BILL ANALYSIS �
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 727
A
AUTHOR: Mitchell
B
AMENDED: May 27, 2011
HEARING DATE: July 6, 2011
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CONSULTANT:
2
Orr
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SUBJECT
Public contracts: healthy and sustainable food
SUMMARY
Requires at least 50 percent of food and beverages offered
in vending machines and all food offered in cafeterias
located on state property to meet specified nutritional
guidelines by 2014.
CHANGES TO EXISTING LAW
Existing federal law:
Establishes the Patient Protection and Affordable Care Act
(PPACA) (Public Law 111-148) as amended by the Health Care
and Education Reconciliation Act (H.R. 4872). Requires,
under PPACA, operators of 20 or more vending machines to
provide signs disclosing the number of calories for food
items in the machines when the Nutrition Facts Panel cannot
be viewed by the purchaser.
Authorizes the Business Enterprise Program (BEP) under the
federal Randolph-Sheppard Act, which is intended to provide
jobs for people who are legally blind.
Continued---
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Establishes the Food and Drug Administration (FDA) to
regulate food, cosmetics, medicines, and medicine products,
and to ensure that such products are labeled appropriately.
Establishes the Nutrition Labeling and Education Act, which
requires all packaged foods sold outside of restaurants to
include nutritional content information on the packaging.
Existing state law:
Governs the operation, placement, and content of vending
machines. Specifically:
Establishes the BEP, which gives priority to blind
persons with respect to the operation of vending
facilities on state property;
Authorizes the placement of vending machines in
roadside rest stops on the state highway system;
Restricts the type of food and beverages sold in
vending machines on school premises; and
Requires that vending machines meet certain health
and safety standards set forth in the California
Retail Food Code.
Requires vendors operating or maintaining a vending machine
on state property to ensure that at least 35 percent of the
food, and at least one-third of the beverages, meet
accepted nutritional guidelines, as defined. Requires an
additional one-third of the beverages offered to either
meet the accepted nutritional guidelines or meet other
specified standards. Allows these standards to be phased
in, requiring 25 percent of the food to meet guidelines by
January 1, 2009, and requiring the total 35 percent of the
food to meet guidelines by January 1, 2011. Sunsets the
requirements in 2015.
Requires the Department of General Services (DGS) to
consult with the California Environmental Protection Agency
(CalEPA), members of the public, industry, and public
health and environmental organizations to provide state
agencies with information and assistance regarding
environmentally preferable purchasing.
This bill:
Sunsets the requirement that at least 35 percent of food
and at least one-third of the beverages in vending machines
on state property meet accepted nutritional guidelines on
January 1, 2014. Instead requires, beginning January 1,
STAFF ANALYSIS OF ASSEMBLY BILL 727 (Mitchell) Page
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2014, that at least 50 percent of food and at least 50
percent of the beverages in vending machines on state
property meet accepted nutritional guidelines. Specifies
that, until January 1, 2014, at least one beverage option
be drinking water, and requires the price not to exceed the
price of other beverages offered for sale. Deletes the
requirement that the nutritional standards for vending
machines on state property be repealed after four years.
Revises the current specified, accepted nutritional
guidelines as they pertain to vending machines on state
property, to include unsweetened carbonated water, limit
milk products, eliminate electrolyte replacement beverages,
and limit sugar sweetened beverages. Requires that the
nutritional guidelines be assessed when the Federal Dietary
Guidelines for Americans are revised.
In particular, prohibits individual snack items, as
defined, from exceeding 250 calories and 230 milligrams of
sodium, with specified exceptions. Prohibits individual
entr�e items, as defined, from exceeding 480 milligrams of
sodium per serving.
Beginning January 1, 2014, requires food sold in any
state-owned or state-leased building at food concessions
and cafeterias to meet standard criteria as contained in
food and nutrition guidelines, as specified.
Requires DGS to give preference to purchasing food grown,
produced or packaged in California, and for food that meets
specified sustainability guidelines, when approving
contracts for food to be sold in state buildings for food
concessions, cafeterias, or vending operations.
Requires that DGS provide specified additional information
to state agencies regarding environmentally preferable
purchasing.
