BILL ANALYSIS Ó SENATE GOVERNANCE & FINANCE COMMITTEE Senator Lois Wolk, Chair BILL NO: SB 288 HEARING: 4/6/11 AUTHOR: Negrete McLeod FISCAL: No VERSION: 3/29/11 TAX LEVY: No CONSULTANT: Lui SPECIAL DISTRICTS' FUNDS Expands independent special districts' authority to establish revolving funds. Background and Existing Law California's 3,294 special districts are separate local governments that provide specialized services like fire, water, irrigation, cemetery, and mosquito abatement and vector control, in geographically defined areas. Two-thirds are independent special districts that operate under governing boards that are either elected by the districts' voters or are appointed for fixed terms. In contrast, dependent special districts are governed by city councils or county boards of supervisors ex officio. Each independent special district varies in size and type of service it provides. Some independent special districts' governing boards designate their own treasurers. Other districts use the county treasurer as the district's treasurer. For special districts that use the county treasurer, the process for paying bills can be lengthy and expensive. Special districts get warrants, or checks, from the county treasurer, but delayed warrants can result in late payments to vendors. Further, some districts have to pay the county treasurer for this service, sometimes almost $5 for each county warrant. In 1976, the Legislature authorized independent special districts to establish a $1,000 petty cash fund to pay for routine expenditures, like utility bills (AB 2997, Duffy, 1976). This authority applied only to districts that used the county treasury as the holding place for the districts' funds. In 1982, the Legislature authorized public cemetery districts to establish revolving funds in an amount not to exceed 110% of one-twelfth of the districts' adopted budget SB 288 -- 3/29/11 -- Page 2 for the fiscal year (AB 2388, Kelley, 1982). In 1990, AB 3179 (N. Waters, 1990) granted the same authority to mosquito abatement and vector control districts. Proposed Law Senate Bill 288 authorizes an independent special district to establish, by resolution, a revolving fund in an amount that does not exceed 110% of one-twelfth of the district's adopted budget for the fiscal year. SB 288 requires the resolution establishing the revolving fund to designate: The purposes for which the fund may be expended. The district officer who is responsible for keeping receipts and making disbursements. The necessity for the fund. The maximum amount of the fund. State Revenue Impact No estimate. Comment Purpose of the bill . SB 288 creates consistency among the enabling acts of independent special districts. The $1,000 revolving fund limit has not been increased since 1976, and the authority for establishing larger funds exists only for public cemetery and mosquito abatement and vector control districts. Public cemetery districts and mosquito abatement and vector control special districts have used larger revolving funds for more than 20 years. Authorizing all independent special districts to establish larger revolving funds can help them pay their routine expenditures more efficiently and expediently. The 110% of the 1/12 district's adopted budget is just over one month's worth of expenditures. Support and Opposition (3/31/11) Support : California Special Districts Association, CA SB 288 -- 3/29/11 -- Page 3 Association of Public Cemeteries Opposition : Unknown.