(1)Under existing law the State Board of Equalization collects and administers a variety of tax and fee programs with respect to matters including, but not limited to, vehicle fuels, timber, cigarettes and tobacco products, alcoholic beverages, emergency telephone services, integrated waste management, oil spills, hazardous materials, underground storage systems, and private railroad cars.

This bill would enact the Professionals in Public Service Act of 2015, which would establish the state professionals in public service program within the State Board of Equalization for the purpose of utilizing the expertise of private-sector entrepreneurs to help make state governmental activities and practices more streamlined and accessible to small businesses. The program would authorize the executive director of the board to appoint a maximum of 5 persons during any calendar year to serve the board, on a voluntary basis, as a professional in public service with duties as set forth in the bill. The bill would provide that these duties be performed pursuant to an agreement and subject to specified confidentiality requirements, the violation of which is a crime. By expanding the scope of a crime, this bill would impose a state-mandated local program.

This bill would require the director of the board to accept appointment applications for the position of a professional in public service and to establish prescribed procedures for complying with the bill adopt procedures for implementing the program by March 1, 2016. The bill would preclude appointment of a professional in public service after August 1, 2016, and would establish the final date of service under the appointment as December 31, 2017. The bill would require the director to establish an informal working group of executives on loan professionals in public service to discuss best practices, experiences, obstacles, opportunities, and recommendations.

This bill would, notwithstanding any law, require the director to annually report on the program to the Governor and the Assembly Committee on Jobs, Economic Development, and the Economy, with the final report due January 1, 2019. March 31, 2021.

This bill would repeal these provisions January 12, 2021 January 1, 2022.

(2)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

(1)Under existing law the State Board of Equalization collects and administers a variety of tax and fee programs with respect to matters including, but not limited to, vehicle fuels, timber, cigarettes and tobacco products, alcoholic beverages, emergency telephone services, integrated waste management, oil spills, hazardous materials, underground storage systems, and private railroad cars.

This bill would enact the Entrepreneur Partnership Pilot Project Professionals in Public Service Act of 2015, which would establish the state executive-on-loan professionals in public service program within the State Board of Equalization for the purpose of utilizing the expertise of private-sector entrepreneurs to help make state governmental activities and practices more streamlined and accessible to small businesses. The program would authorize the executive director of the board to appoint a maximum of 5 persons during any calendar year to serve the board, on a voluntary basis, as an executive on loan a professional in public service with duties as set forth in the bill. The bill would provide these duties be performed pursuant to an agreement and subject to specified confidentiality requirements, the violation of which is a crime. By expanding the scope of a crime, this bill would impose a state-mandated local program.

This bill would require the director of the board to accept appointment applications for the position of an executive on loan a professional in public service and to establish prescribed procedures for complying with the bill by March 1, 2016. The bill would require the director to establish an informal working group of executives on loan to discuss best practices, experiences, obstacles, opportunities, and recommendations.

This bill would, notwithstanding any law, require the director to annually report on the program to the Governor and the Assembly Committee on Jobs, Economic Development, and the Economy, with the final report due January 1, 2019.

This bill would repeal these provisions January 12, 2021.

Under existing law the State Board of Equalization collects and administers a variety of tax and fee programs with respect to matters including, but not limited to, vehicle fuels, timber, cigarettes and tobacco products, alcoholic beverages, emergency telephone services, integrated waste management, oil spills, hazardous materials, underground storage systems, and private railroad cars.

This bill would enact the Entrepreneur Partnership Pilot Project Act of 2015, which would establish the state executive-on-loan program within the State Board of Equalization for the purpose of utilizing the expertise of private-sector entrepreneurs to help make state governmental activities and practices more streamlined and accessible to small businesses. The program would authorize the director of the board to appoint a maximum of 5 persons during any calendar year to serve the board, on a voluntary basis, as an executive on loan with duties as set forth in the bill.

This bill would require the director of the board to accept appointment applications for the position of an executive on loan and to establish prescribed procedures for complying with the bill by March 1, 2016. The bill would require the director to establish an informal working group of executives on loan to discuss best practices, experiences, obstacles, opportunities, and recommendations.

This bill would, notwithstanding any law, require the director to annually report on the program to the Governor and the Assembly Committee on Jobs, Economic Development, and the Economy, with the final report due January 1, 2019.

This bill would repeal these provisions January 12, 2021.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 582 (Calderon) - Entrepreneur-in-Residence Act of 2016

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

AB 582 would establish the Entrepreneur-in-Residence (EIR) program within the Government Operations Agency (GOA) for the purpose of utilizing the expertise of private-sector entrepreneurs to help make state governmental activities and practices more streamlined and accessible.

Fiscal Impact:

Costs resulting from this bill be would be unknown, but could potentially exceed $50,000 annually (General Fund and/or special funds) for (1) GOA to administer the program and comply with the bill’s reporting requirements, and (2) for state agencies to house the entrepreneurs, as specified.

