BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 245
                                                                  Page  1

          Date of Hearing:   May 27, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                   AB 245 (Portantino) - As Amended:  May 11, 2011 

          Policy Committee:                              Education 
          Vote:10-0

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              No

           SUMMARY  

          On or after January 1, 2013, this bill requires the State 
          Department of Education (SDE), at the request of a child care 
          contractor, to request the State Controller make a payment via 
          direct deposit into the contractor's account, as specified.  

           FISCAL EFFECT  

          1)GF administrative costs to SDE, likely between $100,000 and 
            $200,000, to establish a process for implementing a direct 
            deposit process for contractors, as their request.  Of these 
            costs, SDE estimates approximately $100,000 would be on-going 
            costs.  Depending on the number of contractors who request 
            direct deposit, these costs may be offset due to SDE not 
            having to print and mail child care contractor payments.  

          2)Unknown, likely negligible costs to the State Controller to 
            provide payments electronically to child care contractors, as 
            specified.  
            
           COMMENTS  

           Purpose .  According to SDE, the SDE child care and development 
          system is the largest in the nation, with funding at 
          approximately $2 billion in state and federal funding. SDE 
          maintained approximately 1,450 service contracts with almost 800 
          public and private agencies supporting and providing services to 
          503,670 children in the 2008-09 fiscal year.  Contractors 
          include school districts, county offices of education, cities, 
          local park and recreation districts, county welfare departments, 
          other public entities, community-based organizations, and 








                                                                  AB 245
                                                                  Page  2

          private agencies.

          According to the author, "Due to technological innovations 
          governmental agencies now use electronic fund transfers.  There 
          are several advantages to giving contractors the option of 
          receiving payment via direct deposit.  First, it is efficient 
          and safe.  Second, it reduces printing, postage, and paper 
          costs.  In cases where a check does not arrive by mail, the 
          contractor must contact SDE to verify whether a check was 
          actually issued, then wait several days after the inquiry before 
          SDE will stop payment on the check and reissue a new one.  This 
          not only increases the current costs of mailing checks, but 
          delays payments to contractors for services they have rendered." 
           


           Analysis Prepared by  :    Kimberly Rodriguez / APPR. / (916) 
          319-2081