BILL ANALYSIS Ó
AB 1348
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Date of Hearing: January 13, 2016
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT, AND THE ECONOMY
Eduardo Garcia, Chair
AB 1348
(Irwin) - As Amended March 26, 2015
SUBJECT: Governor's Office of Business and Economic Development
SUMMARY: Expands the authorities of the Governor's Office of Business
and Economic Development (GO-Biz) to include the establishment of a
federal grant administrator position. More specially, the bill:
1)Authorizes GO-Biz to establish the position of a federal grant
administrator (Administrator), who will serve as a single
point-of-contact for information on federal grants related to
business development, private sector investment, economic growth,
and local government. The Administrator is directed to coordinate
state activities in a manner that maximizes federal grant
opportunities within the state.
2)Specifies that the Administrator may, among other things:
a) Establish a statewide network of individuals who serve as a
point-of-contact for federal grant opportunities in their
specific state agencies, departments, local governments,
institutions of higher education, and foundations.
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b) Provide in-person and online training for individuals who
serve as point-of-contact for the purpose of improving the
pursuit of federal grant opportunities;
c) Identify employees within state government with expertise in
federal grant management and knowledge of state government
structure and responsibilities.
3)Authorizes the Administrator, beginning January 1, 2017, and
annually thereafter, to post on the GO-Biz website a report that
tracks federal grant funding to California that includes, at a
minimum, all the following performance metrics:
a) Number of federal grants awarded to the state;
b) Number of completed applications;
c) Total dollars received by the state;
d) Total dollars received by the state by schools and local
governments;
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e) Number of training sessions hosted by the Administrator and
the attendance at those events;
f) The extent to which individuals in the statewide network who
serve as a point-of-contact have met and coordinated efforts.
4)Requires GO-Biz to maintain information on its website relating to
federal grant information, including but not limited to, relevant
information from the federal governments, www.grants.gov , or a
successor internet website operated by the federal government,
subgrants, local grants, and foundation grants.
EXISTING LAW:
1)Requires the Governor's Office of Planning and Research to:
a) Serve as the "State Single Point of Contact" for coordinating
state and local review of applications for federal grants or
loans under select state programs, pursuant to Presidential
Executive Order 12372. In this capacity, the State Clearinghouse
coordinates state and local reviews of federal financial
assistance applications, federally required state plans, direct
federal development activities, and federal environmental
documents.
b) Requires the Governor's Office of Planning and Research to
coordinate the development of policies and criteria to ensure the
federal grants-in-aid administered or directly expended by state
government advance statewide environmental goals and objectives.
2)Requires GO-Biz to serve as the lead entity for economic strategy
and the marketing of California on issues related to business
development, private sector investment, and economic growth. In
this capacity, GO-Biz is authorized to coordinate the development of
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policies and criteria to ensure that federal grants administered or
directly expended by state government advance statewide economic
goals and objectives. GO-Biz is also authorized to work in
partnership with federal public institutions to further its mission.
3)Establishes the Federal Trust Fund within the State Treasury in
which all money received by the state from the federal government as
to be deposited, as specified. The expenditure of moneys within the
Federal Trust Fund are under the direction of the related state
agency, pursuant to the any conditions the Director of Finance may
prescribe. Moneys in the Federal Trust Fund are appropriated without
regard to the fiscal year.
4)Requires the State Controller and all state agencies receiving money
from the federal government to keep an accurate account of those
moneys.
FISCAL EFFECT: Unknown
POLICY ISSUE FRAME:
Federal funding in the area of grants has more than doubled since the
1980s. The challenges in accessing and managing these funds is
inspiring some states to take a new look at how they identify, apply,
and oversee federal grants. Some states are creating one-stop shops
for coordinating state activities and supporting applications from
local governments and the private sector. Through the activities of
these Federal Grants Offices, the states believe they are able to
develop deep intergovernmental relationships, which result in more
competitive applications, more responsive program delivery systems,
and are better able meet federal governments compliance mandates.
AB 1348 proposes an initial step toward California taking a more
proactive approach to federal grants by establishing the position of a
Federal Grants Administrator within GO-Biz. The analysis includes
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background on the Federal grant Offices, California's current tracking
of federal funding, and an extended summary of GO-Biz current
activities that support the state in obtaining federal grants.
