BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                       CONSENT


          Bill No:  AB 812
          Author:   Mitchell (D)
          Amended:  6/26/13 in Senate
          Vote:     21


           SENATE EDUCATION COMMITTEE  :  9-0, 7/3/13
          AYES:  Liu, Wyland, Block, Correa, Hancock, Hueso, Huff,  
            Monning, Torres

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           ASSEMBLY FLOOR  :  77-0, 5/29/13 (Consent) - See last page for  
            vote


           SUBJECT  :    Child care:  contracts

           SOURCE  :     Author


           DIGEST  :    This bill eliminates the required 90-day notice prior  
          to the immediate termination of a child care contract, prohibits  
          a contractor from continuing to provide care to children while  
          appealing an immediate termination, expands the reasons for  
          which a contract may be immediately terminated, and makes other  
          changes relative to contracts with the California Department of  
          Education (CDE) for child care and development services.

           ANALYSIS  :    

          Existing law:

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          1.Authorizes local government agencies or non-profit  
            organizations to contract with CDE to operate Alternative  
            Payment Programs and provide alternative payments and support  
            services to parents and child development providers.   
            Alternative Payment Programs help parents arrange child care  
            services and makes payments directly to the provider, which  
            may be in-home care, family child care or center-based care,  
            and either licensed or license-exempt.

           Contract classification.

           2.Requires the Superintendent of Public Instruction to establish  
            a contract classification system to identify, monitor and  
            provide technical assistance to contracted child care and  
            development providers and Alternative Payment Programs.

          3.Defines a "clear contract" as a designation of a contracted  
            agency that is in full compliance withal applicable statutory  
            provisions, funding terms and conditions, and applicable  
            program quality guidelines.

          4.Defines a "provisional contract" as designation of a newly  
            awarded contract to an agency, under which the timeframe of  
            this status is at the discretion of CDE.

          5.Defines a "conditional contract" as a designation of a high  
            risk contracted child care agency that is out of fiscal or  
            programmatic compliance.

          6.Prohibits a child care agency under a "conditional contract"  
            from applying for additional state child development program  
            funds.

           Contract termination

           7.Authorizes CDE to suspend or immediately terminate a contract  
            for chronic fiscal or program violations of a felony nature,  
            which include the following violations:

             A.   Fraud or conspiracy to defraud.

             B.   Misuse of state funds in violation with the California  
               Accounting Manual.


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             C.   Embezzlement.

             D.   Threats of bodily or other harm to state officials.

             E.   Bribery or attempted bribery of a state official.

             F.   Unsafe or unhealthy physical environment or facility.

             G.   Substantiated abuse or molestation of children.

             H.   Failure to report suspected child abuse or molestation.

             I.   Theft of supplies, equipment or food.

             J.   Places a person in position of fiscal responsibility or  
               control who has been convicted of specified crimes,  
               including financial crimes.

          1.Requires CDE to provide to a contractor a 90-day notice of  
            suspension or termination except if there is imminent danger  
            to the health and safety of children.

          2.Provides due process rights to a child care agency, which  
            include the right to an independent appeals process  
            administered by the Office of Administrative Hearings.

          3.Authorizes CDE to suspend or terminate a contract of an agency  
            that places a person in a position of fiscal responsibility or  
            control who has been convicted of burglary, forgery,  
            counterfeiting, larceny, embezzlement, or extortion.

          4.Current regulations establish an internal dispute review  
            process within CDE.

          This bill eliminates the required 90-day notice prior to the  
          immediate termination of a child care contract, prohibits a  
          contractor from continuing to provide care to children while  
          appealing an immediate termination, expands the reasons for  
          which a contract may be immediately terminated, and makes other  
          changes relative to contracts with CDE for child care and  
          development services.  Specifically, this bill:

           Immediate termination of a contract


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           1.Eliminates the requirement that fiscal or program violations  
            be chronic.

          2.Expands the reasons for which the CDE may immediately  
            terminate a contract to include:

             A.   Cessation of operations without the permission of CDE or  
               abandoning the contracts.

             B.   Failure of a program to fully reimburse a significant  
               number of approved child care providers within 15 calendar  
               days after the date set in the plan for timely payments  
               adopted by the contracting agency, unless the failure is  
               due to a delay in receiving apportionments from the state.

