BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   AB 202|
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                                 THIRD READING


          Bill No:  AB 202
          Author:   Brownley (D)
          Amended:  8/15/11 in Senate
          Vote:     21

           
           SENATE EDUCATION COMMITTEE  :  8-0, 6/22/11
          AYES:  Lowenthal, Alquist, Blakeslee, Hancock, Liu, Price, 
            Simitian, Vargas
          NO VOTE RECORDED:  Runner, Huff, Vacancy

           SENATE APPROPRIATIONS COMMITTEE  :  6-3, 8/25/11
          AYES:  Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
          NOES:  Walters, Emmerson, Runner
           
          ASSEMBLY FLOOR  :  78-0, 5/19/11 (Consent) - See last page 
            for vote


           SUBJECT  :    Local educational agencies:  reimbursable state 
          mandates

           SOURCE  :     Author


           DIGEST  :    This bill makes various changes to the states 
          process for the determination and reimbursement of 
          educational mandates that streamline the reimbursement 
          process, and augments the reporting requirements placed on 
          the Legislative Analyst's Office with respect to mandates 
          filed by a local education agency.

          ANALYSIS  :    The California Constitution requires the state 
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          to provide a subvention of funds to reimburse costs to 
          local governments, including local educational entities, 
          whenever the Legislature, executive order, or a state 
          agency through adoption of regulations mandates a new 
          program or higher level of service, with specified 
          exceptions.  

          Existing law specifies the process to determine whether or 
          not a reimbursable state mandate is created and establishes 
          a procedure for local governmental agencies, including 
          local education agencies (LEAs), to file claims for 
          reimbursement of these costs with the Commission on State 
          Mandates (CSM) that requires the CSM to hear and decide 
          upon each claim for reimbursement and then determine the 
          amount to be paid for reimbursement, adopt parameters and 
          guidelines to guide the payment of claims, and adopt a 
          reasonable reimbursement methodology (RRM).  The CSM is 
          required to consult with the Department of Finance (DOF), 
          among other state officials, when adopting parameters and 
          guidelines for reimbursement. 

          In addition, existing law requires the CSM to establish 
          procedures for dealing with incorrect reduction claims.  
          The State Controller may reduce the amount of any 
          reimbursement claim that it determines to be excessive or 
          unreasonable.  If the State Controller takes such an action 
          and the claimant disputes it, the claimant may file an 
          incorrect reduction claim with the CSM.  An incorrect 
          reduction claim alleges that the Controller incorrectly 
          reduced the amount paid on a reimbursement claim for a 
          state-mandated program. The CSM hears and decides whether 
          the State's Controller reduction was correct. 

          This bill implements changes related to the state's process 
          for the determination and reimbursement of educational 
          mandates that streamline the reimbursement process, and 
          augments the reporting requirements placed on the 
          Legislative Analyst's Office (LAO) with respect to mandates 
          filed by a local education agency.  More specifically, this 
          bill:

          1. Defines LEA for the purposes of these provisions to mean 
             a school district or county office of education, but not 
             a community college district. 

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          2. Expresses legislative intent that statues creating a 
             reimbursable state mandate on LEAs be periodically 
             reviewed, and the Legislature consider recommendations 
             on whether these statutes be amended, repealed, or 
             remain unchanged.
           
          3. Requires the State Controller, consistent with 
             legislative intent, to notify the appropriate fiscal and 
             education policy committees of the Legislature within 30 
             days of the date upon which the State Controller 
             determines total reimbursement claims filed in a fiscal 
             year, on any mandate where the LEA test claim exceeds 
             the adopted statewide estimate of costs for that mandate 
             by more than 25 percent.  

          4. Requires the CSM to notify the Legislature within 30 
             days of the date upon which a test claim is filed by an 
             LEA, where the LEA submits a written narrative that 
             identifies the effective date and register number of any 
             regulation alleged to contain a mandate.

          5. Authorizes an LEA test claimant to designate another LEA 
             for the purposes of drafting and submitting the proposed 
             parameters and guidelines to the CSM.  

