California Education Code Section 8357

(a) The cost of child care services provided under this article shall be governed by regional market rates. Recipients of child care services provided pursuant to this article shall be allowed to choose the child care services of licensed child care providers or child care providers who are, by law, not required to be licensed, and the cost of that child care shall be reimbursed by counties or agencies that contract with the State Department of Education if the cost is within the regional market rate. For purposes of this section, regional market rate means care costing no more than 1.5 market standard deviations above the mean cost of care for that region. Beginning March 1, 2009, the regional market rate ceilings shall be established at the 85th percentile of the 2007 regional market rate survey for that region. For the 2008-09 and 2009 -10 fiscal years, the 85th percentile ceilings of the 2007 regional market rate survey for that region shall remain in effect. (b) Reimbursement to child care providers shall not exceed the fee charged to private clients for the same service. (c) Reimbursement shall not be made for child care services when care is provided by parents, legal guardians, or members of the assistance unit. (d) A child care provider located on an Indian reservation or rancheria and exempted from state licensing requirements shall meet applicable tribal standards. (e) For purposes of this section, reimbursement means a direct payment to the provider of child care services, including license exempt-providers. If care is provided in the home of the recipient, payment may be made to the parent as the employer, and the parent shall be informed of his or her concomitant legal and financial reporting requirements. To allow time for the development of the administrative systems necessary to issue direct payments to providers, for a period not to exceed six months from the effective date of this article, a county or an alternative payment agency contracting with the State Department of Education may reimburse the cost of child care services through a direct payment to a recipient of aid rather than to the child care provider. (f) Counties and alternative payment programs shall not be bound by the rate limits described in subdivision (a) when there are, in the region, no more than two child care providers of the type needed by the recipient of child care services provided under this article.