             C.   Failure to pay salaries owed to employees, pay federal  
               payroll tax, or fully reimburse a significant number of  
               child care providers for more than 15 days after the  
               employee salaries, federal payroll taxes, or reimbursement  
               payments were due, unless failure is due to a delay in  
               receiving apportionments from the state. 

          1.Eliminates the requirement that CDE provide written  
            notification 90-days prior to the immediate termination of a  
            contract, and deletes the condition that an immediate  
            termination be based on imminent danger to the health and  
            welfare of children.

          2.Prohibits a contractor from continuing to operate during the  
            period of appeal of an immediate termination of the contract,  
            and deletes the condition that a contractor ceases operation  
            only if the termination is based on imminent danger to the  
            health or welfare of children.

          3.Requires a notice of immediate termination to be served on the  
            contracting agency by personal service or at the last address  
            on file with CDE, by overnight mail or certified mail.   
            Provides that service may be proved in the manner authorized  
            in a civil action, and that service by mail is complete at the  
            time of deposit.  (Notice of immediate termination is still  
            required, but does not give contractor 90-days prior to  
            termination.)

          4.Deletes from the list of offenses for which, if committed by a  

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            person in a position of fiscal responsibility, a contract may  
            be immediately terminated, burglary, forgery, counterfeiting,  
            larceny, embezzlement, or extortion.

          5.Replaces on the list of offenses for which, if committed by a  
            person in a position of fiscal responsibility, a contract may  
            be immediately terminated, a crime involving misuse or  
            misappropriation of state or federal funds, or a state or  
            federal crime involving moral turpitude.

          6.Eliminates obsolete references to the suspension of contracts.

           Conditional contract status

           7.Deems a contracting agency (all contracts with that agency) to  
            be on conditional status if that agency has at least one  
            contract on conditional status.
          8.Removes the prohibition on a contractor with conditional  
            status from applying for additional child care and development  
            funds. 

          9.Clarifies that a conditional contract status may be imposed  
            for both fiscal and programmatic non-compliance (not just one  
            or the other).

           Internal appeal

           10.Requires CDE to provide an internal appeal procedure to  
            resolve a dispute between CDE and a contracting agency  
            regarding a dispute regarding the interpretation or  
            application of a term or condition of a contract, or to  
            dispute a finding made by CDE resulting from a fiscal or  
            programmatic review, including an error rate notification.

          11.Requires a contracting agency to have the right to appeal the  
            finding of a fiscal or programmatic review, including an error  
            rate finding, by submitting a request for appeal in accordance  
            with the internal appeal procedure developed by CDE.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  8/13/13)


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          Superintendent of Public Instruction
          American Academy of Pediatrics
          American Federation of State, County and Municipal Employees
          California Policy Immigrant Center
          Children's Advocacy Institute
          Coalition of Humane Immigrant Rights of Los Angeles
          Community Clinic Association of LA County
          Mexican American Defense and Education Fund


           ARGUMENTS IN SUPPORT  :    According to the author, "In the last  
          two years, there have been incidents where child care  
          contractors involved in financial malfeasance ceased operating  
          or ceased reimbursing providers, but would not relinquish their  
          contracts.  In these circumstances, CDE had no authority to  
          immediately remove those contracts and re-direct funding to  
          contractors who would continue services to eligible children and  
          families.  CDE could only withhold funding, which did nothing to  
          protect children."

           ASSEMBLY FLOOR  :  77-0, 5/29/13
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,  
            Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,  
            Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway,  
            Cooley, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,  
            Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,  
            Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández,  
            Jones, Jones-Sawyer, Levine, Logue, Lowenthal, Maienschein,  
            Mansoor, Medina, Melendez, Mitchell, Morrell, Mullin,  
            Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea,  
            V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner,  
            Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk,  
            Williams, Yamada, John A. Pérez
          NO VOTE RECORDED:  Holden, Linder, Vacancy


          PQ:ej  8/13/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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