BILL ANALYSIS
AB 844
Page 1
Date of Hearing: April 29, 2009
ASSEMBLY COMMITTEE ON EDUCATION
Julia Brownley, Chair
AB 844 (Villines) - As Amended: April 20, 2009
SUBJECT : State-mandated local programs: school districts
SUMMARY : Establishes an alternative system for determining and
providing reimbursements for costs associated with local school
district programs mandated by the state. Specifically, this
bill :
1)Makes Legislative findings and declarations regarding the
shortcomings of the current mandate reimbursement process and
the need for mandate reform.
2)Removes, for all mandates enacted on or after January 1, 2010,
the statute authorizing procedures adopted by the Commission
on State Mandates (CSM) governing the filing, receipt, and
review of test claims for reimbursement related to
state-mandated local programs.
3)Removes, for mandates enacted on or after January 1, 2010,
school districts and the claims that they may have from any of
the CSM's processes for determining the amount to be subvened
to any claimant for reimbursement, including development of
parameters and guidelines, amending test claims, and
consideration of a reasonable reimbursement methodology; also
eliminates any timing requirements or deadlines for these
processes with respect to school districts.
4)Deletes, for mandates enacted on or after January 1, 2010, the
requirement on the CSM to report statewide cost estimates with
respect to school district claims to the appropriate policy
and fiscal committees in both houses of the Legislature.
5)Deletes, for mandates enacted on or after January 1, 2010, the
process whereby the State Controller's Office (SCO) develops
and issues claiming instructions for claims that would be
filed by school districts.
6)Requires the CSM, for any school district mandates enacted on
or after January 1, 2010, to determine:
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a) If a statute creates a mandate, within six months of the
enactment of that statute.
b) A reasonable reimbursement methodology
c) The level of appropriation needed to fund anticipated
claims, and forward that amount to the Director of Finance
within six months of determining that the mandate exists.
d) Claiming instructions and a statewide cost estimate
within twelve months of determining that the mandate
exists.
7)Requires that any non-urgency statute found to create a
mandate in the process described in 6) above, have an
operative date that is the second succeeding January 1 from
the year in which that statute was enacted.
8)Requires the CSM, for any school district mandates enacted
before January 1, 2010, to develop claiming instructions to
allow school districts to claim a reasonable cost
reimbursement if the school district documents that they
complied with the mandate, and restricts audits of such
documentation to only the determination of compliance.
9)Requires the Legislative Analyst (LAO) to examine all mandates
enacted prior to January 1, 2010 and recommend, as part of the
annual analysis of the State Budget, to the Legislature
whether an examined mandate should be amended, repealed or
left without change; these prior mandates are required to be
examined according to the following schedule.
a) Commencing January 1, 2011 for mandates enacted in 1975
through 1989.
b) Commencing January 1, 2012 for mandates enacted in 1990
through 1999.
c) Commencing January 1, 2013 for mandates enacted in 2000
through 2009.
10)Exempts a school district from any penalty if, between July
1, 2010 and June 30, 2012, that school district does not
comply with a state mandate, excepting mandates affecting
pupil health and safety, and does not file a claim for
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reimbursement for that mandate.
EXISTING LAW :
1)Requires the state, under the California Constitution, to
provide a subvention of funds to reimburse local governments,
including school districts, whenever the Legislature or a
state agency mandates a new program or higher level of
service, with specified exceptions such as mandates that stem
from federal requirements or statewide voter-approved
initiatives.
2)Establishes a procedure for local government agencies to file
claims for reimbursement of these costs with the CSM and the
SCO.
3)Requires the CSM to hear and decide upon each claim for
reimbursement, to determine the amount to be subvened for
reimbursement, and to adopt parameters and guidelines to guide
the payment of claims.
4)Requires the CSM to consult with the Department of Finance
(DOF), among other state officials, when adopting parameters
and guidelines for reimbursement.
5)Requires the LAO to submit a report to the Joint Legislative
Budget Committee and legislative fiscal committees on mandates
reported by the CSM, and to make recommendations as to whether
the mandate should be repealed, funded, suspended, or
modified.
FISCAL EFFECT : Unknown
COMMENTS : The concept of state reimbursement to local agencies,
including local education agencies (LEAs), for state mandated
activities originated with SB 90 (Dills), Chapter 1406, Statutes
of 1972, also known as the Property Tax Relief Act of 1972. The
primary purpose of this bill was to limit the ability of local
agencies and school districts to levy taxes. To offset these
limitations, the Legislature declared its intent to reimburse
local agencies and school districts for the costs of new
programs or increased levels of service mandated by state
government. The Legislature authorized the State Board of
Control (BOC) to hear and decide upon claims requesting
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reimbursement for costs mandated by the state.
