BILL ANALYSIS                                                                                                                                                                                                    Ó

                                                                       AB 1348

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       Date of Hearing:  January 13, 2016


                                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  


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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,  , 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  
          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  

       FISCAL EFFECT:  Unknown


       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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       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  

         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  

         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  

         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  
         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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       None Received

       None Received


       Analysis Prepared by:Toni Symonds / J., E.D., & E. / (916) 319-2090