Background:

California small businesses reportedly comprised 96 percent of the State’s exporters in 2009, accounting for 44 percent of the State’s total exports. Business owners with zero employees totaled 2.8 million, and accounted for the single largest component of the State’s 3.5 million firms in 2010. Microenterprises (businesses with less than five employees) represent over 90 percent of the total. These businesses can incur certain challenges in meeting regulatory requirements, accessing capital, and marketing their goods and services.

Proposed Law:

This bill would, among other things, do the following:

• Enact the EIR Act of 2016, which would establish the state EIR program within GOA for the purpose of utilizing the expertise of private-sector entrepreneurs to help make state governmental activities and practices more streamlined and accessible.
• Specify that GOA may appoint one or more EIRs under the program during each year, with a cap of 10 appointments during any calendar year.
• Specify that GOA, with the approval of the state agency, may appoint an EIR to any state agency.
• Specify that any person appointed as an EIR shall meet specified qualifications.
• Prohibit any person appointed as an EIR in having a conflict of interest with the activities of the state agency where he or she is placed, including, but not limited to, having any existing business before the state agency in which he or she is proposed to be placed or is placed.
• Require GOA to accept appointment applications for the position of an EIR and to establish specified procedures for complying with this bill no later than March 1, 2017.
• Require every individual selected to participate in the program, before the effective date of an appointment, to enter into a memorandum of understanding with the secretary of the GOA and the head of the state agency where the entrepreneur will serve. The memorandum of understanding shall be specific to the placement and clearly identify the hours, duties, goals, expected outcomes, agency support, and office participation. The memorandum of understanding shall set the benchmarks and metrics for evaluating the success of the placement.
• Specify that in administering the EIR program, the GOA shall appoint EIRs in a variety of interested agencies. However, to the extent practicable, the secretary shall not appoint more than two EIRs to positions in the same agency during the same year.
• Prohibit an EIR from serving as an EIR for no longer than two years.
• Require an EIR to have all of the following duties:
  • Providing recommendations to the head of the state agency where the EIR serves on how to streamline, eliminate, or modify potentially inefficient or duplicative activities, processes, and programs, if any, at the state agency.
  • Providing recommendations to the head of the state agency where the EIR serves on methods to improve program efficiency at the state agency or new initiatives, if any, that may be instituted at the state agency to address the needs of small businesses and entrepreneurs.
  • Assisting the state agency in improving outreach and service to small business concerns and entrepreneurs including, but not limited to, the following:
    • Facilitating meetings and forums to educate small businesses and entrepreneurs on programs or initiatives of the state agency the EIR is serving.
  • Facilitating in-service sessions with employees of the office and the state agency the EIR is serving on issues of concern to entrepreneurs and small businesses.
  • Providing technical assistance or mentorship to small businesses and entrepreneurs in accessing programs at the office and the state agency the EIR is serving.
• Require an EIR to serve on a voluntary basis, and shall dedicate at least 16 hours per week to the program, unless a greater number of hours per week is otherwise agreed upon. At the discretion of the head of a participating state agency, the EIR shall have access to an office, computer, and other related support services and equipment from the participating state agency as the state agency determines to be necessary for the EIR to discharge his or her duties.
• Require the EIR to report directly to the head of the state agency in which the EIR is serving and shall also keep the secretary of the GOA updated on his or her activities, findings, and recommendations.
• Require GOA to establish an informal working group of EIR to discuss best practices, experiences, obstacles, opportunities, and recommendations.
• Require GOA to annually prepare and submit to the Governor and the Assembly Committee on Jobs, Economic Development, and the Economy a report on the program containing specified information. The requirement for submitting a report imposed by this bill shall become inoperative on January 1, 2021.
• Require the office and the agency where an EIR is placed to continue to measure and report the impact of the activities of the EIR for three years following the placement of an EIR.

Related Legislation:

• SB 1140 (Moorlach, 2016) would have required the automatic repeal of a statute that expressly or implicitly authorizes an executive agency to promulgate regulations two years after the statute goes into effect, unless the Legislature amends the statute to state its intent that the statute not be repealed, or unless the statute was passed in response to an emergency, as defined. The bill failed passage in the Senate Governmental Organization Committee.
• AB 12 (Cooley, 2015) would have required every state agency to review all provisions of the California Code of Regulations it has adopted, and to adopt, amend, or repeal any regulations identified as duplicative, overlapping, or out of date by January 1, 2018. The bill was held under submission on the Suspense File of this Committee.
• AB 1675 (Calderon, 2014) would have established the EIR program within the Governor’s Office of Business and Economic Development to provide private sector expertise and assistance to help make government activities and practices streamlined and accessible to small business. The bill was held under submission on the Suspense File of this Committee.

