BILL ANALYSIS �
AB 2717
Page 1
Date of Hearing: April 22, 2014
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
Jose Medina, Chair
AB 2717 (Bonta and Skinner) - As Amended: April 9, 2014
SUBJECT : Small Business Development Centers
SUMMARY : Appropriates $6 million from the General Fund to the
California Economic Development Fund for the purpose of providing a
cash match for the administrative lead centers that have contracts
with the U.S. Small Business Administration (SBA) to administer the
regional networks of Small Business Development Centers (SBDCs). An
administrative lead center is required to provide written confirmation
that state funds will be matched by the federal SBA. Implementation
of this measure is dependent on the enactment of AB 2670 (Medina),
which sets forth reporting and other requirements related to operation
of SBDCs in California.
EXISTING LAW establishes the California Economic Development Fund for
the purpose of receiving federal, state, local, and private economic
development funds, and receiving repayment of loans or grant proceeds
and interest on those loans or grants. Upon appropriation by the
Legislature, moneys in the fund may be expended by the Governor's
Office of Business and Economic Development (GO-Biz) to provide
matching funds for loans or grants to public agencies, nonprofit
organizations, and private entities.
FISCAL EFFECT : Appropriates $6 million from the General Fund for
the purpose of providing a federal match for SBDC program activities
in California.
COMMENTS :
1)Author's Purpose : According to the author, "As our state's economy
improves and our budget moves back into the black, it is past time
for California to empower our small businesses and create more jobs.
The numbers are clear-small businesses are among California's key
economic drivers, and from providing one-on-one consulting to
increasing access to capital, no one is of more help to small
businesses than California's federally funded Small Business
Development Centers.
SBDCs exist throughout California and are measured on economic
impact indicators including: jobs created and retained, providing
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access to capital, and increased company revenues.
It is truly shameful that California is among a handful of states
not matching the federal Small Business Administration in support of
our small businesses, but in 2014 we can and must do better.
That's why I joined Assemblymember Skinner in authoring AB 2717,
which will appropriate $6 million from the state's General Fund in
order to provide critical matching funds to SBDCs so they can reach
their full potential and access the $12 million reserved for our
state by the federal government. Finally, I would like to thank
Assemblymember Medina for authoring AB 2670, which provides the
framework for long term accountability and support of the SBDC
program."
2)Framing the Policy Issue : This bill appropriates funds in order to
assist SBDCs in California draw-down the maximum amount of federal
moneys available to pay for one-on-one counseling and other
technical assistance to small businesses. Without such assistance
it is unlikely that California SBDCs will have the necessary match
to draw down all available moneys. Unused moneys from one state are
reallocated to other states.
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.
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.
Business owners 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
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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 a Lead
Center that is designated by, and responsible to, the SBA. Each
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 offices.
The SBDCs facilitate the creation, expansion, and retention of
businesses. Each SBDC provides one-on-one counseling, workshops,
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 Lead Center has its own resources and
maintains links with other public and private small business service
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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
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, the Speaker John A. P�rez
negotiated $6 million for the SBDCs as part of the final budget
negotiations with the Governor.
5)Technical Amendments : In order to effectuate the purposes of this
measure, the author will need to add an urgency clause.
6)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
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funding. The $32.35 million was allocated as follows: $20
million was appropriated for use within the state Small Business
Loan 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 2670 (Medina) Small Business Development Centers: This
bill designates GO-Biz as the lead state entity for facilitating
relationships with the SBDCs in California and codifies the
existence and role of the SBDCs in providing technical assistance
to small businesses throughout the state. Status: Scheduled to
be heard in the Assembly Committee on Jobs, Economic Development,
and the Economy on April 22, 2014.
d) 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.
REGISTERED SUPPORT / OPPOSITION :
Support
Alameda County Small Business Development Center
BirdDog Group
California State University Monterey Bay Small Business Development
Center
Cathedral City Chamber of Commerce
Center for Sustainable Suburban Development at University California,
Riverside
Central Coast Small Business Development Center at Cabrillo College
Central Coast Small Business Development Center at Cabrillo College
City of Murrieta
City of Palm Springs
Coachella Valley Economic Partnership
College of the Desert
Gelato Massimo Inc.
Inland Empire Center for Entrepreneurship at California State
University San Bernardino
Lead Center for the Northern California Small Business Development
Center
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Massage Envy Palm Desert, La Quinta, Palm Springs
OCTANe
Orange County/Inland Empire Small Business Development Center
Rancho Santiago Community College District
Small Business California
The California Asian Pacific Chamber of Commerce
Opposition
None received
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916) 319-2090