BILL ANALYSIS Ó
AB 2900
Page 1
Date of Hearing: April 19, 2016
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT, AND THE ECONOMY
Eduardo Garcia, Chair
AB 2900
(Committee on Jobs, Economic Development, and the Economy) - As
Amended April 12, 2016
SUBJECT: State contracting with federal small business technical
assistance centers
SUMMARY: Establishes reporting requirements for state contracts with
federal small business technical assistance centers, including
information on the number and types of businesses served.
Specifically, this bill:
1)Requires a state department that awards state funds to a federal
small business technical assistance center to report annually on the
outcomes of the those contracts, including:
a) The purpose of the contract and contract metrics;
b) The amount of state funds awarded and expended during the
report year; and
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c) Specific information about the businesses served and the
outcomes from that assistance. The information reported to the
Legislature is required to be provided by the federal small
business technical assistance center. The information includes:
i) The amount of federal funds drawn down as a result of
funding through the state contract.
ii) The number of businesses assisted.
iii) The industry sectors of the businesses assisted, as
reported by the business.
iv) The city, county, and small business technical assistance
center jurisdiction in which the businesses are located. If
the population of the county is less than 250,000, only the
name of the county is required to be reported.
v) The number of total employees employed by those businesses
at the time those businesses were assisted based on the
following categories: no employees, five or less employees, 20
or less employees, under 50 employees, under 100 employees, and
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under 500 employees, as reported by the business.
vi) The number of jobs created and retained, as reported by
the business.
vii) Other program outcomes related to the purpose of the
program and contract metrics.
2)Defines an "awarding department" as a department, board, agency, or
authority of the state, or an officer, agent, or other authorized
representative of such a state entity awarding a contract for
services, including technical assistance to small businesses.
3)Defines a "federal small business technical assistance center" to
mean a Small Business Development Center, a Women's Business Center,
a Veteran Business Outreach Center, a Service Corps of Retired
Executives (SCORE) center, a Hollings Manufacturing Extension
Partnership center, or a Procurement Technical Assistance Center
operating in California under a federal contract. Each of these
federal contractors is defined in the bill.
4)Requires the report to the Legislature be submitted in compliance
with state reporting and that a copy of the report be posted on the
Internet Web site of the awarding department.
5)Provides, that to the extent that any provision of this bill
conflicts with a federal regulation or law, the provision in this
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bill will be inoperable.
6)Authorizes a department to include these reporting requirements as
part of any other annual report as an alternative to submitting a
separate report. If the agency chooses to include the information
within a separate report, deadline for submission may be modified
for up to three months.
7)Sunsets these reporting requirements on January 1, 2022.
FISCAL EFFECT: Unknown
POLICY ISSUE FRAME
The federal small business technical assistance centers are an
important resource for California entrepreneurs. A growing number of
state agencies are contracting with these centers to provide valuable
assistance in helping small businesses become ready to compete for
state contracts and comply with new state laws. This measure ensures
consistent reporting across agencies and greater transparency as to
which areas are the state of being provided services.
The analysis includes background on each of the federal technical
assistance programs and the reporting currently available without this
bill.
COMMENTS:
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1)The Role of Small Businesses within the California Economy:
California's dominance in many economic areas is based, in part, on
the significant role small businesses play in the state's $2.3
trillion economy. Two separate studies, one by the U.S. Census
Bureau and another by the Kaufman Foundation, found that net job
growth was strongest among businesses with less than 20 employees.
Among other advantages, small businesses are crucial in the state's
international competitiveness and are an important means for
dispersing the positive economic impacts of trade within the
California economy.
Nonemployer firms make up the single largest component of businesses
in California, 2.9 million out of an estimated 3.6 million firms in
2012, representing over $149 billion in revenues with the highest
number of businesses in the professional, scientific, and technical
services industry sector. As these non-employer businesses grow,
they continue to serve as an important component of California's
dynamic economy. Excluding nonemployer firms, businesses with less
than 20 employees comprise nearly 90% of all businesses and employ
approximately 18% of all workers. These non-employer and small
employer firms create jobs, generate taxes, and revitalize
communities.
