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SB-455 Financial Empowerment Fund: unbanked and underbanked populations.(2019-2020)

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Date Published: 05/17/2019 01:12 PM
SB455:v98#DOCUMENT

Amended  IN  Senate  May 17, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill No. 455


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

February 21, 2019


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 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 require the department to provide grants from those moneys to specified nonprofits for financial education and financial empowerment programs and services to unbanked and underbanked populations in the state. The bill would establish the Financial Empowerment Fund in the State Treasury and would continuously appropriate the moneys in the fund to the department for purposes of the program.
Vote: 2/3   Appropriation: YES   Fiscal Committee: YES   Local Program: NO  

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 program. 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:
(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) 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.

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. Fund or shall contract with an independent third party to do so on the department’s behalf. An applicant shall apply to the commissioner commissioner or to an independent third party designated by the commissioner for a grant in a form and manner prescribed by the commissioner. 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) 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.
(c) 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,” 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. The reimbursement shall be capped at 10 percent of the aggregate grant amount awarded in that fiscal year.
(e) 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 organization ineligible for grant funding during the subsequent fiscal year.
(f) At least once annually, the department shall post on its internet website a summary of the information received from grantees pursuant to subdivision (e).

24002.
 This division shall become inoperative on July 1, 2024, and, as of January 1, 2025, is repealed.