FY14 Spending Plan Board Presentation September 10, 2013

1. FY14 Spending PlanBoard PresentationSeptember 10, 2013

2. FY14 GAA Compared to Historical

3. Spending Plans: FY14 GAA Timeline • The SFY14 budget has been passed into law, but the preparation on SFY14 is not complete. • ANF requires all agencies to submit, through ANF’s MBA database, the agency’s spending plan for SFY14. This exercise sketches out EEC’s detailed SFY14 plan, and is one of the few opportunities an agency has to modify the object class structure of the budget passed into law. • The last major opportunity an agency will have to modify its FY14 object class structure is the mid year spending plan review submitted to ANF in late January/February. • Aside from the aforementioned prescribed periods, any deviation from the spending plan, once approved by ANF in late August/September, must go through an exhaustive review process by ANF.

4. Spending Plans – Line Items • Funding levels are viewed on the line item level. For example, if we are appropriated $12M in 3000-1000 we logically assume to have a $12M budget for 3000-1000. • This is true; however, the $12M is really a roll-up of multiple “mini-budgets” called object classes. Examples of these object classes are: • AA: Payroll • BB: Travel • CC: Contracted Employees & Interns • DD: Pension and insurance chargebacks • EE: Office related expenses (supplies, subscriptions, water, and Single State Audit) • GG: Rent (office lease) • HH: Consultants • JJ: Operational Services (Training & translation services are prime examples) • MM: Purchased service contracts (CCR&R’s contracts and our contract with providers) • PP: Grants • RR: Vouchers.

5. Spending Plans – Line Items • The legislature actually schedules these object classes. ANF polices the object classes, and agencies must adhere to these “mini-budgets”. • So, though we may have sufficient funds in a line item to support a particular project, we may not have sufficient funds in the object class within the line item to support the project. • Expenditures are further broken down to the object code level (a subset within object classes). For example, office supplies is an E01 object code expenditure within the EE object class. Appropriations are not scheduled down to this level.

6. Spending Plan – Budget Structure

7. FY14 Spending Plan – Admin Budget 3000-1000 • Line Item Description: The Administration account provides funding for the agency’s administrative and operational expenses including payroll. This account was funded at $12.1M in FY13 (after $210K in 9C cuts were imposed), and increased to $12.8M in FY14. • The increase will support maintenance needs of the agency (collective bargaining increase for our NAGE and SEIU employees, annualize the CBA increases from FY13, and pay for lease increases for several office locations). The FY14 appropriation will also support the beginning of rebuilding the EEC FTE infrastructure that was decimated since the FY2009 downturn. • Major Highlights • The Governor recommended and the Legislature approved additional funds in 3000-1000 for additional FTEs to help support vital areas of EEC operations. EEC identified nine (9) positions to include in the FY14 Spending Plan: 5 licensors, auditor, legal counsel, Caseload Manager, and a Chief of Staff to help manage the half billion dollar department. The FY14 cost for most positions) would be roughly $398K, but the annualized cost is $529K. • EEC may also receive an $85K PAC from the FY13 balance. This amount is targeted to support the Springfield move, which requires new office furniture (cubicles) and moving costs. If the PAC should not be passed into law, we have a contingency plan that absorbs the cost in existing FY14 funds.

8. FY14 Spending Plan – Admin Budget 3000-1000: Studies to Be Done • Line Item Description: Language added to 3000-1000 has imposed four new requirements on EEC. • First New Requirement ….provided further, the department shall assign staff to collect and report on enhanced data tracking of clients of early education and care services as provided for in line items 3000-3050, 3000-4050, 3000-4060, and 3000-4070 • Status In one sense, this is ongoing. But, in support of the language we are hiring a Caseload Manager whose primary responsibility will be the caseload accounts and creating a forecasting structure that is fully reliable.

