BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1553|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: AB 1553
Author: Irwin (D)
Amended: 8/10/16 in Senate
Vote: 27 - Urgency
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 6/15/16
AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach,
Pavley
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 79-0, 5/5/16 (Consent) - See last page for
vote
SUBJECT: Savings plans: qualified ABLE program
SOURCE: State Treasurer John Chiang
DIGEST: This bill modifies the definition of "eligible
individual" for purposes of the ABLE (Achieving a Better Life
Experience) program, and provides that a section of the Public
Contract Code prohibiting certain contracts does not apply to a
contract between the ABLE Board and an ABLE Act program
consultant.
Senate Floor Amendments of 8/10/16 substitute the term "program
consultant for the qualified ABLE program" for "account
servicer" for purposes of the Public Contract Code exemption,
and insert an urgency clause.
AB 1553
Page 2
ANALYSIS:
Existing law:
1)Conforms to the Stephen Beck, Jr., Achieving a Better Life
Experience Act of 2014, which allows tax-free savings accounts
for eligible individuals who became blind or disabled before
reaching age 26, and directs states to establish one ABLE
account for each eligible individual who is a resident of the
state.
2)Creates the ABLE trust with specified powers, as well as an
ABLE board with specified membership within the State
Treasurer's Office to administer the program (SB 324, Pavley,
Chapter 796, and AB 449, Irwin, Chapter 774, Statutes of
2015).
3)Defines as an "eligible individual" for purposes of the ABLE
program an individual both entitled to benefits based on
blindness and disability under the Social Security Act, with
onset before 26 years of age, and who has a disability
certificate filed pursuant to ABLE Act requirements.
4)Allows the ABLE Act Trust to enter into contracts necessary
for the administration of the ABLE program trust, and engage
personnel, including consultants, actuaries, managers,
counsel, and auditors, as necessary for the purpose of
rendering professional, managerial, and technical assistance
and advice.
5)Prohibits, generally, a consultant from bidding on or being
awarded a follow-on contract based on the product of a
consulting services contract.
This bill:
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1) Modifies the eligibility definition to allow an individual
whose onset of blindness or disability occurred before age 26,
who is either entitled to benefits based on blindness or
disability under Title II or XVI of the federal Social
Security Act, or has filed a disability certification, as
defined in the federal ABLE Act, pursuant to the requirements
set forth in the federal ABLE Act.
2)Provides that the general prohibition against awarding a
contract to the same consultant who recommended the contract
as part of its consulting services does not apply to a
contract between the ABLE trust and a program consultant for
the qualified ABLE program. This bill requires public
disclosure of any contract for which the prohibition would
have applied.
3)Makes a technical change.
4)Provides that its provisions take effect immediately to allow
ABLE accounts to be accessed at the earliest possible time.
Background
The ABLE Act directed states to establish one ABLE account for
each beneficiary who is a resident of the state, and
additionally required the Internal Revenue Service (IRS) to
issue regulations to implement the program to guide states as
they enact legislation creating ABLE accounts. IRS has since
issued proposed regulations, updated them, and issued
Publication 907: Tax Highlights for Persons with Disabilities,
which details ABLE accounts. Comments on the proposed
regulations raised concerns regarding costs on states to manage
medical records and manage records necessary to verify
disability certifications. As a result, the IRS updated
guidance to also allow an individual to also qualify as a
beneficiary based on a certification, signed under penalty of
perjury, that the individual has a condition that meets all of
the required elements, and a diagnosis signed by a physician
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Page 4
regarding the relevant impairment or impairments. AB 1553
conforms state law to reflect this change in guidance.
Existing law, as added by AB 449 (Irwin, 2015), allows the ABLE
Act Trust to enter into contracts necessary for the
administration of the ABLE program trust, and engage personnel,
including consultants, actuaries, managers, counsel, and
auditors, as necessary for the purpose of rendering
professional, managerial, and technical assistance and advice.
AB 1553 disconnects the current prohibition against "follow-on"
contracts, which would prohibit a consultant hired to help set
up the program from providing consulting services to the program
on an ongoing basis.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified8/1/16)
State Treasurer John Chiang
Financial Services Institute
State Council on Developmental Disabilities
The Arc and United Cerebral Palsy
OPPOSITION: (Verified8/1/16)
None received
ARGUMENTS IN SUPPORT: According to the author, "The
California ABLE Act as signed into law by Governor Brown in late
2015 will provide people with disabilities a critical service by
allowing them to save money for the future without jeopardizing
their disability benefits. The State Treasurer and ABLE Act
Board have requested the authority to enter into a multistate,
long-term contract with an account service provider in order to
successfully implement the ABLE Act in a cost-effective manner.
Current statute does not give them this authority. AB 1553 is
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cleanup language that will allow the successful and effective
implementation of AB 449 (Irwin 2015) and SB 324 (Pavley 2015)."
ASSEMBLY FLOOR: 79-0, 5/5/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,
Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,
Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier,
Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,
Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger
Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey,
Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes,
McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte,
O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez,
Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,
Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon
NO VOTE RECORDED: Beth Gaines
Prepared by:Colin Grinnell / GOV. & F. / (916) 651-4119
8/12/16 13:21:56
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