Amended in Assembly April 22, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 812

Introduced by Assembly Member Mitchell

February 21, 2013

An act to amend Sections begin insert 8257, end insert 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 amended, Mitchell. Child care: contracts: termination and suspension.

begin insert (1) end insert begin insert   end insert begin insert Existing law requires the State Department of Education to apply sanctions against contracting agencies that have serious licensing violations, as defined and reported by the State Department of Social Services and provide 90 days end insert begin insert ’ written notification to any contractor whose agreement is being terminated, unless there is imminent danger to the health and welfare of children if agency operation is not terminated promptly. end insert

begin insert This bill would require a 90-day written notification as specified, except in the case of certain immediate terminations. end insert

begin delete

(1)

end delete

begin insert (2) end insert  Existing law requires the begin delete State Department of Education end delete begin insert department end insert 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. begin delete Existing law requires the contracting agency to have submitted all previously required standard monthly or quarterly reporting forms before filing an appeal petition. end delete

This bill would repeal the requirement that the department provide an independent appeal procedure, as described above, in the instance of contract suspension. begin delete 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. end delete

begin delete

(2)

end delete

begin insert (3) end insert  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.

begin delete

(3)

end delete

begin insert (4) end insert  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.

begin delete

(4)

end delete

begin insert (5) end insert  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.

begin delete

(5)

end delete

begin insert (6) end insert  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:

begin insert

begin insert SECTION 1 end insert begin insert . end insert   

end insert

begin insert Section 8257 of the end insert begin insert Education Code end insert begin insert is amended
to read: end insert

8257.  

The department shall do all of the following in
administering the provisions of this chapter:

(a) Apply sanctions against contracting agencies that have
serious licensing violations, as defined and reported by the State
Department of Social Services pursuant to Section 1544 of the
Health and Safety Code.

(b)  begin delete Provide end delete begin insert Except in the case of immediate terminations taken
pursuant to Sections 8406.7 or 8406.9, provide end insert 90 days’ written
notification to any contractor whose agreement is being terminated begin delete ,
except if there is imminent danger to the health and welfare of
children if agency operation is not terminated more promptly end delete .
Notwithstanding Article 18 (commencing with Section 8400), the
department shall establish procedures for placing a contractor
whose agreement is being terminated into receivership. Action to
initiate receivership shall be at the discretion of the department,
and may be taken against a contractor whose agreement is being
terminated either immediately or within 90 days. The receiver shall
not be a department employee. The receiver shall have sufficient
experience in the administration of child care and development
programs to ensure compliance with the terms of the receivership.

begin delete SECTION 1. end delete
begin insert SEC. 2. end insert   

Section 8402 of the Education Code is amended to
read:

8402.  

begin insert (a) end insert begin insert   end insert The department shall provide an independent appeal
procedure to each contracting agency providing child care and
development services pursuant to Section 8262 that shall be
conducted by the Office of Administrative Hearings and shall be
provided upon an appeal petition of the contracting agency in any
of the following circumstances:

begin delete

(a)

end delete

begin insert (1) end insert  Termination of a contracting agency’s contract.

begin delete

(b)

end delete

begin insert (2) end insert  Denial of more than 4 percent or twenty-five thousand dollars
($25,000), whichever is less, of a local contracting agency’s
contracted payment for services schedule.

begin delete

(c)

end delete

begin insert (3) end insert  Demand for remittance of an overpayment of more than 4
percent or twenty-five thousand dollars ($25,000), whichever is
less, of a local contracting agency’s annual contract.

begin insert

(b) Before filing an appeal petition for an action taken pursuant
to paragraph (2) or (3) of subdivision (a), the contracting agency
shall have submitted all previously required standard monthly or
quarterly reporting forms to the department.

end insert

begin delete SEC. 2. end delete
begin insert SEC. 3. end insert   

Section 8403 of the Education Code is amended to
read:

8403.  

All hearings required by Section 8402 shall be conducted
according to the provisions of the Administrative Procedure Act
(Chapter 5 (commencing with Section 11500) of Part 1 of Division
3 of Title 2 of the Government Code), except as otherwise directed
in this article.

begin delete SEC. 3. end delete
begin insert SEC. 4. end insert   

Section 8406.6 of the Education Code is amended to
read:

8406.6.  