9. FY14 Spending Plan – Admin Budget 3000-1000: Studies to Be Done • Line Item Description: Language added to 3000-1000 has imposed four new requirements on EEC. • Second New Requirement …. provided further, the department shall submit a report no later than December 6, 2013 to the house and senate committees on ways and means on the progress of collecting and analyzing data to track (a) the eligibility of clients at the point of application; (b) the reason for attrition from services; (c) improved methodology for forecasting the use of available funds to maximize the number of placements that are supported by state appropriations; and (d) proximity of clients in care and waiting for care to the nearest licensed early education provider • Status EEC has clarified with Senate Ways and Means that the responsibilities as specified the language above can be embedded in the responsibilities required in 1599-0500 (discussed later in this presentation).

10. FY14 Spending Plan – Admin Budget 3000-1000: Studies to Be Done • Line Item Description: Language added to 3000-1000 has imposed four new requirements on EEC. • Third New Requirement ….provided further, that the department shall convene a group of internal and external constituents to conduct an assessment of childcare licensing policies, procedures and regulations to propose and add best practices relative to risk assessment, differential licensing, integration of quality support efforts through licensing practices and policies which ensure the health, safety and quality of early educational opportunities for all children in licensed childcare facilities in the commonwealth; • Status Dave McGrath will be managing this.

11. FY14 Spending Plan – Admin Budget 3000-1000: Studies to be Done • Line Item Description: Language added to 3000-1000 has imposed four new requirements on EEC. • Fourth New Requirement …. provided further, that such review shall also include an assessment of the department’s information technology infrastructure’s capabilities to capture and provide data essential to licensing best practices as well as a review of staffing capacity to introduce and monitor best practices in the commonwealth; provided further, the assessment shall begin no later than October 1, 2013; and provided further, that the assessment shall be submitted to the house and senate committees on ways and means and the joint committee on education not later than March 31, 2014 • Status Dave McGrath and Tan Gopal will be managing this.

12. FY14 Spending Plan – Access Management Budget: 3000-2000 • Line Item Description: This account is for the regional administration and coordination of services provided by Child Care Resource and Referral (CCRR) agencies. The FY14 appropriation of $5,873,862 is a $60K reduction from FY13 levels. • Major Highlight • MM: Most of the MM funds support seven (7) CCR&R contracts. There is presently some unallocated MM funds because the EEC Acting Commissioner has made an intentional effort this year to fund fewer activities in other object codes. CCRRs were selected last year through a competitive process; contracts with funding allocations rolled into FY14. There is approximately $200K in unallocated MM funds which will shortly be made available to CCRRs.

13. FY14 Spending Plan – Innovative Curriculum 3000-3000 • Line Item Description: This is new account funded at $250K to support the implementation of a competitively bid grant program for the development of innovative curriculum in preschool programs for children from the age of 2 years and 9 months until they are kindergarten eligible. • The selected curriculum must:  • Reflect current research and best practices for learning experiences for preschool children by linking research to classroom practice. • Be applicable to all types of settings and educators that care for children ages 2 years and 9 months through 5 across EEC’s mixed delivery system. • Major Highlight The anticipated timeline for this project is as follows: • August 30, 2013 Write request (RFR) for applicants. (DONE) • September 6, 2013 Post RFR to Comm-Pass. • October 4,, 2013 Responses to RFR due. • October 11, 2013 Complete review of submitted proposals. • October 18, 2013 Make selection of vendor. • November 4, 2013 Vendor contract begins.

14. FY14 Spending Plan – Supportive Care3000-3050 • Line Item Description: Provides early education and care and afterschool services for children referred by the Department of Children and Families (DCF). This account is intended to provide immediate access to all eligible families. • This account is funded at $76.9M in FY2014 and EEC anticipates that FY2014 expenditures will be $77M. • FY2014 expenditure projections are based on the following assumptions: • Monthly caseload is forecasted using a three year average percentage change by age group for FY2011, FY2012, and FY2013. A three average was used because a review of fiscal years 2011 thru 2013 indicates that spending levels have not fluctuated significantly as noted in the chart below.  • Cost per child was calculated using the FY2013 average cost by month and age group. • The FY2014 expenditure projection anticipates that approximately 376 open slots will be offered to children on the DCF waitlist. The current DCF waitlist is approximately 850 children   • We anticipate that the approved Infant Toddler Rate Increase at current run rates will cost approximately an additional $300K in FY2014 as more providers meet the QRIS requirements. This cost has been included in our projected FY14 expenditure of $77M.

