California Legislature—2013–14 Regular Session

Assembly BillNo. 812


Introduced by Assembly Member Mitchell

February 21, 2013


An act to amend Sections 8402, 8403, 8406.6, 8406.7, 8406.9, 8407, and 8408 of the Education Code, relating to child care.

LEGISLATIVE COUNSEL’S DIGEST

AB 812, as introduced, Mitchell. Child care: contracts: termination and suspension.

(1) Existing law requires the State Department of Education to provide an independent appeal procedure in certain instances, including, but not limited to, contract termination or suspension, to each contracting agency providing specified child care and development services. Existing law requires the contracting agency to have submitted all previously required standard monthly or quarterly reporting forms before filing an appeal petition.

This bill would repeal the requirement that the department provide an independent appeal procedure, as described above, in the instance of contract suspension. The bill would also repeal the requirement that the contracting agency submit all previously required standard monthly or quarterly reporting forms before filing an appeal petition.

(2) Existing law requires the Superintendent of Public Instruction to establish a contract classification system with 3 classes of contract designations; a clear contract, a provisional contract, and a conditional contract, as specified.

This bill would revise the 3 classes of contract designations, as specified.

(3) Existing law authorizes any contracting agency that evidences chronic fiscal or program violations of a felony nature, as specified, to have its contract immediately suspended or terminated provided there is documented evidence of the violations and upon review and recommendation of the general counsel of the department.

This bill would instead authorize a contracting agency that evidences any specified acts or omissions to have its contract or contracts immediately terminated provided there is documented evidence of the acts or omission and upon review and recommendation of the general counsel of the state department. The bill would add additional acts or omissions, as described, that may result in immediate termination of an agency’s contract or contracts and require the notice of immediate termination of a contract to be served in a specified manner.

(4) Existing law authorizes a contracting agency that places a person in a position of fiscal responsibility or control who has been convicted of certain crimes to have its contract immediately suspended or terminated if there is documented evidence of the conviction and upon review and recommendation of the general counsel of the department. Existing law authorizes a contracting agency whose contract is terminated for the reasons described above to appeal the contract termination, and require the contract termination to occur after notice, as specified, is provided at least 90 days before termination.

This bill would instead authorize a contracting agency that places a person in a position of fiscal responsibility or control who has been convicted of a crime involving misuse or misappropriation of state or federal funds, or a state or federal crime involving moral turpitude, to have its contract immediately terminated if there is documented evidence of the conviction and upon review and recommendation of the general counsel of the department. The bill would repeal the authority of a contracting agency whose contract is terminated for the reasons described above to appeal the contract termination, and the requirement that this termination occur after notice, as specified, is provided at least 90 days before termination.

(5) Existing law authorizes local contracting agencies to continue to operate under their contract during an appeal of termination, unless the specified action is based on imminent danger to the health and welfare of children. Existing law requires, if the contract is being terminated based on imminent danger to the health and welfare of children, the reason for the termination to be specified by the department in its notice of termination.

This bill would instead authorize local contracting agencies to continue to operate under their contract during an appeal of termination, unless the action is an immediate termination action, as specified, in which case a local contracting agency would not be authorized to continue to operate under the contract after the effective date given in the notice of immediate termination.

This bill would make conforming and nonsubstantive changes to these provisions.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P3    1

SECTION 1.  

Section 8402 of the Education Code is amended
2to read:

3

8402.  

Thebegin delete State Department of Educationend deletebegin insert departmentend insert shall
4provide an independent appeal procedure to each contracting
5agency providing child care and development services pursuant
6to Sectionbegin delete 8262. Prior to filing an appeal petition, the contracting
7agency shall have submitted all previously required standard
8monthly or quarterly reporting forms to the State Department of
9Education. The appeal procedureend delete
begin insert 8262 thatend insert shall be conducted by
10the Office of Administrative Hearings and shall be provided upon
11begin insert an appealend insert petition of the contracting agency in any of the following
12circumstances:

13(a) Terminationbegin delete or suspensionend delete of a contracting agency’s contract.

14(b) Denial of more than 4 percent or twenty-five thousand dollars
15($25,000), whichever is less, of a local contracting agency’s
16contracted payment for services schedule.

17(c) Demand for remittance of an overpayment of more than 4
18percent or twenty-five thousand dollars ($25,000), whichever is
19less, of a local contracting agency’s annual contract.

20

SEC. 2.  

Section 8403 of the Education Code is amended to
21read:

22

8403.  

All hearingsbegin insert required by Section 8402end insert shall be conducted
23according to the provisions of the Administrative Procedure Act
24(Chapter 5 (commencing with Section 11500) of Partbegin delete 1,end deletebegin insert 1end insert of
25Division 3 of Title 2 of the Government Code), except as otherwise
26directed in this article.

P4    1

SEC. 3.  

Section 8406.6 of the Education Code is amended to
2read:

3

8406.6.  