In hard economic times, smaller size businesses often function as
economic engines. In this most recent recession the trend
continued, with the number of nonemployer firms increasing from 2.6
million firms ($137 billion in revenues) for 2008 to 2.8 million
firms ($138 billion in revenues) for 2010. In the post-recession
economy, small businesses are expected to become increasingly
important due to their ability to be more flexible and better suited
to meet niche market needs. Their small size, however, results in
certain challenges in meeting regulatory requirements, accessing
capital, competing for large-size contracts and marketing their
goods and services.
2)Small Business Development Center Program: The SBDC program is
sponsored by the federal Small Business Administration (SBA) and
functions as a cooperative effort of the private sector, the
educational community, and federal, state, and local governments.
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In California, SBDCs are administered through a partnership between
the California State Universities at Chico, Humboldt, and Fullerton;
the University of California at Merced; Long Beach City College; and
Southwestern Community College, Chula Vista.
Formal management of the partnership is provided through the six
Administrative Lead Centers that are designated by, and responsible
to, the SBA. Each Administrative Lead Center serves a specific
geographic area compromised of several SBDCs. The California SBDC
network serves businesses throughout California with over 40
permanent and satellite offices.
The SBDCs facilitate the creation, expansion, and retention of
businesses. Each SBDC provides one-on-one counseling, workshops,
advisory services, and referrals to prospective and existing
business owners. The SBDCs assist with financing, government
contracting, business planning and management, marketing,
international trade, energy efficiency and sustainability, disaster
preparedness, and other business issues. Each Administrative Lead
Center has its own resources and maintains links with other public
and private small business service providers in the region, such as
financial institutions, local workforce investment boards, economic
development corporations, and federal, state, and local government
entities.
There are also SBDCs which specialize in assisting technology-based
companies with advice and training on angel and venture capital
presentation preparation, funding strategies, product positioning,
market launch strategies, applications for federal grants,
technology transfers with research universities, intellectual
property issues, and strategic partnerships.
In 2014, the California SBDC network reported that they had advised
more than 60,000 clients and helped these small businesses raise
over $500 million in capital through its core small business
advising and training program, as well as through its array of
specialty programs.
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-----------------------------------------------------------------
| California SBDC Performance in 2015 |
| |
| |
-----------------------------------------------------------------
|-----------------+--------------+---------------+-----------------|
| Impact Category | 2015 | Impact | 2015 |
| | | Category | |
| | | | |
| | | | |
|-----------------+--------------+---------------+-----------------|
|Counseling Hours | 93,412 |Capital | $ 633,756,877 |
| | |Infusion | |
| | | | |
| | | | |
|-----------------+--------------+---------------+-----------------|
|Clients | 16,958 | -Debt | $ 169,480,856 |
|Counseled | |Financing | |
| | | | |
| | | | |
|-----------------+--------------+---------------+-----------------|
|Extended | 6,453 | -Equity | $ 464,276,020 |
|Engagement | |Financing | |
| | | | |
| | | | |
|-----------------+--------------+---------------+-----------------|
|Long Term | 5,720 |Jobs Created | 5,464 |
|Clients | | | |
| | | | |
| | | | |
|-----------------+--------------+---------------+-----------------|
|Training Events | 1,893 |Jobs Retained | 2,998 |
| | | | |
| | | | |
|-----------------+--------------+---------------+-----------------|
|Attendees | 29,935 |Change in | $ 271,781,435 |
|Trained | |Sales | |
| | | | |
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| | | | |
|-----------------+--------------+---------------+-----------------|
|Business | 1,039 | | |
|Startups | | | |
| | | | |
| | | | |
------------------------------------------------------------------
Funding for the program is provided through a federal SBA
population-based grant. In order to draw down these funds, each
Administrative Lead Center must provide a dollar-for-dollar match.
The federal government sets aside approximately $13 million for
California SBDCs annually, which represents slightly more than 11%
of the national program. Since the demise of the Technology, Trade,
and Commerce Agency in 2003, California has only received the full
amount of eligible federal funds once.