15. FY14 Spending Plan – DTA Related3000-4050 • Line Item Description: This line item provides early education and care and after school services for children referred by the Department of Transitional Assistance (DTA). This account is funded at $128.1M in FY2014 which is an increase of $2.6M when compared to the FY2013 GAA appropriation. Based on the projected FY14 caseload we forecast the FY2014 DTA caseload cost to be approximately $130.5M which, at the FY14 appropriation, is a deficit of $2.4M. If realized, this can be remedied only by transferring funds from the Income Eligible account or a supplemental appropriation. • FY2014 expenditure projections are based on the following assumptions:  • Monthly caseload is forecasted using the FY2013 percentage change in caseload by age group. • DTA caseload over the past three years does not have a specific trend; therefore, caseload projections are based on FY2013 trends only. •  The cost per child was calculated using the FY2013 average cost by month and age group. •  Late billing caseload or prior period caseload adjustments are based on the FY2013 percentage caseload change by month. The cost projections for late billing are based on the average cost by month.

16. FY14 Spending Plan – Income Eligible3000-4060 • Line Item Description: Provides child care, early education, and afterschool financial assistance for children from low income and at-risk families through vouchers and contracts. • The total amount available under the approved budget is $222.8M ($214M appropriated and $8.5M PAC’d from FY13). Due to transferability language included in the budget, however, any analysis of the Income Eligible funding level is incomplete without factoring potential exposures in the other caseload accounts. If the projected FY14 DTA deficiency of $2.4M is realized then funds from the IE will be transferred to cover the deficit. The FY2014 Income Eligible projection $220.4M assumes the DTA transfer. • FY2014 expenditure projections are based on the following assumptions:  • Monthly caseload (voucher and contract slots) is forecasted using the FY2013 percentage change in caseload by age group with the exception of the months of May and June for voucher caseload. In April of FY2013 limited voucher access was made available to siblings and children of military families which resulted in a spike in the month to month caseload change. • We mirrored in FY14 the FY13 month to month caseload variance because access was closed. Voucher access was closed in Feb. 2011 (FY12), the impact to caseload began in Sept. 2011 (FY12) resulting in a significant surplus (reversion).

17. FY14 Spending Plan – Income Eligible 3000-4060 • FY14 Assumptions Continued: • The drop in contract expenditures is a direct correlation to the contract providers not filling all of their contract slots and not because access closure. Making voucher access available, through backfill attrition, will ensure compliance to the CCDF block grant which mandates parental choice. Establishing a backfilling process managed by the CCRRs and monitored by EEC should facilitate serving additional children and minimize a surplus (reversion). • Voucher cost per child was calculated using the FY2013 average cost by month and age group.  • Contract cost is based on the maximum obligation for Income Eligible, Teen and Homeless contracts, and Flex slots. The projection includes an estimated underutilization savings.  • Late voucher billing caseload or prior period caseload adjustments are based on the FY2013 percentage caseload change by month. The cost projections for late billing are based on the average cost by month.  • Recognizing that Income Eligible voucher caseload was closed for the majority of FY2013, voucher caseload projections are based on FY2013 trends.  • A formulized process to back fill attrition will be implemented. New access for approximately 800 new children, although limited, will be made available commencing October 1, 2013.  

18. FY14 Spending Plan – Early Education Provider Quality Enhancements: 3000-4065 • Line Item Description: This new account provides $150K to support consulting services in relation to the special commission established in outside section 168 of the FY14 budget to assess the funding and programming needed to enhance early education and care.  • Major Highlight The consultant must perform, among others, the following services/tasks as part of the contract: • Lay the groundwork for making recommendations, including proposals for new legislation as appropriate and needed, to enhance early education and care services in the Commonwealth, that is based off of an investigation and study of the system’s operations, finances, and costs. • Work with the Commission to develop recommendations on enhancing the administration and delivery of early education and care services and the overall system in the Commonwealth. • Finalize the Commission’s recommendations and submit to the House of Representatives and Senate by December 31, 2013. Bids were due August 30, and we received two. We have hired PCG and a contract has been issued.

