BILL ANALYSIS Ó AB 271 Page A Date of Hearing: March 24, 2015 ASSEMBLY COMMITTEE ON HUMAN SERVICES Chu, Chair AB 271 (Obernolte) - As Introduced February 10, 2015 SUBJECT: Child care: alternative payment programs and contractors: electronic records SUMMARY: Expands the authority granted under current law for Alternative Payment Programs (APPs) and child care providers to use electronic or other alternative methods for the storage of records. Specifically, this bill: 1)Authorizes APPs and child care providers, notwithstanding any other law, to retain child care case records electronically or through an alternative means. 2)Includes within the permissible alternative storage technologies: photography, microphotography, electronically recorded video images on magnetic surfaces, electronic data processing systems, optical disk storage, or any other electronic medium that is a trusted system. AB 271 Page B 3)Requires any alternative storage technologies used to not permit additions, deletions, or changes to the original document and to meet all necessary state and federal laws for recording of permanent records or nonpermanent records. 4)Requires a duplicate copy of any record reproduced to be deemed an original. 5)Authorizes APPs and providers to use an electronic signature, which can be a marking that is either computer generated or produced by electronic means and is intended by the signatory to have the same effect as a handwritten signature. Provides that an e-mail signature may constitute an electronic signature. 6)Deletes the requirement that child care contractors only be authorized to store records electronically if the original documents were created in electronic format. Additionally expands the five-year requirement for the storage of original records, as specified, to all records. EXISTING LAW: 1)Establishes the California Child Care and Development Services Act (CCDSA) to provide a comprehensive, community-based, coordinated, and cost-effective system of child care and development services for children from birth to age 13 with the purpose of enhancing the social, emotional, physical, and intellectual development of children. (EDC 8200 and 8201) 2)States the intent of the Legislature that all families have access to child care and development services, regardless of AB 271 Page C their demographic background, in order to help them attain financial stability through employment, while maximizing growth and development of their children, and enhancing their parenting skills through participation in child care and development programs. (EDC 8202) 3)Defines child care and development services as care and services designed to meet a wide variety of needs of children and their families, while their parents or guardians are working, in training, seeking employment, incapacitated, or in need of respite. (EDC 8208(i)) 4)Authorizes local government agencies or non-profit organizations to contract with the California Department of Education (CDE) to operate APPs and provide alternative payments and support services to parents and child development providers. (EDC 8220) 5)Establishes requirements and procedures APPs and child development providers must follow as contracted agencies with the CDE, including but not limited to tracking and reporting of attendance, accounting and auditing requirements, and reimbursement and payment procedures. (EDC 8221.5) 6)Requires any agency that contracts with CDE for the provision of educational services to undergo a periodic audit regarding the use of state and federal funds, as specified. (EDC 33420) 7)Requires agencies that receive state funds to, at the request of the Superintendent of Public Instruction, make all records pertaining to its state-funded programs available to the CDE, as specified, and that all records be retained by each agency for at least five years, as specified. (EDC 33421) 8)Permits APPs and child care providers to maintain records in electronic format only if the original documents were created in electronic format, as specified. (EDC 8227.3) AB 271 Page D 9)Establishes the Uniform Electronic Transactions Act (UETA), which permits, but does not require, a record or signature to be created, generated, sent, communicated, received, stored, or otherwise processed or used by electronic means or in electronic form. (CIV 1633.1 et seq.) FISCAL EFFECT: Unknown COMMENTS: Alternative Payment Programs: There are currently 76 APPs contracted with the CDE, funded through state and federal funds, to provide an array of support and payment services that enable low-income, eligible families to access subsidized child care. APPs do not provide direct child development services or programs, rather they provide families who are participating in welfare-to-work activities under the California Work Opportunities and Responsibility to Kids (CalWORKs) program, or who are low-income but do not qualify for CalWORKs, with subsidized child care vouchers. Those child care vouchers can be used to access child care at either a Title 5 or Title 22 child development center or with a license-exempt child care provider who meets certain criteria. The voucher can only be used at a Title 22 program that accepts them, whereas all vouchers must be accepted at Title 5 programs. Typically, a family that receives a voucher from an APP will then be referred to a local child care resource and referral (R&R) network. The R&R network, also funded through state and federal dollars, will assist a family by helping to identify and access the appropriate and desired child development program for the child or children. However, due to lack of state resources and ongoing cuts to child care, access to programs able to accept vouchers is limited. Should the family be unable to find appropriate care, they will be placed on a waiting list, if one AB 271 Page E is available. Electronic records: SB 820 (Sher/Pavley), Chapter 428, Statutes of 1999, enacted the Uniform Electronic Transactions Act (UETA), which is described as the first comprehensive effort to prepare state law for the electronic commerce era. Through this legislation, California aligned itself with a process developed by the Conference of Commissioners on Uniform State Laws to govern electronic transactions, which generally applies to all records or signatures that are generated or transmitted electronically, the formation of contracts using electronic records, the creation and retention of electronic records and signatures, and the procedures governing changes and errors in electronically-transmitted records. While the UETA does not require records or signatures to be recorded or maintained electronically, it does provide a process by which transactions can occur electronically. Writing in explanation of the UETA, the Conference of Commissioners on Uniform State Laws states "UETA applies only to transactions in which each party has agreed by some means to conduct them by electronically. Agreement is essential. Nobody is forced to conduct to electronic transactions."