In 2010, Speaker John A. Pérez negotiated $6 million for the SBDCs
as part of the final budget negotiations with the Governor. [AB
1632 (Assembly Budget Committee) Chapter 731, Statutes of 2010] In
2010-11 federal fiscal year, the for-once fully funded California
SDBCs consulted with 50,000 business including 50% women, 48%
minorities, and 12% veterans. In addition, the SBDCs:
Created and retained 7,944 jobs, which was a 38% increase over
the prior year;
Assisted in 740 business startups, which was a 23% increase
over the prior year;
Helped small business clients to increase sales by $220,000,
which was a 71% increase over the prior year; and
Helped small business clients raise $176 million in new
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capital, which was a 22% increase over the prior year.
The 2014-15 and the 2015-16 Budget Acts included $2 million in
General Fund assistance for contracts with the SBDCs to assist small
businesses in accessing capital. Grant agreements were awarded to
34 SBDCs in September 2014, covering activities beginning October 1,
2014 through September 30, 2015. In the first year of the program,
the Capital Infusion Program resulted in $202,645,464 in documented
capital infusion, exceeding the capital infusion goal for the
program by more than 50%. The program served 9,702 small business
owners across the state. The chart below shows information
provided by GO-Biz at the special request of the JEDE Committee.
------------------------------------------------------------
| First Year Reported Outcomes from Capital Infusion Program |
| |
------------------------------------------------------------
|----------------------+---+----------+-----------+---------|
|Regional | |Funding |Capital |Clients |
| | | | | |
|Administrative Lead | |Received |Infusion |Served |
| | | | | |
|Center | | | | |
| | | | | |
|----------------------+---+----------+-----------+---------|
|Northern CA SBDC | |$382,124 |$30,128,694|2,312 |
| | | | | |
| | | | | |
| | | | | |
|----------------------+---+----------+-----------+---------|
|Northeastern CA SBDC | |$192,708 |$17,731,645|569 |
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| | | | | |
| | | | | |
| | | | | |
|----------------------+---+----------+-----------+---------|
|UC Merced SBDC | |$208,795 |$12,536,699|1,141 |
| | | | | |
|(Central CA) | | | | |
| | | | | |
|----------------------+---+----------+-----------+---------|
|Los Angeles SBDC | |$540,000 |$33,933,198|3,147 |
| | | | | |
| | | | | |
| | | | | |
-----------------------------------------------------------
------------------------------------------------------------
|Orange County/Inland |$393,665 |$101,257,66|1,003 |
| | | | |
|Empire SBDC | |7 | |
| | | | |
|---------------------------+----------+-----------+---------|
|San Diego/Imperial Valley |$198,000 |$4,304,862 |1,051 |
| | | | |
|SBDC | | | |
| | | | |
------------------------------------------------------------
-----------------------------------------------------------
|Pasadena City College | |$54,708 |$2,477,700 |344 |
| | | | | |
|SBDC | | | | |
| | | | | |
-----------------------------------------------------------
|University of La | |$30,000 |$275,000 |135 |
| | | | | |
|Verne SBDC | | | | |
| | | | | |
|----------------------+---+----------+-----------+---------|
| |Tot|$2,000,000|$202,645,46|9,702 |
| | | | | |
| |al | |5 | |
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| | | | | |
-----------------------------------------------------------
------------------------------------------------------------
| GO-Biz, March 2016|
| |
| |
| |
| |
| |
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AB 2900 would require more in-depth reporting on geographic regions
being served by the program. This would allow a Member of the
Legislature and the public to see whether businesses in the City of
Indio or the County of Ventura were being served under the state
contract.
1)Women's Business Center Program: The Women's Business Center
program is sponsored by the federal SBA and was established to
provide in-depth, substantive, outcome-oriented business services to
women entrepreneurs, both nascent and established businesses,
including a representative number of which are socially and
economically disadvantaged.
The Women's Business Center program is administered through a
regional network of 11 nonprofit organizations who are required to
assist businesses in making a substantial economic impact in their
communities, as measured by successful business startups, job
creation and retention, and increased company revenues.