Makes legislative findings and declarations concerning the
problems of obesity, the advantages of buying local and
sustainable food, and the increasing availability of
well-balanced and healthy food and snack items.
FISCAL IMPACT
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The Assembly Appropriations Committee analysis estimates
that DGS will incur one-time costs of about $80,000 to
modify food contract specifications and to disseminate
nutritional guidelines for food purchasing, and ongoing
costs of at least $150,000 regarding enhanced oversight and
compliance with food purchasing and vending contracts,
including vendor and contractor protests concerning
compliance.
According to the analysis, the increased restrictions on
the types of foods and beverages allowed to be sold could
impact sales volumes and revenues into the Vending Stand
Fund (VSF) and the Business Enterprise Program Vending
Machine Account (BEVMA). A 25 percent loss of sales could
result in revenue losses of $750,000 to the VSF and $90,000
to the BEVMA. In addition, the Department of Rehabilitation
(DOR) would incur increased administrative costs for
monitoring compliance with the content requirements.
The analysis also notes that departments with large food
service operations, such as the Departments of Corrections
and Rehabilitation and Mental Health could see significant
increases in food costs.
BACKGROUND AND DISCUSSION
The author claims that with the rise in obesity and a
subsequent increase in health insurance costs, it is
important that Californian's are provided with healthier
food options. National and state efforts have led to the
promotion of food procurement policies with locally and
regionally grown foods. This bill would require that at
least 50 percent of the food and beverages offered in
vending machines meet accepted nutritional guidelines.
Obesity epidemic
Obesity has reached epidemic proportions in the United
States, affecting one-third of all adults, 27 percent of
children, and 21 percent of adolescents. Former Surgeon
General David Satcher has stated that, "overweight and
obesity may soon cause as much preventable disease and
death as cigarette smoking." Data published by the Centers
for Disease Control and Prevention (CDC) indicate that 68
percent of the adult U.S. population is overweight or
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obese, including 34 percent who are considered obese.
For adults, being overweight or obese increases the risk
for a number of chronic diseases, including coronary heart
disease, type 2 diabetes, stroke, hypertension, arthritis,
and
certain types of cancer. Body mass index over 35 is
associated with excess mortality, primarily from
cardiovascular disease, diabetes, and certain types of
cancer.
In spring 2001, the former California Department of Health
Services contracted with the Public Health Institute and
Health Management Associates (HMA), to provide the most
complete estimate possible of the California-specific costs
of physical inactivity, obesity, and overweight. The
appraisal included relevant medical care conditions,
workers' compensation costs, and lost productivity outcome
measures associated with
the three risk factors. Data from the 1998 California
Behavioral Risk Factor Survey (BRFS) were used to identify
the prevalence of physical inactivity, and data from the
1999 California BRFS were used to identify prevalence of
overweight and obesity. The HMA study revealed that, in
year 2000 dollars, physical inactivity, obesity, and
overweight cost California an estimated $21.7 billion a
year in direct and indirect medical care ($10.2 billion)
costs, workers' compensation ($338 million) costs, and lost
productivity ($11.2 billion). The annual costs of physical
inactivity were estimated at $13.3 billion, obesity at $6.4
billion, and overweight at $2.0 billion. The majority of
these costs were shouldered by public and private employers
in the form of health insurance costs and lost
productivity.
CalPERS data suggest that the incidence of diabetes is
notably growing within the population of state and
municipal workers. In 2009, CalPERS spent about $103.5
million on diabetes care and management. The number of
CalPERS members treated for diabetes increased 24 percent
from 2004 to 2007. According to CalPERS, state and
municipal employees with diabetes lost an average of 8.3
workdays a year compared to 1.7 days for those without
diabetes.
Eating out
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Americans now consume about one-third of their total
calories from foods prepared outside the home. According to
the UC Berkeley Center for Weight and Health, research
shows that consumers routinely underestimate the amount of
calories in food. However, since nutrition labeling of
packaged foods was mandated by the FDA in the 1990s, nearly
one half (48 percent) of American adults report that
reading the nutrition information on food labels has helped
them change their purchasing habits.
