Assembly Standing Committee on Accountability and Administrative Review

If any member of the public in the room would like to testify on a bill, I will ask you to approach the microphone at the appropriate time. Please note that all witness testimony will be here in person. There will be no phone testimony for this hearing. And I also do want to acknowledge that in recent years, the Assembly has experienced several disruptions to Committee and floor proceedings. We would like to ensure, and we're committed to ensuring, that all voices are heard.

However, conduct that disrupts, disturbs, or otherwise impedes the orderly conduct of this hearing is prohibited. Thank you in advance for your cooperation. And before we jump in, I also want to just say thank you to Vanessa Gonzalez, who is joining us today as our Committee Secretary. Vanessa is the secretary for the Assembly's Committee on Utilities and Energy. So thank you for helping us for this hearing. And with that, I think we do have a quorum. So, Madam Secretary, please call the roll.

[Roll Call]

All right, wonderful. So we do have a quorum, and we are waiting for our authors to arrive. So if you have a bill before the Assembly's Accountability and Administrative Review Committee, please make your way to room 437.

All right. Good morning, Assembly Member Valencia. Whenever you are ready.

My apologies. Good morning. How's everybody doing?

Good, how are you? Thank you.

Great. So, once again, we went with yes. Good morning, Madam Chair and Members. I want to start by thanking the Committee team for diligently working on AB 860, a bill that is part of the California Nonprofit Contracting Equity Initiative. I would also like to give a quick shout out to Natalie Teran, who's been taking the lead on this bill on behalf of our office as well.

So AB 860 will support our state's equity and access goals by reducing the effort and expense associated with applying for and receiving state funds pursuant to very small grants. This bill specifies that grant administrators must distribute at least 50% of the grant award upon execution. AB 860 reasonably limits what information administrators may ask of grant recipients and encourages streamlined information. Last year, the Legislature held its first ever joint select Committee hearing on nonprofit sector, which highlighted the challenges that these nonprofits face.

The hearing confirmed our suspicions that nonprofits, especially smaller nonprofits, are struggling to stay afloat. Nonprofits spend an inorbitant amount of time on grant applications and reports, which can distract them from the mission critical work. Nonprofits continue to deliver for our communities that need assistance without hesitation and love and care. We must now ensure the state is being an equitable partner and strengthen our essential partnership with nonprofits.

And here to provide testimony is Anna Hasselblad, the Policy Director of United Ways of California, and Sandra Celedon, President and CEO of Fresno Building Healthy Communities. Thank you.

Good morning, Chair and Members. My name is Anna Hasselblad. I'm the Director of Public Policy with United Ways of California in partnership with California's local United Ways, covering every county. We work to improve the health, education, and financial results for children and families with low incomes. I'm very pleased to speak in support of AB 860 by Assembly Member Valencia today. It is important to share United Ways not only serve California's diverse communities, but we belong to them. We are our communities.

We work hand in hand with CBOs of all sizes to ensure that our communities are robustly supported. A challenge that we are all too familiar with is that the state funding that aligns with nonprofit service capabilities but does not pencil out when it comes to the administrative burden that is required to secure the funding.

This means that a well positioned CBO with direct service overlap with a state funding opportunity may either, a, apply and by doing so, have to divert resources away from an existing program in a deliverable, or b, have to opt to not apply at all, as the upfront requirements of the grant or contract opportunity are too burdensome.

I've encountered this very decision with multiple nonprofit partners in recent years while discussing state funding opportunities to reach priority populations where the administrative burden of the application process is simply too much. Partners that are exactly right, the exactly right entity to help meet the state's equity and inclusion goals are forced to pass a mission aligned opportunity by. AB 860 can help change that for the better. Nonprofits work hard not only to serve our communities, but to be in good standing with the government and our funders.

AB 860 takes a sensible approach to ensuring that nonprofits have expertise and community relationships, are able to apply for funding, and execute programs and deliverables we can all be proud of. For these reasons, we urge your aye vote today on AB 860. Thank you.

Thank you.