          6. Changes the process relating to development of an RRM, 
             as follows:

             A.    Provides for only one extension of 90 days, in 
                addition to the initial 180 days allowed for the 
                development of an RRM.

             B.    Eliminates the ability of an LEA test claimant or 
                DOF to unilaterally end the development of an RRM 
                once this process has begun, and instead authorizes 
                the parties to jointly request that the RRM process 
                be ended.

             C.    Establishes an arbitration process, if a draft of 
                an RRM is not submitted by the required deadline or 
                extended deadline, or a joint notification requesting 
                termination of the RRM process has been submitted.


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          7. Requires all of the following to occur if an LEA test 
             claimant and 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 Fiscal Crisis and Management 
                Assistance Team (FCMAT) the test claimant and DOF are 
                at an impasse.  

             C.    Requires the LEA and DOF to give all available 
                support materials to the arbitrator within 10 days of 
                the declared impasse, including but not limited to, 
                estimates, local cost projections, sample 
                information, and input from associations or other 
                interested parties. 

             D.    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.

             E.    Requires the LEA and DOF, within 30 days of 
                receiving the draft RRM from the arbitrator, to 
                jointly submit to the Executive Director the draft 
                RRM and proposed statewide estimate of costs for the 
                initial claiming period and budget year.  

          8. Requires any LEA filing a reimbursement claim to provide 
             with the reimbursement claim a signed certification from 
             the superintendent attesting to the accuracy of the data 
             used to calculate the amount claimed under the approved 
             RRM.

          9. Requires the LAO, in addition, to information currently 
             required in statute, to also report at least once in 
             each regular session of the Legislature, on each LEA 
             reimbursable state mandate that meets the following 
             criteria: 


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             A.    The CSM has determined the existence of a state 
                reimbursable mandate.

             B.    A claim for reimbursement has been filed with the 
                State Controller by a school district, county office 
                of education, or other eligible LEA.

             C.    The Legislature has not provided an appropriation 
                to fully fund current and pending claims for 
                reimbursement filed with the State Controller. 

          10.Requires the LAO to include specified information in the 
             report, due to the Legislature on or before January 1, 
             following the adjournment of the regular session for 
             which the review was made on each mandate, including:

             A.    A summary of the mandate and its statutory source.

             B.    Fiscal information, including but not limited to, 
                the claims paid to date, unpaid claims, pending 
                claims, and the history of appropriations for the 
                mandate. 

             C.    Recommendations as to whether the mandate should 
                be amended, repealed or remain unchanged.

           Comments  

          The motivation for the elements in this bill come from an 
          October 2009, California State Auditor report concerning 
          state mandate determination and payment processes.  
          According to this audit report, "while the Commission on 
          State Mandates has made progress in reducing its backlog of 
          test claims for state mandates, the continuing backlog is 
          large."  The State Auditor finds that high workload and 
          insufficient resources exist at the CSM, and goes on to say 
          that, "This situation, combined with the long time that 
          elapses before the Commission makes determinations, means 
          that substantial costs will continue to build before the 
          Legislature has the information it needs to take any 
          necessary action."

           Automatic repeal or inoperability of education bills keyed 
          with a mandate  .  The State Auditor in their October 2009 

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          report, after discussion with other states, points out that 
          some mandates represent permanent solutions to temporary 
          problems.  The State Auditor suggested the sunset of each 
          mandate, to enable a legislative "reassessment of mandate 
          activities and costs" at a later time.  This bill makes any 
          bill that imposes a state-mandated local program on an LEA, 
          as determined by Legislative Counsel, to include an 
          automatic repeal or makes the requirement inoperative five 
          years following the date from which the requirement becomes 
          operative, unless the particular bill includes a provision 
          "?that expressly notwithstands" this section in this bill.  


          Though an automatic trigger that would make a prospective 
          LEA mandate inoperable is one way to activate the 
          recommendation of the State Auditor and force the 
          reintroduction and passage of legislation that initially 
          creates a mandate; arguably, the additional reporting by 
          the Legislative Analyst, as envisioned in this measure, 
          should promote the regular "evaluation" of each mandate.  
          In addition, one Legislature cannot bind a future 
          Legislature.  

