BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1064|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 1064
Author: Roger Hernández (D)
Amended: 7/16/15 in Senate
Vote: 21
SENATE EDUCATION COMMITTEE: 7-0, 7/1/15
AYES: Liu, Runner, Leyva, Mendoza, Monning, Pan, Vidak
NO VOTE RECORDED: Block, Hancock
SENATE APPROPRIATIONS COMMITTEE: 7-0, 7/13/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
ASSEMBLY FLOOR: 78-0, 5/14/15 (Consent) - See last page for
vote
SUBJECT: Education finance: indirect cost rates
SOURCE: Los Angeles County Office of Education
DIGEST: This bill removes the January 1, 2016 sunset date that
requires the California Department of Education (CDE) and any
other state agency to allow an indirect cost rate established by
the CDE for state or federal grant programs unless federal or
state law requires a lower rate.
ANALYSIS:
Existing law:
1)Requires the CDE and any other state agency to allow an
indirect cost rate established by the CDE for state or federal
grant programs administered by local educational agencies
AB 1064
Page 2
(LEAs) unless a lower rate is required by state or federal
law.
2)Defines the following:
a) 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,
purchasing, and centralized data processing.
b) Indirect cost rate to mean the rate established by the
CDE for each LEA.
These provisions become inoperative and are repealed as of
January 1, 2016, unless extended by statute enacted before that
date.
This bill repeals the January 1, 2016 sunset date that 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.
Comments
Need for the bill. According to the author's office, the CDE
determines the indirect cost rate for each school district,
county office of education, and other educational agencies.
This indirect cost rate is typically less than 10%, and it
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. The author's office
indicates that 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.
Indirect cost rates. The United States Department of Education
AB 1064
Page 3
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 LEAs. Indirect costs are agencywide
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. Federal and state law often delineate the
amount of indirect costs or administration either the state or
LEAs can utilize from a grant allocation. For example, under
the state After School Education and Safety program, school
districts are limited to expending no more than 5% of their
grant amount for administration.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Assembly Appropriations Committee, there would
be 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.
SUPPORT: (Verified7/30/15)
Los Angeles County Office of Education (source)
Antelope Valley Union School District
Association of California School Administrators
Baldwin Park Unified School District
Downey Unified School District
Lynwood Unified School District
Palmdale School District
Santa Clara County Office of Education
Small School Districts' Association
OPPOSITION: (Verified7/30/15)
None received
ASSEMBLY FLOOR: 78-0, 5/14/15
AB 1064
Page 4
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, Lopez, Low,
Maienschein, Mathis, Mayes, McCarty, 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
NO VOTE RECORDED: Linder, Medina
Prepared by:Lenin Del Castillo / ED. / (916) 651-4105
8/13/15 13:38:27
**** END ****