BILL ANALYSIS Ó
SENATE COMMITTEE ON HUMAN SERVICES
Senator McGuire, Chair
2015 - 2016 Regular
Bill No: AB 271
-----------------------------------------------------------------
|Author: |Obernolte |
-----------------------------------------------------------------
|----------+-----------------------+-----------+-----------------|
|Version: |May 28, 2015 |Hearing |July 14, 2015 |
| | |Date: | |
|----------+-----------------------+-----------+-----------------|
|Urgency: |No |Fiscal: |Yes |
----------------------------------------------------------------
-----------------------------------------------------------------
|Consultant|Mareva Brown |
|: | |
-----------------------------------------------------------------
Subject: Child care: alternative payment programs and
contractors: electronic records: digital signatures
SUMMARY
This bill authorizes alternative payment programs (APPs) and
providers to maintain any records electronically, as specified,
regardless of whether the original documents were created in
electronic format. It also authorizes APPs and providers to use
a digital signature, as defined. This bill additionally requires
the use and storage of electronic records or signatures and the
conversion from a paper record to an electronic format, to
comply with specified standards.
ABSTRACT
Existing law:
1) Establishes the California Child Care and Development
Services Act to provide a comprehensive, community-based,
coordinated, and cost-effective system of child care and
development services for children from birth to age 13 in
order to enhance the social, emotional, physical, and
intellectual development of children. (EDC 8200 and 8201)
2) Defines "alternative payments" to include payments that
are made by one child care agency to another agency or
child care provider for the provision of child care and
AB 271 (Obernolte) PageB
of?
development services, and payments that are made by an
agency to a parent for the parent's purchase of child care
and development services. Defines "alternative payment
program" to mean a local government agency or nonprofit
organization that has contracted with the California
Department of Education (CDE) to provide alternative
payments and to provide support services to parents and
providers. (EDC 8208)
3) Defines APPs to include the following:
a. A subsidy that follows a family from one
provider to another within a given APP.
b. Choices, whenever possible, among hours of
service including before and after school, evenings,
weekends, and split shifts.
c. Child care and development services according
to parental choice, including use of family day care
homes, general center based programs, and other
state-funded programs to the extent that those
programs exist in the general service area and are in
conformity with the purposes and applicable laws for
which those programs were established, excluding state
preschool programs. (EDC 8220)
4) Permits APPs, providers and contractors who provide
state-funded child care and development programs to
maintain records in electronic format only if the original
documents were created in electronic format, including
child immunization records, parental job verification
records, parent income verification and others. (EDC
8227.3) (EDC 8262.1)
5) Requires the Secretary of State to approve and adopt
appropriate electronic record keeping standards established
by the American National Standards Institute or the
Association for Information and Image Management and
defines a "trusted system" of storage, as specified. (GOV
12168.7)
AB 271 (Obernolte) PageC
of?
6) Defines in regulation the uniform statewide standards
adopted by the Secretary of State, in consultation with the
Department of General Services, for use in recording,
storing, and reproducing permanent and nonpermanent
documents or records in electronic media. These regulations
list minimum standards recommended by the American National
Standards Institute or the Association for Information and
Image Management, and provide specific conditions that
would meet the definition of trusted system. (2 CCR §
22620.1)
7) Defines in regulation the criteria for the use of
digital signatures and their acceptable use, including the
requirements that a signature be unique to the person using
it and under the sole control of the user, is capable of
verification, and other specified requirements, and defines
specific technology for acceptable usage, as specified. (2
CCR § 22002)
This bill:
1) Deletes the requirement that specified electronic
records may be maintained only by APPs and providers or
contractors operating or providing child care services, as
specified, if the original documents were created in an
electronic format.
2) Replaces that deletion with the authorization to
maintain records electronically, in compliance with state
and federal standards.
3) Requires that any conversion from a paper record to an
electronic format, as well as the storage of the electronic
record, shall comply with minimum standards established in
statute complies with the standards for trustworthy
electronic document or record preservation, as defined.
4) Deletes the requirement that documents that must be
retained by each contractor for audit purposes for at least
five years be records in their original form.
5) Adds to the education code a new section permitting APPs
and providers operating or providing child care services,
as defined, to use a digital signature that complies with
AB 271 (Obernolte) PageD
of?
state and federal standards, as determined by the
department, that may 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.
6) Establishes that the use of a digital signature shall
have the same force and effect as the use of a manual
signature if the statutory standards for digital signatures
are satisfied.
