AB 1064: Education finance: indirect cost rates.
- Session Year: 2015-2016
- House: Assembly
- Latest Version Date: 2015-09-28
Existing law requires, until January 1, 2016, the State Department of Education or any other state agency that administers a grant or allocation of federal or state funds to a school district to allow an indirect cost rate that is not less than the indirect cost rate established by the department, unless a lower rate is required by law.
This bill would delete the January 1, 2016, repeal date for those provisions, thus extending their operation indefinitely.
Existing law requires, until January 1, 2016, the State Department of Education or any other state agency that administers a grant or allocation of federal or state funds to a school district to allow an indirect cost rate that is not less than the indirect cost rate established by the department, unless a lower rate is required by law.
This bill would delete the January 1, 2016, repeal date for those provisions, thus extending their operation indefinitely.
Existing law requires, until January 1, 2016, the State Department of Education or any other state agency that administers a grant or allocation of federal or state funds to a school district to allow an indirect cost rate that is not less than the indirect cost rate established by the department, unless a lower rate is required by law.
This bill would delete the January 1, 2016, repeal date for those provisions, thus extending their operation indefinitely.
Existing law requires requires, until January 1, 2016, the State Department of Education or any other state agency that administers a grant or allocation of federal or state funds to a school district to allow an indirect cost rate that is not less than the indirect cost rate established by the department, unless a lower rate is required by law.
This bill would make a nonsubstantive change to that provision. delete the January 1, 2016, repeal date for those provisions, thus extending their operation indefinitely.
Existing law requires the State Department of Education or any other state agency that administers a grant or allocation of state funds to a school district to allow an indirect cost rate that is not less than the indirect cost rate established by the department, unless a lower rate is required by law.
This bill would make a nonsubstantive change to that provision.
(a)If, by any act of Congress, funds are provided as federal aid to education to the several states and the disposition of the funds is not otherwise provided for by or under the act of Congress or by or under any law of this state, the apportionment and distribution of those funds to school districts shall, insofar as consistent with the requirements prescribed by the federal law and implementing rules and regulations, be governed by the standards set forth in this article.
(b)If a federal law designates a state educational agency or other agency or officer primarily responsible for state supervision of public schools, that designation shall be deemed to refer to the state board. The state board shall make timely application for any federal funds made available, and shall, pursuant to the federal law and this article, direct the allocation and apportionment of the federal funds to school districts.
(c)The department and any other state agency that administers a grant or allocation of federal funds to a school district, shall allow an indirect cost rate, as that term is defined in Section 33338, that is not less than the indirect cost rate established by the department for each school district, unless federal law requires a lower indirect cost rate for school districts that receive federal funds.
(d)For purposes of this section and Section 12001, school districts include school districts, county offices of education, and other educational agencies or entities deemed eligible pursuant to state and federal law.
SEC. 2.Section 12000 of the Education Code, as added by Section 2 of Chapter 587 of the Statutes of 2012, is repealed.SEC. 3.Section 33338 of the Education Code is amended to read:33338.(a)The department or any other state agency that administers a grant or allocation of state funds to a school district shall allow an indirect cost rate that is not less than the indirect cost rate established by the department, unless a lower rate is required by law.
(b)For purposes of this section, the following terms have the following meanings:
(1)Direct cost means a cost that provides measurable, direct benefits to a particular program of an agency. Direct costs of a local educational agency include, but are not necessarily limited to, salaries and benefits of teachers and instructional aides, costs for purchasing textbooks and instructional supplies, and costs for providing pupils with counseling, health services, and transportation.
(2)Indirect cost means the agencywide, general management cost of the activities for the direction and control of the agency as a whole. Indirect costs include, but are not necessarily limited to, administrative activities necessary for the general operation of the agency, such as accounting, budgeting, payroll preparation, personnel services, purchasing, and centralized data processing.
(3)Indirect cost rate means the indirect cost rate established by the department for each school district.
(4)School district has the same meaning as defined in subdivision (d) of Section 12000.
(a)If, by any act of Congress, funds are provided as federal aid to education to the several states and the disposition of the funds is not otherwise provided for by or under the act of Congress or by or under any law of this state, the apportionment and distribution of those funds to school districts shall, insofar as consistent with the requirements prescribed by the federal law and implementing rules and regulations, be governed by the standards set forth in this article.
