BILL ANALYSIS Ó
AB 202
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Date of Hearing: May 11, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 202 (Brownley) - As Amended: April 15, 2011
Policy Committee: Education
Vote:10-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill makes the following process changes used by K-12 local
education agencies (LEAs) to claim mandate reimbursement:
1)Expresses legislative intent that statues creating a
reimbursable state mandate for LEAs be periodically reviewed
and the Legislature consider recommendations on whether these
statutes be amended, repealed, or unchanged.
2)Requires the Legislative Analyst's Office (LAO), at least once
in each regular session of the Legislature, to report on each
LEA reimbursable state mandate that meets the following
criteria: (a) the Commission on State Mandates (CSM) has
determined the existence of a state reimbursable mandate; (b)
a claim for reimbursement has been filed with the State
Controller (SC) by a school district, county office of
education, or other eligible LEA; and (c) the Legislature has
not provided an appropriation to fully fund current and
pending claims for reimbursement filed with the SC.
3)Requires the LAO to include specified information in the
report, including recommendations as to whether the mandate
should be amended, repealed or remain unchanged, and provide
it to the Legislature on or before January 1 following the
adjournment of regular session for which the review was made.
4)Requires the State Controller (SC) to notify the legislative
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committees, within 30 days of total reimbursement claims filed
in a fiscal year (FY), of any mandate where the LEA test claim
exceeds the adopted statewide estimate of costs for that
mandate by 25%.
FISCAL EFFECT
1)GF administrative costs to the SC, likely less than $70,000,
to report on mandate claims that exceed the adopted statewide
cost estimate by 25%, as specified.
2)Unknown, likely minor, absorbable GF/98 costs to the Fiscal
Crisis and Management Assistance Team (FCMAT) to arbitrate the
existing Reasonable Reimbursement Methodology (RRM) process
that determines a reasonable rate for a mandate claim. This
cost may increase depending on the annual number of cases
referred to FCMAT for arbitration.
SUMMARY
1)Requires any state mandated local program that applies to an
LEA and becomes operative on or after January 1, 2012 to be
inoperative on the date five years following the operative
date of the program.
2)Requires each bill the legislative counsel identifies as an
LEA state mandated local program to include a comment in the
bill digest that the program becomes inoperative on the date
five years following its operative date, as specified.
3)Eliminates the ability of an LEA test claimant or DOF to
unilaterally end the development of an Reasonable
Reimbursement Methodology (RRM) and instead authorizes the
parties to jointly request an end to the process.
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4)Requires all of the following to occur if an LEA test claimant
and the Department of Finance (DOF) notify the executive
director of the CSM that no further progress in developing the
RRM is possible:
a) The executive director declares the development of the
RRM is at an impasse and that binding arbitration is
necessary.
b) The executive director notifies the Chief Executive
Officer of FCMAT the test claimant and DOF are at an
impasse. Requires the Chief Executive Officer of FCMAT to
serve as the sole arbitrator for the RRM impasse and,
within 90 days, mediate or arbitrate a draft RRM and
provide it to the LEA and DOF, as specified.
c) Requires the LEA and DOF, within 30 days of receiving
the draft RRM, to jointly submit to FCMAT the draft RRM and
proposed statewide estimate of costs for the initial
claiming period and budget year.
COMMENTS
1)Background . The California Constitution requires the state to
reimburse local governments, including LEAs, for certain state
mandates. Section 6 of Article XIII B of the Constitution
provides that, with certain exceptions, whenever the
Legislature or any state agency mandates a new program or
higher level of service on any local government, the state
shall reimburse the local government for the costs of the new
state-mandated activity.
For K-14 education, the mandate process begins when an LEA,
including a community college district, files a test claim
with the CSM. LEAs are required to submit claims within one
year of the effective date of the statute. The CSM hears the
test case and issues a "statement of decision," which
determines whether a claim is a reimbursable state mandate. If
a state mandate is determined, the CSM begins the process
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establishing costs based upon mandate claims. In so doing,
claimants propose parameters and guidelines (Ps and Gs) for
determining the costs. Ps and Gs identify the mandated
program, eligible claimants, period of reimbursement,
reimbursable activities, and other necessary claiming
information. The CSM then adopts the Ps and Gs, which are sent
to the SC in order to develop claiming instructions for LEAs.
At this point, LEAs may file claims. In the end, the CSM
estimates the costs of paying claims and reports the amount to
the Legislature as the "statewide cost estimate," for
inclusion in the annual budget.