<1> Fourteen years later, AB 274 (Bonilla) Chapter 733, Statutes of 2013, was adopted. Although AB 274 was not directly associated with the further implementation of the UETA, it was initially introduced to, among other changes, specifically allow APPs to maintain records electronically in accordance with state and federal auditing standards. It was later amended to limit the electronic maintenance of records to only those that were generated electronically. In December 2013, the California Department of Education issued management bulletin 13-10 implementing the requirements of AB 274, which included --------------------------- <1> The National Conference of Commissioners on Uniform State Laws; Electronic Transactions Summary. http://www.uniformlaws.org/ActSummary.aspx?title=Electronic+Trans actions+Act AB 271 Page F additional guidance on what types of documents could be generated and transmitted electronically. In this guidance, the department explicitly states that "documents or records created in paper form cannot be scanned and stored electronically. These records must be stored in their original paper format." Need for this bill: According to the author, "California leads the nation when it comes to innovation and technology. However, many of our state government operations have been left in the past. As a result, a number of state agencies are forced to operate in a manner that is both outdated and inefficient. [This bill] would update an outmoded procedure by giving child care agencies the option of saving and storing all of their paperwork electronically. Providing child care programs with this option would both modernize agency operations and maximize the use of public dollars." Staff comments: This measure seeks to further the AB 274 (Bonilla) effort by permitting all records to be maintained electronically. However, it is unclear whether the bill will achieve the desired outcome while also ensuring that the electronic records meet state auditing requirements. In order for an electronic record to be used and accepted, CDE, which is the contracting agency, will have to agree to the use of electronic documents and have the technology available to accept such documents. Although the bill allows for APPs and child care providers to use electronic records, it does not mandate the CDE to accept or use them for purposes of programmatic or fiscal compliance. It is also unclear whether APPs and child care providers have the financial and technological resources to comply with industry standards of what is considered an authentic or otherwise accurate and reliable electronic document. The process of certifying that a particular agency's system of developing and maintaining electronic records is trustworthy and meets certain standards is costly, generally requiring a third AB 271 Page G party auditor or software firm to assess the system and provide an adequate level of protections and quality assurances necessary to meet state and federal auditing standards. This would occur in addition to annual auditing requirements for agencies already in statute. While CDE supports efforts to transition to the collection and use of electronic records, it lacks the capacity and resources to adequately receive and verify electronically generated and maintained records. Similar to the requirements for local agencies, CDE would likely have to put in place a system that allows for the receipt and use of electronic records for quality assurance and auditing purposes, and a process to verify the authenticity of those records. Without the appropriate checks and balances in the system, child care funding could be jeopardized. Recommended amendments: If the author's intent is to, as was stated, update an old system for the generation and storage of child care records, the provisions of this bill should be consistently applied across the local child care agency spectrum and should fully comply with federal and state statute. Committee staff recommends the bill be amended to do the following: 1)Align language in Section 8227.3 of the Education Code relating to APPs with Section 8262.1 related to contractors; 2)Delete language that exempts the maintenance of electronic records from having to comply with any other laws, including the UETA; 3)Ensure that the option to maintain records electronically is in compliance with state and federal requirements, as determined by CDE; AB 271 Page H 4)Ensure that the option to use an electronic signature is in compliance with state and federal law, as determined by CDE; and 5)Delete language specific to electronic records storage modalities that could conflict with state and federal law. PRIOR LEGISLATION: AB 2101 (Levine), 2014, was nearly identical to this bill, as introduced. It died on the Assembly Appropriations Committee Suspense File. REGISTERED SUPPORT / OPPOSITION: Support California Alternative Payment Program Association (CAPPA), sponsor CAPPA Children's Foundation Child Care Links Child Development Associates, Inc. Child Development Resources of Ventura County, Inc. Community Action Partnership of San Luis Obispo Community Child Care Council (4C's) of Alameda County AB 271 Page I Community Resources for Children Controltec, Inc. Davis Street Family Resource Center Family Resource & Referral Center Knowledge Universe Mexican American Opportunity Foundation North Coast Opportunities, Inc. Santa Cruz County Parents Association Sierra Nevada Children's Services Supportive Services, Inc. Valley Oak Children's Services Opposition None on file. AB 271 Page J Analysis Prepared by: Myesha Jackson/HUM. S./(916) 319-2089