FISCAL IMPACT
An analysis by the Assembly Appropriations Committee
identified one-time costs in the range of $175,000 to train
CDE audit staff and unknown ongoing costs likely in the low
millions of dollars due to increased audit costs on all 76 AP
providers and potentially 800 child care providers. The
Appropriations Committee also identified the risk of losing
approximately $700 million in federal funds if CDE does not
have a system in place to accept the required documentation
necessary for auditors to verify the accuracy of reported
information.
BACKGROUND AND DISCUSSION
Purpose of the bill:
The author writes that currently, laws governing the use of
technology for early care contractors fail to reflect recent
technological advances. Accordingly, county agencies and early
care and education contractors are expending contract dollars
and personnel resources and grappling with outmoded
technologies, the author states. This is important to note as
more than 40 counties contract out their child care contracts to
APP agencies. AB 271 would authorize APPs to maintain any
records electronically regardless of whether the original
documents were created in electronic format.
The author states that this bill will not create a mandate but
AB 271 (Obernolte) PageE
of?
will allow local APPs the option of working towards a more
efficient and cost-effective paperless environment. According to
the author, providing child care programs with this option would
both modernize agency operations and maximize the use of public
dollars.
Child care
Approximately 350,000 children receive subsidized child care in
California through a variety of home-based and center-based
programs which are intended to both support child development
and parents' participation in work. To be eligible for
subsidized child care, a family's income must be below 70
percent of the state median income, or $42,000 for a family of
three; parents must be working or participating in an education
or training program; and children must be under the age of 13.
Space in child care and early childhood education programs is
limited, and shrunk considerably during the Great Recession. The
Legislature has made significant effort in the past several
years to recoup some of the lost slots, however there remains
more demand than supply.
The chart on the next page shows the share of subsidized child
care slots by program from July 1, 2014 through December 31,
2104. Under AB 271, all of the providers in this chart would be
permitted to store records electronically, according to CDE.
------------------------------------------------------------------
| AGGREGATED CHILD COUNTS AND NUMBER OF CONTRACTS FOR |
| THE FIRST SIX MONTHS OF CURRENT YEAR 2014-15 |
------------------------------------------------------------------
|------------------------------------+---------+-------+------------|
|CONTRACT TYPE |CHILD | % |CONTRACT |
| |COUNTS | |COUNTS |
|------------------------------------+---------+-------+------------|
|ALTERNATIVE PAYMENT PROGRAM (CAPP) | 31,305| 8.94| 76 |
|------------------------------------+---------+-------+------------|
|CALWORKS STAGE 2 (C2AP) | 68,352| 19.52| 69 |
|------------------------------------+---------+-------+------------|
AB 271 (Obernolte) PageF
of?
|CALWORKS STAGE 3 (C3AP) | 38,462| 10.99| 67 |
|------------------------------------+---------+-------+------------|
|GENERAL CHILD CARE - CCTR | 39,269| 11.22| 319 |
|------------------------------------+---------+-------+------------|
|FAMILY CHILD CARE HOME - (CFCC) | 3,903| 1.11| 33 |
|------------------------------------+---------+-------+------------|
|GENERAL MIGRANT CHILD CARE (CMIG) | 3,102| 0.89| 23 |
|------------------------------------+---------+-------+------------|
|MIGRANT ALTERNATIVE PAYMENT PROGRAM | 1,038| 0.3| 1 |
|(CMAP) | | | |
|------------------------------------+---------+-------+------------|
|SEVERELY HANDICAPPED (CHAN) | 167| 0.05| 3 |
|------------------------------------+---------+-------+------------|
|CALIFORNIA STATE PRESCHOOL | 164,493| 46.99| 632 |
|PROGRAM(CSPP) | | | |
|------------------------------------+---------+-------+------------|
| | | | |
|------------------------------------+---------+-------+------------|
|Source: California Department of | | | |
|Education | | | |
|801A Archived reports July 2014 - | | | |
|December 2014 | | | |
-------------------------------------------------------------------
Alternative Payment Programs
The 76 APPs that contract with CDE provide an array of support
and payment services for low-income, eligible families, but do
not provide direct child services or programs. Providers through
the APP are reimbursed with vouchers. Parents are offered
vouchers to purchase care from licensed or license-exempt
caregivers, such as friends or relatives who provide in-home
care. Families can use these vouchers at any licensed child care
provider in the state, and the value of child care vouchers is
capped. The state pays a Regional Market Rate (RMR), which
varies by county based on surveys of the local cost of care.
