Navigating the End of Hold Harmless: Key Takeaways for ECE Contractors

In May, EveryChild California—alongside our partners at Monarch Link—hosted a vital Community Connections webinar to explore what the ending of Hold Harmless means for our field. With July 1, 2025, fast approaching, providers and contractors across the state are preparing for a new fiscal reality—one that brings both uncertainty and opportunity.

We are incredibly grateful to all who joined the conversation, asked questions, and shared their insights. Your voices are crucial in helping shape how we respond as a community and how we advocate for clarity and fairness in upcoming policy decisions.

Here are five key takeaways from the discussion:

1. Cost of Care Plus Rate Continues—But Details Remain Unclear

Funding for the Cost of Care Plus rate has been extended beyond the Hold Harmless period. However, we still lack crucial details on how those funds will be distributed. Stay alert—this is a critical point that we expect to be clarified soon.

2. Know the 3 Limits of Reimbursement Starting July 1, 2025

After Hold Harmless ends, contractors must be aware of the three potential reimbursement limits:

• • Maximum Reimbursable Amount (MRA)
  • Net Reimbursable Program Costs
  • Service Earnings
    Understanding how these apply to your program is essential for financial planning.

3. Get Familiar with Projecting Your Earnings

With the alternative reimbursement methodology still pending, it's more important than ever to understand the building blocks of contract earnings projections. Accurate forecasting will be critical as programs navigate this transition.

4. Legislation Is Moving on Abandonment of Care

There is active legislative attention on the challenges posed by abandonment of care. As this evolves, we will be calling on our members to take action—watch for our “Call to Action” emails to help move the conversation forward.

5. Clarify Your Excused Absence Policies Now

Having a clear and consistent excused absence policy in your family handbook can offer stability amid this shift. It’s also a helpful tool while we await further updates on state guidance related to care abandonment.

As we move closer to the end of Hold Harmless, our goal remains the same: to ensure every contractor is equipped with the tools, information, and support they need to succeed. We will continue to offer guidance, trainings, and advocacy opportunities in the weeks and months ahead.

Thank you for your continued partnership and for standing with us in support of California’s children, families, and early learning workforce.