Bill Text: CA SB455 | 2019-2020 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Financial Empowerment Fund: unbanked and underbanked populations.

Spectrum: Slight Partisan Bill (Democrat 2-1)

Status: (Passed) 2019-10-02 - Chaptered by Secretary of State. Chapter 478, Statutes of 2019. [SB455 Detail]

Download: California-2019-SB455-Amended.html

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Amended  IN  Assembly  August 12, 2019

Amended  IN  Senate  May 17, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill

No. 455

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Introduced by Senators Bradford and Chang
(Coauthor: Senator Caballero)

February 21, 2019

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An act to add and repeal Division 10.5 (commencing with Section 24000) of the Financial Code, relating to the Financial Empowerment Fund, and making an appropriation therefor.

LEGISLATIVE COUNSEL'S DIGEST

SB 455, as amended, Bradford. Financial Empowerment Fund: unbanked and underbanked populations.

Existing law establishes the Department of Business Oversight, which is responsible for the administration and enforcement of regulations on the activities of various financial entities, including commercial banks, industrial banks, trust companies, credit unions, and savings and loan associations. Existing law requires specified fees, reimbursements, assessments, or and other moneys collected by the Division of Corporations within the department to be deposited into the State Corporations Fund for specified purposes.

This bill would, until July 1, 2024, appropriate $1,000,000 annually from specified enforcement moneys collected by the department, and would January 1, 2025, require the department to provide grants from those moneys of up to $100,000 to specified nonprofits for financial education and financial empowerment programs and services to unbanked and underbanked populations in the state. state, and would authorize the department to award up to $1,000,000 in grant moneys per fiscal year. The bill would establish appropriate the sum of $4,000,000 plus reasonable administrative costs, as estimated by the department, from the State Corporations Fund to the Financial Empowerment Fund Fund, established in the State Treasury by the bill, and would continuously appropriate the moneys in the fund to the department for purposes of the program.

Digest Key

Vote: 2/3   Appropriation: YES   Fiscal Committee: YES   Local Program: NO  

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Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 Division 10.5 (commencing with Section 24000) is added to the Financial Code, to read:

DIVISION 10.5. Financial Empowerment Fund

24000.

 (a) There is hereby established in the State Treasury the Financial Empowerment Fund. Notwithstanding Section 13340 of the Government Code, moneys in the fund are hereby continuously appropriated without regard to fiscal years to the Commissioner of Business Oversight for purposes of the act.

(b) Notwithstanding Section 13340 of the Government Code, the Controller shall, beginning on July 1, 2020, and annually on July 1 each year thereafter, transfer a sum of one million dollars ($1,000,000) to the Financial Empowerment Fund derived from moneys, as determined by the Controller and notwithstanding Section 12895 of the Government Code, received by the Commissioner of Business Oversight from the following sources, after the department has been reimbursed for the administrative costs to enforce those provisions: transfer from the State Corporations Fund to the Financial Empowerment Fund the sum of four million dollars ($4,000,000) plus an amount estimated by the department to be the reasonable costs to administer the division.

(1)Subdivision (a) of Section 22707.5.

(2)Section 22753.

(3)Subdivision (c) of Section 23051.

(4)Subdivision (a) of Section 23058.

(5)Moneys obtained through a settlement agreement between the state and a person or licensee alleged by the Commissioner of Business Oversight to have violated Division 9 (commencing with Section 22000) or Division 10 (commencing with Section 23000), unless otherwise provided in the settlement agreement.

(c)Notwithstanding subdivision (b), the following shall apply:

(1)In any fiscal year in which less than one million dollars ($1,000,000) in the aggregate is received by the Commissioner of Business Oversight pursuant to sources identified in paragraphs (1) to (5), inclusive, of subdivision (b) after the department has been reimbursed for the administrative costs to enforce those provisions, the Controller shall only transfer to the Financial Empowerment Fund the aggregate amount received.

