BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1064


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          Date of Hearing:  May 6, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          1064 (Roger Hernández) - As Amended March 26, 2015


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill 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  








                                                                    AB 1064


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          grant programs administered by local education agencies unless a  
          lower rate is required by other state or federal law.  


          FISCAL EFFECT:


          No direct state fiscal impact since any potential funding  
          distribution would occur within a program and a set amount of  
          grant funding already dedicated to that program.


          COMMENTS:  





          1)Purpose. AB 2435 (Hernández), Chapter 587, Statutes of 2013,  
            required, through January 1, 2016, the California Department  
            of Education (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.  
          2)Background. The United States Department of Education has  
            approved a delegation agreement with the CDE that authorizes  
            the department 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 and  
            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. CDE determines the indirect cost  
            rate for each LEA, typically less than 10 percent.












                                                                    AB 1064


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            According to the author, 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.  The Los  
            Angeles County Office of Education is sponsoring this bill to  
            ensure, unless otherwise provided in state or federal law, the  
            CDE allows LEAs to use the full indirect rate established for  
            them.





           


          Analysis Prepared by:Misty Feusahrens / APPR. / (916) 319-2081