(b)If a federal law designates a state educational agency or other agency or officer primarily responsible for state supervision of public schools, that designation shall be deemed to refer to the state board. The state board shall make timely application for any federal funds made available, and shall, pursuant to the federal law and this article, direct the allocation and apportionment of the federal funds to school districts.
(c)The department and any other state agency that administers a grant or allocation of federal funds to a school district, shall allow an indirect cost rate, as that term is defined in Section 33338, that is not less than the indirect cost rate established by the department for each school district, unless federal law requires a lower indirect cost rate for school districts that receive federal funds.
(d)For purposes of this section and Section 12001, school districts include school districts, county offices of education, and other educational agencies or entities deemed eligible pursuant to state and federal law.
SEC. 2.Section 12000 of the Education Code, as added by Section 2 of Chapter 587 of the Statutes of 2012, is repealed.SEC. 3.Section 33338 of the Education Code is amended to read:33338.(a)The department or any other state agency that administers a grant or allocation of state funds to a school district shall allow an indirect cost rate that is not less than the indirect cost rate established by the department, unless a lower rate is required by law.
(b)For purposes of this section, the following terms have the following meanings:
(1)Direct cost means a cost that provides measurable, direct benefits to a particular program of an agency. Direct costs of a local educational agency include, but are not necessarily limited to, salaries and benefits of teachers and instructional aides, costs for purchasing textbooks and instructional supplies, and costs for providing pupils with counseling, health services, and transportation.
(2)Indirect cost means the agencywide, general management cost of the activities for the direction and control of the agency as a whole. Indirect costs include, but are not necessarily limited to, administrative activities necessary for the general operation of the agency, such as accounting, budgeting, payroll preparation, personnel services, purchasing, and centralized data processing.
(3)Indirect cost rate means the indirect cost rate established by the department for each school district.
(4)School district has the same meaning as defined in subdivision (d) of Section 12000.
(a)If, by any act of Congress, funds are provided as federal aid to education to the several states and the disposition of the funds is not otherwise provided for by or under the act of Congress or by or under any law of this state, the apportionment and distribution of those funds to school districts shall, insofar as consistent with the requirements prescribed by the federal law and implementing rules and regulations, be governed by the standards set forth in this article.
(b)If a federal law designates a state educational agency or other agency or officer primarily responsible for state supervision of public schools, that designation shall be deemed to refer to the state board. The state board shall make timely application for any federal funds made available, and shall, pursuant to the federal law and this article, direct the allocation and apportionment of the federal funds to school districts.
(c)The department and any other state agency that administers a grant or allocation of federal funds to a school district, shall allow an indirect cost rate, as that term is defined in Section 33329, 33338, that is not less than the indirect cost rate established by the department for each school district, unless federal law requires a lower indirect cost rate for school districts that receive federal funds.
(d)For purposes of this section and Section 12001, school districts include school districts, county offices of education, and other educational agencies or entities deemed eligible pursuant to state and federal law.
SEC. 2.Section 12000 of the Education Code, as added by Section 2 of Chapter 587 of the Statutes of 2012, is repealed.SEC. 3.Section 33338 of the Education Code is amended to read:33338.(a)The department or any other state agency that administers a grant or allocation of state funds to a school district shall allow an indirect cost rate that is not less than the indirect cost rate established by the department, unless a lower rate is required by law.
(b)For purposes of this section, the following terms have the following meanings:
(1)Direct cost means a cost that provides measurable, direct benefits to a particular program of an agency. Direct costs of a local educational agency include, but are not necessarily limited to, salaries and benefits of teachers and instructional aides, costs for purchasing textbooks and instructional supplies, and costs for providing pupils with counseling, health services, and transportation.
(2)Indirect cost means the agencywide, general management cost of the activities for the direction and control of the agency as a whole. Indirect costs include, but are not necessarily limited to, administrative activities necessary for the general operation of the agency, such as accounting, budgeting, payroll preparation, personnel services, purchasing, and centralized data processing.
(3)Indirect cost rate means the indirect cost rate established by the department for each school district.
(4)School district has the same meaning as defined in subdivision (d) of Section 12000.
(a)If, by any act of Congress, funds are provided as federal aid to education to the several states and the disposition of the funds is not otherwise provided for by or under the act of Congress or by or under any law of this state, the apportionment and distribution of those funds to school districts shall, insofar as consistent with the requirements prescribed by the federal law and implementing rules and regulations, be governed by the standards set forth in this article.