The Superintendentbegin delete of Public Instructionend delete shall establish
4a contract classification system for purposes of identifying,
5monitoring, and providing technical assistance to contractors as
6follows:

7(a) Clear contract. This designation shall be given tobegin delete contracted
8agencies that are in full compliance with all applicable statutory
9provisions, funding terms and conditions, and applicable program
10quality guidelinesend delete
begin insert a contract that is neither a provisional contract,
11as described in subdivision (b), nor a conditional contract, as
12described in subdivision (c)end insert
.

13(b) Provisional contract. This designation applies tobegin insert a
14contracting agency’s first contract for any particular service, if
15by anend insert
existingbegin delete contracted agencies,end deletebegin insert contract agency for a new or
16different type of serviceend insert
orbegin delete agencies that are awarded a newend deletebegin insert by a
17contracting agency that does not have an existingend insert
contract for
18services. The time frame of a provisional contract is at the
19discretion of thebegin delete State Department of Educationend deletebegin insert departmentend insert and
20is given to ensurebegin delete demonstratedend deletebegin insert that the contracting agency can
21demonstrateend insert
fiscal and programmatic compliance beforebegin delete grantingend delete
22begin insert the contract is designated as aend insert clear contractbegin delete statusend delete. The contract
23status shall be reviewed annually.

24(c) Conditional contract. This designation applies tobegin insert aend insert high-risk
25begin delete contracted agenciesend deletebegin insert contract awarded to a contracting agencyend insert that
26begin delete evidenceend deletebegin insert evidencesend insert fiscalbegin delete andend delete or programmatic noncompliancebegin insert,
27or both fiscal and programmatic noncomplianceend insert
.begin delete These agencies
28shall not be eligible to apply for additional State Child
29Development program funds, and areend delete
begin insert A contracting agency with
30one or more contracts designated as conditional is deemed to be
31on conditional status with the department for all child care and
32development program purposes and isend insert
subject to any restrictions
33deemed reasonable to secure compliance. The conditional contract
34shall include a bill of particulars detailing the items of
35noncompliance, the standards that must be met to avoid termination
36of contract and to qualify the agency for clear contract status, and
37technical assistance plan. Failure to demonstrate substantive
38progress toward fiscal or program compliance within six months
39of that designation shall constitute a breach of contract andbegin delete beend deletebegin insert mayend insert
40 subjectbegin insert the contractend insert to termination for any applicable cause
P5    1specified in Section 8406.7 orbegin insert 8407,end insert in accordance with Section
28402.

3(d) Agencies with conditional contracts shall receive technical
4assistance from the Child Development Division of thebegin delete State
5Department of Educationend delete
begin insert departmentend insert.

6

SEC. 4.  

Section 8406.7 of the Education Code is amended to
7read:

8

8406.7.  

(a) begin deleteAny end deletebegin insertA contracting end insertagency that evidencesbegin delete chronic
9fiscal or program violations of a felony natureend delete
begin insert any of the following
10acts or omissionsend insert
may have its contractbegin delete suspended orend deletebegin insert or contracts
11immediatelyend insert
terminatedbegin delete immediately, providedend deletebegin insert ifend insert there is
12documented evidencebegin delete thereof,end deletebegin insert of the acts or omissions,end insert and upon
13review and recommendation of the general counsel of thebegin delete State
14Department of Education. A fiscal or programmatic violation
15constituting a breach of contract includes one or more of the
16followingend delete
begin insert departmentend insert:

17(1) Fraud, or conspiracy to defraud.

18(2) Misusebegin insert or misappropriationend insert of statebegin insert or federalend insert fundsbegin delete in
19violation of the State of California Accounting Manualend delete
begin insert, including
20a violation of Section 8406.9end insert
.

21(3) Embezzlement.

22(4) Threats of bodily or other harm tobegin insert aend insert statebegin delete officialsend deletebegin insert officialend insert.

23(5) Bribery or attempted bribery of a state official.

24(6) Unsafe or unhealthy physical environment or facility.

25(7) Substantiated abuse or molestation of children.

26(8) Failure to report suspected child abuse or molestation.

27(9) Theft of supplies, equipmentbegin insert,end insert or food.

begin insert

28(10) Cessation of operations without the permission of the
29department, or acts or omissions evidencing abandonment of the
30contract or contracts.

end insert
begin insert

31(11) Failure of a program operating pursuant to Article 3
32(commencing with Section 8220) or Article 15.5 (commencing with
33Section 8350) to reimburse a significant number of approved child
34care providers, as determined by the department, within 15
35calendar days after the date set in a plan for timely payments to
36providers adopted by the contracting agency pursuant to Section
3718226 of Title 5 of the California Code of Regulations, unless the
38failure is attributable to a delay in receiving apportionments from
39the state.