Contracts
Providers of State Preschool, General Child Care, and Migrant
Child Care - known collectively as Title 5 programs for their
regulation under Title 5 of the California Code of Regulations -
are required to meet additional requirements. These include
development assessments for children, rating scales, and staff
AB 271 (Obernolte) PageG
of?
development. Title 5 programs contract directly with CDE, and
receive the same reimbursement rates statewide.
Electronic records
Fifteen years ago, California adopted the Uniform Electronic
Transactions Act (SB 820, Sher, Chapter 428, Statutes of 1999),
following similar federal legislation. The Act enabled
electronically produced signatures and records to be legally
effective and enforceable, but it stopped short of addressing
how records or signatures should be maintained electronically.
AB 274 (Bonilla, Chapter 733, Statutes of 2013) allowed APPs to
electronically maintain records, including child attendance
records, in accordance with state and federal auditing
standards. However, it limited the electronic maintenance of
records to only those that were generated electronically in
response to CDEs concerns about their ability to adequately
audit such documents. In December 2013, when CDE issued its
management bulletin implementing the requirements of AB 274, it
included additional guidance that "documents or records created
in paper form cannot be scanned and stored electronically. These
records must be stored in their original paper format."<1>
Federal guidance
In May 2015, the U.S. Administration for Children and Families
wrote a letter to the author of this bill upon his request for
an opinion on federal support for the storage of electronic
records. It states, in part, "The federal government supports
the management of records electronically. Good electronic
management includes systematic storage of records with solid
uniform standards and policies and procedures for the retention
and retrieval of necessary information."
Standards for storage and maintenance of electronic records
State statute and regulations specify a series of protocols for
the storage and maintenance of electronic records. Government
Code 12168.7 requires the Secretary of State to approve and
adopt appropriate nationally recognized standards, while state
regulations list minimum standards and conditions that must be
---------------------------
<1> California Department of Education Management Bulletin
13-10, December 2013.
AB 271 (Obernolte) PageH
of?
met to be defined as a "trusted system."
According to the Association for Information and Image
Management, which is cited as an acceptable standard in state
law, appropriate record management of electronic documents
records includes assigning unique identifiers to individual
records, providing safeguards against unauthorized changes being
made to those records, and creating an unbreakable audit trail
for reasons of accountability and e-discovery.
Related legislation:
AB 2101 (Levine, 2014) was substantially similar to this bill.
It was held in the Assembly Appropriations Committee.
AB 274 (Bonilla, Chapter 733, Statutes of 2013) allows APPs to
maintain records, including child attendance records,
electronically in accordance with state and federal auditing
standards, but limited the electronic maintenance of records to
only those that were generated electronically.
COMMENTS
The prior version of this bill (AB 2010, Levine, 2014) was given
a high implementation cost by CDE in part due to potential loss
of federal child care funds of up to $1.7 billion. The bill did
not require providers to retain original paper source documents
which are currently required by CDE for performance of its
audits. If the lack of required documentation necessary for
auditors to verify the accuracy of reported information is
absent, federal funds could be at risk.
After extensive work with the state Department of Education,
insertion of language requiring specified state and federal
electronic record management standards and solicitation of a
letter from the US Department of Education indicating the
federal government's support of the electronic management of
records, the author has reduced the appropriations estimate in
this bill and some concerns of CDE.
AB 271 (Obernolte) PageI
of?
It remains unclear how broadly the electronic management of
records will be employed, since compliance with audit standards
for electronic records require significant financial and
technological resources. The process of certifying that a
particular agency's system of developing and maintaining
electronic records is trustworthy and meets certain standards is
costly and complex.
PRIOR VOTES
-----------------------------------------------------------------
|Assembly Floor: |80 - |
| |0 |
|-----------------------------------------------------------+-----|
|Assembly Appropriations Committee: |17 - |
| |0 |
|-----------------------------------------------------------+-----|
|Assembly Human Services Committee: |7 - |
| |0 |
-----------------------------------------------------------------
POSITIONS
Support:
California Alternative Payment Program (Sponsor)
CA State PTA
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
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
AB 271 (Obernolte) PageJ
of?
Supportive Services, Inc.
Valley Oak Children's Services
Oppose:
None received.
-- END --