Amendments are discussed in Comment #7.
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COMMENTS:
1)Author's Purpose: According to the author, "AB 1348 would provide
the coordinating functions necessary to manage and maximize federal
grants opportunities for the state and local governments in
California. As the most populous state in the country with the
largest economy, it should be a priority to ensure that we are
getting our share of the $550 billion in federal grant dollars that
are spent every year. The grant dollars California already receives
represents roughly one-third of our state budget. Even small
improvements in the cumbersome process of identifying, tracking,
applying and competing, and spending federal grant dollars can mean
large returns for Californians.
By establishing a point-of-contact network for federal grant funding
in state agencies and departments, local government, universities,
and foundations there will be an increase in applications and
awarded grants that benefit California. This model has worked in
other states and California's economy warrants a coordinating entity
that allows it to compete strongly for federal tax dollars."
2)State Grant Offices: Grants and instituting special
intergovernmental relationships are becoming an increasing part of
the federal government's process for advancing important new federal
policies. According to the federal Office of Management and Budget,
federal outlays for grants to state and local governments increased
from $91 billion in 1980 ($224 billion in constant dollars) to
approximately $546 billion in the 2013 federal fiscal year.
While historically, states have utilized their budget and fiscal
offices to track and manage federal funds, a growing number of
states are examining how to take a more proactive approach to this
shift in federal program delivery. One model being considered is
the establishment of a Federal Grant Offices, according to the
testimony from the National Conference of State Legislatures (NCSL)
before a March 2015 hearing of the Assembly Committee on Jobs,
Economic Development, and the Economy (JEDE).
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In addition to maximizing the state's federal grant opportunities,
these offices are designed to:
Provide a means to instill better oversight and management
practices for state staff;
Develop a dynamic network of grant professionals within the
public and private sectors;
Leverage government and nonprofits with a one-stop location
for finding information on grant opportunities;
Provide training to state department staff, as well as other
government and nonprofit grant professionals;
Serve as a key constituent referral point for state
legislative and U.S. Congressional offices; and
Review requests for letters of support from state agencies,
other government entities, and the private sector;
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According to research presented at the JEDE hearing, Arizona,
Massachusetts, Maryland, Nevada, and Rhode Island have Federal Grant
Offices and a range of other states are considering their adoption.
For state's wanting to establish centralized grant offices, it is
recommended that they begin by including three core components: a
designated federal point of contact for the state; an annual report
to track federal funds; and a website to share critical information.
AB 1348 has been drafted to help California make these first
critical steps.
1)California Grant Funding: On a per capita basis, California ranks
in the middle (24th) with $1,719 per capita as compared to the
national average of $1,625. Chart 1 displays federal grant spending
for selected states, including California.
---------------------------------------------------------------
| Chart 1 - FY 2014 Per Capita Federal Spending on Selected |
| Grants |
| |
| |
---------------------------------------------------------------
|--------------+--------------+--------------+--------------+--------------+--------------+--------------|
| Rank | State | Amount Per | | Rank | State | Amount Per |
| | | Capita | | | | Capita |
| | | | | | | |
| | | | | | | |
|--------------+--------------+--------------+--------------+--------------+--------------+--------------|
| 1 | District of | $4,343 | | -- | U.S. Average | $1,625 |
| | Columbia | | | | | |
| | | | | | | |
| | | | | | | |
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|--------------+--------------+--------------+--------------+--------------+--------------+--------------|
| 4 | New York | $2,666 | | 35 | Arizona | $1,513 |
| | | | | | | |
| | | | | | | |
|--------------+--------------+--------------+--------------+--------------+--------------+--------------|
| 8 | Mississippi | $2,157 | | 36 | Texas | $1,509 |
| | | | | | | |
| | | | | | | |
|--------------+--------------+--------------+--------------+--------------+--------------+--------------|
| 11 | Maine | $1,852 | | 45 | Washington | $1,233 |
| | | | | | | |
| | | | | | | |
|--------------+--------------+--------------+--------------+--------------+--------------+--------------|
| 18 | Oregon | $1,790 | | 47 | Florida | $1,184 |
| | | | | | | |
| | | | | | | |
|--------------+--------------+--------------+--------------+--------------+--------------+--------------|
| 24 | California | $1,719 | | 51 | Nevada | $1,069 |
| | | | | | | |
| | | | | | | |
--------------------------------------------------------------------------------------------------------
---------------------------------------------------------------
| Source: NCSL and the Federal Funds Information for States |
|(February 28, 2014) |
| |
| |
---------------------------------------------------------------
2)The Governor's Office of Business and Economic Development: In
April 2010, the Governor's Office of Economic Development was
established to provide a one-stop-shop for serving the needs of
businesses and economic developers. While initially established
through Executive Order S-01-10, the office was later codified and
renamed as GO-Biz. [AB 29 (John A. Pérez), Chapter 475, Statues of
2010] In 2014, GO-Biz assisted over 7,500 companies. This number
includes assistance provided by the six GO-Biz service units:
California Business Investment Services, Permit Assistance, the
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Office of the Small Business Advocate, International Affairs and
Business Development, the California Competes Tax Credit Program,
and the Innovation and Entrepreneurship Program.