(b)If a federal law designates a state educational agency or other agency or officer primarily responsible for state supervision of public schools, that designation shall be deemed to refer to the state board. The state board shall make timely application for any federal funds made available, and shall, pursuant to the federal law and this article, direct the allocation and apportionment of the federal funds to school districts.
(c)The department and any other state agency that administers a grant or allocation of federal funds to a school district, shall allow an indirect cost rate, as that term is defined in Section 33329, that is not less than the indirect cost rate established by the department for each school district, unless federal law requires a lower indirect cost rate for school districts that receive federal funds.
(d)For purposes of this section and Section 12001, school districts include school districts, county offices of education, and other educational agencies or entities deemed eligible pursuant to state and federal law.
(e)This section shall remain in effect only until January 1, 2016, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2016, deletes or extends that date.
SEC. 2.Section 12000 of the Education Code, as added by Section 2 of Chapter 587 of the Statutes of 2012, is repealed.12000.(a)If, by any act of Congress, funds are provided as federal aid to education to the several states and the disposition of the funds is not otherwise provided for by or under the act of Congress or by or under any law of this state, the apportionment and distribution of those funds to school districts shall, insofar as consistent with the requirements prescribed by the federal law and implementing rules and regulations, be governed by the standards set forth in this article.
(b)If a federal law designates a state educational agency or other agency or officer primarily responsible for state supervision of public schools, that designation shall be deemed to refer to the state board. The state board shall make timely application for any federal funds made available, and shall, pursuant to the federal law and this article, direct the allocation and apportionment of the federal funds to school districts.
(c)For purposes of this section and Section 12001, school districts include school districts, county offices of education, and other educational agencies or entities deemed eligible pursuant to state and federal law.
(d)This section shall become operative on January 1, 2016.
SECTION 1.SEC. 3.Section 33338 of the Education Code is amended to read:33338.(a)The department or any other state agency that administers a grant or allocation of state funds to a school district shall allow an indirect cost rate that is not less than the indirect cost rate established by the department, unless a lower rate is required by law.
(b)For purposes of this section, the following terms have the following meanings:
(1)Direct cost means a cost that provides measurable, direct benefits to a particular program of an agency. Direct costs of a local educational agency include, but are not necessarily limited to, salaries and benefits of teachers and instructional aides, costs for purchasing textbooks and instructional supplies, and costs for providing pupils with counseling, health services, and transportation.
(2)Indirect cost means the agencywide, general management cost of the activities for the direction and control of the agency as a whole. Indirect costs include, but are not necessarily limited to, administrative activities necessary for the general operation of the agency, such as accounting, budgeting, payroll preparation, personnel services, purchasing, and centralized data processing.
(3)Indirect cost rate means the indirect cost rate established by the department for each school district.
(4)School district has the same meaning as defined in subdivision (d) of Section 12000.
(c)This section shall remain in effect only until January 1, 2016, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2016, deletes or extends that date.
(a)The department or any other state agency that administers a grant or allocation of state funds to a school district shall allow an indirect cost rate that is not less than the indirect cost rate established by the department, unless a lower rate is required by law.
(b)As used in this section:
(b)For purposes of this section, the following terms have the following meanings:
(1)Direct cost means a cost that provides measurable, direct benefits to a particular program of an agency. Direct costs of a local educational agency include, but are not necessarily limited to, salaries and benefits of teachers and instructional aides, costs for purchasing textbooks and instructional supplies, and costs for providing pupils with counseling, health services, and transportation.
(2)Indirect cost means the agencywide, general management cost of the activities for the direction and control of the agency as a whole. Indirect costs include, but are not necessarily limited to, administrative activities necessary for the general operation of the agency, such as accounting, budgeting, payroll preparation, personnel services, purchasing, and centralized data processing.
(3)Indirect cost rate means the indirect cost rate established by the department for each school district.
(4)School district has the same meaning as defined in subdivision (d) of Section 12000.
(c)This section shall remain in effect only until January 1, 2016, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2016, deletes or extends that date.
