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HomeMy WebLinkAboutMINUTES - 05101994 - 1.53 TO: BOARD OF SUPERVISORS COntf a ,�,.. ? FROM: CHILD CARE TASK FORCE \ Costa . x�;�- - :::.-• � -= County YJ: •'C,P� DATE: May 5, 1994 SUBJECT: AUTHORIZATION TO SEND A LETTER TO SENATOR NICHOLAS PETRIS REGARDING ALLOCATION OF CARRYOVER FEDERAL CHILD CARE BLOCK GRANT FUNDS SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: AUTHORIZE the Chair, Board of Supervisors, to send a letter to Senator Nicholas Petris' in his capacity as Chairman of Senate Budget and Fiscal Review Subcommittee # 1 on Education, urging that some $85 million in unallocated federal child care block grant funds all be used to augment existing child care programs, rather than having $40 million of it allocated in such a way as to free up State funds which would be diverted to other State Programs, as has been recommended by the Legislative Analyst. BACKGROUND: Attached are the pages from the Legislative Analyst ' s Analysis of the Governor' s 1994-95 State Budget pertaining to a substantial carryover of federal child care block grant funds, estimated at that time at between $80 and $93 million. The Child Care Task Force was advised at its meeting on April 27, 1994 that the figure is now apparently $85 million. The Legislative Analyst is recommending that $20 million of this carryover be used to replace $20 million in Proposition 98 funds, thereby allowing those freed- up State funds to be spent on other programs . The Legislative Analyst is also recommending that $20 million be allocated to the State Department of Education' s budget to increase child care services and that $20 million be set aside to be used in the 1995- 96 fiscal year to continue funding for the child care slots added with the other $20 million, in the 1994-95 fiscal year. The final $20 million might be allocated to the State Department of Social Services and a corresponding amount of State funds removed for use elsewhere in the State Budget. CONTINUED ON ATTACHMENT: YES SIGNATURE: :iRECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOAR(((D COMMITTEE 7APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON May 10, _19- 94- APPROVED AS RECOMMENDED OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE UNANIMOUS(ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. , / ATTESTED `- Contact: PHIL BATCHELOR,C RK OF THE BOARD OF cc: See Page 2 SUPERVISORS AND COUNTY ADMINISTRATOR BY DEPUTY -2- The Child Care Task Force opposes the recommendation to allocate $20 million of these funds to replace Proposition 98 funds and the recommendation to use $20 million of the funds to replace $20 million of State funds in the State Department of Social Services . The Task Force believes that all Federal Child Care Block Grant funds should be used to augment existing child care programs, not to supplant existing State funding for those programs . The Child Care Task Force requests that the Board of Supervisors go on record as agreeing with the position of the Child Care Task Force and authorize the Chair of the Board of Supervisors to advise Senator Petris in writing of this position. The Subcommittee Senator Petris chairs will be making the decision regarding how to allocate these funds within a few days and it is, therefore, critical that the Board' s letter reach Senator Petris as soon as possible. cc: County Administrator Senator Nicholas Petris (Via CAO) Child Care Task Force (Via CAO) Social Services Director Community Services Director i i E- 56 K-12 Education E•3: f ; 1 I � 5 r CHILD DEVELOPMENT The 1994-95 Governor's Budget proposes $487.6 million from the General Fund for child development programs. This represents an y increase of $27.4 million from the current-year level of funding for the program. The increase is the result of three changes: (1) a $25 million g. augmentation in lieu of an increase based on a statutory growth for- mula , (2) $2.7 million to provide ongoing support for certain activities (in the center and alternative payment programs) that were funded I from carryover monies in 1993-94, and (3) the reduction of$315,000 in one-time expenditures that were included in the 1993-94 budget. (Table 2 in the budget document, which shows current and proposed mega-item program expenditures, contains incorrect figures for child 1 development programs for both 1993-94 and 1994-95.) a The budget also displays an additional $7.5 million in� gexpenditures from state carryover funds,which are unencumbered funds from earlier jI years. Under current law,child development funds may be carried over i� for two years. i- Y No Plan for State Carryover Funds We recommend the Legislature (1) reappropriate $6.5 million in j available state carryover funds to the categorical mega-item and (2) reduce the General Fund appropriation to the mega-item by a like !