California budget revision proposes $60M cut to childcare cost of living adjustment

The California Senate Budget and Fiscal Review Subcommittee No. 3 on Health and Human Services convened on May 19, 2025, to discuss significant budget revisions impacting childcare funding and services. The meeting highlighted the state's projected budget shortfall of $12 billion, prompting the need for difficult financial decisions.

Key discussions centered on proposed reductions in childcare funding for the 2025-2026 fiscal year. Notably, the May revision suggests a $60.7 million cut to the general fund, which would have supported cost-of-living adjustments for childcare providers. Additionally, a $42.7 million reduction is proposed for the emergency childcare bridge program, although $51 million in ongoing funding for this program will be maintained.

The meeting also addressed the implementation of a federally mandated policy requiring prospective payments to childcare providers starting in 2026. To prepare for this change, the budget includes $52 million to facilitate the transition. Furthermore, $91.8 million is allocated to develop a new single rate structure for subsidized childcare reimbursement rates.

Officials from the Department of Finance emphasized that the state is facing challenging trade-offs to balance the budget, as previous one-time funding options have been largely exhausted. They acknowledged that the proposed changes aim to address the long-term structural imbalance in the budget while maintaining current reimbursement rates for childcare providers.

The discussions underscored the importance of ongoing collaboration with the legislature to navigate these financial challenges and ensure continued support for childcare services in California. As the state moves forward, the implications of these budget revisions will be closely monitored, particularly regarding their impact on families and childcare providers.