BILL ANALYSIS �
AB 2670
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Date of Hearing: April 22, 2014
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
Jose Medina, Chair
AB 2670 (Medina) - As Introduced: February 21, 2014
SUBJECT : Small Business Technical Assistance Act of 2014
SUMMARY : Recognizes the importance of the federal Small Business
Development Center (SBDC) Program in California and designates the
Governor's Office of Business and Economic Development (GO-Biz) as the
lead state entity for overseeing the state's participation and
collaboration with the federal program. Specifically, this bill :
1)Makes findings and declarations on, among other things, the importance
of the SBDCs in expanding and supporting California small businesses.
2)Defines a number of terms, including, but not limited to:
a) The California Small Business Development Center Program as being
comprised of the six regional networks of SBDCs which operate under
a contract between each of the six Administrative Lead Centers and
the U.S. Small Business Administration (SBA).
b) The Administrative Lead Center as the entity which the federal
government contracts with and is directly accountable for all
aspects of the California SBDC Program including staffing, program
outreach, and securing the required federal match.
c) An SBDC is the individual physical location where a small
business owner or an aspiring entrepreneur can receive free
one-on-one consulting and low at-cost training on a variety of
topics including starting, operating, and expanding a small
business.
3)Codifies the existence of the federally designated SBDCs and grants
them all rights and responsibilities as authorized under the federal
Small Business Act of 1980.
4)Requires GO-Biz to serve as the lead state entity for overseeing the
state's participation with the California SBDC Program. GO-Biz is
authorized to collaborate and support the Administrative Lead Centers
in the provision of technical assistance and other related services to
small businesses.
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5)Recognizes that SBDCs offer a range of services including, but not
limited to, providing specialized counseling and technical assistance,
offering expert start-up business advising, commercialism assistance,
conducting workshops and seminars, and coordinating employee training
and placement programs.
6)Authorizes GO-Biz and other state entities to contract with an
Administrative Lead Center.
7)Requires the Administrative Lead Center(s) to report on any activities
that are the result of state funds being contributed to the California
SBDC Program, including, the number of businesses assisted, number of
jobs created and retained as a result of assistance, estimated amount
of tax dollars generated, increase in sales reported as a result of the
assistance, the amount of capital infusion obtained by the assistance,
and the amount of total federal funds allocated to each region. For
general tracking purposes, the report is required to also provide
information on the businesses assisted including industry sector and
size of the business based on employment.
EXISTING LAW :
1)Establishes GO-Biz within the Governor's Office for the purpose of
serving as the lead state entity for economic strategy and marketing of
California on issues relating to business development, private sector
investment and economic growth. GO-Biz also serves as the
administrative oversight for the California Business Investment
Service, the Office of the Small Business Advocate (OSBA), and the
California Infrastructure and Economic Development Bank (I-Bank).
2)Establishes the OSBA for the purpose of advocating on the behalf of
small businesses. Among other duties, the Office responds to
complaints from small businesses concerning the actions of state
agencies and the operative effects of state laws and regulations
adversely affecting those businesses.
3)Establishes the Small Business Finance Center within GO-Biz under the
direct administrative oversight of the I-Bank for the purpose of
addressing the capital needs of California small businesses through a
statewide network of small business financial development corporations.
FISCAL EFFECT : Unknown
COMMENTS :
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1)Author's Purpose : According to the author, "AB 2670 designates the
Governor's of Business and Economic Development as the lead state
agency for overseeing the state's Small Business Development Centers.
In addition, the state identifies the Small Business Development
Centers as a federal program, operating in California, in order to
promote and encourage California small businesses to take advantage of
free counseling and services.
Small Business Development Centers in California have been leaders in
providing small business owners and entrepreneurs with the tools and
guidance needed to become successful in today's challenging economic
climate. As of January 13, 2014, the California Small Business
Development Centers has reported assisting a combined total of 64,000
small business clients through one-on-one consulting and training
activities. As a result of this assistance, clients created 5,484 new
jobs.
AB 2670 recognizes the important role Small Business Development
Centers play with in the California economy."
2)Framing the Policy Issue : This bill recognizes the important role
SBDCs play within the California economy and designates GO-Biz as the
lead state entity for facilitating the state's engagement with these
centers. The bill also recognizes the federal requirement that SBDCs
must provide a financial match in order to draw down federal funds and
sets reporting requirements for the use of any state moneys.
In deliberating the merits of the measure, Members may wish to consider
the importance of small businesses to the California economy and jobs
creation. The analysis includes information on California small
businesses, the SBDCs, and related legislation. Comment 7 includes
amendment recommendations.
3)The Role of Small Business 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 trillion economy. Among
other advantages, small businesses are crucial to the state's
international competitiveness and are an important means for dispersing
the positive economic impacts of trade within the California economy.