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Date
|
Status
|
|---|---|
| Jul 1, 2015 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 7. Noes 0.) (July 1). Re-referred to Com. on APPR. |
| Sep 28, 2015 | Chaptered by Secretary of State - Chapter 344, Statutes of 2015. |
| Sep 28, 2015 | Approved by the Governor. |
| Sep 10, 2015 | Enrolled and presented to the Governor at 4 p.m. |
| Sep 1, 2015 | Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 77. Noes 0.). |
| Sep 1, 2015 | Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 77. Noes 0. Page 2749.). |
| Sep 1, 2015 | Assembly Rule 77 suspended. (Page 2729.) |
| Sep 1, 2015 | Assembly Rule 77 suspended. |
| Aug 31, 2015 | Read third time. Passed. Ordered to the Assembly. (Ayes 40. Noes 0. Page 2310.). |
| Aug 31, 2015 | Read third time. Passed. Ordered to the Assembly. |
| Aug 31, 2015 | In Assembly. Concurrence in Senate amendments pending. May be considered on or after September 2 pursuant to Assembly Rule 77. |
| Aug 26, 2015 | Ordered to special consent calendar. |
| Jul 16, 2015 | Read second time and amended. Ordered to third reading. |
| Jul 15, 2015 | From committee: Amend, and do pass as amended. (Ayes 7. Noes 0.) (July 13). |
| Feb 26, 2015 | Read first time. To print. |
| Jun 10, 2015 | In committee: Set, first hearing. Hearing canceled at the request of author. |
| May 28, 2015 | Referred to Com. on ED. |
| May 14, 2015 | Read third time. Passed. Ordered to the Senate. (Ayes 78. Noes 0. Page 1449.) |
| May 14, 2015 | Read third time. Passed. Ordered to the Senate. |
| May 14, 2015 | In Senate. Read first time. To Com. on RLS. for assignment. |
| May 7, 2015 | Read second time. Ordered to Consent Calendar. |
| May 6, 2015 | From committee: Do pass. To Consent Calendar. (Ayes 17. Noes 0.) (May 6). |
| Apr 23, 2015 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 7. Noes 0.) (April 22). Re-referred to Com. on APPR. |
| Apr 6, 2015 | Re-referred to Com. on ED. |
| Mar 26, 2015 | Referred to Com. on ED. |
| Mar 26, 2015 | From committee chair, with author's amendments: Amend, and re-refer to Com. on ED. Read second time and amended. |
| Feb 27, 2015 | From printer. May be heard in committee March 29. |
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Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Sep 1, 2015 | AB 1064 HERNÁNDEZ Concurrence in Senate Amendments | Assembly Floor |
Passed |
|
| Aug 31, 2015 | Special Consent #8 AB1064 Roger Hernández | Senate Floor |
Passed |
|
| Jul 13, 2015 | Do pass as amended | Senate Standing Committee on Appropriations |
Passed |
|
| Jul 1, 2015 | Do pass, but first be re-referred to the Committee on [Appropriations] with the recommendation: To Consent Calendar | Senate Standing Committee on Education |
Passed |
|
| May 14, 2015 | AB 1064 HERNÁNDEZ Consent Calendar Second Day Regular Session | Assembly Floor |
Passed |
|
| May 6, 2015 | Do pass. To Consent Calendar. | Assembly Standing Committee on Appropriations |
Passed |
|
| Apr 22, 2015 | Do pass and be re-referred to the Committee on [Appropriations] with recommendation: To Consent Calendar | Assembly Standing Committee on Education |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| Antelope Valley Union High School District | ** Support | Jul 13, 2015 |
| Antelope Valley Union School District | ** Support | Sep 1, 2015 |
| Association Of California School Administrators | ** Support | Sep 1, 2015 |
| Baldwin Park Unified School District | ** Support | Sep 1, 2015 |
| Claremont Unified School District | ** Support | Jul 13, 2015 |
| Downey Unified School District | ** Support | Sep 1, 2015 |
| La Canada Unified School District | ** Support | Jul 13, 2015 |
| Los Angeles County Office Of Education | ** Support | Sep 1, 2015 |
| Lynwood Unified School District | ** Support | Sep 1, 2015 |
| Palmdale School District | ** Support | Sep 1, 2015 |
| San Gabriel Unified School District | ** Support | Jul 13, 2015 |
| Santa Clara County Office Of Education | ** Support | Sep 1, 2015 |
| Torrance Unified School District | ** Support | Jul 13, 2015 |
| u None received. | ** Against | Jul 13, 2015 |
AB 1064
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1064
(Roger Hernández)
As Amended July 16, 2015
Majority vote
ASSEMBLY: |
78-0 |
(May 14, 2015) |
SENATE: |
40-0 |
(August 31, 2015) |
Original Committee Reference: ED.
