistance to support implementation.

• The family fee exemption for families in the first priority category (child protective services referrals) changes from up to 12 months to one certification period.

Staff Training Days - CSPP

CSPP providers may now schedule up to five staff training days per contract period, an increase from the previous limit of two days.

Emergency and Disaster Planning - Licensed Facilities

By January 1, 2027, all licensed child daycare facilities must have a written emergency and disaster plan that includes:

• Evacuation procedures.

• Lockdown procedures.

• Shelter-in-place protocols.

• A 72-hour self-reliance plan.

• Relocation procedures with at least two temporary shelter locations.

• Contact information.

• Utility shutoff information.

• Family reunification and communication procedures.

Facilities must also:

• Train all staff upon hire and annually.

• Conduct quarterly emergency drills covering different emergency scenarios.

• Review and update the plan annually.

• Maintain keys providing access to facility vehicles, exits, and emergency supply cabinets during evacuations.

Programs without compliant plans should begin preparing now to meet the January 1, 2027 deadline.

Health and Safety Training - Licensed Facilities

The required 15-hour health and safety training now applies to:

• All child care staff.

• Family child care home licensees.

• Substitute adults in family child care homes.

Beginning January 1, 2028, all covered staff must complete at least 12 hours of annual continuing education addressing emergency preparedness, building safety, safe sleep, prevention of shaken baby syndrome, safe transportation, infectious disease prevention, food allergies, hazardous materials handling, and medication administration.

Substitute Adults in Family Child Care Homes

SB 150 establishes statewide requirements governing substitute adults in family child care homes:

• Licensee absences may not exceed 20% of monthly operating hours unless waived by CDSS.

• Families must receive written notice before planned absences or by the next business day in emergency situations.

• Absences must be reported to CDSS by the next business day, with written documentation submitted within seven calendar days.

Medication Administration - Licensed Facilities

Licensed child daycare facilities may now administer all medications, rather than only inhaled medications, provided written instructions from a health care provider include the medication name and administration directions.

Anaphylactic Policy - Licensed Facilities

Beginning January 1, 2028:

• Compliance with CDSS’s anaphylactic policy becomes mandatory for all licensed child daycare facilities.

• Facilities must notify families of the policy annually upon enrollment.

• CDSS must publish the statewide policy by September 1, 2027.

Mandated Reporter Training - Licensed Facilities

The previous exemption for individuals with limited English proficiency has been eliminated.

All licensed providers, applicants, administrators, and employees must complete mandated reporter training. Programs with multilingual staff should identify available training options in the languages spoken by their workforce.

Fraud and Program Integrity - CDSS Programs

Child care contractors must:

• Formally adopt best practices on fraud prevention and program integrity.

• Terminate eligibility when there is substantiated evidence of fraud or program integrity violations that invalidate certification.

CDSS may enter into agreements with county welfare departments to strengthen fraud investigation and enforcement across subsidized child care programs.

Funds Transfer Authority - CDSS Programs

CDSS is authorized to transfer funding across and within Alternative Payment Programs, Migrant Child Care, General Child Care (CCTR), Family Child Care Home Education Networks, and Special Needs programs when contractors have not made sufficient progress toward serving children.

Contractors with unspent slot expansion awards should be aware that CDSS may redirect those funds.

CDSS must report annually to the Legislature and the Legislative Analyst’s Office by October 1 regarding funding transfers.

Infrastructure and Disaster Relief - CDSS Programs

Beginning July 1, 2027:

• CDSS may reserve up to 15% of General Child Care slot expansion funding to support minor repairs, infrastructure upgrades, and readiness activities.

• A new disaster-related infrastructure grant program is established, subject to appropriation, for child care facilities impacted by state or federally declared disasters.

• $25,674,000 is appropriated from the Federal Trust Fund for disaster relief related to disasters occurring in 2023 and 2024 and is available for encumbrance through September 30, 2029.

EveryChild California Will Continue to Support Members

As these new laws take effect today, EveryChild California will continue to monitor implementation, provide timely guidance as state agencies issue additional direction, and advocate for sustainable investments that strengthen California’s early care and education system.

While this budget includes important gains, such as additional child care spaces, much remains missing, including progress towards a single rate and rate reform. EveryChild California remains committed to advocating for adequate ongoing funding, including future rates that reflect the true cost of delivering high-quality early learning programs.

Questions? Contact us at advocacy@everychildca.org.