Good morning, Madam Chair, Members of the Committee. My name is Sandra Celedon. I work with Fresno Building Healthy Communities. We are actually a coalition comprised of over 30 community based and grassroots organizations, predominantly working in Fresno County. And part of my role is to provide support to very small organizations that often have staff of three or less that provide very critical services to vulnerable communities and really are key to the fabric of our community and their civic infrastructure.

Too often, our grassroots organizations opt out of pursuing public funding because not only of the burdensome application process, but also the reporting requirements that often are unreimbursed expenses because they cost a lot of administrative overhead that is not covered by many state funding sources. AB 860, would help to streamline the application process that right now, quite frankly, perpetuates inequity.

Right now, as a nonprofit organization, whether you're pursuing a grant of 22 million or a grant of a small grant of less than $500, you have to apply through the same process and you are subject to the same reporting requirements, which ultimately really hurts the civic infrastructure of communities that need that support and often perpetuates the inequity of preventing economic mobility and economic infrastructure to actually enable communities to then pursue bigger grants. As an example, I would share that for Fresno Building Healthy Communities.

When we first started, we were a staff of three with a very tiny budget of less than $300,000. And fast forward to 2020. Because of slowly and methodically growing our infrastructure locally, we were able to help draw down a $6.8 million grant to actually renovate infrastructure in our community, which ultimately sets our community up for success. We would not have been able to do that without strategic partnerships through Cal nonprofits and other agencies that helped shepherd us through the process of applying for burdensome grants.

But I can tell you that I regretted it many times when I had to complete those reports to actually get paid for the work that we were doing, and it actually created an additional need for us to fundraise outside of that process to enable the administration of the grant. And so unless you actually think ahead about how am I actually going to administer to be able to get paid by the state and pursue philanthropic or other dollars.

Very often, you're left out of those conversations and those opportunities. So AB 860 will remove some of those unnecessary administrative barriers that, quite frankly, are self created and perpetuate poverty in ways that we could address very significantly by simply streamlining and limiting the reporting requirements for small grants of $20,000 or less, that in communities like rural Fresno and in unincorporated communities like my home and Kaweah actually go a long way.

While they may seem small in the scope of the state budget, they are very impactful on the ground and at the community level. So I'm here today to urge your support for AB 860 to enable building civic infrastructure from the ground up.

Well, thank you for those comments. And we don't have any primary witnesses in opposition, so we'll go ahead and open it up for any additional witnesses that are here in support. Is there anyone in the room wishing to testify in support of AB 860?

Jennifer Fearing, I'm pleased to represent Cal Nonprofits as well, but I'd like to register the support of Meals on Wheels California today. Thank you.

Thank you.

Good morning. Dr. Leandra Clark Harvey, CEO of the California Council of Community Behavioral Agencies in strong support. Thank you.

I'm Jan Masoka, CEO of the California Association of Nonprofits, here to express our support.

Thank you.

Ejiro Okoro, United Way of the California Capital Region, also in support. Thank you.

Thank you. Is there anyone in the room wishing to testify in opposition? Seeing and hearing none. We'll open it up for questions or comments from Committee Members. Assembly Member Davies.

Good morning. I want to thank you so much for bringing this forth. Sitting on City Council for many years, and we had the nonprofit grants. Unfortunately, a lot of these agencies, it wasn't worth their time because we really needed to give them something that was at least $5,000 or more.

Otherwise, it wasn't worth them having to take the time to fill out the grant. So it's about time. And this is just going to open up to so many more nonprofits that will have an opportunity to get funding from the state. So it's a great bill. Thank you. I'd make a motion and like to co-author.

Thank you. We have a lot of motions and a lot of seconds, lots of enthusiasm today.

Who doesn't love nonprofits, right?

Vice Chair Dixon.

Thank you, Chair. I agree with the enthusiasm, and I will enthusiastically support this, but I do have some administrative-type questions. Now, you said 20,000 or is it 200,000? What is the threshold for the reporting?