California small businesses comprised 96% of the state's 60,000
exporters in 2009, which accounted for over 44% of total exports in the
state. Nationally, small businesses represented only 31.9% of total
exports. These numbers include the export of only goods and not
services.
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Businesses with no employees make up the single largest component of
businesses in California, 2.8 million out of an estimated 3.5 million
firms in 2010. As these businesses grow, they continue to serve as an
important component of California's dynamic $2 trillion economy.
Microenterprises, meaning businesses with less than five employees
represent approximately 93% of all businesses in the state, or
approximately 3.2 million of all businesses. Businesses with 99 or
less employees comprise nearly 98% of all businesses and employ
approximately 38% 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) by 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, also results in certain challenges in
meeting regulatory requirements, accessing capital, and marketing their
goods and services. California's network of SBDCs provide small size
businesses, including business start-ups, with access to quality
education, one-on-one counseling, and other business development
resources.
4)Small Business Development Center Program : The SBDC program is
sponsored by the federal SBA and functions as a cooperative effort of
the private sector, the educational community, and federal, state, and
local governments. 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.
Formal management of the partnership is provided through an
Administrative Lead Center that is 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 30 permanent and satellite
office.
The SBDCs facilitate the creation, expansion, and retention of
businesses. Each SBDC provides one-on-one counseling, workshops,
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advice, 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, 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.
Last year the California SBDC network advised more than 65,000 clients
through its core small business advising and training program, as well
as through its wide array of specialty programs.
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 $12 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. P�rez 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]
5)Accountability and Transparency : Public accountability of state
expenditures is very important, as is having clear strategic objectives
and measurable outcomes. In 2001, the Joint Legislative Audit
Committee requested the California Bureau of State Audits to conduct a
performance review of the now defunct Technology, Trade and Commerce
Agency (TTCA). At the time, the state served as the Lead Center for
the SBDC program under a cooperative agreement with the SBA.
The state audit reported that many of the TTCA programs, including the
SBDC program, lacked key components of sound strategic planning.
Recommended improvements included setting more significant performance
goals that would challenge programs and selecting goals that emphasized
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real outcomes rather than process inputs. Unlike the issues raised
with TTCA's performance, the reporting requirements in AB 2670
represent best practices and ensure GO-Biz will receive key information
on the impact of any state funding provided including data on the
number of businesses assisted, jobs created/retained, and state tax
dollars generated from assisted businesses.
California's prior administration of the SBDC program was also the
subject of a 2001 audit by the federal SBA. This audit found that the
state did not have adequate service center monitoring procedures and
was out of compliance with a range of federal fiscal requirements. The
state failed to respond to the SBA regarding the audit findings and was
eventually required to return $800,000 to the SBA, according to
research by committee staff. When TTCA was dissolved, the SBA
regionalized the administration of the SBDC program in California and
entered into cooperative agreements with six Lead Centers - one for
each of the SBA regions in California. While top level oversight
remains in Washington D.C., the six SBA district directors actively
participate with the Lead Centers on both program and administrative
issues. The SBDCs are also independently reviewed to ensure management
and accounting methods are accurate.
While prior related bills proposed to codify and make the SBDC program
a state program, AB 2670 takes a different approach. This bill
establishes a state liaison for collaborating with the federal program
and sets ground rules for state collaborative actions. Nothing in the
bill would require the state to become responsible for individual SBDC
or Lead Center actions.
6)Governor's Office of Business and Economic Development : In April 2010,
the Governor's Office of Economic Development was established to
provide a one-stop-shop for serving the needs of businesses and
economic developers. While initially established through Executive
Order S-01-10, the office was later codified and renamed as GO-Biz.
[AB 29 (John A. P�rez), Chapter 475, Statues of 2010] In 2012, GO-Biz
assisted over 5,300 companies which resulted in the creation and/or
retention of 9,050 jobs and $1.45 billion in investments. GO-Biz
directly assisted over 6,500 companies in 2013.
Among other programs, GO-Biz provides permit and other business
assistance for new and expanding businesses, as well as administering
the California Innovation Hub Program under an initial partnership with
the statewide network of SBDCs. GO-Biz also oversees the OSBA, who
advocates for and provides key information to small businesses.
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In March 2012, the Governor initiated a reorganization process to
realign the state's administrative structure. Key changes included
dismantling of the Business, Transportation and Housing Agency (BTH)
and the shifting of a number of programs and services to GO-Biz
including:
The Small Business Loan Guarantee Program;
The California Travel and Tourism Commission;
The California Film Commission;
The Film California First Program; and
I-Bank.
AB 2670 codifies the state's relationship with the federal small
business program within the specific responsibilities of the I-Bank and
designating GO-Biz as the state lead entity for overseeing the state's
participation and collaboration with the statewide network of
California SBDC. In doing so, this would further GO-Biz' ability to
serve as a strategic resource for start-ups, small businesses, and
entrepreneurs in California.
