BILL ANALYSIS
Bill No: SB
1079
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
SB 1079 Author: Walters
As Amended: April 5, 2010
Hearing Date: April 13, 2010
Consultant: Chris Lindstrom
SUBJECT
State agencies: advertising agreements.
DESCRIPTION
SB 1079 clarifies the law relative to the placement of paid
advertisements in state agency publications to reflect
current practice.
Specifically, the bill clarifies that the Office of State
Publishing (OSP) within the Department of General Services
(DGS) may authorize paid advertisements in materials
printed or published by OSP, a state agency, or a vendor,
except that OSP shall not print, publish or authorize paid
political advertising.
EXISTING LAW
Existing law authorizes the Office of State Publishing to
accept paid advertisements in materials printed or
published by the state except for paid political
advertising.
Existing law requires any state agency that was not
authorized to accept paid advertising in its publications
before January 1, 2006 to use OSP for all paid advertising
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in its publications.
BACKGROUND
Purpose of the bill . According to the author's office,
"The law is not clear as to how one may go about securing
advertising space, nor does it cite how one might go about
securing appropriations language. Government Code Section
14851 states, "The Office of State Publishing may accept
paid advertisements in materials printed or published by
the state, except that the department shall not print or
publish paid political advertising."
"When speaking with some of agencies (Controllers Office,
DMV, Franchise Tax Board & State Board of Equalization)
they believe that there is a need for language that
explicitly authorizes them to use third party advertisers
on the outside of their mail."
Background . OSP's Advertising Program was first approved
in July of 1996 as part of a budget trailer bill. The
Advertising Program was intended to allow state agencies to
offset their printing costs through the incorporation of
paid advertising in state publications.
In September 2005, SB 828 (Chapter 381, Statutes of 2005)
was enacted to authorize OSP to accept paid advertisements
in state publications. SB 828 also requires any state
agency that was not authorized to accept paid advertising
in its publications before January 1, 2006 to use OSP for
all paid advertising in its publications.
Under SB 828, any material that contains advertising must
either be printed at OSP or come through OSP. Agencies
cannot print ads in publications using other vendors unless
the job is vended out through OSP's Print Procurement
Department.
Three methods to solicit ads : Currently, there are three
methods for state agencies to solicit ads, as follows:
1)State agencies may contract with OSP. OSP has a contract
with a publishing representative who can produce a state
agency's publication. OSP works with the state agency,
and after OSP understands the agency's goals, forwards
samples of the agency's publication, circulation and
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demographic information to the publishing representative
for generating sales and revenue projections.
The state agency approves all ad copy prior to it being
printed in the agency's publication. OSP invoices all
advertisers, pays all commissions, and deducts the
balance from the agency's printing bill.
2)State agencies may contract with a commercial advertising
firm. State agencies must contact OSP for delegation to
contract with an outside ad agency. All procurement,
contracting, and Small Business and Disabled Veterans
Business Enterprise laws must be observed. State
agencies must pay the advertising firm directly without
OSP involvement. Collection of ad revenues is the
responsibility of the state agency or the advertising
firm. After the ads are sold and approved by the agency,
the completed artwork is submitted to OSP with a printing
requisition. OSP bills the agency the full amount for
the printing.
3)State agencies can solicit their own ads. State agencies
can request delegation from OSP to solicit the ads.
Agencies develop their own mailing lists and media kits
to solicit ads. Agencies submit approved artwork to OSP
with their printing requisition. OSP bills the agency
the full amount for the printing.
Staff comments . Arguably, the advertising program is
underutilized and underperforming. The Department of Motor
Vehicles is OSP's primary customer in the advertising
program, placing paid ads in approximately 10 publications.
This generates roughly between $500,000 - $1 million a
year, which in turn, is used to discount the printing costs
of the department's driver handbooks.
The greatest hindrance to the Advertising Program is that
there is no incentive for agencies to use the program.
Agencies are reluctant to get involved in the program
because they can't accept the money directly. Further, any
positive money flow (money in excess of the costs of
producing a print job) is not retained by the agency.
The original version of the bill created an incentive for
agencies to utilize the Advertising Program by allowing the
funds derived for the paid advertising to be available to
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the agency, upon appropriation by the Legislature, to fund
agency operations.
In addition, it may be possible for an agency to realize
more money from a paid advertisement contract than it costs
to produce the printed material. There is no provision in
law that specifies how any positive money flow is to be
directed.
The author may wish to consider adding language to the bill
to allow funds derived for paid advertising to be available
to the agency, upon appropriation by the Legislature, to
fund agency operations .
PRIOR/RELATED LEGISLATION
AB 1139 (Emmerson), Chapter 407, Statutes of 2007 .
Authorizes the Department of Motor Vehicles to enter into a
contract with a private vendor for the purpose of acquiring
and utilizing message display systems that may be used on
the Department's mailings or other department property.
Allows the contract vendor to utilize a portion of the
available time and space for the purpose of advertising
products or services.
SB 828 (Maldonado), Chapter 381, Statutes of 2005 . Strikes
the sunset on the Advertising Pilot Project which allows
state agencies to include advertisements in its
publications as a means of reducing printing costs.
AB 2315 (Chu), Chapter 220, Statutes of 2002 . Allows the
Office of State Printing, until January 1, 2006, to accept
paid advertisements in materials printed or published by
the state.
SB 1393 (Thompson), Chapter 162, Statutes of 1996 . The
Budget Act of 1996 provided, "[n]otwithstanding Section
14851 of the Government Code, the Office of State Printing
may accept paid advertisements in state publications or in
publications promoting an Office of State
Printing-supported project or program from any vendor that
is participating as a partner in that project or program,
except that the Office of State Printing may not accept or
publish any paid political advertising."
SUPPORT: As of April 9, 2010.
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Cross Commerce Media (Sponsor)
OPPOSE: None on file as of April 9, 2010.
FISCAL COMMITTEE: Senate Appropriations Committee
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