Before implementing the local subsidy plan, the City and County of San Francisco, in consultation with the department, shall develop an individualized county child care subsidy plan for the city and county that includes the following four elements:

(a) An assessment to identify the city and county’s goal for its subsidized child care system. The assessment shall examine whether the current structure of subsidized child care funding adequately supports working families in the city and county and whether the city and county’s child care goals coincide with the state’s requirements for funding, eligibility, priority, and reimbursement. The assessment shall also identify barriers in the state’s child care subsidy system that inhibit the city and county from meeting its child care goals. In conducting the assessment, the city and county shall consider all of the following:

(1) The general demographics of families who are in need of child care, including employment, income, language, ethnic, and family composition.

(2) The current supply of available subsidized child care.

(3) The level of need for various types of subsidized child care services including, but not limited to, infant care, after-hours care, and care for children with exceptional needs.

(4) The city and county’s self-sufficiency income level.

(5) Income eligibility levels for subsidized child care.

(6) Family fees.

(7) The cost of providing child care.

(8) The regional market rates, as established by the department, for different types of child care.

(9) The standard reimbursement rate or state per diem for centers operating under contracts with the department.

(10) Trends in the county’s unemployment rate and housing affordability index.

(b) Development of a local policy to eliminate state-imposed regulatory barriers to the city and county’s achievement of its desired outcomes for subsidized child care.

(1) The local policy shall do all of the following:

(A) Prioritize lowest income families first.

(B) Follow the family fee schedule established pursuant to Section 8273 for those families that are income eligible, as defined by Section 8263.1.

(C) Meet local goals that are consistent with the state’s child care goals.

(D) Identify existing policies that would be affected by the city and county’s child care subsidy plan.

(E) (i) Authorize any agency that provides child care and development services in the city and county through a contract with the department to apply to the department to amend existing contracts in order to benefit from the local policy once it is adopted.

(ii) The department shall approve an application to amend an existing contract if the child care subsidy plan is approved pursuant to subdivision (b) of Section 8335.3, or modified pursuant to subdivision (c) of Section 8335.3.

(iii) The contract of a department contractor who does not elect to request an amendment to its contract remains operative and enforceable.

(2) (A) The city and county shall, by the end of the first fiscal year of operation under the approved child care subsidy plan, demonstrate an increase in the aggregate child days of enrollment in the county as compared to the enrollment in the final quarter of the 2004–05 fiscal year.

(B) The amount of the increase shall be at least equal to the aggregate child days of enrollment in the final quarter of the 2004–05 fiscal year for all contracts amended as provided in subparagraph (E) of paragraph (1), under which the contractor receives an increase in its reimbursement rate, times 2 percent.

(C) The amount of the increase shall also be proportional to the total contract maximum reimbursable amount to reflect the changes in the budget allocation for each fiscal year of the plan.

(3) The local policy may supersede state law concerning child care subsidy programs with regard only to the following factors:

(A)  Provide a family that qualifies for the second or third stage of child care services pursuant to Article 15.5 (commencing with Section 8350), for purposes of eligibility, fees, and reimbursements, the same or higher level of benefit as a family that qualifies for subsidized child care on another basis pursuant to the local policy, except as otherwise provided in Article 15.5 (commencing with Section 8350). Nothing in this section shall be interpreted to impact or reduce any element in the second or third stage of child care services pursuant to Article 15.5 (commencing with Section 8350) that provides a greater benefit to participating families than is provided for in the local policy.

(B) Fees including, but not limited to, family fees, sliding scale fees, and copayments for those families that are not income eligible, as defined by Section 8263.1.

(C) Reimbursement rates, including adjustment factors identified in Section 8265.5.

(D) The ratio of four-year-old children in state preschool programs pursuant to subdivision (b) of Section 8236.

(E) Methods of maximizing the efficient use of subsidy funds, including, but not limited to, multiyear contracting with the department for center-based child care, and interagency agreements that allow for flexible and temporary transfer of funds among agencies.

(F) Families with children enrolled in part-day California state preschool program services, pursuant to Article 7 (commencing with Section 8235), may be eligible for up to two 180-day periods within a 24-month period without the family being certified as a new enrollment each year.

(c) Recognition that all funding sources utilized by direct service contractors that provide child care and development services in the city and county are eligible to be included in the child care subsidy plan of the city and county.

(d) Establishment of measurable outcomes to evaluate the success of the plan to achieve the city and county’s child care goals and to overcome any barriers identified in the state’s child care subsidy system. The State Department of Social Services shall have an opportunity to review and comment on the proposed measurable outcomes before they are submitted to the local child care and development planning council for approval pursuant to Section 8335.3.

(e) Nothing in this section shall be construed to permit the city and county to change the regional market rate survey results for the city and county.

(f) Nothing in this section shall allow the city and county to adopt as part of its plan an increase to the regional market reimbursement rate beyond the level provided in the Budget Act.

(g) The plan may include stage one child care services in addition to alternative payment and direct service child care programs. If the plan includes CalWORKs child care, the plan administrator shall consult with their county welfare department to identify opportunities for alignment, ensuring families experience no break in their child care services due to a transition between the three stages of child care services and policies implemented in the plan.

(Amended by Stats. 2018, Ch. 7, Sec. 14. (AB 108) Effective March 13, 2018.)