BILL ANALYSIS Ó
AB 1064
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CONCURRENCE IN SENATE AMENDMENTS
AB
1064 (Roger Hernández)
As Amended July 16, 2015
Majority vote
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|ASSEMBLY: | 78-0 | (May 14, |SENATE: | 40-0 | (August 31, |
| | |2015) | | |2015) |
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Original Committee Reference: ED.
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.
The Senate amendments correct an Education Code reference
FISCAL EFFECT: According to the Senate Appropriations
Committee, 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.
Absent this bill, CDE indicates that it would establish the same
indirect costs rates as under this bill.
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COMMENTS: The United States Department of Education has
approved a delegation agreement with the CDE that designates 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 removes the sunset date on provision that require 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.
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.
Analysis Prepared by:
Rick Pratt / ED. / (916) 319-2087 FN: 0001578
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