BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        AB 271|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
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                                   THIRD READING 


          Bill No:  AB 271
          Author:   Obernolte (R), et al.
          Amended:  5/28/15 in Assembly
          Vote:     21  

           SENATE EDUCATION COMMITTEE:  9-0, 7/8/15
           AYES:  Liu, Runner, Block, Hancock, Leyva, Mendoza, Monning,  
            Pan, Vidak

           SENATE HUMAN SERVICES COMMITTEE:  5-0, 7/14/15
           AYES:  McGuire, Berryhill, Hancock, Liu, Nguyen

           SENATE APPROPRIATIONS COMMITTEE:  7-0, 8/27/15
           AYES:  Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen

           ASSEMBLY FLOOR:  80-0, 6/3/15 - See last page for vote

           SUBJECT:   Child care:  alternative payment programs and  
                     contractors:  electronic records:  digital signatures


          SOURCE:    Author

          DIGEST:   This bill expands the existing authority of  
          Alternative Payment Programs (APP) and child care providers to  
          use electronic methods for storage of documents or records and  
          use of digital signatures pursuant to current state standards,  
          as specified.

          ANALYSIS:
          
          Existing law:









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          1)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.  APPs help parents arrange child care services and  
            make payments directly to the provider, which may be in-home  
            care, family child care or center-based care, and either  
            licensed or license-exempt.  (Education Code § 8220)

          2)Establishes requirements and procedures that 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.  (EC § 8221.5) 

            Current regulations require child care and development  
            providers that contract with APPs to submit periodic reports  
            that must include:

          a)Days and hours of enrollment and attendance.

          b)Total days of operation.

               c)     Services, revenues and expenditures relating to care  
                 provided for subsidized and unsubsidized children.

            Parents are required to physically sign-in and sign-out their  
            child when they drop off and pick up their child each day.   
            (California Code of Regulations, Title 5, § 18065)

          3)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 requires that all records be retained by  
            each agency for at least five years, as specified. (EDC §  
            33421) 

          4)Authorizes alternative payment programs and providers and  
            other contractors providing child care development services to  
            maintain records in electronic format if the original  
            documents were created in electronic format.  (EC § 8262.1)

          This bill:








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          1)Expands the existing authority of APP and child care providers  
            to use electronic methods for storage of documents or records  
            pursuant to current law and the standards for trustworthy  
            electronic document preservation under state regulations.  

          2)Authorizes APPs and child care providers to maintain child  
            care records electronically and requires any conversion from a  
            paper record to an electronic format, as well as the storage  
            of the electronic record to comply with the specified state  
            standards for electronic document or record preservation. 

          3)Authorizes APPs and child care providers to use digital  
            signatures and requires a digital signature to have the same  
            force and effect as the manual signature provided that the  
            requirements for digital signatures and their acceptable  
            technology satisfy state standards, as specified.

          4)Deletes the requirement that APPs and child care providers  
            only store records electronically if the original documents  
            were created in electronic format.

          5)Extends the existing five-year requirements for the storage of  
            original records, as specified to all records including  
            electronic records as described in this bill. 

          6)Makes other non-substantive technical changes. 

          Comments
          
       1)Need for the bill.  According to the author existing law  
            governing the use of technology for child care contractors  
            fails to reflect recent technological advances.  The author  
            further asserts that local child care agencies and contractors  
            are expending dollars and resources to store paper copies of  
            case files dating back five to seven years. This bill seeks to  
            give APPs and child care providers the option of storing  
            documents electronically and the ability to use digital  
            signatures on records.

       2)Alternative Payment Programs.  APPs are funded with state and  
            federal funds and offer vouchers to parents that allow them  
            choose care from licensed or license-exempt child care  
            providers, such as in-home care, family child care, and  
            center-based care. APPs help families arrange child care  







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            services through referral networks and make payments for those  
            services directly to the child care provider selected by the  
            family.  Statewide, there are currently 76 APPs contracted  
            with CDE. 
               
       3)System for preserving documents.  Existing law requires uniform  
            statewide standards for the purpose of storing and recording  
            documents in electronic media to be approved and adopted by  
            the Secretary of State in accordance with the American  
            National Standards Institute or the Association for  
            Information and Image Management (AIIM).  These standards  
            specify that in order to ensure that official electronic  
            documents are considered to be a true and an accurate copy of  
            the original information received and before the original copy  
            may be destroyed, at least two separate copies of the official  
            document must be created to meet the following AIIM standards:  


             a)   Copies are stored using both hardware and media storage  
               methodologies.

             b)   The system for storing copies must ensure that there is  
               no plausible way for electronically stored information to  
               be modified, altered, or deleted during the approved  
               information lifecycle.

             c)   At least one copy of the electronic document or record  
               must not permit unauthorized additions, deletions, or  
               changes to the original document and that is to be stored  
               and maintained in a safe and separate location.

            Additionally, any information being scanned, or electronically  
            received or stored should be stored using industry accepted  
            format such as JPEG, JBIG, JPEG 2000, or PDF-A.

            This bill seeks to authorize APPs and child care providers  
            that use at minimum the system described above in order to  
            reduce costs of maintaining original documents.

       1)Digital signature.  Current regulations establish criteria for  
            public entities using digital signature of technology.   
            Acceptable technology must be capable of creating signatures  
            that are unique to the person using it, capable of  
            verification, under sole control of the person using it and  







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            cannot be altered.  The regulations also provide  
            recommendations of acceptable digital signature technology.   
            This bill attempts to authorize digital signatures to have the  
            same effect as a manual signature.

       2)Auditing.  The Child Care and Development Services Act requires  
            an independent financial and compliance audit of organizations  
            that contract with the CDE under direct service contracts.   
            Existing law also 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 and requires that all records be  
            retained by each agency for at least five years. This bill  
            extends the existing five-year requirements for the storage of  
            original records to all records including electronic documents  
            and records. It is unclear how the use of electronic records,  
            if at all, will impact audit procedures by CDE.  Concerns were  
            raised on prior versions of this bill regarding the integrity  
            of electronically stored documents.  This bill has since been  
            amended to comply with existing state standards for storing  
            electronic documents as described in #3 and #4 above.

          Prior Legislation

          AB 2101 (Levine, 2014), similar to this bill, would have allowed  
          APPs and child care providers to maintain and retain records  
          electronically and would have expanded the list of types of  
          records that can be maintained electronically.  AB 2101 died in  
          the Assembly Appropriations Committee. 
          
          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          According to the Senate Appropriations Committee:


           The CDE indicates that this bill will drive one-time costs of  
            $73,000 to train audit staff, update related auditing  
            procedures, and participate in the development of regulations.  
            (Federal funds and General Fund)

           The CDE anticipates unknown additional costs for audit  
            fieldwork to verify systems meet required standards, with  







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            costs expected to decrease over time.  Potential costs could  
            be between the low tens of thousands to the low hundreds of  
            thousands.  Costs will largely depend on the duration and  
            complexity of each audit.  (Federal funds and General Fund)


          SUPPORT:   (Verified8/28/15)


          California Alternative Payment Program 
          California State PTA
          Knowledge Universe 


          OPPOSITION:   (Verified  8/28/15)


          None received




          ASSEMBLY FLOOR:  80-0, 6/3/15
          AYES:  Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,  
            Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,  
            Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina  
            Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,  
            Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,  
            Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,  
            Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,  
            Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,  
            Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez,  
            Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,  
            Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins

          Prepared by:Olgalilia Ramirez / ED. / (916) 651-4105
          8/30/15 19:42:04


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