` amount in order to make additional funds available for the Legisla- E ! ture's priorities. Although the proposed 1994-95 budget for child development F rry assumes$7.5 million in state carryover funds,the SDE has identified the need for about$1 million of this amount. There is no spending plan for IN the remaining funds at the current time. In the past two years, the Legislature has used carryover funds to meet a variety of budgetary needs. In the 1992 Budget Act, the Legisla- ture rea ro riated carryover child development funds to the mega- item. e aitem. This made $22 million in Proposition 98 funds available for he } Legislature's priorities. In the 1993 Budget Act, carryover funds were `- used to address program needs created by the federal child care block grant funds.The 1994-95 proposed budget satisfies those program needs through augmentations in the mega-item appropriation. j< I' I' Child Development E- 57 In 1994-95, only $1 million in carryover funds is needed for child development program purposes. Because the remaining$6.5 million in carryover funds will be available, we recommend the Legislature reappropriate $6.5 million in carryover funds to the mega-item and reduce Proposition 98 support for the mega-item by $6.5 million. We further recommend the freed-up Proposition 98 funds be added to our ►m the proposed categorical program block grant (discussed elsewhere in this nts an section). for the :pillion Significant Carryover of Federal Funds th for- tivities We recommend the SDE provide to the budget subcommittees by ' 5 ended March 15, 1994, specific information that will help the Legislature f ,000 in address the issues raised by the large amount of federal block grant ;I )udget. carryover funds that will be available in 1994-95. - �pcluld In addition to state child development funds, the budget proposes federal funds of $96.7 million, an increase of $10.2 million from esti- mated current-year expenditures. The budget proposal reflects the level I, ditures of federal block grant funding that the SDE anticipates will be received earlier during 1994-95. .d over The budget does not reflect,however,a substantial amount of federal block grant carryover funds that will be available in 1994-95. We 'I reviewed the department's block grant expenditure records for the past three years. From this review, we have concluded that roughly $80 million to $93 million in carryover funds will be available for lion in expenditure in the budget year. With the addition of the $96.7 million and (2) in federal block grant funds already scheduled in the budget, at least a like $176.7 million in federal funds will be available in 1994-95. :egisla- There are two factors that account for the uncertainty over the amount of carryover funding that will be available next year. First, the opment estimate is based on the existing level of program activity in the current fied the year. Actual program expenditures may be higher or lower than the plan for scheduled amount, which would affect the amount of carryover funds available in 1994-95. For instance, the SDE may spend up to $5 million unds to in the current year to repair child care facilities that were damaged in Le sla- the Los Angeles earthquake. '- Aga" Second, the SDE is not sure whether federal law permits funds that for the were originally budgeted during 1991-92 to be spent for services in I 3s were 1993-94.While the federal government has given its verbal approval, the re block department is waiting for written confirmation. If approval is not m needs forthcoming, about $13 million will have to be returned to the federalot government. I E - 58 K-12 Education Causes for Carryover. The department advises that a number of different problems resulted in the large amount of carryover federal I funds. According to the SDE, the $13 million is at risk because the !` department did not track expenditure of the federal funds to ensure that all federal funds were used within the allowable time frames. For federal law required that funds be obligated within the 1991-92 grant, eq a one-year period that spanned two state fiscal years. Thus, any federal funds not obligated within the first state fiscal year could be obligated E within the second year.The department did not track first-year expendi- tures closely enough to ensure that all available amounts were commit- ' = ted in the second state fiscal year. In addition,$38 million in federal block grant funds were transferred to the Department of Social Services (DSS) in 1991-92. Only$10 million of these funds have been spent. The funds were transferred to the DSS to a for child care expenses of adults collecting Aid to Families with pay Pe g Dependent Children (AFDC) who worked or were participating in !I M education or training. After the program was underway, however, the federal government advised the DSS that state health and safety stan- dards for child care providers are not sufficient to meet federal block - grant requirements. As a result, it appears the block grant funds may not be used to support the DSS program. 