BILL ANALYSIS
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UNFINISHED BUSINESS
Bill No: SB 74
Author: Senate Budget and Fiscal Review Committee
Amended: 6/25/09
Vote: 27 Urgency
PRIOR SENATE VOTE NOT RELEVANT
SENATE FLOOR : 24-14 (FAIL), 6/25/09
AYES: Alquist, Calderon, Cedillo, Corbett, DeSaulnier,
Ducheny, Florez, Hancock, Kehoe, Leno, Liu, Lowenthal,
Negrete McLeod, Oropeza, Padilla, Pavley, Price, Romero,
Simitian, Steinberg, Wiggins, Wolk, Wright, Yee
NOES: Aanestad, Ashburn, Benoit, Cogdill, Cox, Denham,
Dutton, Harman, Hollingsworth, Huff, Runner, Strickland,
Walters, Wyland
NO VOTE RECORDED: Correa, Maldonado
ASSEMBLY FLOOR : 73-2, 6/25/09 - See last page for vote
SUBJECT : Budget Act of 2009: State Finance
SOURCE : Author
DIGEST : As it left the Senate, this bill expressed the
intent of the Legislature to enact necessary statutory
changes relating to the Budget Act of 2009.
Assembly Amendments deleted the prior version of the bill
and made necessary statutory changes to implement the State
Finance portions of the 2009-10 Budget, as specified below.
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ANALYSIS : This trailer bill contains the following
revisions:
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
(September through June). (Sections 1 & 3)
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.
(Section 2)
3. K-12/Community College Payment Deferrals for QEIA .
Requires that $450 million in K-12 payments and $48
million in Community Colleges payments pursuant to the
Quality Education Improvement Act (QEIA) will be
released no sooner than October 8 of each year.
According to current practice, 80 percent of QEIA
payments are made in July and 20 percent are made in
January of each year. (Section 4)
4. 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. (Section 18)
5. 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
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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.
6. California State University Deferrals . Defers $290
million in General Fund payments to the California
State University (CSU) that otherwise would have been
dispersed from the State Treasury for the month of
July, and instead makes this payment in October, 2009.
7. 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
deferral, the state will be deferring a total of $655
million in Community College payments from one fiscal
year to the next.
8. 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.
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
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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
$4.4 million.
11. Prompt Payment Amendments . Requires that late
payment penalties be paid to the claimant if payment
in 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: Yes Fiscal Com.: Yes
Local: No
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Arambula, Beall, Bill Berryhill, Tom
Berryhill, Blakeslee, Block, Blumenfield, Brownley,
Buchanan, Caballero, Charles Calderon, Carter, Chesbro,
Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore,
Duvall, Emmerson, Eng, Evans, Feuer, Fletcher, Fong,
Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick,
Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber,
Huffman, Jeffries, Jones, Knight, Krekorian, Logue,
Bonnie Lowenthal, Ma, Mendoza, Monning, Nava, Nestande,
Niello, Nielsen, John A. Perez, Portantino, Ruskin,
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Salas, Saldana, Silva, Skinner, Smyth, Solorio, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Yamada, Bass
NOES: Anderson, Miller
NO VOTE RECORDED: Gilmore, Lieu, V. Manuel Perez, Audra
Strickland, Vacancy
DLW:nl 6/30/09 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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