-- END --

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Isadore Hall, III

Chair

2015 - 2016 Regular

Bill No: 582 Hearing Date: 6/28/2016

SUBJECT: Entrepreneur-in-Residence Act of 2016

DIGEST: This bill enacts the Entrepreneur-in-Residence (EIR) Act of 2016, which would establish the state EIR program within the Government Operations Agency (GOA) for the purpose of utilizing the expertise of private-sector entrepreneurs to help make state governmental activities and practices more streamlined and accessible.

ANALYSIS:

Existing law:

1. Establishes the GOA, within the Governor’s office, which consists of several state agencies, including the Department of General Services and the Department of Technology.
2. Finds and declares that it is in the public interest to aid, counsel, assist, and protect the interest of small business concerns in order to maintain a healthy state economy.

This bill:

1. Enacts the EIR Act of 2016, which would establish the state EIR program within the GOA for the purpose of utilizing the expertise of private-sector entrepreneurs to help make state governmental activities and practices more streamlined and accessible.
2. Specifies that the GOA may appoint one or more EIRs under the program during each year, however, the GOA shall not appoint more than 10 EIRs during any calendar year.
3. Specifies that the GOA, with the approval of the state agency, may appoint an EIR to any state agency.
4. Specifies that any person appointed as an EIR shall meet at least one of the following qualifications:
   1. The individual shall have demonstrated success in working with California small businesses and entrepreneurs.
   2. The individual shall have successfully developed, invented, or created a product and brought the product to the marketplace.
5. Prohibits any person appointed as an EIR in having a conflict of interest with the activities of the state agency where he or she is placed, including, but not limited to, having any existing business before the state agency in which he or she is proposed to be placed or is placed.
6. Requires the GOA to accept appointment applications for the position of an EIR and to establish procedures for complying with this bill no later than March 1, 2017. Among other requirements, the procedures shall include the following:
   1. A process for engaging with and receiving approval from state agencies about prospective appointments.
   2. A process for screening prospective appointees, including checking background and references.
   3. A standard memorandum of understanding that stipulates the responsibilities of each party in undertaking an EIR under the program, including, but not limited to, hours, duties, goals, expected outcomes, agency support, and office participation. This standard memorandum of understanding shall be a model that shall be adapted to address each individual placement to create the memorandum of understanding into which the appointee, the agency, and the office enter. As a condition of having a placement of an EIR, the state agency shall agree to the memorandum.
7. Requires every individual selected to participate in the program, before the effective date of an appointment, to enter into a memorandum of understanding with the secretary of the GOA and the head of the state agency where the entrepreneur will serve. The memorandum of understanding shall be specific to the placement and clearly identify the hours, duties, goals, expected outcomes, agency support, and office participation. The memorandum of understanding shall set the benchmarks and metrics for evaluating the success of the placement.
8. Specifies that in administering the EIR program, the GOA shall appoint EIRs in a variety of interested agencies. However, to the extent practicable, the secretary shall not appoint more than two EIRs to positions in the same agency during the same year.
9. Prohibits an EIR from serving as an EIR for no longer than two years.
10. Requires an EIR to have all of the following duties:
    
    1. Providing recommendations to the head of the state agency where the EIR serves on how to streamline, eliminate, or modify potentially inefficient or duplicative activities, processes, and programs, if any, at the state agency.
    2. Providing recommendations to the head of the state agency where the EIR serves on methods to improve program efficiency at the state agency or new initiatives, if any, that may be instituted at the state agency to address the needs of small businesses and entrepreneurs.
    3. Assisting the state agency in improving outreach and service to small business concerns and entrepreneurs including, but not limited to, the following:
       1. Facilitating meetings and forums to educate small businesses and entrepreneurs on programs or initiatives of the state agency the EIR is serving.
       2. Facilitating in-service sessions with employees of the office and the state agency the EIR is serving on issues of concern to entrepreneurs and small businesses.
       3. Providing technical assistance or mentorship to small businesses and entrepreneurs in accessing programs at the office and the state agency the EIR is serving.
11. Requires an EIR to serve on a voluntary basis, and shall dedicate at least 16 hours per week to the program, unless a greater number of hours per week is otherwise agreed upon. At the discretion of the head of a participating state agency, the EIR shall have access to an office, computer, and other related support services and equipment from the participating state agency as the state agency determines to be necessary for the EIR to discharge his or her duties.
12. Requires the EIR to report directly to the head of the state agency in which the EIR is serving and shall also keep the secretary of the GOA updated on his or her activities, findings, and recommendations.
13. Requires the GOA to establish an informal working group of EIR to discuss best practices, experiences, obstacles, opportunities, and recommendations.
14. Requires the GOA to annually prepare and submit to the Governor and the Assembly Committee on Jobs, Economic Development, and the Economy a report on the program. The report, at a minimum, shall include the following:
    1. A progress report on the activities of each EIR during the reporting period, based on the applicable memorandum of understanding.
    2. A general summary on how the overall program is addressing the goals of the program, which are as follows:
       
