City Manager’s Office
www.santa-ana.org/cm
Item # 8
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
September 16, 2025
TOPIC: Informational Report for the California Department of Social Services Child Care Grant
AGENDA TITLE
Informational Report for the California Department of Social Services Child Care Grant
RECOMMENDED ACTION
Receive and file informational report for the California Department of Social Services (CDSS) child care grant.
GOVERNMENT CODE §84308 APPLIES: No
DISCUSSION
The purpose of this report is to provide information to the public regarding the cancellation of the CDSS child care grant.
Background
During FY22-23, Parks, Recreation, and Community Services Agency (PRCSA) staff submitted an application to CDSS for an after-school child care program with a proposal to begin service fall 2023. On May 23, 2023, the City received notification from CDSS of a proposed award of $6.7 million to fund a multi-year program. The CDSS issued a local agreement to Santa Ana on July 1, 2024 for an initial year of funding in the amount of $915,583 for start-up costs to initiate the program and provide a minimum of 12 days of operation during FY24-25. Future actual grant receipts would be based on attendance and compliance with CDSS Funding Terms and Conditions (explained further below).
On November 19, 2024, the City Council approved the PRCSA recommendation to accept the CDSS grant (Exhibit 1).
To satisfy the requirement to provide a minimum 12 days of operation during FY24-25, the City had a deadline of May 12, 2025 to establish the program. After follow-up with PRCSA staff regarding the status of program implementation, and a site visit to the City of La Habra that operates a CDSS funded child-care program, City Management
Informational Report for the California Department of Social Services Child Care Grant September 16, 2025
5 3
3 9
discovered a series of challenges associated with the program. Some of these challenges were not identified until shortly before the May 12 deadline to begin child care service.
Funding Terms and Conditions
The CDSS Funding Terms and Conditions (Exhibit 2, an 81-page document available on the CDSS website) require grantee compliance with the following:
•Title 45 Code of Federal Regulations addressing public welfare; •Any applicable Welfare and Institutions Code statutes; •Title 5 California Code of Regulations addressing educational requirements, staff qualifications, program administration, and parent involvement; •Title 22 California Code of Regulations addressing facility licensing, health and safety standards, and staff background checks;
•Specific program requirements;
•The CDSS Audit Guide;
•The California School Accounting Manual;
•Uniform administrative requirements, cost principles, and audit requirements for federal awards, known as Uniform Guidance; and
•Any other applicable regulations.
During the initial stages of planning, PRCSA staff believed the program would be exempt from Title 5 and Title 22 Regulations. Shortly after receiving the award notification, CDSS clarified the City would indeed need to adhere to these regulations, as outlined in the Funding Terms and Conditions document on the CDSS website.
The regulations were not addressed in the November 19, 2024 staff report to City Council.
Examples include:
•Site licensing with facility compliance and inspections, such as the provision of separate bathrooms for adults and children with different sized fixtures; which cannot be accommodated by the City’s current facilities without significant capital improvements.
•Food distribution safety requirements, which PRCSA staff planned to satisfy by utilizing the Santa Ana Unified School District (SAUSD) food distribution system.
There was no written agreement with SAUSD to provide these services.
Distributing food in-house would necessitate significant capital improvements for kitchen and food-safety compliance, such as allergy management. •Minimum staffing requirements.
•Medical training for staff.
•Certified teachers to develop and manage a curriculum. •Specific insurance requirements.
•Development of numerous policies to address child pick-up safeguards, discipline procedures, and parent-teacher communications.
Informational Report for the California Department of Social Services Child Care Grant September 16, 2025
5 3
3 9
•Specific requirements for enrollment, attendance tracking, and determining student eligibility. Without implementing a specialized software system, these requirements would be difficult to comply with and regular state audits come with a high level of scrutiny.
As part of the initial application (Exhibit 3), PRCSA planned to serve 515 school-aged children at seven (7) different City facilities with a staff to child ratio of 1:10 resulting in a plan for 52 qualified staff members. Title 22 Regulations only require a ratio of 1:14 for school-aged children, resulting in a need for 37 qualified staff members. PRCSA staff planned to hire an experienced Site Director to subsequently hire certified teaching staff and to develop a curriculum and a plan to comply with Title 5 and Title 22 Regulations.
This would place significant risk of City liability in one new employee’s hands. The City currently lacks the institutional experience, resources, and capacity to effectively and successfully implement a program compliant with all applicable regulations within the initial contract period.
Grantee Agencies
City Management was able to find recent CDSS award information for the child care program.
•FY21-22 – only 3 of 113 awardees were cities (Colton, Los Angeles, and Oakland) •FY22-23 – only 1 of 108 awardees was a city (Santa Ana) •FY23-24 – no award information posted
•FY24-25 – no cities were among the 108 awardees
The overwhelming majority of awardees were non-profit organizations and educational agencies that have existing resources and facilities to provide education and childcare.
PRCSA staff advised City Management that Santa Ana was the last applicant accepted to the program before CDSS stopped accepting new applications citing projected future state budget shortfalls.
Fiscal Review
The City has an internal requirement for departments to submit grant information to Finance for a fiscal review before a grant award is accepted. PRCSA staff did not submit the grant information for a fiscal review as they saw the award as “contract funds” as opposed to a grant, even though the proposed resolution for City Council on November 19 included an authorization to execute any documents “necessary to accept the grant award.”
The program does not provide assurances for future reimbursements of the City’s total costs associated with the program. For example, the City would not be reimbursed for charges that are not in full compliance with the Funding Terms and Conditions. As another example, the City would be required to enter into contracts with families served Informational Report for the California Department of Social Services Child Care Grant September 16, 2025
5 3
3 9
by the program and, if the state ceased to provide funding for the program, the City would be required to honor the agreed-to services for families without state reimbursement.
Award Relinquishment
On May 2, 2025, at the direction of City Management, PRCSA staff issued an award relinquishment letter to CDSS (Exhibit 4). The City had not yet spent any of the funding award. The decision was based on the City’s lack of preparation to meet the May 12, 2025 deadline, the City’s lack of experience and resources to comply with regulations, the risk associated with relying on a single new employee to ensure program compliance, the potentially significant capital improvements necessary for facilities, the potential need to operate the program without reimbursements, and the City’s financial outlook with the impending decrease of local sales tax. The City Manager apprised the City Council of the relinquishment during individual meetings with each City Council Member.
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
There is no fiscal impact associated with the recommendation.
EXHIBIT(S)
1. November 19, 2024 City Council agenda item to accept the CDSS award
2. CDSS Funding Terms and Conditions
3. Initial Application for Funding
4. Award Relinquishment Letter
Submitted By: Kathryn Downs, Assistant City Manager
Approved By: Alvaro Nuñez, City Manager