           Additional background  .  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.  In 1984, the 
          Legislature created the CSM, as a quasi-judicial body, to 
          decide test claims alleging that the State imposed a 
          reimbursable state-mandated local program.  If 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 
          incorrect reductions claims (IRCs) from local agencies if 
          the Controller reduces reimbursement claims upon audit and 
          the claimant chooses to dispute that reduction.  From 
          beginning to end, the mandate determination process is 
          sometimes excessively lengthy, often taking five years or 
          more to be resolved by the CSM.

          In November 2004, state voters approved Proposition 1A, 
          which requires the Legislature to appropriate funds in the 

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          annual budget to pay outstanding mandate claims, "suspend" 
          the mandate, or "repeal" the mandate.  However, these 
          provisions apply to local governments only and - by 
          definition - do not include school districts or community 
          colleges.

          The CSM consists of the State Treasurer, the State 
          Controller, 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.  No 
          current member of the CSM is an elected member of an LEA 
          board.
           
          Prior Legislation

           AB 2082 (Assembly Education Committee), 2009-10 Session, 
          similar to this bill with regard to provisions relating to 
          legislative review of new mandates and the information on 
          educational mandates the LAO is required to provide the 
          Legislature.  (Held in Senate Education Committee)

           Related Legislation  

          SB 64 (Liu), 2011-12 Session, 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.  (Held under 
          submission in Senate Appropriations Committee Suspense 
          File)

          SB 887 (Emmerson), 2011-12 Session, enacts the Streamlined 
          Temporary Mandate Process Act of 2011, a voluntary, 
          temporary, streamlined alternative mandate reimbursement 
          process for LEA from the 2011-12 through the 2014-15 fiscal 
          years.  (In Senate Education Committee)

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  No


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          According to the Senate Appropriations Committee:

                          Fiscal Impact (in thousands)

            Major Provisions                 2011-12      2012-13      
            2013-14              Fund  

           Arbitration process            Likely minor, possible 
           significant ongoing costs      General

           Streamline LEA                 Potential future costs; 
           some offsetting savings        General
           mandates

           Notifications/reports          Minor to significant 
           ongoing workload               General
           
           SUPPORT  :   (Verified  8/29/11)

          California Association of School Business Officials
          California Association of Suburban School Districts
          California School Boards Association
          Education Mandated Cost Network
          Manhattan Beach Council of PTAs
          Public Advocates
          Small School Districts' Association

           ARGUMENTS IN SUPPORT  :    According to the author's office, 
          the intent of this bill is to implement changes in the 
          mandate reimbursement process in order to (1) reduce the 
          impact of ineffective and unnecessary mandates placed on 
          local educational agencies, (2) reduce the long-term 
          liability to the state for mandate reimbursements, and (3) 
          streamline the process and reduce the workload of the CSM, 
          other state agencies and local educational agencies, so as 
          to reduce processing time and administrative costs for all 
          claims.


           ASSEMBLY FLOOR  :  78-0, 5/19/11 (Consent)
          AYES:  Achadjian, Allen, Ammiano, Atkins, Beall, Bill 
            Berryhill, Block, Blumenfield, Bonilla, Bradford, 
            Brownley, Buchanan, Butler, Charles Calderon, Campos, 
            Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson, 

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            Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani, 
            Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove, 
            Hagman, Halderman, Hall, Harkey, Hayashi, Roger 
            Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Jones, 
            Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor, 
            Mendoza, Miller, Mitchell, Monning, Morrell, Nestande, 
            Nielsen, Norby, Olsen, Pan, Perea, V. Manuel Pérez, 
            Portantino, Silva, Skinner, Smyth, Solorio, Swanson, 
            Torres, Valadao, Wagner, Wieckowski, Williams, Yamada, 
            John A. Pérez
          NO VOTE RECORDED:  Alejo, Gorell


          CPM:mw  8/29/11   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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