Among other programs, GO-Biz provides permit and other business
assistance for new and expanding businesses, as well as
administering the California Innovation Hub Program and the state
international trade investment program. GO-Biz also oversees the
Office of the Small Business Advocate, who advocates for and
provides key information to small businesses.
The Governor's 2012 reorganization plan (GRP2), further aligned the
state's economic development-related administrative structure. Key
changes included dismantling of the Business, Transportation and
Housing Agency (BTH) and the shifting of a number of programs and
services to GO-Biz including:
The Small Business Loan Guarantee Program;
The California Travel and Tourism Commission;
The California Film Commission;
The Film California First Program; and
The California Infrastructure and Economic Development Bank
(I-Bank).
In 2013, the Governor signed legislation to establish three new
programs at GO-Biz and expand existing program authority in two
other areas including the Made in California Program, the California
Competes Tax Credit, the Small Business Finance Center, the Green
Infrastructure Bank and the codification of the Innovation Hub
Program. Each of these programs are described under Comment 8.
1)GO-Biz' Current Federal Grant Activities: According to GO-Biz, the
Office already engages in a range of federal grant activities
through several of its organizational units and programs. GO-Biz
learns about federal programs through its own research and
engagement with key stakeholders including cities, counties, and
economic developers.
The Business Investment Services unit the most involved in staying
up-to-date on federal incentive and business assistance programs.
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This information is used by the Business Services Unit in preparing
client letters that outline the federal, state, and local resources
available to meet the client's individual needs. GO-Biz also issues
project support letters for economic development-related grant
applications. According to GO-Biz, they do not pick winners and
losers when helping federal grant applicants, which means that on
occasion, GO-Biz provides support letters to multiple applicants
applying for the same grant. While support letters are provided by
whichever GO-Biz organizational unit that is most related, the
Innovation and Entrepreneurship unit has been especially busy given
the scale of new federal investments in innovation and new
technology.
Committee staff requested and GO-Biz provided examples of federal
competitive grants on which they have previously engaged. A
selection of those programs, including a description of GO-Biz'
participation, is provided below.
Federal Aviation Administration - Drone Test Site and Center
of Excellence competitions. Role: Held a Drone summit, acted as
coalition builders and conveners, drafted support letter for
Governor's signature;
U.S. Department of Defense/Department of Energy - NNMI
(National Network of Manufacturing Innovation Institutes). Role:
GO-Biz served as a coalition builder, resource agency convener,
and sent letter of support;
U.S. Department of Energy - i6 Grants. Role: GO-Biz sent
letters of support;
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U.S. Department of Commerce - IMCP (Invest in Manufacturing
Communities Partnerships). Role: GO-Biz sent letters of support;
U.S. Department of Defense - Office of Economic Adjustment
Grants. Role: GO-Biz served an advisory role, a coalition
builder, and sent letter of support;
NIST (National Institute of Standards and Technology). Role:
GO-Biz sent letters of support; and
Small Business Administration - Federal and State Technology
(FAST) Partnership Program. Role: GO-Biz sent letters of
support.