Research suggests that nutrition behaviors can be
positively influenced by work health-promotion programs
that include healthful modifications of the work
environment. Dietary intake has been positively influenced
by environmental strategies such as increasing the
availability and variety of healthful food options,
reducing the price of healthful food in work-site
cafeterias and vending machines, and sending tailored
nutrition education email messages.
Diet-related health impacts
Scientific studies have consistently shown that choosing
healthy foods can reduce the risk of heart disease, cancer,
and other diseases. It is common medical knowledge that
regular physical activity and healthy eating, including
diets rich in fruits and vegetables, are key components of
energy balance and for the maintenance of appropriate
weight and overall good health. Conversely, long-term
sedentary lifestyles and consumption of too much high
calorie, low-nutrient food can result in the gradual
accumulation of excess body weight.
BEP
The BEP provides consumers who are legally blind with
opportunities to be trained in the operation of cafeterias,
vending stands, and snack bars, with the ultimate goal of
becoming independent food service professionals in
California. The program was created through federal
legislation, the Randolph-Sheppard Act of 1936, which was
enacted to "provide blind persons with remunerative
employment, enlarging the economic opportunities of the
blind, and stimulating the blind to greater efforts in
striving to make themselves self-supporting." Under
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federal and state guidelines, those individuals considered
legally blind are given priority in operating food services
facilities within federal and state buildings, including
state office buildings, highway rest stops, and state
prisons. The DOR administers the BEP program.
The BEP program trains these individuals to become
potential vendors. Upon completion of training, a new
vendor is provided with a license from DOR. Once a
location becomes available, BEP solicits applications from
eligible vendors. DOR supports vendors in the program with
financial assistance for equipment, counseling, and fiscal
oversight.
Approximately 60 percent of vending machines in state
buildings are operated by individuals from the BEP. The
remaining 40 percent of vending machines are contracted out
to private vendors. Vendors generate approximately $140
million in business per year. Revenues are deposited into
the VSF and the BEVMA in the Special Deposit Fund. The
program currently encompasses 3,300 vending machines at 474
state-owned or leased properties. This includes 151 sites
where 57 BEP vendors provide direct concession services,
including vending machines. The program receives revenues
of about $13 million annually from vending machines on
state property, with each vendor earning on average about
$35,000 per year.
According to DOR, individuals currently have the ability to
express their desire for a different choice of snacks than
what is offered by calling the number located on the
vending machine.
Other restrictions on food choices in public settings
Several California cities and counties have implemented
nutritional requirements for vended food. Contra Costa,
Marin, and Santa Clara counties, and the cities of Berkeley
and San Jose, have established vending machine policies
that require half of all food items to follow nutritional
guidelines, similar to those established by SB 12
(Escutia), Chapter 235 of 2005 and SB 965 (Escutia) Chapter
237, Statues of 2005 for schools (see prior legislation).
Some high schools in Los Angeles and San Diego have also
placed restrictions on vended foods.
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Related bills
SB 471 (Rubio) would require the state Department of Social
Services (DSS) to expand the list of items that are not
allowed to be purchased with CalFresh benefits, as
prescribed and to the extent permitted by federal law.
Would require DSS to prohibit the use of CalFresh benefits
at restaurants, including fast-food restaurants. Would
modify the list of allowable food items purchasable under
CalFresh to prohibit purchasing sweetened beverages
containing more than 10 calories per cup, with specified
exceptions. Pending in the Senate Human Services
Committee.
AB 581 (John A. P�rez) would establish, until January 1,
2015, the California Healthy Food Financing Initiative and
Fund for the purpose of expanding access to healthy foods
in underserved communities. Would require the Department
of Food and Agriculture (CDFA), in consultation with other
specified departments, to implement the initiative and
prepare recommendations by July 1, 2012 on promoting food
access. Pending hearing in the Senate Health Committee on
July 6, 2011.
Prior legislation
SB 1420 (Padilla), Chapter 600, Statutes of 2008, requires
every food facility in the state that operates under common
ownership or control or operates as a franchised outlet of
a parent company, with at least 19 other food facilities or
franchises with the same name that sell substantially the
same menu items, to disclose to consumers specified
nutritional information for all standard menu items.
