BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1624|
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THIRD READING
Bill No: AB 1624
Author: Assembly Budget Committee
Amended: 10/6/10 in Senate
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
SUBJECT : State finance: deferrals: Budget Trailer
Bill
SOURCE : Author
DIGEST : Senate Floor Amendments of 10/6/10 delete the
prior version of the bill which expressed the intent of the
Legislature to enact statutory changes relating to the
Budget Act of 2010, and add the current content relating to
state finance.
This bill is now the State Finance Budget Trailer Bill
which adds limited-term payment deferrals for the period
between the enactment of the 2010 Budget Act and the
completion of external cashflow borrowing.
ANALYSIS : This bill contains new limited-term payment
deferrals in recognition that the state will experience
cashflow pressures in the period between enactment of the
2010 Budget Act, and the completion of external cashflow
borrowing. The deferrals included in this bill may be
canceled or paid early, as the State Controller, State
Treasurer, and Director of the Department of Finance deem
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appropriate to maintain cash reserves. This bill
authorizes new payment deferrals that could total
approximately $5.5 billion in the following areas:
1. K-14 Education
Revenue Limit . Authorizes deferral of the
October 27, 2010, K-12 education apportionment to no
later than November 15, 2010. The amount authorized
for deferral is estimated at $2.6 billion. If
external cashflow borrowing in excess of $3.2 billion
is obtained prior to the deferral or during the
period of the deferral, then respectively, the
deferral will either not occur, or be promptly paid.
Includes a hardship exemption process for school
districts to be excluded from the deferral and paid
as scheduled under current law.
Categorical Funding . Authorizes deferral of the
October 27, 2010, K-12 education apportionment to no
later than November 4, 2010. The amount authorized
for deferral is estimated at $300 million. Includes
a hardship exemption process for school districts to
be excluded from the deferral and paid as scheduled
under current law.
Community Colleges . Authorizes deferral of the
October 27, 2010, community college apportionment to
no later than November 4, 2010. The amount
authorized for deferral is estimated at $536 million.
If external cashflow borrowing in excess of $3.2
billion is obtained prior to the deferral or during
the period of the deferral, then respectively, the
deferral will either not occur, or be promptly paid.
Includes a hardship exemption process for college
districts to be excluded from the deferral and paid
as scheduled under current law.
California State Teachers Retirement System
(CalSTRS) . For CalSTRS in 2010-11, defers the
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October payment 31 days and accelerates the April
payment 32 days to the Supplemental Benefit
Maintenance Account. This would provide a $316
million cash benefit in the October-November period,
and on net, accelerate payments by one day.
2. Higher Education
CalGrant Payments . Authorizes deferral of the
July, August, September, and October 2010 CalGrant
payments to the University of California and the
California State University to no later than December
10, 2010. The amount authorized for deferral is
estimated at $323 million.
3. Other Payment Deferrals
This bill makes reference to existing constitutional and
statutory authority that the State Controller has
available to defer other payments, such as tax refunds
and Department of Social Services payments for the
CalWORKS program administration. With the stated and
unstated existing authority, approximately $1.6 billion
in additional short-term payment deferrals could be
made.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
DLW:mw 10/6/10 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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