BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 82
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          SENATE THIRD READING
          SB 82 (Budget and Fiscal Review Committee)
          As Amended March 14, 2011
          2/3 vote.   Urgency 

           SENATE VOTE  :Vote not relevant  
           
           SUMMARY  :  Makes various changes to state laws in the area of 
          cash management and cash deferrals in order to ensure adequate 
          cash availability during 2011-12.  Specifically,  this bill  :

          1)Authorizes deferrals in General Fund (GF) payments starting in 
            July 2011, October 2011, and March 2012, except as specified 
            below. The deferrals can be made for each of these dates no 
            more than 60 days, 90 days, and 60 days, respectively. These 
            deferrals may be triggered off or repaid early in whole or in 
            part if the State Treasurer, State Controller, and Director of 
            Finance determine sufficient cash reserves are available.  The 
            deferrals can be moved forward to the prior month or delayed 
            to the subsequent month; however, the Joint Legislative Budget 
            Committee must be notified before changes can be made.  In 
            addition to the deferral criteria outlined above, certain GF 
            payments are subject to additional payment-specific criteria 
            listed below:

             a)   Permits up to three deferrals of payments to the federal 
               government for Supplementary Security Income/State 
               Supplementary Payments (SSI/SSP) benefits; and,

             b)   Permits deferral of social services and other payments 
               to cities, counties, and local governments not to exceed $1 
               billion.  Deferrals of Mental Health Services Act payments 
               are not counted towards the $1 billion.  This may include 
               deferral of California Work Opportunity and Responsibility 
               to Kids (CalWORKs) assistance payments and other social 
               services costs. The Administration has stated that it does 
               not anticipate resulting delays to beneficiaries' receipt 
               of assistance payments. Payments to counties or cities with 
               a population less than 50,000 shall not be deferred.

          2)Authorizes the following specific deferral plan for K-12 
            education payments:

             a)   Both the July 2011, and August 2011 payments of $1.4 








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               billion shall be deferred;  

             b)   The October 2011 payment of $2.4 billion shall be 
               deferred;

             c)   In September 2011, $700 million of the July deferral 
               shall be paid;

             d)   In January 2012, $4.5 billion from the remaining July, 
               August, and October deferrals shall be paid; and,

             e)   In March 2012, $1.4 billion shall be deferred and paid 
               in April 2012.

          3)Includes a hardship waiver process for Local Educational 
            Agencies (LEAs) who might not be able to meet financial 
            obligations if payments are deferred.  In order to be eligible 
            for a hardship waiver, LEAs would need to qualify for an 
            emergency apportionment.  Expenditure obligations required for 
            payments of tax and revenue anticipation notes (TRANs) or 
            other short-term debt issued for cashflow purposes in 2010-11 
            are also to be considered for qualification of hardship.

          4)Modifies higher-education payments to smooth payment over the 
            fiscal year, specifically:

             a)   For the University of California (UC), authorizes the 
               state to pay only one-twelfth (1/12) of the UC's annual 
               appropriation each month between July 2011 and April 2012.  
               After April 2012, there are no limitations on payments 
               within the UC's appropriations limit.

             b)   For the California State University (CSU), authorizes 
               the state to pay only one-twelfth (1/12) of the CSU's 
               annual appropriation each month between July 2011 and April 
               2012. After April 2011, there are no limitations on 
               payments within the CSU's appropriations limit.

          5)Includes specific changes to other deferrals and adjustments, 
            specifically:

             a)   For transportation, due to the approval of Proposition 
               22 on the November 2010 ballot, repeals the section that 
               authorizes the deferral of apportionments to local 








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               governments for the Highway Users Tax Account (HUTA) 
               revenues. Deferrals of the local share of gasoline excise 
               tax revenue are now prohibited by the Constitution; 

             b)   For the CSU, in addition to the payment smoothing 
               authorizes deferral of a $250 million payment to the CSU 
               with repayment mandated in April 2012; and,

             c)   For California Community Colleges, authorizes the 
               deferral of a $200 million payment from July 2011 to 
               October 2011, and the deferral of a $100 million payment 
               from March 2012 to May 2012.  Includes a hardship clause to 
               exempt those community college districts that cannot raise 
               funds to cover their necessary expenses during those time 
               periods.

          6)Authorizes borrowing from additional special funds for 
            cashflow needs.  This bill adds four new special funds to 
            those eligible for cashflow borrowing.  Most special funds are 
            already eligible for cashflow borrowing, except where 
            prohibited by the Constitution. The new funds are the 
            Education Protection Account, the Local Revenue Fund 2011, the 
            Immediate and Critical Needs Account of the State Court 
            Facilities Construction Fund, and the Hospital Quality 
            Assurance Revenue Fund.


          7)Adds an urgency clause allowing this bill to take effect 
            immediately upon enactment.


           Analysis Prepared by  :   Mark Ibele / BUDGET / (916) 319-2099


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