California's network of women's business centers include: Anew
America Women's Business Center/Anew America Community Corporation
(Berkeley); Mendocino Women's Business Center West Company (Fort
Bragg); Asian Pacific Islander Small Business Program WBC/LTSC
Community Development Corp. (Los Angeles); PACE Women's Business
Center/Pacific Asian Consortium Employment (Los Angeles); University
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Enterprises Corporation at CSUSB (Coachella Valley); California
Capital Financial Development Corporation (Sacramento); Inland
Empire Women's Business Center University Enterprise Corp. at
California State University, San Bernardino (San Bernardino);
Renaissance Entrepreneurship Center (San Francisco); Women Business
Partners Program; Mission Community Services Corp. (San Luis
Obispo); Women's Economic Ventures (Santa Barbara); and Valley
Economic Development Center (Sherman Oaks).
In federal fiscal year 2014, assistance from the Women's Business
Centers resulted in the creation of 63 new jobs, and the retention
of 80 retained jobs in California. The Women's Business Centers
assisted 80 business start-ups, and helped clients access over $1
million in capital, which included $67, 625 in SBA loans, $729,400
in non-SBA loans, and $238,240 in equity.
2)The Veteran Business Outreach Center program: The Veteran Business
Outreach Center program in California is one of only four in the
U.S. The Veteran Business Outreach Center program is designed to
play a significant role in meeting the unique needs of veterans in
starting and operating businesses. The program is funded by the
federal SBA. The Veteran Business Outreach Center program provides
statewide small business consulting and workshops for veteran owners
of small businesses, and veterans wishing to start a small business.
According to information on its website, the Veteran Business
Outreach Center program offers outreach through its network of
related nonprofit veteran service centers in the California Cities
of Santa Rosa, Eureka, Menlo Park, and Redding, and in Reno, Nevada.
Below are 2014 outcomes for all four Veteran Business Outreach
Centers.
----------------------------------------------------------
| Activities at all Veteran Business | 1/1/2014 to |
| Outreach Centers | 12/31/2014 |
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| | |
| | |
|--------------------------------------+-------------------|
|(1) Number of Clients Counseled | 2,395|
| | |
| | |
|--------------------------------------+-------------------|
| (a) Small Businesses Counseled | 1,636|
| | |
| | |
|--------------------------------------+-------------------|
| (b) Large Businesses Counseled | 759|
| | |
| | |
|--------------------------------------+-------------------|
|(2) Number of Initial/Follow-up | 5,433|
|Counseling Sessions | |
| | |
| | |
|--------------------------------------+-------------------|
| (a) Small Business Sessions | 3,482|
| | |
| | |
|--------------------------------------+-------------------|
| (b) Large Business Sessions | 1,951|
| | |
| | |
|--------------------------------------+-------------------|
|(3) Number of Training Events | 201|
| | |
| | |
|--------------------------------------+-------------------|
| (a) Sponsored Training Events | 198|
| | |
| | |
|--------------------------------------+-------------------|
| (b) Non-sponsored Training Events | 3|
| | |
| | |
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|--------------------------------------+-------------------|
|(4) Number of Training Event | 10672|
|Attendees | |
| | |
| | |
|--------------------------------------+-------------------|
| (a) Sponsored Training Event | 10656|
|Attendees | |
| | |
| | |
|--------------------------------------+-------------------|
| (b) Non-sponsored Training Event | 16|
|Attendees | |
| | |
| | |
|--------------------------------------+-------------------|
|(5) Number of Awards (Fed+DoD+State) | 13|
| | |
| | |
|--------------------------------------+-------------------|
| (a) Small Business Awards | 13|
|(Fed+DoD+State) | |
| | |
| | |
|--------------------------------------+-------------------|
| (b) Large Business Awards | 0|
|(Fed+DoD+State) | |
| | |
| | |
|--------------------------------------+-------------------|
|(6) Dollar Value of Awards | $38,782.69 |
|(Fed+DoD+State) | |
| | |
| | |
|--------------------------------------+-------------------|
| (a) Small Business Dollars | $38,782.69 |
|(Fed+DoD+State) | |
| | |
| | |
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|--------------------------------------+-------------------|
| (b) Large Business Dollars | $0.00 |
|(Fed+DoD+State) | |
| | |
| | |
|--------------------------------------+-------------------|
|(7) Number of Prime Contract Awards | 11|
|(Fed+DoD+State) | |
| | |
| | |
|--------------------------------------+-------------------|
| (a) Small Business Prime Contracts | 11|
|(Fed+DoD+State) | |
| | |
| | |
|--------------------------------------+-------------------|