In 1979, Proposition 4 amended the California Constitution by
adding Article XIII B, section 6 requiring the state to
reimburse local governments for the cost of new programs or
higher levels of service mandated by the Legislature or any
state agency; the BOC continued to hear claims under these
requirements. In 1984, the Legislature created the CSM, a
quasi-judicial body succeeding the BOC as the entity that
decides test claims alleging that the Legislature or a state
agency imposed a reimbursable state-mandated local program. If,
after its hearing process, the CSM identifies a state-mandated
program as eligible for reimbursement, it adopts parameters and
guidelines defining what activities will be reimbursed and
adopts statewide cost estimates. The CSM is also authorized to
hear claims from local agencies for which the State Controller
has incorrectly reduced reimbursement claims. The CSM consists
of the State Treasurer, the SCO, the Director of DOF, the
Director of the Office of Planning and Research, two local
elected officials (with the restriction that they come from
different categories of local government, including school
district governing boards, city councils, or county boards of
supervisors), and a public member with experience in public
finance.
The SCO is authorized to make payments for costs of mandated
programs from amounts appropriated by the annual Budget Act, by
the State Mandates Claims Fund, or by specific legislation. In
the event the appropriation is insufficient to pay claims in
full, claimants receive prorated payments in proportion to the
dollar amount of approved claims for the program. Balances of
prorated payments are made when supplementary funds become
available. The SCO reports the amounts of insufficient
appropriations to the State Department of Finance, the
Chairperson of the Joint Legislative Budget Committee, and the
Chairperson of the respective committee in each house of the
Legislature which considers appropriations in order to assure
appropriation of these funds in the Budget Act. If these funds
cannot be appropriated on a timely basis in the Budget Act, this
information is transmitted to the CSM which includes these
amounts in its report to assure that an appropriation sufficient
to pay the claims is included in the next local government
claims bill or other appropriation bills. When the
supplementary funds are made available, the balances of each
claim are paid. A claimant is entitled to receive accrued
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interest at the pooled money investment account rate if the
payment is made more than a specified period of time after the
claim filing deadline or the actual date of claim receipt,
whichever is later.
Existing reimbursable mandates for local education agencies
cover a wide variety of activities.
State-Mandated Local Programs Funded Under
the Department of Education (from Governor's
2008-09 Budget)
---------------------------------------------
|AIDS Prevention Instruction I and II |
|---------------------------------------------|
|Annual Parent Notification III |
|---------------------------------------------|
|Caregiver Affidavits |
|---------------------------------------------|
|Charter Schools |
|---------------------------------------------|
|Charter Schools II |
|---------------------------------------------|
|Comprehensive School Safety Plans |
|---------------------------------------------|
|County Office of Education Fiscal |
|Accountability Reporting |
|---------------------------------------------|
|Criminal Background Check |
|---------------------------------------------|
|Criminal Background Checks II |
|---------------------------------------------|
|Differential Pay and Reemployment |
|---------------------------------------------|
|Expulsion Transcripts |
|---------------------------------------------|
|Financial and Compliance Audits |
|---------------------------------------------|
|Graduation Requirements |
|---------------------------------------------|
|Habitual Truant |
|---------------------------------------------|
|Immunization Records |
|---------------------------------------------|
|Immunization Records-Hepatitis B |
|---------------------------------------------|
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|Intradistrict Attendance |
|---------------------------------------------|
|Juvenile Court Notices II |
|---------------------------------------------|
|Law Enforcement Agency |
|---------------------------------------------|
|Notification of Truancy |
|---------------------------------------------|
|Notification to Teachers of Public Expulsion |
|---------------------------------------------|
|Physical Education Reports |
|---------------------------------------------|
|Physical Performance Tests |
|---------------------------------------------|
|Pupil Expulsions/Expulsion Appeals |
|---------------------------------------------|
|Pupil Health Screenings |
|---------------------------------------------|
|Pupil Promotion and Retention |
|---------------------------------------------|
|Pupil Residency Verification and Appeals |
| |
|---------------------------------------------|
|School District Fiscal Accountability |
|Reporting |
|---------------------------------------------|
|School District Reorganization |
|---------------------------------------------|
|Scoliosis Screening |
|---------------------------------------------|
|Teacher Incentive Program |
|---------------------------------------------|
|Collective Bargaining |
|---------------------------------------------|
|Grand Jury Proceedings |
|---------------------------------------------|
|Health Benefits for Survivors of Peace |
|Officers and Firefighters |
|---------------------------------------------|
|Mandate Reimbursement Process |
|---------------------------------------------|
|Peace Officers Procedural Bill of Rights |
| |
|---------------------------------------------|
|Removal of Chemicals |
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|---------------------------------------------|
|PERS Death Benefits |
|---------------------------------------------|
|PERS Unused Sick Leave Credit |
---------------------------------------------
According to the Governor's January 2008 Budget, the state was
obligated for 39 mandated local programs in the area of
education, including kindergarten through grade 14 and other
local education agencies funded under Proposition 98. Other
test claims have subsequently been approved and more are
pending. According to the LAO, ongoing district costs of
administering these mandated programs are estimated to be $190
million in 2008-09, however, funds to cover those costs have not
been regularly appropriated in current year budgets; thus the
total outstanding costs of prior year unpaid mandates exceeds $1
billion. Limiting the funding provided in the budget for
mandate reimbursements, with the knowledge that unpaid claimants
would be reimbursed for the untimely payment with accrued
interest, has been an important aspect of the state's approach
to dealing with the fiscal problems it has faced in this decade.
