Welf. & Inst. Code, § 10372

(a) The second stage of child care begins when the county determines that the recipient’s work or approved work activity is stable or when a recipient is transitioning off of aid and child care is available through a local stage two program. Second stage child care may be provided to a family who elects to receive a lump-sum diversion payment or diversion services under Section 11266.5 when a funded space is not immediately available for the family in third stage. The local stage two agency shall assist in moving families to stage three as quickly as feasible. Former CalWORKs recipients are eligible to receive child care services in stage one and stage two for up to a total of no more than 24 months after they leave cash aid, or until they are otherwise ineligible within that 24-month period. Family size and income for purposes of determining eligibility and calculating the family fee shall be determined pursuant to Sections 10271 and 10271.5. A family leaving cash aid under the CalWORKs program shall receive up to two years of child care, if otherwise eligible, as needed to continue the family’s employment. The provision of the two-year time limit is not intended to limit eligibility for child care under Section 10372.5.

(b) The second stage shall be administered by agencies contracting with the department. These contractors may be either agencies that have an alternative payment contract pursuant to Section 10225.5 or county welfare departments that choose to administer this stage in order to continue to provide child care services for recipients or former recipients of aid. If the county chooses to contract with the department to provide alternative payment services, this contract shall not displace, or result in the reduction of an existing contract of, a current alternative payment program.