| (b) Large Business Prime Contracts | 0|
|(Fed+DoD+State) | |
| | |
| | |
|--------------------------------------+-------------------|
|(8) Dollar Value of Prime Contract | $22,455.00 |
|Awards (Fed+DoD+State) | |
| | |
| | |
|--------------------------------------+-------------------|
| (a) Small Business Prime Contract | $22,455.00 |
|Dollars (Fed+DoD+State) | |
| | |
| | |
|--------------------------------------+-------------------|
| (b) Large Business Prime Contract | $0.00 |
|Dollars (Fed+DoD+State) | |
| | |
| | |
|--------------------------------------+-------------------|
|(9) Number of Sub-Contract Awards | 2|
|(Fed+DoD+State) | |
| | |
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| | |
|--------------------------------------+-------------------|
| (a) Small Business Sub-Contracts | 2|
|(Fed+DoD+State) | |
| | |
| | |
|--------------------------------------+-------------------|
| (b) Large Business Sub-Contracts | 0|
|(Fed+DoD+State) | |
| | |
| | |
|--------------------------------------+-------------------|
|(10) Dollar Value of Sub-Contract | $16,327.69 |
|Awards (Fed+DoD+State) | |
| | |
| | |
|--------------------------------------+-------------------|
| (a) Small Business Sub-Contract | $16,327.69 |
|Dollars (Fed+DoD+State) | |
| | |
| | |
|--------------------------------------+-------------------|
| (b) Large Business Sub-Contract | $0.00 |
|Dollars (Fed+DoD+State) | |
| | |
| | |
----------------------------------------------------------
----------------------------------------------------------
| Source: SBA tracking system, 2014|
| |
| |
| |
| |
| |
----------------------------------------------------------
3)The Service Corps of Retired Executives (SCORE): The Service Corps
of Retired Executives (SCORE) is managed by the SCORE Association
"Counselors to America's Small Business" and is organized as a
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nonprofit association comprised of over 13,000 volunteer business
counselors working in 348 SCORE chapters throughout the U.S. and its
territories. SCORE members are trained to serve as counselors,
advisors, and mentors to aspiring entrepreneurs and business owners.
Services are offered at no fee, as a community service. SCORE was
formed in 1964 and nearly 10 million Americans have utilized SCORE
services.
SCORE is considered a resource partner with the SBA, which
administers a congressional grant that provides SCORE funding.
SCORE volunteers work with the Small Business Administration and
small business development centers to provide small business
mentoring and training to entrepreneurs through the Small Business
Administration and small business development center offices. There
are 19 SCORE offices in California, as well as a range of online
services.
In federal fiscal year 2014, SCORE counseled 15,698 clients and
provided a range of training workshops where 37,913 small business
owners attended.
4)The Procurement Technical Assistance Cooperative Agreement: The
Procurement Technical Assistance Cooperative Agreement program is
administered by the Department of Defense for the purpose of
helping small businesses access public contracts at the federal,
state, and local levels. The program provides matching funds
through cooperative agreements with state and local governments and
nonprofit organizations for the establishment of procurement
technical assistance centers
Some procurement technical assistance centers are administered
directly by state governments; others partner with universities,
community colleges, local economic development corporations, or
other local institutions. Some procurement technical assistance
centers operate within Bureau of Indian Affairs areas and serve
exclusively Native American-owned businesses. Many are affiliated in
some way with small business development centers and other small
business programs.
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Procurement technical assistance centers are staffed with counselors
experienced in government contracting and provide a wide range of
services including classes and seminars, individual counseling, and
easy access to bid opportunities, contract specifications,
procurement histories, and other information necessary to
successfully compete for government contracts.
There are 98 procurement technical assistance centers in the U.S.
including all 50 states, Washington D.C., Puerto Rico, and Guam.
Total funding for the program was $63.5 million in federal fiscal
year 2014 (federal and nonfederal funds combined). California 6
centers operated under contract by California Capital CDFI
(Sacramento), Los Angeles Office of Small Business (Los Angeles),
Monterey County Business Council (Seaside), Northern California
Small Business Development Center (Arcata), Riverside Community
College District (Corona), and San Diego County (San Diego). The
American Indian Chamber of Commerce has a contract that serves
Native Americans throughout the state.