19. FY14 Spending Plan – Waitlist 3000-4070 • Line Item Description: This is a new account funded at $15.0M to reduce the waitlist for income-eligible early education and care programs. • As of August 22, 2013 there are over 41,000 children on the waitlist. These are children that have been placed on or have received an updated status within the past 12 months. • Using the average Income Eligible cost per child, and starting October 1, 2013, EEC estimates we can serve in FY2014 2,367 additional children. (The number of children served would increase if the plan is implemented after October.)

20. FY14 Spending Plan – Head Start 3000-5075 • Line Item Description: Provides state supplemental salary grants for 29 federally funded Head Start agencies to support their programs. This account was funded at $8M in FY13 and increased to $8.1M in FY14. All expenditures flow through the PP Grants object class. • Major Highlights: • Prior to FY13, when the funding level was $7.5M, EEC used enrollment data for State funded Head Start children to determine funding levels; each grantee received approximately a minimum $9.1K for each state subsidized child. In FY13, when the funding level increased to $8.0M, the additional $500K was allocated to each grantee by using enrollment data for Federal and State Head Start and Federal Enrollment for Early Head Start. A grantee’s percentage determined from the enrollment data against the total was used to determine the funding allocation for the additional $500K.   • The FY14 GAA provides an additional $100K in the Head Start allocation. This has been allocated to each grantee based on the grantee’s percentage of the FY13 grant amount to the total with the exception that no grantee has received less than $100. This allocation method was vetted to the Head Start Association which found it acceptable.

21. FY14 Spending Plan – UPK 3000-5075 • Line Item Description: Provides grants to preschool programs to promote school readiness and positive outcomes for children and to inform the longer term implementation of a program of universally accessible, high-quality early education. This account is funded at $7.5M in FY14 as it was in FY13. • Major Highlights • EEC released an RFR for FY14 UPK services and has contracted with 147 providers. The FY2014 funding formula is the same as FY2013, and is based on the number of high needs children in the classroom. Funding was limited up toa maximum of five (5) high needs children per classroom at a value of $3,009 per child. For programs providing less than full-day, full-year services, award amounts were proportionately reduced based on the number of hours provided. • The EEC Acting Commissioner has made an intentional effort to fund fewer Research and Training opportunities so that increased funds can be directed to PP activities in the UPK appropriation. The UPK RFR was released in early May prior to knowing what funds might be unallocated in HH and JJ. There is approximately $700K in unallocated PP funds. These funds will shortly be made available to UPK grantees for use in FY14.

22. FY14 Spending Plan – UPK Research 3000-5075 • Some of the Research (HH) projects include: • Pre K to Grade 3 Research and Documentation of Pre k to 3 Activities ($55K): EEC has contracted over a three year period (FY14 is Year Two) to analyze the progress that has been made by EEC-funded early learning partnerships in Massachusetts; to identify the ways that changes in these Birth to Grade 3 partnerships are impacting programs, educators, and children; and to analyze the Birth to Grade 3 Community Implementation or Planning grants to determine implications and lessons learned for programs and children across the age group. • Develop a guide of the Core Knowledge and Competencies for 3-5 year olds and out of school time providers ($100K): In the CCDF plan we created a goal to develop effective technical assistance to increase and support high quality Early Learning Programs. We would like to build a system in MA that supports consultants, mentors, and faculty; this system would be utilized as a beginning step to provide consistent guidance around this work. • Alignment to Revised Science Standards ($5K): Continue to work with Elementary and Secondary Education to align the revised Science Standards. Once the standards are aligned, they will be printed.

23. FY14 Spending Plan – UPK Training 3000-5075 • Some of the Training (JJ) planned projects include: • Translate Financial Assistance Policy Manual ($20K): EEC serves a diverse population of children across the Commonwealth. These children are frequently given care by an equally diverse population. We therefore need to make our Financial Assistance Policy Guide available in multiple languages and will accordingly translate the Guide into four languages (Spanish, Portuguese, Haitian Creole, and Chinese) and post these documents on our website. We will print a version of the Guide in Spanish. • Preschool Science Standards ($35K): Once the Preschool Science, Technology, Engineering, and Mathematics (STEM) Learning Standards created in FY13 are approved by the Board, EEC will need the developer of these standards to conduct train the trainer events to train the field around these newly developed Preschool Science Standards developed for early education programs for preschool children from 2 years and 9 months through 5 years old.

