S2908 —

S2908 SBAFISCAL StatementESTIMATE 11/9/20 SENATE BUDGET AND APPROPRIATIONS COMMITTEE   STATEMENTLEGISLATIVE TOFISCAL  ESTIMATE SENATE, No.

 2908 STATE OF NEW JERSEY 219th LEGISLATURE   DATED:

 NOVEMBERNOVEMBER 9,13, 2020         SUMMARY The  SenateSynopsis: Budget and Appropriations Committee reports favorably Senate Bill No.

2908.Increases child care provider payments and revises hourly limits on child care for school-aged children under subsidized child care assistance program during 2020-2021 school year.

     Type This bill revises the subsidized child care assistance program reimbursement rate for participating licensed child care providers that enroll school-aged children during the 2020-2021 school year, and establishes limits on the number of hoursImpact: of child care services provided to school-aged children enrolled on a “part-time” and “full-time” basis.  Under the bill, providers that enroll school-aged children on a part-time basis would receive $28.90 per day for providing a maximum of six hours of care.  Child care providers enrolling school-aged children on a full-time basis would be reimbursed $48.80 per day for providing between 6.25 and ten hours of care.  In addition, this bill specifies that nothing in the bill should be construed as preventing the Division of Family Development in the Department of Human Services, which administers the subsidized child care assistance program, from paying providers a higher hourly subsidy rate for school-aged children.  The bill’s requirements become effective upon enactment and expire on June 30, 2021.

     One-Year TheIncrease billin appropriatesState suchExpenditures, amountsGeneral asFund. necessary to implement these reimbursement changes to the subsidy program, but notes that the primary source of funding is to be federal funds allocated pursuant to the “Child Care and Development Block Grant of 1990,” Pub.L.

101-508Agencies (42Affected: U.S.C.

s.9857Department et seq.), to the extent allowed under federal law.  Any remaining funding needed to implement the bill’s provisions is to be appropriated from the General Fund.  Finally, the bill stipulates that the Commissioner of Human ServicesServices. is to apply for any State plan amendments or waivers required to ensure continued federal financial participation for the State’s subsidized child care assistance program.

       Under  currentOffice regulationof (N.J.A.C.Legislative Services Estimate Fiscal Impact FY 2021  FY 2022   State Expenditure Increase Indeterminate $0         ·         The Office of Legislative Services (OLS) lacks the informational basis to quantify the bill’s one-year State expenditure increase.  The added costs in FY 2021 would accrue because of two aspects of the bill:  a) the temporary higher child care subsidy rates the Department of Human Services (DHS) would pay to child care providers for eligible school-aged children who require care during the school day due to a hybrid or remote school schedule, and b) the higher demand for subsidized services prompted by the temporary rise in the number of hours for which subsidized child care for school-aged children would be available.

10:15-3.3·         The program expansion would be in effect from the bill’s date of enactment through June 30, 2021 and N.J.A.C.any associated costs would first be charged to federal Child Care and Development Block Grant (CCDBG) funds with the State General Fund responsible for any residual amount.    BILL DESCRIPTION         This bill increases the subsidized child care assistance program reimbursement rates for licensed child care providers that enroll school-aged children and the limits on the daily number of subsidized child care hours that may be provided to school-aged children.  The changes become effective upon enactment and expire on June 30, 2021.        Under the bill, providers that enroll school-aged children on a part-time basis would receive a daily subsidy rate of $28.90 per eligible child, rather than the current $14.65, for up to six, rather than three, hours of care.  Providers would be paid a daily subsidy rate of $48.80 per eligible child, rather than the current $29.30, for school-aged children who are enrolled on a full-time basis, which would range from 6.25 hours to ten hours of care per day.  Under current law, only during the summer months, as well as recognized holidays and vacations during the school year, are providers paid for a full day of care for school-aged children.            The bill first charges the cost of the program expansion to available federal CCDBG funds, to the extent permitted under federal law.

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      By Toway comply with federal and State public health guidelines during the novel coronavirus disease 2019 (COVID-19) pandemic, many New Jersey school districts plan to have some combination of hybridreference, and remote instruction during the 2020-2021 school year, whilea otherfamily districtsof planthree tocan provideearn onlyup remoteto instruction. $43,300 Inand general,qualify thefor number of hours that a child willcare besubsidy.  physicallySubsidies presentare inavailable schoolfor willpart-time likely be limited to three or fourfull-time hourschild percare dayservices for twochildren orunder threethe daysage perof week. 13 Inyears lightand offor thesespecial circumstances,needs manychildren workingand parentschildren willunder needprotective moresupervision thanby the currently-subsidizedDivision three hours of careChild perProtection dayand forPermanency their school-aged children.  The changes in the programDepartment madeof underChildren thisand billFamilies forwho theare 2020-2021under schoolage year19.  reflect  the  needsFISCAL ofANALYSIS both  parentsEXECUTIVE andBRANCH the  child      careNone providersreceived. that participate in the State’s subsidized child care assistance program.