end insert
begin insert

P6    1(12) Failure of a program not operating pursuant to Article 3
2(commencing with Section 8220) or Article 15.5 (commencing with
3Section 8350) to pay salaries owed to employees, pay federal
4payroll tax, or reimburse a significant number of child care
5providers, as determined by the department, affiliated with a
6contracting agency pursuant to Article 8.5 (commencing with
7Section 8245) for more than 15 days after the employee salaries,
8federal payroll taxes, or reimbursement payments were due, unless
9the failure is attributable to a delay in receiving apportionments
10from the state.

end insert

11(b) An agencybegin insert whoseend insert contractbegin insert is immediatelyend insert terminatedbegin delete for
12causeend delete
begin insert pursuant to this sectionend insert retains appeal rights in accordance
13with Section 8402.

begin insert

14(c) Notwithstanding any service provision in the Administrative
15Procedure Act (Chapter 5 (commencing with Section 11500) of
16Part 1 of Division 3 of Title 2 of the Government Code), a notice
17of immediate termination shall be served on the contracting agency
18by personal service or at the last address on file with the
19department, by overnight mail or certified mail. Service may be
20proved in the manner authorized in civil action. Service by mail
21is complete at the time of deposit.

end insert
begin delete

22(c)

end delete

23begin insert(d)end insert Thebegin delete State Department of Educationend deletebegin insert departmentend insert shall advise
24child care and development contractors of thebegin delete provisionend deletebegin insert provisionsend insert
25 of this section within 30 working days ofbegin delete its enactmentend deletebegin insert the effective
26date of the act amending this section during the 2013-end insert
begin insert14 Regular
27Session of the Legislatureend insert
.

28

SEC. 5.  

Section 8406.9 of the Education Code is amended to
29read:

30

8406.9.  

(a) An agency that places a person in a position of
31fiscal responsibility or control who has been convicted ofbegin delete anyend deletebegin insert aend insert
32 crimebegin delete specified in Chapter 2 (commencing with Section 458) of,
33Chapter 4 (commencing with Section 470) of, Chapter 5
34(commencing with Section 484) of, Chapter 6 (commencing with
35Section 503) of, or Chapter 7 (commencing with Section 518) of,
36Title 13 of Part 1 of the Penal Codeend delete
begin insert involving misuse or
37misappropriation of state or federal funds, or a state or federal
38crime involving moral turpitude,end insert
may have its contractbegin delete suspended
39orend delete
begin insert immediatelyend insert terminatedbegin delete immediatelyend deletebegin insert pursuant to Section 8406.7end insert
40 if there is documented evidence of the conviction, and upon review
P7    1and recommendation of the general counsel of thebegin delete State Department
2of Educationend delete
begin insert departmentend insert.

3(b) For purposes of this section, “position of fiscal responsibility
4or control” includes any authority to direct or control expenditure
5of, or any access to, state or federal child care and development
6funds received pursuant to this chapter whether that authority or
7access is conferred based on the person’s status as an employee,
8director, manager, board member, or volunteer, or based on any
9other status.

begin delete

10(c) An agency whose contract is terminated pursuant to this
11section may appeal that action in accordance with Section 8402.

end delete
begin delete

12(d) Termination pursuant to this section shall not occur without
13notice as described in Section 8406 at least 90 days prior to
14termination.

end delete
begin delete

15(e)

end delete

16begin insert(c)end insert If the agency provides evidence to thebegin delete State Department of
17Educationend delete
begin insert department, before the effective date given in the notice
18of immediate termination,end insert
that the convicted person has been
19removed from the position of fiscal responsibility or control and
20provides assurance that the person will not be returned to a position
21of fiscal responsibility or control, thebegin delete State Department of
22Educationend delete
begin insert departmentend insert shall withdraw the termination action.

23

SEC. 6.  

Section 8407 of the Education Code is amended to
24read:

25

8407.  

Except for causes listed inbegin delete Sectionend deletebegin insert Sectionsend insert 8406.7begin insert and
268406.9end insert
, termination ofbegin delete existing fundingend deletebegin insert a child care and
27development contractend insert
shall not occur without good cause and
28without notice as described in Section 8406 at least 90 daysbegin delete prior
29toend delete
begin insert before the effective date given in the notice ofend insert termination.

30

SEC. 7.  

Section 8408 of the Education Code is amended to
31read:

32

8408.  

Actions as defined in subdivisions (a) to (c), inclusive,
33of Section 8402 shall remain in effect during the appeal process.
34However, local contracting agencies may continue to operate under
35the contract during an appeal of termination, unless the action is
36begin delete based on imminent danger to the health or welfare of children. If
37the local agency contract is being terminated for this reason, the
38reason shall be specified by the department in its notice of
39terminationend delete
begin insert an immediate termination action taken pursuant to
40Section 8406.7 or 8406.9, in which case a contracting agency shall
P8    1not continue to operate under the contract after the effective date
2given in the notice of immediate terminationend insert
.



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