Centers are funded based on, among other things, the service areas
level of distress including having a median income at or below 80%
of the statewide average, an unemployment rate 1% higher than the
national average for the most recent 24 months, or serving Native
American Indian reservations. Proposed new annual reporting will
include: number of clients served, number of new clients; amount of
counseling time; and number events the procurement technical
assistance center participated in during the report year.
5)Accountability and Transparency: Public accountability of state
expenditures is very important, as is having clear strategic
objectives and measurable outcomes. The reporting requirements in
AB 2900 represent best practices and ensures, according to the
author, that the state will receive key information on the impact of
state funding, including data on the number of businesses assisted,
jobs created/retained, and industry sectors served.
While top level oversight remains in Washington D.C. for these small
business technical assistance programs, the six SBA district
directors actively participate with the SBDC Lead Centers, SCORE,
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the Women's Business Centers, and the Veteran Outreach Center on
both program and administrative issues. The federal programs are
also independently reviewed to ensure management and accounting
methods are accurate.
While prior legislation proposed to codify and make the SBDC program
a state program, AB 2900 takes a different approach. This bill
establishes a method for tracking the state's activities through the
federal small business technical assistance programs.
6)Related Legislation: Below is a list of the related bills.
a) AB 184 (E. Garcia) Small Business Technical Assistance Act of
2015: This bill would have designated the Governor's Office of
Business and Economic Development as the lead state entity for
overseeing the state's participation and collaboration with the
federal small business technical assistance programs. Status:
Held on Suspense in the Assembly Committee on Appropriations,
2015.
b) AB 837 (Campos) Economic Development Program Reporting: As
passed by JEDE, this bill would have required annual reporting to
GO-Biz from the Small Business Development Center Leadership
Council on its activities in any year that the state contributes
funds. Amendments taken in the Senate deleted the content of the
bill and added language relating to CalPERS with Assemblymember
Wieckowski as the author. Status: Vetoed by the Governor, 2014.
The veto message reads: "This measure creates an exemption to
the California Public Employees' Pension Reform Act of 2013. I
am unwilling to begin chipping away at these reforms."
c) AB 1632 (Assembly Budget Committee) Financing and Technical
Assistance Funds for Small Businesses: This bill provided $32.35
million in funds for small business finance and technical
assistance, which leveraged $174 million in federal and in-kind
funding. The $32.35 million was allocated as follows: $20
million was appropriated for use within the state Small Business
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Loan Guarantee Program; $6 million to provide a federal match for
California SBDCs to draw-down federal dollars; $6 million for the
California Capital Access Program for loss reserve programs; and
$350,000 to the Federal Technology Program to draw-down federal
dollars. Status: Signed by the Governor, Chapter 731, Statutes
of 2010.
d) AB 2206 (Price) Small Business Development Centers: This bill
would have re-established the California Small Business
Development Center Program through the auspices of the Business,
Transportation, and Housing Agency. Status: Held in Assembly
Committee on Appropriations, 2008.
e) AB 2670 (Medina) Small Business Technical Assistance Centers:
This bill would have designated the Governor's Office of Business
and Economic Development as the lead state entity for overseeing
the state's participation and collaboration with the federal
small business technical assistance programs. Status: Held on
the Suspense File in the Assembly Committee on Appropriations,
2014. As a result of this bill and AB 2717, $2 million dollars
was provided in the budget to the SBDCs for assisting small
businesses access capital.
f) AB 2717 (Bonta) Funding for Small Business Development
Centers: This bill would have appropriated $6 million for the
purpose of assisting SBDC Administrative Lead Centers to provide
the mandatory match to draw down federal funds. Status: Held on
the Suspense File in the Assembly Committee on Appropriations,
2014. As a result of this bill and AB 2670, $2 million dollars
was provided in the budget to the SBDCs for assisting small
businesses access capital.
REGISTERED SUPPORT / OPPOSITION:
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Support - None Received Opposition - None Received
Analysis Prepared by:Toni Symonds / J., E.D., & E. / (916) 319-2090