  FISCALOFFICE IMPACT:OF LEGISLATIVE SERVICES         The OLS lacks the informational basis to quantify the bill’s one-year State expenditure increase.  The added costs in FY 2021 would accrue because of two aspects of the bill:  a) the temporary higher child care subsidy rates the DHS would pay to child care providers for eligible school-aged children who require care during the school day due to a hybrid or remote school schedule, and b) the higher demand for subsidized services prompted by the temporary rise in the number of hours for which subsidized child care for school-aged children would be available.  The changes would apply to child care services furnished from the bill’s date of enactment through June 30, 2021.        The OLS is unable to quantify the FY 2021 expenditure increase because several key variables are unknown:  the start date of the temporary program expansion, which would depend on the bill’s date of enactment;

     the Thenumber Office of Legislativeschool-aged Serviceschildren lacksfor thewhom informationalhigher basispart-time to quantify the State expenditure increase that would result from temporarily increasing child care subsidy rates paid to child care providers for eligible school-aged children.  The higher rates would only apply to child care services provided from the bill’s unknown date of enactment through June 30, 2021 and would first be chargedpaid; to any available federal Child Care and Development Block Grant funds with the State General Fund responsible for any residual amount.  

and the number of school-aged children for whom full-time rates would be paid when under current law school-aged children only qualify for part-time subsidy rates outside of the summer months, school vacations, and school holidays.           According to the DHS’ response to an OLS FY 2021 budget question, in September, there were 21,000 school-aged children enrolled in the subsidized child care assistance program who were eligible for care during the school day.  However, the number of school-aged children who will receive subsidized child care during the school day at any point during the 2020-2021 school year is likely to fluctuate appreciably as school schedules and family incomes change in response to the spread of coronavirus disease 2019 (COVID).        Estimates of the possible range of State costs under this bill are highly sensitive to assumptions about participation rates among subsidy-eligible school-aged children.  For purposes of illustrating the potential cost impact of the temporary program expansion, the OLS presents several scenarios.

      Table 1 indicates that the cost of the bill, were it in effect from January 1, 2021 through June 30, 2021, assuming a stable enrollment of 21,000 children, would be an extra $35.9 million if all children remained enrolled part-time.  If all children switched to full-time enrollment, in turn, the additional cost would be $86.1 million.  If half the children continued to be enrolled part-time and the other half switched to full-time, the additional cost would total $61.0 million.

  Table 1:  Cost Impact of Bill Stable Enrollment of 21,000 Children, Effective January 2021 through June Scenario Total Cost Additional Cost Baseline Cost, Current Program Parameters $36,918,000 Cost of Bill, Higher Part-Time Rate Only $72,828,000 $35,910,000 Cost of Bill, All Children Switched to Full-Time $122,976,000 $86,058,000 Cost of Bill, 50% of Children Higher Part-Time Rate, 50% Switched to Full-Time $97,902,000 $60,984,000         Table 2 shows the cost using the same assumptions as in Table 1, except that the OLS assumes that the increased hours of subsidized day care for school-aged children would grow enrollment by 25 percent.  The program expansion would cost $54.1 million if the bill were in effect from January 1, 2021 through June 30, 2021 and if all children were enrolled part-time.  If all children were enrolled full-time, the additional cost would be $116.8 million.  If half the children were enrolled part-time and the other half full-time, the additional cost would equal $85.5 million.

  Table 2:  Cost Impact of Bill Enrollment of 21,000 Children plus 25 Percent Increase Because of Bill, Effective January 2021 through June 2021 Scenario Total Cost Additional Cost Baseline Cost, Current Program Parameters $36,918,000 Cost of Bill, Higher Part-Time Rate Only $91,035,000 $54,117,000 Cost of Bill, All Children Full-Time Day Care $153,720,000 $116,802,000 Cost of Bill, 50% of Children Higher Part-Time Rate, 50% Full-Time Day Care $122,377,500 $85,459,500         In assuming that the bill would take effect on January 1, 2021, the OLS avoids any interaction between this bill and the State’s School-Age Tuition Assistance Program, which provides subsidized child care during the school day for children who are attending school remotely, either on a full- or part-time basis.  This child care subsidy, which is funded from New Jersey’s allocation from the federal Coronavirus Relief Fund, is available to families with an annual gross household income of $150,000 or less with federal funding for the program ceasing on December 30, 2020.        The bill first charges the cost of the temporary program expansion to available federal CCDBG funds, to the extent permitted under federal law.  The State General Fund is to pay for the residual cost.  Therefore, it is unclear to what extent State funds would be required to supplement federal funding for the temporary program expansion.

 According to the federal Administration for Children and Families, New Jersey received $170.8 million in CCDBG funding in 2020.  This allocation does not include the additional $63.1 million in federal COVID-19 assistance for child care services, allocated pursuant to the federal Coronavirus Aid, Relief, and Economic Security Act.  Given that the CCDBG is a block grant program, the program enhancements established under the bill would not increase the grant amount the State can expect to receive from the federal government.  However, as of the date of this analysis, the DHS has approximately $21 million in uncommitted federal block grant balances from FY 2020, perhaps because many parents had scaled back their use of subsidized child care services during the COVID-19 pandemic.  These otherwise uncommitted federal funds could potentially be utilized to support the temporary program expansion under the bill.      Section:

Human Services Analyst:

Anne Cappabianca Assistant Fiscal Analyst Approved:

Thomas Koenig Assistant Legislative Budget and Finance Officer     This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

  This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).