       1. Making state programs simpler, easier to access, more efficient, and more responsive to the needs and concerns of small businesses and entrepreneurs.
       2. Providing for better outreach by the state to the private sector.
       3. Strengthening coordination and interaction between the state and the private sector on issues relevant to entrepreneurs and small business concerns.
15. Specifies that the requirement for submitting a report imposed by this bill, shall become inoperative on January 1, 2021.
16. States that it is anticipated that program impacts will not be fully measurable until recommended changes and activities are fully implemented.
17. Requires the office and the agency where an EIR is placed to continue to measure and report the impact of the activities of the EIR for three years following the placement of an EIR.

Background

Purpose of the bill. The author argues that, “without practical experience with the limited administrative capacity in which many small businesses operate or a realistic method for small businesses to participate in the regulatory process, it is difficult for state agencies to adopt rules that are considerate of needs of these smaller size businesses while still meeting the intended policy requirements.”

Quality of the EIR Program. The bill currently specifies that the EIR program is completely voluntary and that an EIR is required to volunteer a minimum of 16 hours per week. Without any compensation, and being required to work a minimum of 16 hours per week, it is hard to imagine that too many successful entrepreneurs would volunteer for such an assignment.

In addition, the bill currently prohibits an EIR from being placed in a state agency where the EIR might have a conflict of interest. While understandable, the prohibition does diminish the knowledge that such an EIR would provide for the state. If the EIR is prohibited from volunteering in the state agency where he/she would realistically have more of an expertise, are we not then diminishing the role of an EIR?

Similar EIR Programs. EIR Programs are not necessarily a new idea and have been used in the investment and business world for decades. The use of EIR Programs to help government agencies is more recently gaining traction. As an example, in 2012, the Federal Drug Administration (FDA) established an EIR Program to attract seasoned entrepreneurs in the medical industry that had successfully navigated the FDA's regulatory process. The six to seven month program was designed to help the FDA and small businesses work together to introduce new products in the marketplace both quickly and safely.  The FDA not only improved processes, FDA staff also gained a better understanding of the challenges small businesses face and how to better network with entrepreneurs in the future.

In another example, U.S. Citizenship and Immigration Services (USCIS) established an EIR initiative with the goal of recruiting a small “tactical team” of business experts to work with USCIS staff to help streamline operations and enhance pathways within existing immigration law to help immigrant entrepreneurs start and grow businesses in the U.S. This was a 90-day project, which also included the other entities within the Department of Homeland Security and was a component of the White House Startup America initiative.

Prior/Related Legislation

SB 1140 (Moorlach, 2016) would have required the automatic repeal of a statute that expressly or implicitly authorizes an executive agency to promulgate regulations two years after the statute goes into effect, unless the Legislature amends the statute to state its intent that the statute not be repealed, or unless the statute was passed in response to an emergency, as defined. (Failed passage in Senate Governmental Organization Committee)

AB 12 (Cooley, 2015) would have required every state agency to review all provisions of the California Code of Regulations it has adopted, and to adopt, amend, or repeal any regulations identified as duplicative, overlapping, or out of date by January 1, 2018. (Held on Senate Appropriations Suspense File)

AB 1675 (Calderon, 2014) would have established the EIR program within the Governor’s Office of Business and Economic Development to provide private sector expertise and assistance to help make government activities and practices streamlined and accessible to small business. (Held on Senate Appropriations Suspense File)

SB 981 (Huff, 2014) would have required each state agency to review each regulation adopted prior to January 1, 2014, and to develop a report to the Legislature containing prescribed information. (Failed passage in Senate Governmental Organization Committee)

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

TechNet

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: According to TechNet, “This bill is a great step in the right direction to support and encourage some of the best and brightest minds in the private and small business sectors to help positively influence the operation and business processes and procedures at the governmental agency level. AB 582 is a win-win for all involved and we believe will not only provide the benefit to the public sector, but will move to incent small business, private sector executives to build, maintain and enhance their businesses in the State of California.”

ASSEMBLY THIRD READING

ATR Bill Id:AB 582

Author:(Calderon)

As Amended Ver:May 4, 2015

Majority vote

SUMMARY: Requires the Legislative Analyst and the California State Auditor to convene a work group to determine the most appropriate state agency to house a pilot program with the goal of making state government more streamlined and accessible to small businesses. The work group is required to submit a report to the Legislature on or before December 31, 2016.

FISCAL EFFECT: According to the Assembly Appropriations Committee, General Fund costs in the range of $75,000 to $100,000 for the State Auditor and the Legislative Analyst's Office to convene a work group and produce a report with recommendations related to the establishment of professionals in public service pilot program.