In addition to business clients, GO-Biz reports that it serves a
range of clients on issues relating to federal programs including
service providers and other government jurisdictions. In some cases
where the federal grant directly relates to GO-Biz' mission, the
Office supports the work of another state agency. As an example,
GO-Biz partnered with the California Community College Chancellor's
Office on its preparation of the federal State Trade and Export
Promotion application. GO-Biz both wrote entire sections and helped
to edit the overall application.
As the state's leading economic development entity, GO-Biz also
reports that it often engages with federal government program
administrators, as well as California recipients of federal funds.
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Below are highlights provided by GO-Biz on some of these activities.
GO-Biz has previously worked with:
The statewide network of the Small Business Development
Centers, which are primarily funded through the federal Small
Business Administration;
Coalitions across California on projects related to the
National Network of Manufacturing Innovation Institutes;
Several communities and businesses trying to identify and take
advantage of federally designated Foreign Trade Zones;
The U.S. Department of Agriculture in obtaining credit
enhancements for farm loans offered through the Small Business
Center at the I-Bank; and
Several communities in federally designated Empowerment Zones.
In addition to all the activities discussed above, GO-Biz also has
agency-level responsibility for ensuring that $84 million in federal
Small Business Jobs Act funds are properly administered though the
I-Bank Board.
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1)California's Current Tracking of Federal Funds: The state currently
tracks the receipt and use of federal funds in a number of ways,
none of which is particularly transparent to the public. Among
other means, federal funds are required (pursuant to the State
Administrative Manual) to be deposited in the Federal Trust Fund
within the State Treasury, unless the receiving state department has
specific statutory authority to hold its federal funds elsewhere.
State agencies that anticipate the receipt of federal funds complete
a State Controller's Office form in order to establish an account
within the Federal Trust Fund. Once established, the federal funds
can be tracked through initial receipt to final disbursement.
The State Controller also receives and reports annually on city and
county financial transactions, including revenues from federal
sources. All this information is available online, however, program
descriptions may need to be added in order to make it more user
friendly. Chart 2, on the following page, provides a sample of the
type of information currently available through the State
Controller's website.
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----------------------------------------------------------------------
| |
| |
| |
| Chart 2 - Selected Federal Revenues 2014 |
| |
| |
----------------------------------------------------------------------
|----------+---------+-------------+----------+----------+------------|
| City |Community| Total | City |Community | Total |
| | | Functional | |Developmen| Functional |
| |Developme| Revenues | | t Block | Revenues |
| |nt Block |Intergovernme| | Grant |Intergovern-|
| | Grant | ntal - | |Functional| mental - |
| |Functiona| Federal | | Revenues | Federal |
| | l | | | | |
| |Revenues | | | | |
|----------+---------+-------------+----------+----------+------------|
|Alameda | 0 | $2,170,944|Bell | 646,531| $1,009,954|
| | | |Gardens | | |
| | | | | | |
| | | | | | |
|----------+---------+-------------+----------+----------+------------|
|Alhambra | $112,660| $1,492,073|Blythe | 314,320| $706,011|
| | | | | | |
| | | | | | |
|----------+---------+-------------+----------+----------+------------|
|Anaheim |$4,118,73| $87,121,900|Brawley | 0| $3230211|
| | 6| | | | |
| | | | | | |
|----------+---------+-------------+----------+----------+------------|
|Bakersfiel|$3,213,67| $56,147,404|Los |$41,976,50|$394,850,757|
|d | 5| |Angeles | 1| |
| | | | | | |
| | | | | | |
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|----------+---------+-------------+----------+----------+------------|
|Baldwin |$1,350,71| $6,308,056|Thousand | $472,101| $12,511,262|
|Park | 7| |Oaks | | |
| | | | | | |
| | | | | | |
---------------------------------------------------------------------
----------------------------------------------------------------------
|Source: State Controller's Office, Cities Raw |
|Data |
| |
| |
| |
----------------------------------------------------------------------
Federal Trust Fund moneys are also reflected in the Governor's
Proposed Budget under "Reconciliation with Appropriations" and are
displayed within the relevant department's budget. Existing law
requires that the Budget Bill provide for the specific appropriation
of federal funds received by the state and deposited in the State
Treasury. Modification to the Legislature's current budget review
and adoption process could be made that would make this information
more accessible. One possible method would be to ask state
departments to present on federal funds as part of their budget
review by the Legislature, including posting information on their
website. Alternatively, the Legislative Analyst Office could be
asked to annually prepare a chart on federal funds.
