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AB 2425

Department of Financial Protection and Innovation: budget reports.

2025-2026 Regular Session Introduced by Phillip Chen

AB 2425 creates an annual, detailed DFPI budget and revenue-expenditure reporting regime, including cost-recovery methods, to increase legislative transparency.

From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 7. Noes 0.) (June 17). Re-referred to Com. on APPR.
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Bill Summary · AB 2425

Summary: AB 2425 (2025-2026) – Department of Financial Protection and Innovation: Budget Reports

Purpose and Intent

AB 2425 would require the California Department of Financial Protection and Innovation (DFPI) to provide detailed budget and financial reporting on its administration, oversight, and enforcement activities related to the Escrow Law and other DFPI-regulated divisions. The bill adds a new Division 27 to the Financial Code establishing annual budgeting and revenue/expenditure reporting to the Legislature.

Key goal: increase transparency regarding the DFPI’s revenues, expenditures, and cost recovery methods for the various laws it administers, including those that authorize pro rata assessments to recover actual administration costs.

Key Provisions

  • New Division 27 (Budget Reports):

    • DFPI (the Commissioner) must, on or before March 1, 2027 and annually thereafter, report to:
    • Joint Legislative Budget Committee
    • Senate Banking and Financial Institutions Committee
    • Assembly Banking and Finance Committee
    • The report must cover the projected and actual revenues and expenditures for the immediately preceding fiscal year for all DFPI-administered laws listed in specified divisions of the Corporations Code (a broad set of statutes governing securities, corporations, and related financial activities).
    • Revenues must be categorized as exam vs. non-exam revenues, with subcategories for:
    • Annual assessment revenue
    • Application and licensing fees
    • Renewal fees
    • Fingerprinting fees
    • Penalties and settlement revenue
    • Income from the Surplus Money Investment Fund (SMIF)
    • Investigation fees
    • Delinquent fees
    • Cost recovery
    • For divisions that authorize pro rata assessments/charges to recover actual costs, the report must include the method used to determine those assessments and charges.
    • Initial implementation detail: the first annual report to cover item (11) in subdivision (a) (which corresponds to a specific division listed in the bill) is due by February 1, 2027; subsequent annual reports are due by March 1 of each year.

  • Budget and Fiscal Reporting (Financial Code amendment):

    • Section 17208 of the Financial Code is amended to:
    • Require all money received by the DFPI commissioner to be deposited into the State Treasury, to credit the State Corporations Fund, for administration and enforcement of the division.
    • Require the commissioner to annually submit a report to the Legislature providing a detailed budget and accounting of the DFPI’s oversight, implementation, and enforcement of this division (i.e., the new budget-reporting framework).

  • Scope of Reporting:

    • The reporting framework covers multiple divisions cited in the bill (listed by name in the text), including parts of the Corporations Code and related provisions administered by DFPI.
    • Emphasizes transparency of both revenues (types and sources) and expenditures, including how assessments are set for cost recovery.

Who Is Affected

  • Department of Financial Protection and Innovation (DFPI): Responsible for compiling and submitting the annual budget/revenue/expense reports and for detailing methodology of cost-recovery assessments.
  • California Legislature: Receives annual reporting to inform oversight, budgeting, and policy decisions.
  • Entities regulated by DFPI (e.g., escrow agents and other finance-related industries under DFPI oversight): While not directly mandated to change behavior, the reporting could influence perceptions of agency funding, fee structures, and administration efficiency.

Procedural and Timeline Aspects

  • Effective/Reporting Timeline:
    • First required detailed report due by February 1, 2027 (for the specified first category in the list).
    • Subsequent annual reports due by March 1 of each year.
  • Reporting Bodies: Joint Legislative Budget Committee; Senate Banking and Financial Institutions Committee; Assembly Banking and Finance Committee.
  • Compliance Standard: DFPI must separate exam vs. non-exam revenues and detail the methodology for any pro rata cost-recovery assessments.

Administrative/Policy Context

  • The bill builds on existing Escrow Law and DFPI authority, expanding fiscal transparency across multiple divisions under DFPI.
  • It aligns with broader legislative interests in clear budgeting, revenue-expenditure accountability, and explicit cost-recovery mechanisms for regulatory activities.

Bottom Line

AB 2425 would create a formal, annual budget and revenue-expenditure reporting regime for DFPI, covering multiple laws administered by the department. It requires detailed financial disclosures, categorization of revenues, and disclosure of cost-recovery methodologies, with a staged start in early 2027 and ongoing annual reporting to key legislative committees.

Compiled from official sources — confirm details with the bill’s official record.

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