SUMMARY: Removes the January 1, 2016, sunset date from provisions of law that require the California Department of Education (CDE) and any other state agency to allow the full indirect cost rate established by the CDE for state or federal grant programs administered by local education agencies unless a lower rate is required by other state or federal law.
The Senate amendments correct an Education Code reference
FISCAL EFFECT: According to the Senate Appropriations Committee, no direct state fiscal impact since any potential funding distribution would occur within a program and a set amount of grant funding already dedicated to that program. Absent this bill, CDE indicates that it would establish the same indirect costs rates as under this bill.
COMMENTS: The United States Department of Education has approved a delegation agreement with the CDE that designates the CDE as the recognized agency to establish indirect cost rates for the state’s local educational agencies (LEAs). Indirect costs are agency-wide general management costs (i.e., activities for the direction and control of the agency as a whole). General management costs consist of administrative activities necessary for the general operation of the agency, such as accounting, budgeting, payroll preparation, personnel services, purchasing, and centralized data processing.
This bill removes the sunset date on provision that require the CDE, or any other state agency that administers a grant or allocation of federal or state funds to a school district, to allow an indirect cost rate that is not less than the indirect cost rate established by CDE for each district, unless federal or state law requires a lower cost rate.
Need for this bill. The CDE determines the indirect cost rate for each LEA. This indirect cost rate is typically less than 10%, and this rate covers such general operating costs as accounting, budgeting, personnel services, purchasing, payroll and data processing. However, LEAs cannot cover their operating costs when the indirect rate allowed for certain grants and allocations are less than the CDE determined rate. If LEAs cannot cover these operating costs, they cannot operate programs that provide important services for students and families without putting the LEA at financial risk. According to the author's office, statutory protections are necessary to ensure that, unless otherwise provided in state or federal law, the CDE allows LEAs to use the full indirect rate established for them.
Analysis Prepared by: Rick Pratt / ED. / (916) 319-2087 FN: 0001578
AB 1064
Page 4
|
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 |
THIRD READING
Bill No: AB 1064
Amended: 7/16/15 in Senate
SENATE EDUCATION COMMITTEE: 7-0, 7/1/15
AYES: Liu, Runner, Leyva, Mendoza, Monning, Pan, Vidak
NO VOTE RECORDED: Block, Hancock
SENATE APPROPRIATIONS COMMITTEE: 7-0, 7/13/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
ASSEMBLY FLOOR: 78-0, 5/14/15 (Consent) - See last page for vote
SUBJECT: Education finance: indirect cost rates
SOURCE: Los Angeles County Office of Education
DIGEST: This bill removes the January 1, 2016 sunset date that requires the California Department of Education (CDE) and any other state agency to allow an indirect cost rate established by the CDE for state or federal grant programs unless federal or state law requires a lower rate.
Existing law:
Requires the CDE and any other state agency to allow an indirect cost rate established by the CDE for state or federal grant programs administered by local educational agencies (LEAs) unless a lower rate is required by state or federal law.
Defines the following:
Indirect cost to mean the agencywide, general management cost of the activities for the direction and control of the agency as a whole which include, but are not necessarily limited to, administrative activities necessary for the general operation of the agency, such as accounting, budgeting, payroll preparation, personnel services, purchasing, and centralized data processing.
Indirect cost rate to mean the rate established by the CDE for each LEA.
These provisions become inoperative and are repealed as of January 1, 2016, unless extended by statute enacted before that date.
This bill repeals the January 1, 2016 sunset date that requires the CDE, or any other state agency, that administers a grant or allocation of federal or state funds to a school district, to allow an indirect cost rate that is not less than the indirect cost rate established by CDE for each district, unless federal or state law requires a lower cost rate.
Comments
Need for the bill. According to the author’s office, the CDE determines the indirect cost rate for each school district, county office of education, and other educational agencies. This indirect cost rate is typically less than 10%, and it covers such general operating costs as accounting, budgeting, personnel services, purchasing, payroll and data processing. However, LEAs cannot cover their operating costs when the indirect rate allowed for certain grants and allocations are less than the CDE determined rate. The author’s office indicates that if LEAs cannot cover these operating costs, they cannot operate programs that provide important services for students and families without putting the LEA at financial risk.
