BILL ANALYSIS Ó
AB 1064
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Date of Hearing: April 22, 2015
ASSEMBLY COMMITTEE ON EDUCATION
Patrick O'Donnell, Chair
AB 1064
(Roger Hernández) - As Amended March 26, 2015
SUBJECT: Education finance: indirect cost rates
SUMMARY: Removes the January 1, 2016 sunset date from
provisions of law that require the California Department of
Education (CDE) and any other state agency to allow the full
indirect cost rate established by the CDE for state or federal
grant programs administered by local education agencies unless a
lower rate is required by other state or federal law.
EXISTING LAW:
1)Requires the CDE and any other state agency to allow the full
indirect cost rate established by the CDE for state or federal
grant programs administered by local education agencies unless
a lower rate is required by other state or federal law.
2)Defines "indirect cost" to mean "the agencywide, general
management cost of the activities for the direction and
control of the agency as a whole [which] include, but are not
necessarily limited to, administrative activities necessary
for the general operation of the agency, such as accounting,
budgeting, payroll preparation, personnel services,
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purchasing, and centralized data processing."
3)Defines "indirect cost rate" to mean the rate established by
the CDE for each local education agency.
4)Becomes inoperative and is repealed January 1, 2016 unless
extended by statute enacted before that date.
FISCAL EFFECT: Unknown
COMMENTS: The United States Department of Education has
approved a delegation agreement with the CDE that authorizes the
CDE, as the recognized agency to establish indirect cost rates
for the state's local educational agencies (LEAs). Indirect
costs are agency-wide general management costs (i.e., activities
for the direction and control of the agency as a whole).
General management costs consist of administrative activities
necessary for the general operation of the agency, such as
accounting, budgeting, payroll preparation, personnel services,
purchasing, and centralized data processing.
This bill requires the CDE, or any other state agency, that
administers a grant or allocation of federal or state funds to a
school district, to allow an indirect cost rate that is not less
than the indirect cost rate established by CDE for each
district, unless federal or state law requires a lower cost
rate.
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Need for this bill. The CDE determines the indirect cost rate
for each LEA. This indirect cost rate is typically less than
10%, and this rate covers such general operating costs as
accounting, budgeting, personnel services, purchasing, payroll
and data processing. However, LEAs cannot cover their operating
costs when the indirect rate allowed for certain grants and
allocations are less than the CDE determined rate. If LEAs
cannot cover these operating costs, they cannot operate programs
that provide important services for students and families
without putting the LEA at financial risk. According to the
author's office, statutory protections are necessary to ensure
that, unless otherwise provided in state or federal law, the CDE
allows LEAs to use the full indirect rate established for them.
REGISTERED SUPPORT / OPPOSITION:
Support
Antelope Valley Union High School District
Claremont Unified School District
La Canada Unified School District
Los Angeles County Office of Education
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Lynwood Unified School District
San Gabriel Unified School District
Torrance Unified School District
Opposition
None received
Analysis Prepared by:Rick Pratt / ED. / (916) 319-2087