Legislative Update: Governor Newsom Signs Budget and SB 120

This budget cycle was tough, but we fought hard and secured critical wins.

It’s official: on Friday, June 27, 2025, at around 7:00 pm, Governor Newsom signed the 2025–26 California state budget and the Early Childhood Education Bill package. Facing a $12 billion deficit, our team knew we had to be strategic and persistent to protect early learning and care.

Our members showed up powerfully and gained legislator attention by advocating in key committees, participating in our lobby day, and educating legislators and staff about the vital role early learning plays in communities across the state.

Our Executive Director, Nina Buthee, led exceptional outreach efforts, working directly with legislators to secure meaningful victories through the trailer bill process. This complex approach to passing legislation required intensive communication, ensuring clarity across impacted stakeholders, and writing well-crafted legal language.

Thanks to your collective efforts, we were able to preserve and advance support for the field, proving again the strength of our advocacy community.

We accomplished some significant policy victories:

• CSPP and CCTR Contract Earnings:
  • Starting July 1, 2025, and through June 30, 2026, if the program is open and operating in accordance with its approved program calendar, and remains open and providing services to certified children throughout the program year, the contract reimbursement will be based on the lesser of:
    • The maximum reimbursable amount is stated in the contract.
    • Net reimbursable program costs.
  • Starting July 1, 2026, contract reimbursement to be based on the lesser of:
    • The maximum reimbursable amount stated in the contract.
    • The net reimbursable program costs.
    • The product of the adjusted child days of enrollment for certified children times the contract rate set forth in the above-described provisions.
• APP Reimbursements:
  • Starting July 1, 2025, through June 30, 2026, requires Alternative Payment Programs to reimburse providers based on families’ maximum authorized hours of care.
    • For variable schedule families, providers shall be reimbursed based on the maximum authorized hours of care.
    • For license-exempt providers that provide part-time services, providers shall be reimbursed based on the maximum authorized hours of care.
• Cost of Care Plus Payment:
  • Extends the cost of care plus monthly payment, through June 30, 2026 for CDE and CDSS programs. From July 1, 2025, to June 30, 2026, the cost plus payment will be equal to the existing cost of care rate, increased by a percentage calculated by the Department of Finance.
• Time Extension for the Alternate Methodology Implementation:
  • Extends the time frame for the Alternate Rate Methodology from January 1, 2026, to January 1, 2027.
• Reduction of Admin on Cost of Care Payments for APPs and FCCHENs:
  • For payments provided after June 30, 2025, the 10% administrative fee for processing monthly rates shall only apply to the monthly rate amounts; the 5% and other supportive funding will end on June 30th.

Take a moment to reflect on being part of impactful change-making.

This budget season began with uncertainty, and, at times, things looked quite bleak. But the ultimate outcome, with the signed budget and SB 120, is a powerful testament to the strength of advocacy. Your advocacy. The wins we secured were not accidental; they were the direct result of our collective effort, persistence, and voice. In a challenging political climate, we know more battles lie ahead. But for now, let’s take a moment to celebrate how we showed up, stood together, and made a real impact. Congratulations!

Warmly,

Alicia Hatfield
Government Relations Coordinator

Stay informed on the latest budget updates and calls to action at:
www.everychildca.org/legislative-resources

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