24. FY14 Spending Plan – Mental Health3000-6075 • Line Item Description: This account mainly funds grants for mental health consultation services to empower programs to manage children’s mental health issues in order to reduce the number of expulsions. This account is funded at $750K in FY14 which is the same level as FY13. Aside from $100K dedicated to payroll and fringe, all other funds in this appropriation support the Mental Health Consultation Grant which also receives nearly half its support ($600K) from the 3000-3050 Supportive line items. • Major Highlights • This program was bid competitively for FY14 services. The bid was open to all vendors able to demonstrate through the submission of a successful grant application that they could meet the priorities and required services as outlined. • There were seven applicants.  Because one applicant did not submit a hard copy as required in the RFR, they were eliminated from review.  Six contracts were awarded. • A new funding formula was initiated in FY14. The formula assesses the prevalence of high-needs across the Commonwealth and provides funding allocations to ensure that resources, supports, and services are available to cities and towns where there is a prevalence of high-needs children.

25. FY14 Spending Plan – Services for Infants and Parents: 3000-7050 • Line Item Description: This appropriation primarily funds grants for a statewide system that provides families with access to comprehensive services and supports that strengthen families and promote optimal child development. The Services for Infants and Parents account is used to fund two grant programs in FY14: Coordinated Family and Community Engagement (CFCE) and Educator and Provider Support (EPS). • CFCE: CFCEgrantees act as a community-based information and resource hub for all families in order to increase knowledge of and accessibility to high-quality early education and care programs and services for families with children birth through age 8. There are 99 CFCE grantees across the Commonwealth funded at a total of $13,665,637. • EPS: EPS was a competitive grant in FY14. Through this competitive grant application, EEC awarded grants to five vendors to provide professional development opportunities and services for working adults in the early education and out of school time field to increase their knowledge and skills which can then be applied to practice. Grant funding focused on three core areas: educator and provider pathways, coaching and mentoring in support of matriculation, and/or competency development.

26. FY14 Spending Plan – Services for Infants and Parents 3000-7050 • Major Highlight • The EEC Acting Commissioner made an intentional effort to fund fewer Research and Training opportunities so that increased funds can be directed to PP activities in the UPK appropriation. The EPS RFR was released on March 25 and the CFCE RFR was released on April 17, each prior to knowing what funds might be unallocated in HH and JJ. There is approximately $635K in unallocated PP funds. These funds will shortly be made available to CFCE and EPS grantees for use in FY14.

27. FY14 Spending Plan – Infants & Parents Research: 3000-7050 • Some of the Research (HH) projects include: • Childhood Resource Centers ($35K): EEC supports Early Childhood Resource Centers at the Cambridge Public Library, Haverhill Public Library, City of Springfield, and the towns of Falmouth and Norfolk. • FCC Systems Assessment ($39,950): The vendor will conduct a full assessment of Family Child Care Systems within the Commonwealth. This initiative began in FY13 and will continue and complete in FY14. • Home Visiting Evaluation Contract ($28,500): This is part of a larger project that includes ISA funds from DPH. Capitalizing on work already begun through other initiatives, EEC will move into the next phase of work defining measureable indicators, identifying data sources, and developing data collection methodologies most useful when working families. Our goal for the next year is to expand our reach into eight new communities to gather more data. • Consultant to Work on the SOW to hire Non-Profit Research Organization ($10K): The Consultant will work closely in conjunction with EEC staff, stakeholders, and content experts to ensure that the Non-Profit Research Organization identified and ultimately hired for the two year assessment is qualified and capable of completing the assessment project.