For the reporting, and Jan is here with the Cal Nonprofits, who can provide a little bit of additional feedback if I get anything wrong, is for $20,000 or less, it would reduce the amount of reporting that's required. So 200,000 or more. It would create an additional requirement for the state to actually provide some dedicated outreach to ensure that nonprofit organizations are clear on the requirements and are also aware of the opportunities.

What about 20,000 up to 200? What happened?

And that would be a Jan question. Jennifer. Yeah, I'm sorry.

I can assist with that. The total amount of grant availability, so the total funds being allocated the grants individually can't exceed $20,000.

You mean this pool of funds?

Correct.

Oh, got it. And then on the accountability side, I think I read somewhere that the receipt management, do you see a problem with that, where there doesn't have to be any kind of accountability on spending from the nonprofit?

I can answer that, Jennifer. So the requirement currently, as it stands, the way that the state functions is when you submit an invoice for reimbursement, you have to attach every receipt. So, for example, even if you have a $3 expenditure, you have to attach that receipt as backup to that invoice, which then creates, for a simple invoice, I've had packages of, like, 900 pages. And so it doesn't remove the requirement that nonprofits must follow in terms of keeping receipts. Following accounting practices, obtaining audits is required. Right. But it does remove that front end requirement of submitting every single receipt.

So you'll still be the management of all that, just like the IRS requirements?

Absolutely.

And that type of thing? Okay, very good. Thank you. I will be a co-author too.

Wonderful. Thank you. Excuse me. So I would just add, as my colleagues noted, thank you so much for bringing this measure forward. California's network of nonprofits and grassroots advocacy organizations are such important partners as we look to combat our toughest challenges.

And I think that the common sense measures that are proposed in this bill will ensure that more of our state dollars are going to the people that need them and going to solve the problem, rather than just helping navigate red tape. So thank you for bringing the measure forward. I, too, would love to be a co-author. Assembly Member, would you like to close?

Thank you. And I do appreciate your comments about making sure that whatever systems we're implementing or processes we have now moving forward, we streamline them and make them as efficient as possible, considering a potential budget deficit. So with that, I just respectfully ask for an aye vote, and I do appreciate your time. Gracias.

All right. Wonderful. Well, we have a motion and a second. The motion is due pass and re-refer to the Committee on Appropriations. Secretary, please call the roll.

Item number three, AB 860. The motion is due pass Appropriations. [Roll Call]

All right, 7-0. That measure is out. Thank you so much. Thank you. All right. And Assembly Member Fong, whenever you are ready.

Thank you. Thank you, Chair and Members. I'll be quick because I know we have a lot of things going on today. It's my pleasure to present AB 467--or 469. Sorry. In our current process right now, state agencies can deny California Public Records Act requests knowing there is no appeals option for requesters other than to sue the agency in court, which is not feasible and too costly for many in the public.

This bill addresses this problem by establishing an independent ombudsperson who can review the denied Public Records Act request and serve as an independent referee to decide if the state agency had legitimate grounds for denying the request. State agencies should not be able to freely deny public records requests and rob the public of information crucial to holding their government accountable. State government is here to serve the public. It is our duty to be transparent in how we conduct the state's business and use taxpayer dollars.

This bill addresses this loophole in the Public Records Act process so that it can do what it was intended to do, which is to bring transparency, fairness, and accountability to government. I'm joined today by Britteny Barsotti with the California News Publishers Association. I respectfully ask for your aye vote.

Thank you.

Good morning, Madam Chair and Members of the Committee. As the Assemblyman mentioned, I'm Britteny Barsotti. I'm the General Counsel over at the California News Publishers Association. We represent over 800 publications throughout the State of California. As one of my duties for the Association, I operate a legal helpline for our members, and the vast majority of issues that we see are Public Records Act related and denied requests.

And so for those who don't have access to legal counsel, including members of the public and small publications, this bill would provide an effective avenue to appeal those improper denials, and I respectfully urge your aye vote.