COMMENTS: Although the state has a vigorous public process that is designed to allow the rulemaking agency to fully consider the comments, suggestions, and economic impacts of proposed regulations on all business – especially small businesses – state agencies often receive few specific comments and recommendations on how to reduce the cost and complexity of the proposed implementation method, while still maintaining the same regulatory standard.

An intrinsic challenge to California's rulemaking process is that those businesses that may be most affected have the least ability to monitor the broad range of state rulemaking entities, recommend appropriate alternative implementation methods or engage meaningfully in the often complex and highly technical rule making proceedings.

Without practical experience with the limited administrative capacity in which many small businesses operate or a realistic method for small businesses to participate in the regulatory process, it is difficult for state agencies to adopt rules that are considerate of the needs of these smaller size businesses. Given that nearly 3 million firms in California have no employees and 90% of firms with employees have less than 20, having implementation methods that are appropriate for small businesses in terms of time, money, and expertise are important to the state's economic growth.

This bill calls for the establishment of a work group to determine the best process for implementing an entrepreneur-in residence program (EIR) within state government. EIRs have been used successfully by both the public and private sectors to create leaner administrative processes and provide better customer service.

Similar Programs: The EIR model has been used in the investment and business world for decades. According to Dell, a supporter of this and prior EIR legislation, the high tech sector began using the EIR model in the 1980s as a means to bring experienced professionals into startup businesses.

The use of EIR Programs to help government agencies has more recently been gaining traction. As an example, in 2012, the Federal Drug Administration (FDA) established an EIR Program to attract seasoned entrepreneurs from the medical industry who had prior experience in navigating the FDA's regulatory process. The six to seven month program was designed to help the FDA and small businesses work together to more quickly introduce safe new products into the marketplace. Under the program, the FDA not only improved processes, the FDA staff are reported to have also gained a better understanding of the challenges small businesses face and how to better network with entrepreneurs in the future. The goal of one of the first FDA EIR placements was described as delivering "transformational change" by creating opportunities for internal and external talent to collaboratively apply the principles of lean engineering by rapidly testing, validating, and scaling new approaches. EIR Programs were included as a key component of President Obama's Strategy for American Innovation.

In another example, United States Citizenship and Immigration Services (USCIS) established an EIR initiative to improve processing times and the related administrative burden for certain entrepreneur immigrants. The strategy of this EIR project was to recruit a small "tactical team" of business experts to work with USCIS staff, using the authorities and limitations in existing law, to streamline operations and enhance pathways for future business development by these immigrant entrepreneurs. This was a short 90-day project, which ultimately involved other federal agencies and was used as an example of the innovative type of relationships that are being encouraged under the White House Startup America initiative.

In March 2014, Virginia enacted an EIR Program (HB 321, Chapter 63, Statutes of 2014) and several other states are reported to be considering EIR Programs in 2015. AB 1675 (Calderon), which failed to move from the Assembly Appropriations Committee in 2014, was patterned after the Texas and Virginia legislation. This bill calls for the development of a strategic action plan to have California establish its own EIR pilot program.

Analysis Prepared by: Toni Symonds / J., E.D., & E. / (916) 319-2090 FN: 0000750

Date of Hearing: May 20, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

ABPCA Bill Id:AB 582

Author:(Calderon) – As Amended Ver:May 4, 2015

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires the Legislative Analyst and the California State Auditor to convene a work group to determine the most appropriate state agency to house a pilot program with the goal of making state government more streamlined and accessible to small businesses. The work group is required to submit a report to the Legislature on or before December 31, 2016.

FISCAL EFFECT:

General Fund costs in the range of $75,000 to $100,000 for the State Auditor and the Legislative Analyst's Office to convene a work group and produce a report with recommendations related to the establishment of a professionals in public service pilot program.

COMMENTS:

1. Purpose. According to the author, entrepreneurs and local business owners responsible for California's economic prosperity are some of the best and brightest in the world. Still, entrepreneurs face many obstacles in today's economy, such as access to capital and access to different markets, and often government itself. Governmental processes are highly bureaucratic, which leads to slow decision making that can have a direct impact on the private sector.

According to the bill's findings and declarations, allowing the most creative private sector professionals to volunteer their time and expertise to make government work better for its citizens would permit the state to utilize this creativity for the benefit of all its citizens.

This bill directs the Legislative Analyst and the California State Auditor to convene a work group to determine the most appropriate state agency to house a professionals in public service pilot program with the goal of making state government activities and practices more streamlined and accessible to small businesses.

2. Prior legislation. AB 1675 (Calderon) of 2014, would have established the Entrepreneur-in-Residence Act of 2014 to use the expertise of private-sector entrepreneurs to help make state governmental activities and practices more streamlined and accessible to small businesses. This bill was held on the Suspense file in the Senate Appropriations Committee.