6 ii I` Outstanding Issues. There are still significant questions that remain ; f g � i= concerning the DSS use of the federal block grant funds: • Is the state liable for any DSS costs that have been supported with block grant funds?The state may be required to reimburse the federal block grant program for the $10 million the DSS has already spent. Have the federal administrative cost guidelines been followed by u,j1 i the DSS?The SDE agreement with the DSS permitted the DSS to is use 11 percent of the$38 million (or$4.2 million) for administra- tive costs. The SDE is concerned that a significant part of the ! $10 million in DSS claims may be administrative costs. If so, much of the $28 million in unspent DSS money would be avail- able for child care grants only—not for administrative costs—due to caps on the percent of federal block grant funds that may be spent for administration. I!' • How will the DSS and the SDE resolve the issue of health and safety requirements? According to the SDE, both agencies are working with the federal government to resolve barriers to using the block grant funds for DSS programs. i .z ' Child Development E- 59 .mber of ` At the time this analysis was written, the department was reviewing r federal ; ause the its past block grant expenditures and procedures to (1) determine more precisely how much federal funding is available and (2) create an o ensure mes. For internal process to ensure that all federal funds are spent. The SDE also d within f:' was developing a multi-year plan for spending the carryover federal y federal block grant funds. )bligated r' To provide the information the Legislature needs to develop a plan expendi- for the use of federal block grant funds, we recommend the SDE commit- ' provide the budget subcommittees by March 15, 1994, the following information on the federal block grant funds: (1) an estimate of the ;nsferred amount of federal carryover funds,by program component, that will be 0 million available in the budget year and the department's proposal for the use the DSS of the funds, (2) the proposed process for ensuring that all future block flies with grant funds are spent in a timely manner, (3) an update on the issues = . pating in �< :; raised by the transfer of funds to the DSS,(4) the department's proposal ? j lever, the for resolving the health and safety issues,and (5) the department's plan _ '} fety stan- for the expenditure of federal block grant funds for state administration. !ral block Inds may How Should the Legislature Use The Federal Carryover Funds? at remain We recommend that the Legislature use the carryover federal block grant funds to (1) supplant $20 million in Proposition 98 funds in supported 1994-95 and (2) increase the availability of child care for low-income reimburse families. e DSS has The block grant is divided into two parts: 25 percent may be used to t support preschool, center-based programs,and latchkey programs; and Vowed by the remaining 75 percent must be used for voucher-based care. Federal the DSS to law prohibits using block grant funds to supplant state expenditures, Iministra- and there is a maintenance-of-effort requirement based on state spend- )art of the ing in 1990-91. The state could reduce its own spending to the-1990-91 )sts. If so, level--or about $50 million less than proposed spending in I be avail- 1994-95—and still meet this requirement. .osts—due The Legislature has a number of options for how the federal block j ►at maybe grant carryover funds may be used. We believe a combination of these options is the best solution. The apparent amount of carryover is so - { health and large that it would take years for the SDE to spend these funds through ;encies are its contractors. In addition,General Fund relief—for both education and -rs to using the overall budget—is desirable in this very tight fiscal time. For these j reasons, we recommend that the Legislature: I I • Allocate available funds from the 25 percent portion of the block ; grant carryover funds to replace General Fund preschool or = _ j 10 r w E - 60 K-12 Education d center program support, for a savings of about $20 million i j G�•; - Proposition 98 funds. !� (� : • Increase the SDE's child care budget for 1994-95 by $20 million ;,; ;j l from 75 percent carryover funds. CAS I 7 gV The net effect of these actions is to (1)save$20 million in Proposition ' 98 funds and (2) increase services by $20 million. At least $20 million ;, ; Tl of the remaining federal funds should be carried over to 1995-96.to Lean I �• support the child care slots created by the addition of $20 million in .; or 2E federal funds in 1994-95. This would leave rou hl $20 million ;�.,,. t ede Y to isc g .. d $30 million of the federal carryover funds for which no expenditure plan has been identified. . CLA! One option the Legislature might consider for the remaining funds .;;: } is a transfer to the DSS. This could work only if the problems with the .- 4,n C` !i '� = federal health and safety standards can be resolved. Specifically, the achie Legislature could transfer up to $20 million of carryover funds to the the ` ; DSS, thereby eliminating the need for $10 million in General Fund (CAF _; how :i'� support budgeted for 1994-95. The Legislature could then use these i;. General Fund monies to increase support for high-priority programs scien E+ within the DSS or redirect the funds to other priority uses elsewhere in twelf '�'� ;I = the budget. .I j Tf stude. •,,; i _ of th, - able; stud( and t It _ were :li i Ej Cl state testir tEE: fE,. • �E E'-