BILL ANALYSIS Ó AB 1064 Page 1 Date of Hearing: May 6, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 1064 (Roger Hernández) - As Amended March 26, 2015 ----------------------------------------------------------------- |Policy |Education |Vote:|7 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- 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 Page 2 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 Page 3 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