Thank you. And we do not have any primary witness in opposition. We'll go ahead and open it up for additional public testimony. Is there anyone in the room wishing to testify in support of AB 469? Seeing and hearing none, is there anyone in the room wishing to testify in opposition? Seeing and hearing none, open it up for questions from Committee Members. Vice Chair Dixon.

I was going to say the same thing. I'll second. I think it's an excellent and much needed. I have a similar bill that calls for transparency with Public Record Act requests. I think we should continue to work hard for this. So I'm strongly supportive. Thank you.

Thank you.

So I just have one question because I know that--happy to support the bill today. It enjoys an aye recommendation, but you have attempted kind of previous iterations of this in the past. Have you addressed the concerns that kind of caused the bill to fall short in--I think it was 2017 and 2022--so that we ensure that this actually doesn't just pass out of this Committee, but in fact continues to make it through the legislative process and become law?

Yes. Absolutely. I mean, we are working with the Chair on the Senate side. The first attempt, I think there was some miscommunication. There were amendments provided. We accepted them. They were drawn late in the process with the new Chair. He's willing to work--I think moving it from maybe the Auditor's Office to another entity. So we're working all those specifics.

Our emphasis to those that may have some concerns is that we are not precluding anyone to pursuing legal action. This is just a process, an appeals process, to provide some relief and address a loophole in the process to allow someone to appeal.

Great. Okay. Thank you for clarifying. Assembly Member, would you like to close?

Respectfully ask for an aye vote.

Thank you. So we have a motion from Assembly Member Rodriguez; second from Assembly Member Davies. Secretary, please--oh, the motion is 'do pass and re-refer to the Assembly Judiciary Committee.' Secretary, please call the roll.

Item Number One: AB 469. The motion is 'do pass to Judiciary.' [Roll Call]

Seven/zero. That measure is out. Thank you. And moving to our next bill.

Assembly Member Hart is here on AB 590. Good morning.

Well, it's nice to be with everyone today, and I'm pleased to present AB 590 to the Committee. AB 590 would improve and expand the practice of providing nonprofits with advance payments when they receive state grants and contracts. Specifically, this bill would ensure all nonprofits have an opportunity to receive up to 25 percent in advance and prioritize payments for nonprofits serving disadvantaged, low-income, and underresourced communities. There are currently a limited number of programs across state government where advanced programs and payments are authorized.

This patchwork approach creates inequity, particularly around nonprofits that serve vulnerable communities. Currently, nonprofits rely on a reimbursement model and are often placed in the challenging position of having to consider pursuing loans to cover costs associated with starting up state grants and contracts. For example, one nonprofit paid over 28,000 dollars in interest last year while waiting for payments from the state. Providing advanced payments will bolster the nonprofit sector, ensure they can continue to perform critical work in communities across the state.

Speaking in support of the bill with me today is Ejiro Okoro on behalf of the United Way of the Capital Region, and Dr. Clark Harvey on behalf of the California Council of Community Behavioral Health Agencies.

Good morning, Chair and Members of the Committee. My name is Ejiro Okoro. I'm Senior Council of Public Policy and Advocacy for United Way of California Capital Region. We provide direct services in Amador, El Dorado, Placer, Sacramento counties, as well as Yolo. For 100 years, we have brought people together to build stronger, healthier, and more compassionate communities. I'm honored to speak in support of AB 590 by Assembly Member Hart, as this is a much-needed and common sense bill.

United Ways, along with many nonprofit organizations, know firsthand the challenges that come with running critical programs with limited resources. Nonprofits are deeply skilled at making a dollar go as far as possible, but in order to stretch resources, there must be some things in place. Advanced payments to nonprofits, as outlined in AB 590 is, simply put, a smart move to make sure that community-based organizations that have deep connections and trust with priority populations are set up from day one of a program for success.

Ensuring the launch of a program can be successful and funded appropriately is absolutely critical. We are always eager to advance our partnerships with the state through contracting grants that meet Californians where they are at with resources they need, like Digital Inclusion, Broadband for All, Community Schools, and Free Tax Prep during tax season. These are all programs that we provide. These programs are endangered and being able to support them with AB 590 will increase incredible results.