AB 2856 (Laird), Chapter 890, Statues of 2004, established the
RRM, a formula for reimbursing local agencies, including
school districts. The RRM is required to be based on cost
information from a representative sample of eligible
claimants, information provided by associations of local
agencies and school districts, or other projections of local
costs. The RRM is required to consider the variation in costs
among local agencies and school districts to implement the
mandate in a cost-efficient manner.
DOF and LEA test claimants are authorized to work together to
develop and agree on the RRM, with the intent of submitting it
to the COSM for approval. Under this process, however, any
one party has the authority to end negotiations of this
methodology. School districts cite examples of investing a
significant amount of time in working with DOF on a RRM, only
to have DOF end negotiations. This bill proposes to reform
the RRM process by eliminating one party's ability to end the
process and requiring binding arbitration, as specified.
2)Purpose . In 2009, the State Auditor (SA) issued a report
entitled State Mandates: Operational and Structural Changes
Have Yielded Limited Improvements in Expediting Processes and
in Controlling Costs and Liabilities. This report states:
"Over the last six years, since we issued our last report on
state mandates, operational and structural changes have
marginally improved the way state mandates are determined and
subsequently managed in California."
According to the author, "the intent of this bill is to
implement changes in the mandate reimbursement process in
order to (a) reduce the impact of ineffective and unnecessary
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mandates placed on local educational agencies,(b) reduce the
long-term liability to the state for mandate reimbursements,
and (c) streamline the process and reduce the workload of the
COSM, other state agencies and LEAs, so as to reduce
processing time and administrative costs for all claims."
3)Technical amendments . The committee understands it is the
author's intent to limit the ability of one party to
unilaterally end the RRM process only for LEA mandate test
claimants, not non-LEAs. The bill, however, is unclear and
the proposed amendments address this issue.
4)Outstanding K-14 mandate obligations . According to the LAO,
the state owes approximately $3.7 billion GF/98 in outstanding
K-14 mandate claims. Of this amount, $3.3 billion GF/98 is
attributed to K-12 mandates. As part of the March 2011 budget
process, $90 million GF/98 was provided for annual K-14
education mandates in the budget bill passed by the
Legislature.
5)LAO recommendations to revise the K-12 state reimbursable
mandate process . According to the LAO, the mandates process
has significant, longstanding shortcomings. Test claims can
take many years to be resolved. During this time, state fiscal
liabilities increase and K-14 education agencies are not
reimbursed for mandated activities. In addition, the LAO
identifies the following major problems with the current K-14
mandate system: (a) mandates do not serve a compelling
purpose; (b) costs can be higher than anticipated; (d)
reimbursements can vary greatly without justification; (e)
reimbursements reward inefficiency; and (f) the reimbursement
process ignores effectiveness.
The LAO recommends a comprehensive reform package for K-14
education mandates that relies on making determinations for
individual mandates. These recommendations include: (a) either
funding or eliminating them in their entirety and (b) a hybrid
approach whereby certain activities associated with a mandate
would be funded and the remaining activities eliminated.
AB 1610 (Committee on the Budget), Chapter 724, Statutes of
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2010, required the LAO to convene a workgroup to discuss the
future of school district and community college mandates. The
work group included representatives from the LAO, DOF, SDE,
the California Community College Chancellor's Office, and
legislative fiscal and policy staff. Specifically, statute
required the work group to consult with appropriate
stakeholders and develop recommendations, including whether to
preserve, modify, or eliminate particular K-14 mandates. The
workgroup conducted meetings over the fall and winter. The
LAO is expected to release a report regarding this process in
May 2011.
6)Previous legislation . AB 2082 (Assembly Committee on
Education), similar to this measure with regard to provisions
relating to legislative review of new mandates and the
information on educational mandates the Legislative Analyst
Office (LAO) is required to provide the Legislature. This
bill, at the request of the author, remained in the committee.
7)Related legislation .
a) SB 64 (Liu), pending in the Senate Government and
Finance Committee, provides for a specialized mandate test
claim process for K-12 school districts that has many of
the same process elements as that for local agencies, with
the exception of creating a school district test claim
advisory committee tasked with assisting CSM by providing
recommendations, as specified.
b) SB 887 (Emmerson) enacts the Streamlined Temporary
Mandate Process Act of 2011, a voluntary, temporary,
streamlined alternative mandate reimbursement process for
LEA from the 2011-12 FY to the 2014-15 FY. This bill is
scheduled to be heard in the Senate Education Committee on
May 4, 2011
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081
AB 202
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