A new California law changes how family childcare providers get paid—and most don't know about it yet.
Most family childcare providers in California operate on a simple but precarious model: they get paid only for the days children actually attend. A sick kid, a family vacation, a snow day—and that's lost revenue. But a provision buried in AB1981 changes that arrangement for providers serving subsidized care, and the shift takes effect immediately.
What the law does
Under AB1981, family childcare providers must now be reimbursed for the full certified hours of care they are contracted to provide, whether or not a child actually shows up on any given day. This eliminates the attendance-based payment risk that currently causes significant revenue shortfalls when families miss scheduled days.
The change applies specifically to providers serving children through California's subsidized childcare system. Instead of losing income when a child is absent, providers receive their full reimbursement based on the hours they have certified as available—the same way many center-based programs already operate.
Who this affects
Family childcare providers—the small, home-based businesses that care for a handful of children—are the primary beneficiaries. These providers have historically borne the financial burden of attendance fluctuations, which can be unpredictable and significant. Parents using subsidized care slots also benefit, as the stability may reduce pressure on providers to turn away families or adjust schedules frequently.
Larger center-based facilities may already have similar protections in their contracts, but this law standardizes the protection across the family childcare sector.
Timeline and implementation
AB1981 became effective immediately upon enactment as an urgency statute. New reimbursement rates reflecting this change must be implemented within 90 days of the state providing guidance to providers and programs.
The specific requirement appears in Section 4, Section 10227.7(a)(9)(A) of the bill.
What it means for your business
If you operate a family childcare home and serve subsidized care, this change should stabilize your monthly revenue. You'll no longer need to build in a buffer for attendance gaps or worry as much about single-family absences affecting your bottom line. This can make budgeting and staffing decisions more predictable.
The practical effect: certified hours become your guaranteed baseline, not your hopeful target.
Next steps
Watch for official guidance from your local childcare subsidy administrator or the California Department of Social Services about new rate schedules and how they'll be applied to your contract. Rates may adjust to reflect this change, and you should review any updated agreements carefully.
If you haven't already, confirm with your program administrator whether your current contract falls under this provision and when the new rates take effect in your county.
For a detailed breakdown of how this affects your specific situation, childcare trade associations and local business resources have published provider guides on AB1981's requirements.