The Superintendent shall establish a contract
classification system for purposes of identifying, monitoring, and
providing technical assistance to contractors as follows:

(a) Clear contract. This designation shall be given to a contract
that is neither a provisional contract, as described in subdivision
(b), nor a conditional contract, as described in subdivision (c).

(b) Provisional contract. This designation applies to a
contracting agency’s first contract for any particular service, if by
an existing contract agency for a new or different type of service
or by a contracting agency that does not have an existing contract
for services. The time frame of a provisional contract is at the
discretion of the department and is given to ensure that the
contracting agency can demonstrate fiscal and programmatic
compliance before the contract is designated as a clear contract.
The contract status shall be reviewed annually.

(c) Conditional contract. This designation applies to a high-risk
contract awarded to a contracting agency that evidences fiscal or
programmatic noncompliance, or both fiscal and programmatic
noncompliance. A contracting agency with one or more contracts
designated as conditional is deemed to be on conditional status
with the department for all child care and development program
purposes and is subject to any restrictions deemed reasonable to
secure compliance. The conditional contract shall include a bill of
particulars detailing the items of noncompliance, the standards
that must be met to avoid termination of contract and to qualify
the agency for clear contract status, and technical assistance plan.
Failure to demonstrate substantive progress toward fiscal or
program compliance within six months of that designation shall
constitute a breach of contract and may subject the contract to
termination for any applicable cause specified in Section 8406.7
or 8407, in accordance with Section 8402.

(d) Agencies with conditional contracts shall receive technical
assistance from the Child Development Division of the department.

begin delete SEC. 4. end delete
begin insert SEC. 5. end insert   

Section 8406.7 of the Education Code is amended to
read:

8406.7.  

(a) A contracting agency that evidences any of the
following acts or omissions may have its contract or contracts
immediately terminated if there is documented evidence of the
acts or omissions, and upon review and recommendation of the
general counsel of the department:

(1) Fraud, or conspiracy to defraud.

(2) Misuse or misappropriation of state or federal funds,
including a violation of Section 8406.9.

(3) Embezzlement.

(4) Threats of bodily or other harm to a state official.

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

(6) Unsafe or unhealthy physical environment or facility.

(7) Substantiated abuse or molestation of children.

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

(9) Theft of supplies, equipment, or food.

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

(11) Failure of a program operating pursuant to Article 3
(commencing with Section 8220) or Article 15.5 (commencing
with Section 8350) to reimburse a significant number of approved
child care providers, as determined by the department, within 15
calendar days after the date set in begin delete a end delete begin insert the end insert plan for timely payments
to providers adopted by the contracting agency pursuant to Section
18226 of Title 5 of the California Code of Regulations, unless the
failure is attributable to a delay in receiving apportionments from
the state.

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

(b) An agency whose contract is immediately terminated
pursuant to this section retains appeal rights in accordance with
Section 8402.

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

(d) The department shall advise child care and development
contractors of the provisions of this section within 30 working
days of the effective date of the act amending this section during
the 2013-14 Regular Session of the Legislature.

begin delete SEC. 5. end delete
begin insert SEC. 6. end insert   

Section 8406.9 of the Education Code is amended to
read:

8406.9.  

(a) An agency that begin insert has in place or end insert 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, may
have its contract immediately terminated pursuant to Section
8406.7 if there is documented evidence of the conviction, and upon
review and recommendation of the general counsel of the
department.

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

(c) If the agency provides evidence to the department, before
the effective date given in the notice of immediate termination,
that the convicted person has been removed from the position of
fiscal responsibility or control and provides assurance that the
person will not be returned to a position of fiscal responsibility or
control, the department shall withdraw the termination action.

begin delete SEC. 6. end delete
begin insert SEC. 7. end insert   

Section 8407 of the Education Code is amended to
read:

8407.  

Except for causes listed in Sections 8406.7 and 8406.9,
termination of a child care and development contract shall not
occur without good cause and without notice as described in
Section 8406 at least 90 days before the effective date given in the
notice of termination.

begin delete SEC. 7. end delete
begin insert SEC. 8. end insert   

Section 8408 of the Education Code is amended to
read:

8408.  

Actions as defined in subdivisions (a) to (c), inclusive,
of Section 8402 shall remain in effect during the appeal process.
However, local contracting agencies may continue to operate under
the contract during an appeal of termination, unless the action is
an immediate termination action taken pursuant to Section 8406.7
or 8406.9, in which case a contracting agency shall not continue
to operate under the contract after the effective date given in the
notice of immediate termination.