BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 16XXXX|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 16XXXX
Author: Evans (D)
Amended: 7/23/09 in Senate
Vote: 27 - Urgency
WITHOUT REFERENCE TO COMMITTEE
PRIOR VOTE NOT RELEVANT
SUBJECT : Budget Act of 2009: cash management and
deferrals
SOURCE : Author
DIGEST : Senate Floor Amendments of 7/23/09 delete the
prior version of the bill expressing the intent of the
Legislature to enact statutory changes relating to the 2009
Budget Act.
This bill now provides the necessary statutory changes in
the area of cash management and cash deferrals in order to
amend the 2009 Budget Act.
ANALYSIS : This trailer bill contains the following
amendments:
1. K-12 School Payment Schedule . Changes the scheduled
flow of all state payments to K-12 local educational
agencies (LEAs) to five percent in July, five percent
in August, and nine percent in each month thereafter
CONTINUED
AB 16XXXX
Page
2
(September through June).
2. K-12 Inter-Year Payment Deferrals . Authorizes a $1.7
billion deferral of K-12 principal apportionment
payments to LEAs from 2009-10 to 2010-11. Commencing
in 2009-10, this includes $678.6 million in April
payments and $1.0 billion in June payments that will
be shifted to August of the next fiscal year.
3. K-12 Intra-Year Payment Deferrals . Shifts $1 billion
in K-12 revenue limit apportionment payments to LEAs
from October to December of 2009 and shifts an
additional $1 billion in apportionment payments from
November 2009 to January 2010. Hardship exceptions
are provided for school districts, county offices of
education, and charter schools that are unable to meet
expenditure obligations for the period that payments
are deferred.
4. University of California Deferrals . Defers up to
$750 million in General Fund payments to the
University of California (UC) that otherwise would
have been dispersed from the State Treasury for the
months of July 2009 through September 2009. Of this
amount, $250 million will be repaid to the UC in
October 2009; the remaining payments will be repaid no
earlier than April 2010 and no later than June 30,
2010 (as determined by the Director of Finance). This
amount is in addition to the $500 million cash
deferral enacted by the Legislature in 2008, thus
shifting approximately $1.25 billion in payments
throughout the fiscal year.
5. California State University Deferrals . Defers $290
million in General Fund payments to the California
State University that otherwise would have been
dispersed from the State Treasury for the month of
July, and instead makes this payment in October, 2009.
6. Community College Deferrals . Increases, by $115
million, the amount of Community College General
Apportionment payments that are deferred from April,
May, and June 2009 to July 2010. With this additional
AB 16XXXX
Page
3
deferral, the state will be deferring a total of $703
million in Community College payments from one fiscal
year to the next.
7. Proposition 42 Transportation Deferrals . Defers the
October 2009 and January 2010 Proposition 42
allocations to cities and counties, with full
repayment on May 31, 2010. The amount of each
quarter's deferral is approximately $144 million. The
Proposition 42 funding is for improvements to local
streets and roads.
8. Highway Users Tax Account Deferrals . Defers the
monthly allocations of gas excise tax revenue to
cities and counties in the period of July 2009 through
December 2009. Other legislation in the budget
package directs the 2009-10 allocation of these funds
after the deferral period ends.
9. Cash-flow Borrowing from Lottery Funds . Continues
the authority to borrow lottery funds for cash-flow
purposes. Current law allows cash-flow borrowing from
certain lottery funds. However, this authority has a
sunset date of September 30, 2009. The sunset date is
associated with a proposal to securitize future
lottery revenues, which was rejected by voters in the
May 2009 election. Since future lottery funds are not
available for securitization, the current sunset on
cash-flow borrowing is no longer necessary. The
Administration estimates up to $360 million in lottery
funds may be available for cash-flow borrowing in
2009-10. Internal borrowing of this type saves
General Fund interest costs by reducing the amount of
more-expensive external borrowing.
10. Accounts Receivable Amendments . Authorizes state
agencies to impose a reasonable fee for the actual
cost of its collections of past due accounts.
Increases the amount of debt which state agencies can
discharge from collections activity from $250 to $500.
The Administration believes this will increase
revenue collection by focusing staff resources on
larger receivables. The Administration estimates
these changes will increase General Fund revenues by
AB 16XXXX
Page
4
$4.4 million.
11. Prompt Payment Amendments . Requires that late
payment penalties be paid to the claimant if payment
is not issued within 45 calendar days from the state
agency receipt of an undisputed invoice. Under
current law, late payment penalties are triggered by
the same 45-day period but also if a state agency
fails to submit a correct claim schedule to the
Controller by the required payment approval date or if
the Controller fails to make a payment within 15
calendar days of receipt of the claim schedule from
the state agency. This bill would only apply the late
payment penalties if the 45-day period has passed.
Also clarifies that payments made with registered
warrants (state IOUs) qualify as payments under the
Prompt Payment Act. However, registered warrants will
pay interest as provided by law.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
DLW:nl 7/23/09 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
**** END ****