28. FY14 Spending Plan – Infants & Parents Training: 3000-7050 • Training (JJ) projects include: • Spanish CDA Training ($60K): CDA training for Spanish speaking FCC providers. We will train one cohort of 20 educators in each of three regions (1, 2, and 3). • Development of three courses addressing topics relevant to school age and out of school time programs ($29,005): Continue the work started in FY13 and will continue on into FY15. • Development of three NEW courses addressing topics relevant to school age and out of school time programs ($75K): Develop three (3) new online courses related to school age child care and a plan for the ongoing presentation of such courses to educators and providers working with school age children in multiple formats leading to professional development hours, continuing education units, and college credit. Coursework must result in a minimum of 0.5 Continuing Education Units (CEUs) and 1 college credit. • QRIS and NAEYC Accreditation Visits ($7K): EEC will provide funding in FY2014 to NAEYC to support the goals outlined in the Alignment of MA QRIS Standards and NAEYC Accreditation awarded in FY2013. In FY13, NAEYC and EEC identified and visited the first group of programs in this pilot. In FY14, NAEYC and EEC will identify and visit the remaining 12 programs for participation in the pilot.

29. FY14 Spending Plan – Infants & Parents Training: 3000-7050 (Continued) • Train PHCP Coordinators and Retrain Existing Coordinators ($10K): EEC has not supported training for the PCHP programs that are embedded in 29 of our CFCEs in many years. This proposal would train the new coordinators as well as refresh the knowledge and practice of existing coordinators. • Strengthening Families Training ($25K): Allocate to Children’s Trust Fund (CTF) a contract to do training for strengthening families. The target audience is family and community engagement grantees but also the state agencies. • Playmakers ($20K): Offer training opportunities for Coordinated Family and Community Engagement grantees that provide strategies to bolster the social emotional health of all children, with specific attention to children who have experienced trauma. • CFCE Training Funds ($25K): This is a set aside of funds for a training budget for CFCE statewide meetings. EEC has historically “begged” people to offer training to the CFCE grantees for free and, as a result, we have a limited human resources pool that may or may not meet the training needs of the grantees.  In particular, CFCE grantees need training on data collection and measuring impact.  • Pre-STEM Training for EPS Grantees ($5K): Pre - STEM Summit workshop for EPS partners and educators in advance of the STEM summit. 

30. FY14 Spending PlanReach Out and Read 1599-0500 • Line Item Description: Reach Out and Read is a research-proven, pediatric literacy intervention program which trains doctors and nurse practitioners to provide advice to parents on reading aloud to children and books for children living in poverty and in underperforming school districts through programs established in community health centers, medical practices, and hospitals. The funds distributed through Reach Out and Read are contingent upon a match of not less than $1 in private or corporate contributions for every $1 in state grant funding.  • Major Highlight • EEC has already released a contract to Reach Out and Read for $800,000.

31. FY14 Spending PlanStudy of Child Care Reserve: 3000-7070 • Line Item Description: The FY14 budget sets aside $500K in a reserve account for “a 2-year assessment of the provision of childcare supports funded in items 3000-3050, 3000-4050, 3000-4060, and 3000-4070; provided, that the assessment shall be directed by a nonprofit research organization with demonstrated experience assessing the business practices, service delivery and financial systems of state-subsidized childcare programs…” • While EEC has the expertise to have written the SOW, we have neither the staffing nor the time to have written it and organize a competitive process to select the successful vendor “not later than October 1, 2013.” Consequently, EEC released on August 14 a SOW to hire a consultant to write the RFR seeking the nonprofit research organization. • Major Highlight • EEC released the RFR seeking a consultant. • We had one response which was reviewed by two staff. • We are presently contracting with Nicole Lessard to write the RFR.

32. FY14 Spending Plan: Outside Section 145Consolidated Net Surplus Transfer to Rate Reserve • Line Item Description: Outside Section 145 of the FY14 budget would potentially make available $11.5M for a reimbursement rate increase, subject to the availability of funding through an FY13 state budget surplus.  This rate increase will be an across-the-board increase of approximately $.80 per day for all four caseload accounts. Based on this language this increase will need to be annualized in FY15. • Major Highlight • The last rate increase was March 2009 when we gave .45%.

33. Fiscal Resources of EEC: FY15 GAA Timeline