Analysis Prepared by: Misty Feusahrens / APPR. / (916) 319-2081

Date of Hearing: April 27, 2015

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Philip Ting, Chair

ABPCA Bill Id:AB 582

Author:(Calderon) – As Amended Ver:April 21, 2015

Majority vote. Fiscal committee.

SUBJECT: Professionals in Public Service Act of 2015

SUMMARY: Establishes a professionals in public service program (Program) within the State Board of Equalization (BOE) to utilize the expertise of private-sector professionals "to help make state governmental activities and practices more streamlined and accessible to small businesses." Specifically, this bill:

1. Establishes the Professionals in Public Service Act of 2015 (Act).
   
   

2. Contains the following legislative findings:
   
   

   1. California is home to some of the most innovative and resourceful entrepreneurs in the world, making it the nation's leader in technology and related industries;
      
      

   2. The state should harness this innovation and leverage it to provide the best possible customer service to all of its citizens in the most cost-effective, efficient, and creative manner;
      
      

   3. Creativity and efficiency should not be limited to the private sector, but rather should be embraced and developed to further the public interest;
      
      

   4. The Act applies a philosophy of success to state government, allowing the most creative private sector professionals to volunteer their time and expertise to make government work better for its citizens;
      
      

   5. Establishing the professionals in public service program in a California state agency is a model that has been applied successfully by a variety of public and private entities and has proven to be a useful tool to help various processes become more efficient; and,
      
      

   6. It is the intent of the Legislature that the Act serve as a model for similar measures authorizing other state agencies to utilize and adopt similar programs, where applicable, to support and streamline activities associated with their regulatory responsibilities.
      
      

3. Directs the BOE, by March 1, 2016, to adopt procedures for implementing the Program, and to begin accepting applications within 60 days after their adoption. At a minimum, these procedures must include all of the following:
   
   

   1. The BOE director (Director) may appoint one or more professionals in public service under the Program during the Program's existence. However, the Director shall not appoint more than five professionals in public service during any calendar year;
      
      

   2. Nominations for appointment may be submitted by any entity, public or private;
      
      

   3. An application for appointment may be submitted in writing on a form developed by the BOE, or through an online application process established by the BOE;
      
      

   4. Any person appointed as a professional in public service shall meet at least one of the following qualifications: (1) The individual shall have demonstrated success in working with California small businesses and entrepreneurs; or, (2) The individual shall have successfully developed, invented, or created a product and brought the product to the marketplace;
      
      

   5. A person appointed as a professional in public service shall not have a conflict of interest with the activities of the BOE, including, but not limited to, having any existing business before the BOE;
      
      

   6. A process for screening prospective appointees, including checking backgrounds and references;
      
      

   7. A standard memorandum of understanding that stipulates the responsibilities of each party in undertaking a "professional in public service" [sic] under the Program, including duties, goals, expected outcomes, administrative support, and office participation. This standard memorandum of understanding may function as a model for future professionals in public service programs; and,
      
      

   8. A reporting process, as specified.
      
      

4. Provides that the appointment of a professional in public service shall be made no later than August 1, 2016. The final date of service of a professional in public service shall be December 31, 2017.
   
   

5. Provides that, before the effective date of an appointment, every individual selected to participate in the Program shall have entered into a memorandum of understanding with the Director, as specified.
   
   

6. Specifies that procedures adopted under this bill are exempt from the rulemaking provisions of the Administrative Procedure Act.
   
   

7. Provides that, subject to the confidentiality requirements of Government Code Section 15619 and of the Revenue and Taxation Code (R&TC) applicable to the BOE, a professional in public service shall have the following duties:
   
   

   1. Providing recommendations to the BOE on how to streamline, eliminate, or modify potentially inefficient or duplicative activities, processes, and programs, if any, of the BOE;
      
      

   2. Providing recommendations to the BOE on methods to improve program efficiency at the BOE or new initiatives, if any, that may be instituted at the BOE to address the needs of small businesses and entrepreneurs;
      
      

   3. Assisting the BOE in improving outreach and service to small business concerns and entrepreneurs including the following:
      
      

      1. Facilitating meetings and forums to educate small businesses and entrepreneurs on programs or initiatives of the BOE;
         
         

      2. Facilitating in-service sessions with employees of the BOE on issues of concern to entrepreneurs and small businesses; and,
         
         

      3. Providing technical assistance or mentorship to small businesses and entrepreneurs in accessing programs at the BOE.
         
         

8. Provides that a professional in public service shall serve on a project-based, voluntary basis, and shall be given a timeline for completion. At the discretion of the Director, the professional in public service shall have access to an office, computer, and other related support services and equipment as the Director determines to be necessary for the professional in public service to discharge his or her duties.
   
   

9. Specifies that a professional in public service shall report directly to the Director.
   
   

10. Requires the Director to establish an informal working group of professionals in public service to discuss best practices, experiences, obstacles, opportunities, and recommendations.
    
