California child care union wins raises in bargaining, reforms and waivers in state budget

After months of negotiations and a number of vigils, marches and rallies to spur public support, California’s unionized child care providers have reached a new labor deal with the state.

The new tentative contract agreement addresses provider demands for increased rates and guaranteed funding for health care and retirement funds.

“This is a welcome relief, because it relieves some stress,” said Charlotte Neal, who runs a 24-hour child care business out of her home in South Natomas. “It means providers can keep their doors open.”

The deal sets aside nearly $600 million for pay raises, in the form of increased subsidy rates, over the next two years. It earmarks $80 million each year for retirement, $100 million annually for health care and additional funds for training and continuing education.

Providers also received a two-year extension on a policy that allowed them to be paid based on enrollment rather than attendance – a policy that provides a financial cushion in case of unexpected absences.

The union Child Care Providers United first announced the agreement late last Friday, June 30 – just hours before the previous contract was set to expire. Members will vote to ratify the contract within the next few weeks.

Still, CCPU, which represents the more than 40,000 child care workers in California, had hoped for more.

“It’s not all of what we wanted,” Neal said. “But this is a great start.”

Providers say they’re desperate for funds

Neal primarily cares for children whose families receive state assistance. Since parents work odd hours, her home becomes a “revolving door” of children who are dropped off and picked up at all hours of the day and night. Some of them even stay overnight.

Neal offers pick-up and drop-off services for parents who can’t bring their children to her home. She provides breakfast, lunch, afternoon snack, dinner and also an evening snack for the children.

But all those expenses add up, and the money she makes from state subsidies usually doesn’t cover everything. Neal often finds herself having to prioritize her monthly expenses, such as mortgage, food, gasoline, utilities and medical bills, which can total upwards of $10,000.

“It’s a juggling act month to month to month, and it’s very stressful,” Neal said. “I always fall short – every month.”

Neal employs two assistants and an on-call aide to be able to stay open at all hours – positions that are increasingly hard to fill since they make less than minimum wage (Neal doesn’t know how she’d stay afloat if she had to pay $15.50 an hour.) Still, her assistants out-earn her.

“I’m so in debt,” Neal said. She’s behind on her mortgage payments, she said, and she’s deferred her utility bills due to the state’s low subsidy rates.

State reimbursement rates don’t reflect ‘true cost’ of care

Providers have for years advocated for “rate reform,” or a change in how the state calculates the amount it pays for subsidized child care. The union has argued that the state’s current method fails to accurately represent the true cost of providing care.

California has historically used a market rate approach to set reimbursement rates for subsidized child care. To calculate the subsidy rate, the state surveys child care providers and calculates an amount based on what providers charge families.

However, providers tend to set their tuition rates at prices that families in their communities can afford, which is less than the true operating cost of their business. Essentially, child care workers are subsidizing parents by suppressing their own earnings.

“Identifying the true cost of providing quality child care is critical to addressing the underfunding of the system and moving to reimbursement rates that are informed by the cost of care,” reads the California Cost of Quality Study conducted by Prenatal to Five Fiscal Strategies, a consulting group that advocates for child care reform.

A single rate also does not adequately account for geographical differences in cost of living, advocates say.

Newsom, legislators grant budget asks

In addition to contract bargaining, child care providers called on Gov. Gavin Newsom to set aside money in the 2023-24 budget for rate increases and an extension to a COVID-era policy that waived the monthly fees – or co-payments – that families previously had to chip in.

The finalized budget requires the state to develop a new method for setting child care reimbursement rates based on recommendations from the union’s joint labor management committee and a working group that was established to study the cost of providing quality child care.

It also extends the fee waiver through Sept. 30 of this year. Starting Oct. 1, families who earn less than 75% of the state’s median income will no longer pay fees for subsidized child care, and those who exceed the 75% threshold will pay fees capped at 1% of their monthly income.

Lawmakers also set aside a total of $2.9 billion over two years to continue funding subsidized child care and state preschool slots for low-income families.

Providers plan to keep pushing for more

With the tentative agreement on the table, Neal has started calling up fellow providers and asking them to vote for the contract. She hopes they’ll see the deal as she does – a step in the right direction, but not a stopping point.

“We’ve got to keep fighting, and we’ve got to keep pushing,” she said. “We are not babysitters – we are educators.”

Neal said the new contract will keep her from having to accumulate credit card debt. Instead, she’ll be able to start paying off the debts she already has, such as delayed mortgage payments, overdue utility bills and deferred maintenance – both for her house and her own physical health.

“I just feel a little lighter,” Neal said. “I feel a lot less stressed.”