Indirect cost rates. The United States Department of Education has approved a delegation agreement with the CDE that authorizes the CDE, as the recognized agency to establish indirect cost rates for the state’s LEAs. Indirect costs are agencywide general management costs (i.e., activities for the direction and control of the agency as a whole). General management costs consist of administrative activities necessary for the general operation of the agency, such as accounting, budgeting, payroll preparation, personnel services, purchasing, and centralized data processing. Federal and state law often delineate the amount of indirect costs or administration either the state or LEAs can utilize from a grant allocation. For example, under the state After School Education and Safety program, school districts are limited to expending no more than 5% of their grant amount for administration.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
According to the Assembly Appropriations Committee, there would be no direct state fiscal impact since any potential funding distribution would occur within a program and a set amount of grant funding already dedicated to that program.
Los Angeles County Office of Education (source)
Antelope Valley Union School District
Association of California School Administrators
Baldwin Park Unified School District
Downey Unified School District
Lynwood Unified School District
Palmdale School District
Santa Clara County Office of Education
Small School Districts’ Association
OPPOSITION: (Verified 7/30/15)
None received
ASSEMBLY FLOOR: 78-0, 5/14/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Linder, Medina
Prepared by: Lenin Del Castillo / ED. / (916) 651-4105
8/13/15 13:38:27
**** END ****
AB 1064 (Roger Hernández) Page 2 of 2
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1064 (Roger Hernández) - Education finance: indirect cost rates.
|
|
Version: March 26, 2015 |
Policy Vote: ED. 7 - 0 |
Urgency: No |
Mandate: No |
Hearing Date: July 13, 2015 |
Consultant: Jillian Kissee |
This bill does not meet the criteria for referral to the Suspense File.
Bill Summary:
This bill removes the January 1, 2016 sunset date that requires the California Department of Education (CDE), and any other state agency, to allow an indirect cost rate established by the CDE for state or federal grant programs, unless federal or state law requires a lower rate.
Fiscal Impact:
No direct state fiscal impact since any potential funding distribution would occur within a program and a set amount of grant funding already dedicated to that program. Absent this bill, CDE indicates that it would establish the same indirect costs rates as under this bill.
Background:
Existing law requires the CDE and any other state agency to allow an indirect cost rate established by the CDE for state or federal grant programs administered by local educational agencies (LEAs) unless a lower rate is required by state or federal law.
Existing law further defines the following:
"Indirect cost" to mean "the agencywide, general management cost of the activities for the direction and control of the agency as a whole [which] include, but are not necessarily limited to, administrative activities necessary for the general operation of the agency, such as accounting, budgeting, payroll preparation, personnel services, purchasing, and centralized data processing."
"Indirect cost rate" to mean the rate established by the CDE for each LEA.
These provisions become inoperative and are repealed as of January 1, 2016, unless extended by statute enacted before that date.
The United States Department of Education has approved a delegation agreement with the CDE that authorizes the CDE as the recognized agency to establish indirect cost rates for the state’s LEAs. Federal and state law often delineate the amount of indirect costs or administration either the state or LEAs can utilize from a grant allocation, in which case those rates must be used. For example, under the state After School Education and Safety program, school districts are limited to expending no more than five percent of their grant amount for administration.
According to CDE’s 2015–16 Restricted Indirect Cost Rates for K–12 LEAs, the average indirect cost rate for 2015-16 is 5.11 percent. Indirect cost rates allow LEAs to have a standardized way to recover a share of general management costs from individual programs.
Proposed Law:
This bill repeals the January 1, 2016 sunset date that requires the CDE, or any other state agency, that administers a grant or allocation of federal or state funds to a school district, to allow an indirect cost rate that is not less than the indirect cost rate established by CDE for each district, unless federal or state law requires a lower cost rate.
Related Legislation:
AB 2435 (Hernández, Chapter 587, Statutes of 2012) established the requirement for CDE to allow the full indirect cost rate for state or federal programs administered by LEAs.
Staff Comments:
This bill continues the CDE’s authority under existing law to allow an indirect cost rate that is not less than the indirect cost rate established by the department, unless a lower rate is required by federal law. It removes the CDE’s discretion to require that more of a grant’s funds be spent on direct services by reducing the allowed indirect cost rate. According to CDE guidance, an LEA may claim up to its approved indirect cost rate unless there is specific authority to limit the rate.
Absent
this bill or federal or state requirements that specify an indirect
cost rate, the CDE has the implicit authority to limit the indirect
cost rate for a specific grant. For example, if the CDE believes
that a grant will result in minimal actual indirect costs, it may set
the rate for that grant lower than an LEA’s approved indirect cost
rate. To the extent a lower indirect cost rate could be imposed by
the CDE for a particular grant in the future, more grant funding
would be available for direct services. Similarly, if less funding
is allowed to administer a grant program, this could pressure other
unrestricted areas of an LEA’s budget to cover the full costs of
the grant. Ultimately, the total grant levels would not change and
any potential funding distribution would occur within a grant’s
dedicated funding stream.