(2)If, in any fiscal year, the balance of the Financial Empowerment Fund would exceed one million five hundred thousand dollars ($1,500,000) upon the transfer under subdivision (b), the Controller shall only transfer those amounts into the fund that would result in the balance of the fund not exceeding one million five hundred thousand dollars ($1,500,000).

(d)

(c) The Commissioner of Business Oversight shall use moneys in the Financial Empowerment Fund for allocation to fund financial education and financial empowerment programs and services for at-risk populations in California, as described in Section 24001. The commissioner may additionally use moneys in the Financial Empowerment Fund to cover its costs to administer this act.

24001.

 (a) The Commissioner of Business Oversight shall administer an application process for grants of up to one hundred thousand dollars ($100,000) per applicant from the Financial Empowerment Fund or shall contract with an independent third party to do so on the department’s behalf. An The commissioner, or the independent third party designated by the commissioner, may award up to one million dollars ($1,000,000) in grant moneys per fiscal year, beginning in the 2020–2021 fiscal year. To be eligible for selection by the department to administer the grant program, an independent third party must cap its administrative fees at no more than 15 percent of the grant moneys it administers on the department’s behalf.

(b) An applicant shall apply to the commissioner or to an independent third party designated by the commissioner for a grant in a form and manner prescribed by the commissioner or the independent third party. To be eligible for a grant, an applicant shall meet both of the following criteria:

(1) The organization is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and is organized and operated exclusively for one or more of the purposes described in Section 501(c)(3) of the Internal Revenue Code.

(2) No part of the net earnings of the organization shall inure to the benefit of a private shareholder or individual.

(b)

(c) A grantee shall only use grant moneys for the following financial education and financial empowerment programs and services for at-risk populations:

(1) Designing, developing, or offering, free of charge to consumers, classroom- or web-based financial education and empowerment content intended to help unbanked and underbanked consumers achieve, identify, and access lower cost financial products and services, establish or improve their credit, increase their savings, or lower their debt.

(2) Providing individualized, free financial coaching to unbanked and underbanked consumers.

(3) Designing, developing, or offering, free of charge to consumers, a financial product or service intended to help unbanked and underbanked consumers identify and access responsible financial products and financial services, establish or improve their credit, increase their savings, or lower their debt.

(d) A grantee shall use no more than 15 percent of its grant to cover its administrative costs. Failure to comply with this requirement shall render the organization ineligible for grant funding during the subsequent fiscal year.

(c)

(e) Every project funded with a grant from the Financial Empowerment Fund shall meet all of the following criteria:

(1) Promote and enhance the economic security of consumers.

(2) Adhere to the five principles of effective financial education described in the June 2017 report, “Effective financial education: Five principles and how to use them,” issued by the federal Consumer Financial Protection Bureau.

(3) Include one or more specific outcome targets.

(4) Include an evaluation component designed to measure and document the extent to which the project achieves its intended outcomes and increases consumers’ financial well-being.

(d)The Commissioner of Business Oversight may recover reimbursement for the costs to administer the grant program from the Financial Empowerment Fund.

(e)

(f) Each grantee shall submit a report, in a form and by a date acceptable to the Commissioner of Business Oversight, documenting the specific uses to which grant funds were allocated, documenting the number of individuals aided through use of the funds, providing quantitative results regarding the impact of grant funding, and including any other information requested by the commissioner. Failure to submit a report shall render an the organization ineligible for grant funding during the subsequent fiscal year.

(f)At

(g) On or before December 31, 2021, and at least once annually, annually thereafter, the department shall post on its internet website a summary of the information received from grantees pursuant to subdivision (e). (f).

24002.

This division shall become inoperative on July 1, 2024, and, as of January 1, 2025, is repealed.

24002.

 (a) This division shall remain in effect only until January 1, 2025, and as of that date is repealed.

(b) Upon the repeal of this division, the Controller shall transfer any moneys remaining in the Financial Empowerment Fund to the State Corporations Fund.