    

11. Requires the Director annually to prepare and submit to the Governor and the Assembly Committee on Jobs, Economic Development, and the Economy a report on the Program, as specified.
    
    

12. Sunsets automatically on January 1, 2022.

EXISTING LAW:

1. Establishes the BOE, which consists of five voting members: the State Controller and four members elected for four-year terms at gubernatorial elections. The State is divided into four BOE districts, with the voters of each district electing one member. (California Constitution Article XIII, Section 17.)
   
   

2. Specifies that any member or ex-member of the BOE, or any agent employed by it, or the Controller, or ex-Controller, or any person employed by him or her, or any person who has at any time obtained such knowledge from any of the foregoing officers or persons, shall not illegally divulge any of the following items of information concerning the business affairs of companies reporting to the BOE:
   
   

   1. Any information concerning the business affairs of any company that is gained during an examination of its books and accounts or in any other manner, and is not required by law to be reported to the BOE;
      
      

   2. Any information, other than the assessment and the amount of taxes levied, obtained by the BOE in accordance with law from any company other than one concerning which that information is required by law to be made public; and,
      
      

   3. Any particular item of information relating to the disposition of its earnings contained in the report of a quasi-public corporation that the corporation, by written communication specifying the items and presented at the time when it files its report, requests shall be treated as confidential. (Government Code Section 15619.)

FISCAL EFFECT: The BOE estimates that this bill would have no direct revenue impact.

COMMENTS:

1. The author has provided the following statement in support of this bill:
   
   

California is home to the largest, richest and most diverse economy in the United States. In fact, according to Bloomberg, California has overtaken Brazil as the 7th largest economy in the world. A significant reason being the ingenuity of the citizens in our extraordinary state.

Small businesses make up 99.2% of all businesses in the state and create two-thirds of all new jobs. Subsequently, the entrepreneurs and local business owners responsible for California's economic prosperity are some of the best and brightest in the world. Still, entrepreneurs face many obstacles in today's economy, such as access to capital and access to different markets, however, the biggest obstacle to success is often government itself.

Our representative government is designed to give a voice to citizens with different views to debate in a public platform in hopes that consensus can be achieved. Sometimes, legislators pursue policies that can be out-of-touch with the public's interest, or behind the times due to the rapid growth of technological advances. More to the point, governmental processes are highly bureaucratic which leads to slow decision making that can have a direct impact on the private sector.

Incorporating a private citizen who has a diverse technical background in business, financial and governmental processes into a governmental entity (e.g. BOE) can provide government employees direct access to an expert who is knowledgeable of the various challenges facing businesses in California today. The result can potentially give California's business leaders an edge on the world competition to ensure the continued growth of our economy.

2. Proponents of this bill note the following:

This bill is a great step in the right direction to support and encourage some of the best and brightest minds in the private and small business sector to help positively influence the operations and business process and procedure at the governmental agency level.

AB 582 would incorporate a private citizen who has a diverse technical background in business, finance and governmental process into a governmental entity where they can provide the knowledge and tools as an expert to make positive influences within the agency.

3. The BOE notes the following in its staff analysis of this bill:
   
   

   1. The BOE Members discussed this bill at the March 25, 2015 Legislative Committee meeting, but could not support it: "Specific issues expressed by the BOE Members include:
      
      

      1. "Is legislation needed to implement a professional in public service program? The BOE could internally explore a professional in public service program through the BOE's Customer Service & Administrative Efficiency Committee. This Committee's roles and responsibilities include considering issues to improve customer service and administrative efficiencies.
         
         

      2. "Should the bill apply to state government in general? A number of state entities that currently provide oversight and investigate state government operations, such as the Little Hoover Commission and the California State Auditor, might benefit from such a program.
         
         

      3. "The BOE is a tax administration and collection agency that deals with confidential taxpayer information. Concerns arise over appointees working in BOE offices with the secured data that BOE maintains."
         
         

   2. BOE's confidential taxpayer information: "The bill authorizes, at the discretion of BOE's Director, the professional in public service to have access to an office, computer, and other related support services and equipment. The March 26, 2015 amendments require that the professional in public service duties comply with confidentiality requirements in law. Accordingly, a professional in public service . . . will only have access to information that is currently available on BOE's public website (nonconfidential information)."
      
      

   3. Appointees cannot have a conflict of interest with the activities of the BOE: "The extent of the conflict is unclear. Would a corporate officer of a business that holds a seller's permit be eligible? Would corporate officers of a company with a history of not filing and paying their sales and use tax returns on time be disqualified? Does a corporation's audit liability appeal represent a conflict of interest for individuals? BOE staff will work with the author's office to identify circumstances that pose a conflict of interest, and disqualify an individual from participating in the program."
      