Recommended Amendments:
Technical amendment to update an incorrect code reference in existing law.
-- END --
AB 1064 (Roger Hernández) Page 2 of 2
SENATE COMMITTEE ON EDUCATION
Senator Carol Liu, Chair
2015 - 2016 Regular
Bill No: AB 1064
Author: |
Roger Hernández |
||
Version: |
March 26, 2015 Hearing Date: July 1, 2015 |
||
Urgency: |
No |
Fiscal: |
Yes |
Consultant: |
Lenin Del Castillo |
||
Subject: Education finance: indirect cost rates
SUMMARY
This bill removes the January 1, 2016 sunset date that requires the California Department of Education (CDE) and any other state agency to allow an indirect cost rate established by the CDE for state or federal grant programs unless federal or state law requires a lower rate.
BACKGROUND
Existing law requires the CDE and any other state agency to allow an indirect cost rate established by the CDE for state or federal grant programs administered by local educational agencies (LEAs) unless a lower rate is required by state or federal law.
Existing law further defines the following:
"Indirect cost" to mean "the agencywide, general management cost of the activities for the direction and control of the agency as a whole [which] include, but are not necessarily limited to, administrative activities necessary for the general operation of the agency, such as accounting, budgeting, payroll preparation, personnel services, purchasing, and centralized data processing."
"Indirect cost rate" to mean the rate established by the CDE for each LEA.
These provisions become inoperative and are repealed as of January 1, 2016, unless extended by statute enacted before that date.
ANALYSIS
This bill repeals the January 1, 2016 sunset date that requires the CDE, or any other state agency, that administers a grant or allocation of federal or state funds to a school district, to allow an indirect cost rate that is not less than the indirect cost rate established by CDE for each district, unless federal or state law requires a lower cost rate.
STAFF
COMMENTS
Need for the bill. According to the author’s office, the CDE determines the indirect cost rate for each school district, county office of education, and other educational agencies. This indirect cost rate is typically less than ten percent, and it covers such general operating costs as accounting, budgeting, personnel services, purchasing, payroll and data processing. However, local educational agencies (LEAs) cannot cover their operating costs when the indirect rate allowed for certain grants and allocations are less than the California Department of Education (CDE) determined rate. The author’s office indicates that if LEAs cannot cover these operating costs, they cannot operate programs that provide important services for students and families without putting the LEA at financial risk.
Indirect cost rates. The United States Department of Education has approved a delegation agreement with the CDE that authorizes the CDE, as the recognized agency to establish indirect cost rates for the state’s LEAs. Indirect costs are agencywide general management costs (i.e., activities for the direction and control of the agency as a whole). General management costs consist of administrative activities necessary for the general operation of the agency, such as accounting, budgeting, payroll preparation, personnel services, purchasing, and centralized data processing. Federal and state law often delineate the amount of indirect costs or administration either the state or LEAs can utilize from a grant allocation. For example, under the state After School Education and Safety program, school districts are limited to expending no more than five percent of their grant amount for administration.
Fiscal impact. According to the Assembly Appropriations Committee, there would be no direct state fiscal impact since any potential funding distribution would occur within a program and a set amount of grant funding already dedicated to that program.
Related and prior legislation. AB 2435 (Hernández, Chapter 587, Statutes of 2012) established the requirement for CDE to allow the full indirect cost rate for state or federal programs administered by LEAs.
SUPPORT
Antelope Valley Union School District
Association of California School Administrators
Baldwin Park Unified School District
Downey Unified School District
Los Angeles County Office of Education (sponsor)
Lynwood Unified School District
Palmdale School District
Santa Clara County Office of Education
Small School Districts’ Association
OPPOSITION
None received.
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AB 1064
Page 2
Date of Hearing: May 6, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB 1064
(Roger Hernández) – As Amended March 26, 2015
Policy Committee: |
Education |
Vote: |
7 - 0 |
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Urgency: No State Mandated Local Program: No Reimbursable: No
SUMMARY:
This bill removes the January 1, 2016, sunset date from provisions of law that require the California Department of Education (CDE), and any other state agency, to allow the full indirect cost rate established by the CDE for state or federal grant programs administered by local education agencies unless a lower rate is required by other state or federal law.