The California School Board Association's Education Legal
Alliance and four local education agencies filed suit in 2007 to
challenge California's authority to defer compensation to
schools for programs that the state requires them to perform,
but does not fund. The lawsuit, filed with the San Diego County
Superior Court, sought to compel the state to immediately comply
with its constitutional obligation to fully reimburse the cost
of all state mandated local programs that create new programs or
increased levels of service. The court ruled in December 2008
that the Legislature's practice of budgeting $1,000 for each of
the current mandate programs applicable to schools and
indefinitely deferring payment on the balance due on claims is
unconstitutional. However, citing separation of powers, the
court did not order the state to appropriate funds to discharge
these unpaid prior year mandate obligations.
According to the author, "AB 844 will offer relief from unfunded
mandates as it provides intent that the implementation of new
school mandates be delayed for one year while the Commission on
State Mandates determines a reasonable reimbursement rate to be
included in the Governor's Budget." In addition, "It also
establishes a three year review period of existing mandates
during which time the LAO would recommend which mandates should
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be continued, suspended or repealed. Except for mandates found
by the Commission to be pupil health and safety mandates, for a
two year period for current mandates, school districts could
choose to not claim reimbursement and not implement the mandate.
AB 844 is the critical next step for school districts in the
funding flexibility they need to address program requirements."
Supporters of the bill also point to the inequities that the
current system creates with respect to small school districts as
one of the primary reasons why a structural change in the
treatment of school district mandates is necessary.
It is not surprising, since this bill is amending a part of law
that is complex and establishes numerous quasi-judicial
processes, that this bill raises many significant questions.
1)Does the Constitution, which requires the reimbursement of
local governments whenever the a new or expanded mandate is
created, allow for a process that differentiates between types
of local governments? A school district is a local
governmental entity with a duly elected governing board, just
as any city or county; it is not clear that there is a
justification for applying the Constitution differently to
local governmental entities based solely on the types of
services that they provide.
2)If a school district is a local government, then does this
bill create ambiguity as to whether a school district might
still file a claim as a local government? The bill does not
except school districts from acting as a local government in
filing claims, but only excepts school district claims; this
ambiguity would likely lead to litigation.
3)Is it legal or ethical to eliminate due process for school
district claimants? The current process for determining the
efficacy of a claim and the amount to be reimbursed is
quasi-judicial in nature and entails the filing of a claim, as
well as a public hearing with the ability of the claimant to
offer testimony; the alternative school district process
proposed in this bill does not identify a claimant to argue
that claim, but has the CSM make a determination, without any
requirement of hearing or testimony, as to whether there is a
mandate, and as to the amount of reimbursement that should be
available.
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4)Under this bill, could county offices of education still file
test claims even though school districts can not? County
offices of education are not proposed to be excepted from any
of the current processes and, as local governmental entities,
could still file a test claim for reimbursement even though
that claim might be for the same mandate that a school
district would be prohibited from filing a claim on. Since a
small number of county offices of education still function as
dependent agencies under their county governments, rather than
as independent governmental entities, even if county offices
of education were excepted in this bill, those county offices
could simply have their parent county government file the test
claim for them.
5)Are all mandates reimbursable? No, there are specific
exemptions from the requirement that the state reimburse local
governments whenever the Legislature or a state agency
mandates a new program or higher level of service; included in
those specified exceptions are mandates that stem from federal
requirements or from statewide voter-approved initiatives.
Under this bill, for school district mandates it is unclear
whether the CSM would account for these exceptions, since the
CSM is required to determine whether a statute creates
mandated costs and then to develop a reasonable reimbursement
methodology for that mandate, without a clear decision point
on what portions, if any, of those mandated costs are
reimbursable.
