BILL ANALYSIS �
AB 245
Page 1
ASSEMBLY THIRD READING
AB 245 (Portantino)
As Amended May 11, 2011
Majority vote
EDUCATION 10-0 APPROPRIATIONS 17-0
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|Ayes:|Brownley, Norby, Ammiano, |Ayes:|Fuentes, Harkey, |
| | Buchanan, | |Blumenfield, Bradford, |
| |Butler, Carter, Eng, | |Charles Calderon, Campos, |
| | Halderman, | |Davis, Donnelly, Gatto, |
| |Wagner, Williams | |Hall, Hill, Lara, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Specifies that at the request of a contractor for a
contract executed by the California Department of Education
(CDE) with public and private agencies for the delivery of child
care and development services or for any facility and
administrative costs related to the delivery of child care
services, the CDE shall request the State Controller to make a
payment via direct deposit by electronic fund transfer (EFT)
into the contractor's account at the financial institution of
the contractor's choice.
EXISTING LAW :
1)Establishes eligibility for child care services and child
development programs administered by the CDE and requires the
Superintendent of Public Instruction (SPI) to adopt rules and
regulations on eligibility, enrollment and priority of
services needed for implementation (Education Code (EC)
Section 8263).
2)Authorizes the SPI to enter into and execute local contractual
agreements with any public or private entity or agency for the
delivery of child care and development services or the
furnishing of property, facilities, personnel, supplies,
equipment, and administrative services related to the delivery
of child care development services. Specifies that prior to
entering into or executing a local agreement, the CDE shall
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obtain annual approval from the Department of General Services
and the Department of Finance as to the form and general
content thereof. Provides that the agreements may only be
made for the delivery of child care and development services,
or the furnishing of property, facilities, personnel,
supplies, equipment, or administrative services related
thereto (EC Section 8262).
FISCAL EFFECT : According to the Assembly Appropriations
Committee, General Fund administrative costs to the CDE, likely
between $100,000 and $200,000. Of these costs, the CDE
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 CDE not having to
print and mail child care contractor payments. Unknown, likely
negligible costs to the State Controller.
COMMENTS : The CDE administers a child care and child
development system, maintaining over 2,800 funding agreements
with approximately 950 public and private agencies. Contractors
include school districts, county offices of education, cities,
colleges, other public entities, community-based organizations,
and private agencies. In fiscal year (FY) 2010-11, $2.669
billion was provided for child care and development programs
from state and federal funds, enrolling an estimated 415,715
children from birth through age 12. The FY 2011-12 budget
decreases the total funding by $500.7 million.
The author states, "The issue of how payments �are] being
delivered to child care contractors is not addressed in statute.
Therefore, Department of Education does not offer its
contractors the option to receive payments for services via
direct deposit or electronic fund transfer." This bill requires
the CDE to request the State Controller to make child care and
development program payments via EFTs or direct deposit if it is
requested by a contractor. The author argues that EFT is
efficient, safe, and less costly than mailing checks. The
author cites, as an example, the cost for the federal government
to print a check is $1.03 compared with 10.5 cents through
direct deposit. The author further states that the process of
mailing checks can cause delay in receiving payment when checks
are lost in the mail or delivered to the wrong address. In
those situations, the contractor must contact the CDE to stop
payment on a check and reissue a new check, which further delays
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payments to contractors for services they have already provided.
According to the State Controller's Office (SCO), approximately
half of all payments made by the SCO are through direct
deposits, primarily for state payroll, state retirement programs
(Public Employees' Retirement System and State Teachers'
Retirement System), and personal income tax refunds.
In order for payments to be made through EFT, the requestor, in
this case, the CDE, must initiate the request for payments to be
made through EFT and submit required information, including
audit data, electronically. The audit data is information
regarding the payments the SCO needs in order to verify that
payments are legitimate and accurate. The CDE must collect and
store the banking information, and once the SCO verifies the
audit data, the SCO can then make EFTs with the banking
information of the contractors provided by the CDE.
Over the last several years, the CDE has been working on
replacing its software program used to manage child care and
development contracts. Last year, the CDE issued a request for
proposal for a new software program to be paid with federal
funds that will allow the CDE to manage contracts and payments
more efficiently, including the ability to calculate and
generate payments to contractors; track agreement payment and
encumbrance information; generate local contract documents,
including making revisions to contracts; perform budgetary and
accounting functions; and implement an EFT process. Due to
higher than expected costs, the project has been suspended. The
CDE states that it would be difficult to implement EFT without
the new computer system.
The California Alternative Payment Program Association, the
sponsor of the bill, states, "In the lives of the providers we
support in every district throughout California, any delay in
receipt of monies creates hardships in their ability to pay
their bills. Just recently, the uncertainty and delay in
funding of CalWORKs Stage 3 created month's long backlogs of
monies owed to early care and education providers. When the
funding was then secured, the delay in actually getting the
dollars into the hands of the small business child care
providers took longer than it should have due to this process
not yet being in place."
AB 245
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Analysis Prepared by : Sophia Kwong Kim / ED. / (916) 319-2087
FN: 0000913