FISCAL EFFECT:
No direct state fiscal impact since any potential funding distribution would occur within a program and a set amount of grant funding already dedicated to that program.
COMMENTS:
Purpose. AB 2435 (Hernández), Chapter 587, Statutes of 2013, required, through January 1, 2016, the California Department of Education (CDE), or any other state agency that administers a grant or allocation of federal or state funds to a school district, to allow an indirect cost rate that is not less than the indirect cost rate established by CDE for each district, unless federal or state law requires a lower cost rate.
Background. The United States Department of Education has approved a delegation agreement with the CDE that authorizes the department as the recognized agency to establish indirect cost rates for the state’s local educational agencies (LEAs). Indirect costs are agency-wide general management costs and consist of administrative activities necessary for the general operation of the agency, such as accounting, budgeting, payroll preparation, personnel services, purchasing, and centralized data processing. CDE determines the indirect cost rate for each LEA, typically less than 10 percent.
According to the author, LEAs cannot cover their operating costs when the indirect rate allowed for certain grants and allocations are less than the CDE determined rate. If LEAs cannot cover these operating costs, they cannot operate programs that provide important services for students and families without putting the LEA at financial risk. The Los Angeles County Office of Education is sponsoring this bill to ensure, unless otherwise provided in state or federal law, the CDE allows LEAs to use the full indirect rate established for them.
Analysis Prepared by: Misty Feusahrens / APPR. / (916) 319-2081
AB 1064
Page 2
Date of Hearing: April 22, 2015
ASSEMBLY COMMITTEE ON EDUCATION
Patrick O'Donnell, Chair
AB 1064
(Roger Hernández) – As Amended March 26, 2015
SUBJECT: Education finance: indirect cost rates
SUMMARY: Removes the January 1, 2016 sunset date from provisions of law that require the California Department of Education (CDE) and any other state agency to allow the full indirect cost rate established by the CDE for state or federal grant programs administered by local education agencies unless a lower rate is required by other state or federal law.
EXISTING LAW:
Requires the CDE and any other state agency to allow the full indirect cost rate established by the CDE for state or federal grant programs administered by local education agencies unless a lower rate is required by other state or federal law.
Defines "indirect cost" to mean "the agencywide, general management cost of the activities for the direction and control of the agency as a whole [which] include, but are not necessarily limited to, administrative activities necessary for the general operation of the agency, such as accounting, budgeting, payroll preparation, personnel services, purchasing, and centralized data processing."
Defines "indirect cost rate" to mean the rate established by the CDE for each local education agency.
Becomes inoperative and is repealed January 1, 2016 unless extended by statute enacted before that date.
FISCAL EFFECT: Unknown
COMMENTS: The United States Department of Education has approved a delegation agreement with the CDE that authorizes the CDE, as the recognized agency to establish indirect cost rates for the state’s local educational agencies (LEAs). Indirect costs are agency-wide general management costs (i.e., activities for the direction and control of the agency as a whole). General management costs consist of administrative activities necessary for the general operation of the agency, such as accounting, budgeting, payroll preparation, personnel services, purchasing, and centralized data processing.
This bill requires the CDE, or any other state agency, that administers a grant or allocation of federal or state funds to a school district, to allow an indirect cost rate that is not less than the indirect cost rate established by CDE for each district, unless federal or state law requires a lower cost rate.
Need for this bill. The CDE determines the indirect cost rate for each LEA. This indirect cost rate is typically less than 10%, and this rate covers such general operating costs as accounting, budgeting, personnel services, purchasing, payroll and data processing. However, LEAs cannot cover their operating costs when the indirect rate allowed for certain grants and allocations are less than the CDE determined rate. If LEAs cannot cover these operating costs, they cannot operate programs that provide important services for students and families without putting the LEA at financial risk. According to the author's office, statutory protections are necessary to ensure that, unless otherwise provided in state or federal law, the CDE allows LEAs to use the full indirect rate established for them.
REGISTERED SUPPORT / OPPOSITION:
Support
Antelope Valley Union High School District
Claremont Unified School District
La Canada Unified School District
Los Angeles County Office of Education
Lynwood Unified School District
San Gabriel Unified School District
Torrance Unified School District
Opposition
None received
Analysis Prepared by: Rick Pratt / ED. / (916) 319-2087
Discussed in Hearing
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Bill Author
Bill Co-Author(s):