Excludes specified facilities, such as grocery stores,
convenience stores, public and private school cafeterias,
and vending machines from these requirements.
SB 441 (Torlakson), Chapter 597, Statutes of 2008, requires
vendors operating vending machines on state property to
offer in any machine at least 35 percent of food items and
at least one-third of beverages that meet accepted
nutritional guidelines, as defined.
SB 490 (Alquist), Chapter 648, Statutes of 2007, prohibits
beginning July 1, 2009, a school district from making
available to pupils enrolled in kindergarten or grades 1
through 12 a food containing artificial trans-fat, and
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prohibits the use of artificial trans-fat in the
preparation of a food item served to those pupils. Exempts
from these requirements food provided as part of a USDA
meal program.
SB 254 (Torlakson) of the 2005-06 Session would have
required each vendor that operates or maintains a vending
machine on designated state property to satisfy the
requirement that at least 50 percent of the food and
beverages offered in the vending machine meet accepted
nutritional guidelines. Held in Assembly Business and
Professions Committee.
SB 522 (Torlakson) of the 2005-06 Session would have
required each vendor that operates or maintains a vending
machine on designated state property to satisfy a specified
phased-in requirement that at least 25 percent of the food
and beverages offered in the vending machine meet accepted
nutritional guidelines, as defined, by December 31, 2006,
and 50 percent by December 31, 2007, or under specified
conditions, by December 31, 2009. Would have required
users, upon request, be provided information about the
nutritional value of food and beverages offered in the
vending machine and procedures for requesting a change in
vending machine offerings. Held in Senate Governmental
Organization Committee.
SB 12 (Escutia), Chapter 235, Statutes of 2005, revised,
and extended to high schools, on a phased-in basis
beginning July 1, 2007, restrictions relating to the sale
of certain beverages and food items. Also removed the
requirement that SB 19 (Escutia), Chapter 913, Statutes of
2001, be funded in order to be implemented.
SB 965 (Escutia), Chapter 237, Statues of 2005, modified
the list of beverages that may be sold to pupils at an
elementary, middle or junior high school, in effect banning
the sale of sodas in schools.
SB 74 (Torlakson) of the 2003-04 Session would have
required each vendor that operates or maintains a vending
machine on designated state property to satisfy the
requirement that at least 50 percent of the food and
beverages offered in the vending machine meet accepted
nutritional guidelines. Held in Assembly Business and
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Professions Committee.
SB 677 (Ortiz), Chapter 415, Statutes of 2003, restricted
the sale of beverages to pupils in elementary, middle, and
junior high schools to drinking water, milk, fruit-based
drinks, and electrolyte replacement drinks during regular
school hours. All other beverages may be sold in the
schools one-half hour before the start of a school day and
one-half hour after the end of the school day.
SB 19 (Escutia) Chapter 913, Statutes of 2001, established
the Pupil Nutrition, Health and Achievement Act of 2001.
Established, as of January 1, 2004, various prohibitions on
the sale of beverages in elementary and middle schools, and
placed nutritional standards on the type of foods that may
be sold to pupils during school breaks and through vending
machines. Required the Department of Education to establish
a pilot program in which high schools voluntarily adopt
food sale requirements, in exchange for eligibility for an
increased reimbursement rate for free and reduced price
meals served.
Arguments in support
The California Pan-Ethnic Health Network (CPEHN) cites
studies that have shown a relationship between the physical
and social environments at the workplace and the health and
behaviors of employees. CPEHN states that nearly half of
waking hours are at the workplace, and that foods available
in employee cafeterias, vending machines, and
work-sponsored events frequently determine what people eat
throughout the day.
The California Food Policy Advocates (CFPA) believes that
providing healthy food options, as AB 727 prescribes, will
help prevent many obesity-related chronic diseases, while
adopting sustainable procurement practices will encourage
greater investment in California's agricultural economy and
minimize harm to the environment. CFPA claims that the
treatment of obesity-related diseases is increasing health
care costs and has a profound impact on workplace
productivity, costing the state an estimated $41.2 billion.