1)Amendments : Staff understands that the author will offer amendments to
expand the federal technical assistance programs covered under the bill
to also include the Small Business Administration's Women's Business
Center, SCORE, and Veteran Business Outreach Center programs and the
U.S. Department of Defense's Procurement Technical Assistance Center
program.
2)Related Legislation : Legislation related to this measure includes the
following:
a) 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: Pending in the Senate Committee on Public
Employment and Retirement.
b) 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 Loan
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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 a 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.
c) 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.
d) AB 2717 (Bonta) Funding for Small Business Development Centers:
This bill Appropriates $6 million for the purpose of assisting SBDC
Administrative Lead Centers provide the mandatory match to draw down
federal funds. Status: Scheduled to be heard in the Assembly
Committee on Jobs, Economic Development, and the Economy on April
22, 2014.
REGISTERED SUPPORT / OPPOSITION :
Support
Small Business Development Centers
Alameda County Small Business Development Center
Alameda County Small Business Development Center (Oakland Metropolitan
Chamber of Commerce)
Alliance Small Business Development Center
Cal Poly Small Business Development Center for Innovation
California State University Bakersfield Small Business Development Center
California State University Monterey Bay Small Business Development
Center
Central Coast Small Business Development Center at Cabrillo College
LaunchPad Small Business Development Center, OCTANE
Los Angeles Regional Small Business Development Center Network
Marin Small Business Development Center
Mendocino Small Business Development Center
Merced Small Business Development Center Network
Napa and Sonoma Small Business Development Centers at Napa Valley College
Fresno State Small Business Development Center
Fresno State Small Business Development Center-Tulare Kings
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Pacific Coast Regional Small Business Development Corporation
Lead Center for the Northern California Small Business Development Center
Marin Small Business Development Center
Orange County Small Business Development Center
Orange County/Inland Empire Small Busines Development Center
Small Business Development Center at El Camino College
Chambers and Business Organizations
Black Chamber of Commerce of Orange County
CalAsian Chamber of Commerce
California Association for Micro Enterprise Opportunity
California Disabled Veteran Business Alliance
California Hispanic Chambers of Commerce
Coalition of Small and Disabled Veteran Businesses
Disabled Veteran Business Enterprise Alliance
Hesperia Chamber of Commerce
Hispanic Chamber of Commerce Silicon Valley
Los Angeles Chamber of Commerce
National Federation of Independent Business
Small Business California
Southwest California Legislative Council
Victor Valley Chamber of Commerce
Women's Business Momentum Center
Los Angeles County Business Technology Center
National Hispanic Business Women Association
Pasadena Chamber of Commerce
Metropolitan Chamber of Commerce
Vietnam American Chamber of Commerce
Yuba-Sutter Chamber of Commerce
Apple Valley Chamber of Commerce
Asian Business Association - Orange County
California Disabled Veteran Business Alliance
Cities and Local Elected
City of Long Beach
City of Merced
City of Rancho Cucamonga
City of Riverside
City of Torrance
Mayor of Long Beach
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Higher Education
California Center for Rural Policy at Humbolt State University
California State University Bakersfield School of Business and Public
Administration
California State University, Fullerton: Host of the Small Business
Development Center Orange County/Inland Empire Regional Center
Fresno State - Office of Community and Economic Development
Glamistree
Inland Empire Center for Entrepreneurship at Cal State University San
Bernardino
Rancho Santiago Community College District
Humboldt Area Foundation
Humboldt State University
Riverside Community College District Office of Economic Development
Workforce Investment
Fresno Regional Workforce Investment Board
Stanislaus Economic Development and Workforce Alliance-Alliance Small
Business Development Center
Innovation Centers & I-Hubs
Los Angeles Cleantech Incubator
The Lyles Center for Innovation and Entrepreneurship at Fresno State
Economic Development Corporations
Redwood Region Economic Development Commission
San Gabriel Valley Economic Partnership
The Coachella Valley Economic Partnership
Additional Support
Annam Bioschiences, LLC.
Enterprise Foundation
Exquadrum, Inc.
Fire & Light Originals, LP
Gelato Massimo, Inc.
High Desert Opportunity
Intalatin
Intuit
Kona Ice
Los Angeles County Business Technology Center
Monster Technology, LLC
Planet Bouncy, LLC
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Pur-A-Life Water Solutions
Renaissance Entrepreneurship Center
Soody Tronson Law Group, PC
Sub_Urban Riot
The Headwaters Fund - County of Humbolt
The Norcal Procurement Technical Assistance Center
West Company
Vabyon America Inc.
Gallium Lighting, LLC
Kitchen Wizard
Parcel Pending
Accion San Diego
All Temperature Air, Inc.
Ambryx Biotechnology Inc.
Amerisense, LLC
Combustion Associates, Inc.
Eco & Associates
California Manufacturing Technology Consulting
Opposition
None received
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916) 319-2090