AB 590 will enable us to have cash flow so that we are able to increase our impact. There are several organizations that I could think of that are currently underwater because they've advanced funds and are not able to make the impact that they initially intended. Children have more resources to grow up healthy and successful when they have digital access and wraparound services that are critically important at stages of life in school.

Families with access and financial coaching and tax filing support can be ensured that they have the resources they need to have a brighter future. This is transformational and community-centered work, but it can only achieve its highest potential if the partners that are tasked with these transformations are set up for success from the very beginning. The state enacted advanced payments to nonprofits, as outlined in AB 590, as a core component of building community success. For these reasons, I urge your aye vote today on AB 590. Thank you.

Thank you.

Good morning, esteemed Chair and Members. I am Le Ondra Clark Harvey, CBHA CEO, and a proud cosponsor of AB 590. CBHA--we're a statewide advocacy organization representing mental health and substance use disorder clinics across the state that collectively serve over one million individuals annually. Our members do it all. They run 988 call centers.

They provide outpatient and inpatient behavioral health services, school-based services, homeless services, housing, foster care, substance use disorder services, mobile crisis units across the lifespan and the state. You think it, they really do it all. One-third of Medi-Cal services are provided by nonprofits like the ones that CBHA represents. Our members survive off of a variety of funding sources, including grants, and in this tenuous funding environment, it's imperative that there are myriad opportunities to fund these vital services.

During the pandemic, we saw behavioral health clinics and agencies on the brink of crisis, from funding basic PPE to supporting critical programs that serve youth, families, and older adults. And as the behavioral health needs of the community grew exponentially, funding continued to be threatened. The literal and figurative doors of our agencies were at risk of closing every day, particularly smaller agencies that served rural populations and diverse client populations. And CBHA uniquely understands the woes of smaller nonprofits who serve disenfranchised populations, as about 40 percent of our organizations are BIPOC led and serving entities.

Now this isn't a story from the past. The pandemic continues to dictate the ability for our members to provide vital services, and we see AB 590 as a solution to assist nonprofits as they do the critical work to serve your many constituents in need. And your vote today can help expand the services available to clients in crisis, and we request your favorable consideration. Thank you.

Thank you. We do not have any primary witnesses in opposition. We'll go ahead and open it up for additional testimony. Is there anyone in the room wishing to testify in support of AB 590?

This is Jan Masaoka, CEO of the California Association of Nonprofits. We're very happy to support this very important bill, not just to support small agencies. Large agencies have cash flow problems, too. This is a very important bill for all of us.

Thank you.

Anna Hasselblad with United Ways of California, in strong support. Thank you.

Thank you.

Jennifer Fearing, on behalf of Meals on Wheels California, who are struggling with this very issue with a grant program right now. Thank you.

Thank you.

Thank you, Chair and Members. My name is Noah Whitley, and I'm speaking on behalf of the Midpeninsula Regional Open Space District. We are in support.

Thank you. Any witnesses here to testify in opposition to AB 590? Seeing and hearing none, questions, comments from Committee Members? Seeing none. Similar to the comments that I made regarding Assembly Member Avelino Valencia's proposal, we recognize that nonprofits play such a critical role in addressing the priorities of the state and in tackling our toughest challenges.

And this, too, seems to me to be a common sense measure to ensure that organizations on the ground are able to do that work as effectively as possible. So thank you for bringing the measure forward. Happy to support. And with that, would you like to close?

Thank you, Madam Chair, for the kind words. I just respectfully request an aye vote.

Thank you. We have a motion from Assembly Member Wilson; second from Assembly Member Rodriguez. Madam Secretary--the motion is 'do pass and re-refer to the Committee on Appropriations.' Madam Secretary, please call the roll.

Item Number Two: AB 590. The motion is 'do pass to Appropriations.' [Roll Call].

Seven/zero. That measure is out. Thank you, Assembly Member.

All right, and we will go ahead and move to our last item, final item for AB 956. Assemblymember Alvarez, whenever you are ready.