As AB 1348 moves through the legislative process, the author may
wish to add language that more clearly indicates existing federal
grants data sources and replaces the requirement for an annual
report to a grants web-portal.
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2)Changes in Federal Grant Management: The increase in federal grants
has come with growing concerns by the federal General Accounting
Office (GAO) that more oversight and controls need to added to
ensure federal funds are being spent appropriately and result in the
intended outcomes. In 2014, the federal government began a process
of implementing a series of GAO recommendations including actions
that would increase the transparency of grant spending; require
deeper collaborations among intergovernmental participants and
nonprofits; strengthen internal controls; and improve the single
audit process. Implementation of these recommendations will require
better training and sharing of best practices among federal grant
recipients.
AB 1348 proposes to have the Federal Grants Administrator establish
and support the professional development and community out-reach
efforts of the statewide network of individuals who serve as a
point-of-contact for federal grant opportunities. Given the already
high degree of oversight required to oversee federal funds and the
potential new reforms, taking a comprehensive approach to upgrading
California may necessitate this bill.
3)Author's Amendments: Staff understands that the author will be
presenting amendments that shift the federal grant center to the
Governor's Office of Planning and Research. This is consistent with
other duties of OPR, including its role in reviewing and tracking
federal grants.
4)Related Legislation: In addition the 2012 reorganization, which
added a number of new programs (discussed above) and authorities
under GO-Biz' administrative oversight, the Governor signed other
legislation to expand GO-Biz' activities. Below is a list of
related legislation from current and past sessions.
a) AB 93 (Assembly Committee on Budget) California Competes Tax
Credit and State Sales and Use Tax Exemption*: This bill
institutes three new tax programs, including a California
Competes tax credit for attracting and retaining major employers;
a Sales and Use Tax exemption for manufacturing and bio-tech
equipment and similar purchases; and a hiring credit under the
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Personal Income Tax and Corporation Tax for employment in
specified geographic areas. Additionally, the bill results in
the phasing-out and ending of certain tax provisions related
Enterprise Zones and similar tax incentive areas, and ending the
current Small Business New Jobs Credit tax incentive program.
The bill also provides for allocating the California Competes tax
credit through the Governor's Office of Business and Economic
Development to assist in retaining existing and attracting new
business activity in the state. Status: Signed by the Governor,
Chapter 69, Statutes of 2013.
b) AB 250 (Holden and V. Manuel Pérez) Codification of California
Innovation Hubs: This bill codifies and expands the California
Innovation Hub Program at GO-Biz for the purpose of stimulating
economic development and job creation through the regional
coordination of federal, state, and local innovation-supporting
resources. Status: Signed by the Governor, Chapter 530,
Statutes of 2013.
c) AB 1247 (Medina and Bocanegra) Small Business Finance Center:
This bill establishes the California Small Business Finance
Center at the I-Bank, within the Governor's Office and Economic
Development, and transfers the authority to administer the small
business loan guarantee program and other related programs to the
I-Bank. Status: Signed by the Governor, Chapter 537, Statutes
of 2013.
d) SB 12 (Corbett) "Made in California" Labeling: This bill
establishes the "Made in California Program" within the
Governor's Office of Business and Economic Development for the
purpose of encouraging consumer product awareness and to foster
the purchases of products manufactured in California. In order to
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qualify, the product must meet the state standard for being "Made
in the U.S." and have at least 61% California components.
Status: Signed by the Governor, Chapter 541, Statutes of 2013.
e) SB 798 (De León) Green Infrastructure Bank: This bill
establishes the California Green Infrastructure Bank as a public
corporation. The bill puts the bank under the direction of an
executive director to be appointed by the Governor and subject to
Senate confirmation. The bill authorizes the bank to issue loans
and bonds that facilitate green economic development, and adds
the bank to the list of investments eligible for funds from the
Greenhouse Gas Reduction Fund. Status: Signed by the Governor,
Chapter 367, Statutes of 2014.
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REGISTERED SUPPORT / OPPOSITION:
Support
None Received
Opposition
None Received
Analysis Prepared by:Toni Symonds / J., E.D., & E. / (916) 319-2090