BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 548
                                                                  Page  1

          Date of Hearing:   April 29, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

               AB 548 (Krekorian) - As Introduced:  February 25, 2009 

          Policy Committee:                              Local  
          GovernmentVote:7-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill provides that the state controller must initiate an  
          audit of a local mandate reimbursement claim no later than three  
          years from the time the claim is first filed or last amended by  
          the local agency or school district. 

           FISCAL EFFECT
           
          To the extent that (a) some audit issues may take years to  
          develop and (b) controller audits often result in major  
          reductions in claim payments, the stricter audit deadlines will  
          result in potentially substantial increases in state mandate  
          reimbursement costs.
           
          COMMENTS
           
           1)Background  . Under the California Constitution, whenever the  
            Legislature or a state agency mandates a new program or higher  
            level of service on any local government (including school  
            districts), the state is required to reimburse the local  
            government for the costs incurred. Existing law requires the  
            COSM to hear and decide each claim for reimbursement.  
            Legislation passed last year allows the Legislature to approve  
            an agreement between the Department of Finance and local  
            governments relating to a reimbursement methodology.
           
            Existing law also requires the controller to initiate an audit  
            of a reimbursement claim for actual costs filed by a local  
            agency or a school district no later than three years after  
            the date the reimbursement claim is filed or last amended,  
            whichever is later, unless no funds are appropriated or no  








                                                                  AB 548
                                                                  Page  2

            payment is made to a claimant for the program for the fiscal  
            year for which the claim is filed. In this latter case, the  
            three-year time frame the controller to initiate an audit  
            begins on the date of the initial payment of the claim.
           
          2)Rationale  . Sponsors of this bill assert that the measure is  
            needed to streamline the mandate reimbursement process, so  
            that local agencies and school districts are not kept under  
            the shadow of a possible audit for an expanded period of time.  
            Currently, local agencies claim that they are required to hold  
            off on allocating the mandate reimbursement funds until the  
            extended audit period runs its course, denying local  
            governments badly needed funds.

           3)Previous legislation  . The provisions of this bill were  
            contained in AB 1170 (Krekorian) from the 2007-08 session.  
            That measure, which also required the Commission on State  
            Mandates to issue a decision on a test claim no later than 36  
            months after it is filed, passed the Assembly on a 79-0 vote,  
            but died in the Senate Appropriations Committee.
           
           Analysis Prepared by  :    Brad Williams / APPR. / (916) 319-2081