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AB 120

Provides for the review of certain regulations by the Legislature. (BDR 18-882)

2025 Regular Session Introduced by Heidi Kasama

AB 120 shifts California childcare to a unified per-child reimbursement, ending regional market-rate surveys and extending cost-of-care plus payments through June 2026.

(Pursuant to Joint Standing Rule No. 14.3.1, no further action allowed.)
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Bill Summary · AB 120

AB 120 — Early childhood education and childcare (Budget Act of 2025)

Status: Re‑referred to Senate Committee on Budget & Fiscal Review (07/02/2025)
Introduced: 01/08/2025 (Committee on Budget, as amended)

Purpose / intent

AB 120 is a Budget Act trailer bill that makes targeted statutory changes to California’s early childhood education and childcare system (Child Care and Development Services Act). Its goals are to (1) adjust eligibility and payment rules to improve continuity of care for families who add a child while already enrolled, (2) extend and modify temporary supplemental payments to providers, (3) change certain reporting and reimbursement rules, and (4) transition rate‑setting away from frequent regional market rate surveys toward an alternative methodology and a more unified reimbursement structure.

Key provisions and changes

  • Eligibility for added child: If a family already receiving subsidized childcare adds a child and requests services during the family’s current eligibility period, the family’s eligibility period is extended as necessary so the added child receives at least 12 months of eligibility before a redetermination (aligning practice with the federal 12‑month minimum).
  • Reporting: Removes the requirement that the Department of Social Services’ annual statewide summary identify the number of preschool‑age children receiving part‑day preschool and wraparound childcare services.
  • Daily‑rate reimbursements: Lowers the documented need threshold that allows daily‑rate reimbursement from 6 hours to 5 hours per occurrence (applies to documented unscheduled needs or temporary increases up to specified monthly limits).
  • Cost‑of‑care plus payments (supplemental monthly payments): Extends payment through June 30, 2026; appropriates additional funds from the Budget Act of 2025 to provide a once‑per‑month cost‑of‑care plus payment per child enrolled in subsidized childcare. For July 1, 2025–June 30, 2026, the monthly payment equals the existing rate increased by a percentage calculated by the Department of Finance under a specified formula.
  • Cost‑of‑living adjustment (COLA) suspension: Suspends the annual COLA for childcare and development programs for the 2025–26 fiscal year (adding to earlier suspensions for 2012–13, 2013–14, 2014–15, and 2020–21).
  • Rate‑setting and reporting timeline: Extends mandatory quarterly implementation updates on the alternative reimbursement methodology to the Legislature and LAO through July 1, 2027, and requires additional specified information beginning with the October 1, 2025 update. Commencing July 1, 2026, certain program rates are to increase by the COLA granted by the Legislature.
  • Policy intent: Expresses legislative intent to stop using the regional market rate survey and to use an alternative methodology (by statute) to inform future reimbursement rates; to move toward a unified per‑child reimbursement structure with common rate elements and criteria.
  • State preschool contractor reimbursements: For July 1, 2025–June 30, 2026, if programs remain open and serve certified children, contract reimbursement will be based on the lesser of the contract’s maximum reimbursable amount and the net reimbursable program costs (text in summary truncated in source).

Who is affected

  • Families receiving subsidized childcare (greater continuity for an added child).
  • Licensed childcare providers and family child care homes (reimbursement rule change; continued temporary supplemental payments).
  • State agencies: Department of Social Services (CDSS) and Department of Education (CDE) (implementation, reporting, and contracting).
  • Local contracting agencies that administer alternative payment programs.

Fiscal/procedural notes

  • The bill makes an appropriation via the Budget Act of 2025 to fund the extended cost‑of‑care plus payments; the payment formula for 7/1/25–6/30/26 is set by Department of Finance calculation.
  • Introduced 1/8/2025; passed Assembly (3/20/2025, Ayes 53 Noes 17); transmitted to Senate and has proceeded through Senate committees with amendments and multiple floor actions; most recently re‑referred to the Senate Committee on Budget & Fiscal Review (7/2/2025).

Additional observations

  • Several provisions change transitional/temporary payment and reporting rules tied to the state’s move away from market rate surveys; some language in source documents was truncated — recipients should consult the bill text as enrolled or amended for complete contract reimbursement detail and exact formulas referenced for the Department of Finance calculation.

Compiled from official sources — confirm details with the bill’s official record.

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