California Church Impact (Impact) believes that concern for
the health of the state's populations and for sustainable
agriculture should be the focus of the state's purchasing
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power within all of the state's own food distribution
programs. Impact states that the state Department of Parks
and Recreation already provides incentives to
concessionaires to use local farm products and offer
nutritious food items for sale. Impact believes that
Californians should have healthy food choices when they are
on or in state facilities, and that the state should not
add to the soaring rates of diabetes and obesity by failing
to give people access to healthier foods.
Arguments in opposition
The California Automatic Vendors Council (CAVC) opposes
provisions in AB 727 that require 50 percent of the
products in vending machines to meet specified nutritional
guidelines. CAVC believes AB 727 creates two different
standards for food venues in state buildings, placing
vending at a disadvantage relative to cafeterias and food
concessions.
The Grocery Manufacturers Association (GMA) believes AB 727
arbitrarily attempts to define foods as good or bad,
healthy or unhealthy. GMA claims that, by most standards,
many American diets are in need of improvement and there
are several initiatives (both public and private) that
strive towards this goal. GMA believes these efforts
uniformly recognize that it is not a simple task to draw a
bright line between foods that contribute to a healthy diet
and those that do not. According to GMA, AB 727 arbitrarily
tries to achieve this "bright line" and correlate food
purchases with obesity.
PRIOR ACTIONS
Assembly Business, Professions and Consumer Protection:5- 4
Assembly Appropriations: 12- 5
Assembly Floor: 49- 26
Senate Governmental Organization: 7- 5
COMMENTS
1.Double- referral. This bill was first referred to the
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Senate Governmental Organization Committee, where it
passed on a 7-5 vote.
2.Effects on vendor revenue. There is an assumption that
vending machine revenues will decrease due to the bill's
requirements but the effect could be otherwise. This
assumes that all consumer vending machine preferences
trend toward the less healthy snack options that many
machines currently offer. People generally use vending
machines because they are convenient, and some may use
them because the foods contained in vending machines are
often inexpensive. Consumers looking for convenient,
inexpensive products are not automatically predisposed to
purchasing unhealthy foods. Although research findings
are limited, it is possible that by increasing access to
healthy foods, vending machines could begin to attract
new customers who are interested in consuming healthy
foods that are also convenient and inexpensive, but who
have been discouraged from using vending machines to
purchase those foods due to the limited healthy options.
POSITIONS
Support: California Pan-Ethnic Health Network (sponsor)
AltaMed Health Services
American Cancer Society, California Division
Baldwin Park Healthy Eating Active Communities
Initiative
California Association of Nutrition and Activity
Programs
California Black Health Network
California Center for Public Health Advocacy
California Center for Rural Policy
California Church Impact
California Food Policy Advocates
California Food Project
California Medical Association
California Optometric Association
California Public Health Association - North
California Rural Legal Assistance Foundation
California WIC Association
Capitol Community Health Network
Center for Collaborative Solutions
Central Valley Partnership for Citizenship
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Clinical Nutrition Services, San Francisco
General Hospital
Community Resource Centers, St. Joseph Health
System -
Congress of California Seniors
Consumer Federation of California
Consumers Union
Environmental Working Group
Food for People, Inc.
Fresno Metro Ministry
Having Our Say
Health Officers Association of California
Humboldt Partnership for Active Living
Latino Coalition for a Healthy California
Libreria del Pueblo, Inc.
Los Angeles County Board of Supervisors
Madera Coalition for Community Justice
Pacific Islander Cancer Survivors' Network
Physicians for Social Responsibility, San
Francisco - Bay Area Chapter
Prevention Institute
SEIU Local 1000
SEIU - United Service Workers West
St. Mary Medical Center
Stanford School of Medicine - Prevention Research
Center
Street Level Health Project
Time for Change Foundation
UCLA Kaiser Permanente Center for Health Equity
One individual
Oppose: California Automatic Vendors Council (unless
amended)
California Council for the Blind (unless amended)
Grocery Manufacturers Association
Randolph Sheppard Vendors of California (unless
amended)
California Nevada Soft Drink Association
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