Thank you, Madam Chair and Committee Members. I'm here to present AB 956. This Bill is actually quite simple. It requires that the State Auditor collect fingerprints from prospective employees and contractors to complete a background check with the Department of Justice when those prospective employees will have access to confidential information. During the information gathering portion of background checks, state agencies rely on the FBI's criminal justice information system, CJIS. The State Auditor's office has been utilizing CJIS database for decades with authorization through existing California statutes.

However, late last year, the FBI notified the Department of Justice that the existing statutory authorization to utilize their system for background checks would no longer be accepted and are now requiring a new statutory authority to be enacted. AB 956 grants this statutory authority and therefore will allow the State Auditor to continue access to the CJIS database during its hiring practices. At its core, 956 is a clarifying Bill which enjoys no opposition.

I thank you for your time, and as chair of JLAC, I really want to highlight the importance of this tool that's necessary for our Auditor to do his work with that. I'd like to introduce our witness, Judy Anne Alanis is an attorney with the Auditor's office.

Good morning, Madam Chair and Committee Members. As mentioned, my name is Judy Anne Alanis, and I am with the California State Auditor's office. Thank you for considering Assembly Bill 956. The purpose of this Bill is to allow the California State Auditor's office to continue its practice of conducting criminal history background checks on prospective employees and contractors.

Thank you. You do have a motion and a second? Yes.

Do I still present? Yes. Okay. Thank you.

As you know, the California State Auditor's office is responsible for performing audits of state and local entities as directed by the Joint Legislative Audit Committee and by the Legislature. In this regard, our office is frequently called upon to audit highly sensitive matters which may require our employees to access confidential information, such as financial documents, medical record information, Social Security numbers, tax ID numbers, education records, police officer records, et cetera.

Because we have a right of access to any and all documents in an Auditoees custody, we currently require all of our staff who will have access to confidential information to undergo a criminal history background check as a condition of hire. In essence, we must know that every employee from our office who handles confidential information is trustworthy so that we can ensure that the public's confidential information will be safe and will not fall into the hands of individuals with improper motives.

The same is true for the contracted consultants that we hire. In addition, the entities that we are directed to audit often insist that our employees have this high level of clearance in order to access their data and facilities. For example, the Franchise Tax Board requires our staff to have this level of clearance in order for our staff to access information from their agency.

As I mentioned, our office has conducted these state and federal level criminal background checks on prospective employees and contractors for many years, and, in fact, we've had a contract with the California Department of Justice to provide these criminal background checks for the last 20 years. As mentioned, in December of last year, we were notified by the California Department of Justice that our current authorization to receive federal level background checks was going to expire at the end of this year.

And the California Department of Justice advised our office that in order to continue to receive federal level service, we needed a specific state statute that allows our office to continue to receive this service. So this Bill has been drafted to comply with those federal requirements. However, please keep in mind that this Bill merely authorizes our office to continue the practice that we've been doing for the last 20 years.

I would like to thank the California Department of Justice for bringing to our attention the need for this Bill. And I'd like to thank Assembly Member Alvarez for authoring this Bill. I respectfully ask for an aye vote.

Thank you. There are no primary witnesses here in opposition. We'll go ahead and open it up to additional testimony. Is there anyone in the room wishing to testify in support of AB 956? Seeing none. Anyone wishing to testify in opposition to AB 956? Seeing none.

Questions or comments from Committee Members? Seeing or hearing none. Certainly seems like a common sense and very critical action for us to take as the State of California. Thanks for bringing it forward. And with that, would you like to close?

Thank you. Yeah. This has allowed the Auditor to continue to do their work, and I appreciate your consideration. Thank you.

Thank you. We have a motion from Assembly Member Wilson, second from Assembly Member Wynn. Madam Secretary, please call the roll. The motion is do pass, and we refer to the Committee on Appropriations.[Roll Call] That Bill is out. Thank you. And that concludes the business of today's hearing of the Assembly's Committee on Accountability and Administrative Review. We are adjourned. Thank. Good job. Nice job.