      

   4. Other states: "Texas and Virginia have enacted similar, pilot programs referred to as the Entrepreneur-in Residence Program (EIR). Texas' EIR program is administered by the Texas Governor's Office of Economic Development and Tourism. The Governor or the Governor's designee may appoint not more than 10 entrepreneurs-in-residence to state agencies during each fiscal year. An appointee is a full-time employee of the state agency to which they are appointed.

"Virginia's EIR program is administered by the Virginia's Secretary of Commerce and Trade. The Secretary may appoint up to 10 entrepreneurs to serve as entrepreneurs-in-residence with state agencies. They serve without compensation but, at the discretion of the head of the agency for which they were appointed, may receive reasonable and necessary expenses incurred in the discharge of their duties as an entrepreneur-in-residence."

4. Committee Staff Comments
   
   

   1. The Taxpayers' Rights Advocate: More than two decades ago, the Legislature enacted the Harris-Katz California Taxpayers' Bill of Rights (Harris-Katz). That legislation was designed to "ensure that the rights, privacy, and property of California taxpayers are adequately protected during the process of the assessment and collection of taxes." (R&TC Section 7081.) Among its many provisions, Harris-Katz directed the BOE to establish the position of the Taxpayers' Rights Advocate (TRA). (R&TC Section 7083.) The TRA is charged with facilitating the resolution of taxpayer complaints, including complaints alleging unsatisfactory treatment by BOE employees. (Id.)

The BOE notes that the TRA is also responsible for monitoring tax and fee programs for compliance with Harris-Katz and recommending new procedures or revisions to existing policy. The TRA is also charged with recommending changes in statutes, regulations, policies, and procedures to improve service to taxpayers. Finally, the BOE notes that, under existing law, the BOE must develop and maintain a taxpayer education and information program that includes all of the following:

1. A program of written communication with newly registered taxpayers explaining in simplified terms their duties and responsibilities, and the most common areas of noncompliance encountered by participants in their business or industry;
   
   

2. Participation in small business seminars and similar programs organized by federal, state, and local agencies;
   
   

3. Revision of taxpayer educational materials explaining the most common areas of taxpayer noncompliance in simplified terms; and,
   
   

4. Implementation of a continuing education program for audit and compliance personnel to include the application of new legislation to taxpayer activities and areas of recurrent taxpayer noncompliance or inconsistency of administration.
   
   

This bill, in turn, is designed with the goal of making state governmental activities and practices more streamlined and accessible to small businesses. To the extent the Legislature determines that changes in BOE processes and procedures are required to accomplish this end, Committee staff questions whether it might be preferable to augment or refine the existing authority of the TRA, who possesses extensive experience in this field, rather than implement a new program.

2. Defining terms and objectives: As noted above, this bill is designed to make state government more accessible to small businesses. For example, a professional in public service would be responsible for providing recommendations to the BOE on new initiatives to address the needs of small businesses and entrepreneurs. This bill, however, lacks any definition or guidance regarding what exactly constitutes a "small business". In addition, this bill requires any appointed professional to have either: (i) demonstrated success in "working with" California small businesses and entrepreneurs, or (ii) successfully developed a product and brought the product to the marketplace. These categories, however, are so broad in scope that it is questionable whether they would adequately ensure small businesses, however defined, are given a seat at the table. For example, would an external consultant or vendor to small businesses meet the definition of a professional under this bill, even if she worked for a large multi-national firm? Would a corporate executive at Apple meet the definition for having successfully developed the iPhone and brought it to market? While the expertise of such individuals may prove invaluable, would it necessarily promote a greater understanding of the issues faced by small businesses in California?
   
   

3. Keeping things confidential: By necessity, a tax agency such as the BOE handles highly sensitive and confidential taxpayer information. This information includes tax account information, employee personnel records, criteria used for audit selection, and information considered proprietary in nature. While this bill specifies that a professional in public service will be subject to the confidentiality requirements applicable to the BOE, the potential for inadvertent or intentional misuse of confidential information is amplified in a tax agency setting. Thus, Committee staff questions whether the BOE is the most appropriate state agency for initiating a pilot program bringing in small business professionals and entrepreneurs from the private sector.
   
   

4. Prior legislation: AB 1675 (Calderon), of the 2013-14 Legislative Session, would have established the Entrepreneur-in-Residence Act of 2014 to use the expertise of private-sector entrepreneurs to help make state governmental activities and practices more streamlined and accessible to small businesses. AB 1675 was held on the Senate Committee on Appropriations' Suspense File.
   
   

5. Double-referral: This bill was double referred to the Assembly Committee on Jobs, Economic Development, and the Economy and passed that Committee by a vote of 8-0 on April 21, 2015. For additional discussion of this bill's provisions, please refer to that Committee's analysis.

REGISTERED SUPPORT / OPPOSITION:

Support

Dell

TechNet

Opposition

None on file

Analysis Prepared by: M. David Ruff / REV. & TAX. / (916) 319-2098