6)Will the restriction on audits, to only examine school
district claim documentation with respect to compliance with
the mandate, address the problem with disallowed costs that
school districts have taken issue with in recent years? With
respect to this restriction, the bill makes reference to
"commission audit"; the problem with mandate claim audits that
school districts have raised in recent years is mainly an
issue with audits conducted by the SCO.
7)The LAO is proposed to review all statutes enacted between
1975 and 2009 in order to evaluate the associated mandates;
are all mandates created by statute? No, mandates can also be
created by state agencies, through the regulatory process or
by any other action that creates a new program or higher level
of service. The LAO review process proposed in this bill,
however, appears only to apply to mandates created by enacted
statute.
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8)Is a new LAO review of statutes creating mandates necessary?
Current law requires the LAO to annually submit a report to
the Joint Legislative Budget Committee and legislative fiscal
committees on mandates reported by the CSM, and to make
recommendations as to whether the mandate should be repealed,
funded, suspended, or modified. This current requirement
makes the new LAO review duplicative.
9)Is the CSM staffed to unilaterally determine a reasonable
reimbursement methodology and claiming instructions for all
school district mandates? The CSM, an adjudicatory commission
which manages a quasi-judicial process is staffed to process
claims and provide legal analysis and advice to the
Commission; under current law the CSM relies on the DOF, SCO,
and other state agencies (such as the Department of Education
with respect to education mandates) to act as partners and to
provide the applied expertise concerning the practices and
processes followed by the claimants - expertise that is
necessary in estimating appropriate costs and reimbursements.
This expertise is provided through the current processes that
school district claims would be exempt from under this bill;
it is not clear whether the CSM would have to expand its staff
to include this expertise under this proposal. In addition,
under current law the SCO develops claiming instructions for
all reimbursable mandates; this bill shifts that
responsibility to the CSM for school district mandates.
10)Do we know what impacts the previous reform efforts enacted
by AB 2856 (Laird), Chapter 890, Statutes of 2004 and AB 1222
(Laird and Silva), Chapter 329, Statutes of 2007 have had, and
if those efforts have failed to the point where an alternative
mandate process applied solely to school districts is
necessary? Both of those two previous efforts at mandate
reform were long discussed among numerous stakeholders and
well debated in both houses of the Legislature. They made
changes to a complicated legal process, and it is likely that
one full year of implementation (in the case of AB 1222) is
insufficient time to make a judgment that those efforts have
failed.
These questions should be clearly answered before the
Legislature moves to pass this bill, to implement these proposed
changes to the process for determining and reimbursing school
district mandated costs, or to commit to a change as significant
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as this.
Related legislation: SB 540 (Romero), pending in the Senate
Education Committee, expresses Legislative intent to enact
legislation to repeal or amend statutory provisions that impose
reimbursable state mandates on school districts after an
evaluation of each mandate; also requires that the total amount
owed school districts for unpaid prior year mandate
reimbursements is required to be paid over a period of an
unspecified number of years. AB 548 (Krekorian), pending in the
Assembly Appropriations Committee, deletes the provision that
authorizes the Controller to conduct an audit of a mandate
reimbursement claim more than 3 years from the date of the
initial payment of the claim if specific conditions exist.
Previous legislation: SB 90 (Dills), Chapter 1406, Statutes of
1972, expressed the Legislature's intent to reimburse local
agencies and school districts for the costs of new programs or
increased levels of service mandated by state government.
Proposition 4 amended the California Constitution in 1979 to
established this intent as a requirement. SCA 4 (Torlakson),
Res. Chapter 133, Statutes of 2004, requires the Legislature to
either appropriate full funding for or suspend the operation of
the mandate in that fiscal year, with the exception of education
or employment mandates. AB 2856 (Laird), Chapter 890, Statutes
of 2004, authorizes the CSM to adopt reimbursement methodologies
for mandates that place greater emphasis on the use of unit
costs and other approximations of local costs, and stated the
intent to streamline the documentation and reporting process for
mandates. AB 1222 (Laird and Silva), Chapter 329, Statutes of
2007, revises the criteria required to be met for the reasonable
reimbursement methodology for state mandates. AB 3008
(Villines), failed in the Assembly Education Committee in 2008,
would have required either full funding for or suspension of
education related state-mandated local programs in each fiscal
year.
REGISTERED SUPPORT / OPPOSITION :
Support
Small School Districts' Association
Opposition
AB 844
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None on file
Analysis Prepared by : Gerald Shelton / ED. / (916) 319-2087