Amended in Assembly May 12, 2014

California Legislature—2013–14 Second Extraordinary Session

Assembly Constitutional AmendmentNo. 1


Introduced by Assembly Member John A. Pérez

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(Coauthor: Assembly Member Gatto)

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(Coauthors: Assembly Members Achadjian, Atkins, Chávez, Conway, Cooley, Fox, Gatto, Gorell, Harkey, Linder, Medina, Muratsuchi, Olsen, Quirk-Silva, Salas, and Wilk)

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(Coauthors: Senators Anderson, Berryhill, Cannella, Corbett, De León, Fuller, Gaines, Galgiani, Hernandez, Hill, Huff, Jackson, Leno, Nielsen, Steinberg, Vidak, and Wolk)

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April 24, 2014


Assembly Constitutional Amendment No. 1—A resolution to propose to the people of the State of California an amendment to the Constitution of the State, by directing the Secretary of State to withdraw from the consideration of the people of the State of California Assembly Constitutional Amendment No. 4 (Resolution Chapter 174 of the Statutes of 2010) and proposing to the people of the State of California an amendment to the Constitution of the State, by adding Section 12.5 to Article IVbegin insert thereofend insert, andbegin insert byend insert adding Sections 21 and 22begin insert to,end insert and repealing and adding Sectionbegin delete 20, ofend deletebegin insert 20 of,end insert Article XVI thereof, relating to state finance.

LEGISLATIVE COUNSEL’S DIGEST

ACA 1, as amended, John A. Pérez. State reserve policy.

Existing provisions of the California Constitution require the Governor to submit to the Legislature a budget for the ensuing fiscal year within the first 10 days of each calendar year and prohibit the Legislature from sending to the Governor for consideration a Budget Bill that would appropriate from the General Fund a total amount that exceeds General Fund revenues for that fiscal year estimated as of the date of the Budget Bill’s passage.

This measure would require the Director of Finance to submit estimates of General Fund revenues and expenditures for the ensuing fiscal year and the 3 fiscal years thereafter within 10 days following the submission of a budget by the Governor, following the submission of proposed adjustments to the Governor’s Budget, as required by statute, and following the enactment of the Budget Bill.

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Existing provisions of the California Constitution require the Governor to submit to the Legislature a budget for the ensuing fiscal year within the first 10 days of each calendar year and prohibit the Legislature from sending to the Governor for consideration a Budget Bill that would appropriate from the General Fund a total amount that exceeds General Fund revenues for that fiscal year estimated as of the date of the Budget Bill’s passage.

end delete

Existing provisions of the California Constitution require the Legislature to establish a prudent state reserve fund in an amount the Legislature deems reasonable and necessary. Existing provisions of the California Constitution, approved by the electors on March 2, 2004, additionally establish the Budget Stabilization Account in the General Fund and require the Controller, commencing no later than September 30, 2006, and for each fiscal year thereafter, to transfer from the General Fund to the account a specified percentage of estimated General Fund revenues.

Section 8 of Article XVI of the California Constitution (Proposition 98) sets forth a formula for computing the minimum amount of General Fund revenues that the state is required to appropriate for the support of school districts, as defined, and community college districts for each fiscal year.

This measure would establish a replacement version of the Budget Stabilizationbegin delete Account and, commencingend deletebegin insert Account, and would require the Controller, commencing with the 2015-end insertbegin insert16 fiscal year and each fiscal year thereafter, to transfer from the General Fund to the accountend insertbegin insert 1.5% of the estimated amount of General Fund revenues for that fiscal year. Commencingend insert with the 2015-16 fiscal year,begin insert this measureend insert wouldbegin insert alsoend insert require the Controller to annually transfer from the General Fund to the account amounts determined pursuant to specified formulae, consisting of General Fund proceeds of taxes derived from personal income taxes paid on net capital gains that exceed a designated level, based on estimates provided in the Budget Act.

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This measure, for the 2015-16 fiscal year through the 2029-30 fiscal year, would require the Legislature to appropriate 50% of these total amounts for one or more designated fiscal obligations of the state, including accrued school funding obligations, repayment of budgetary loans, payment of accrued claims for mandate costs, and payment of unfunded pension liabilities and prefunding of other postemployment benefits. For the 2030-31 fiscal year and each fiscal year thereafter, this measure would instead authorize the Legislature to appropriate up to 50% of these total amounts for one or more of these designated fiscal obligations of the state.

end insert

This measure would require the Department of Finance, commencing with the 2015-16 fiscal year, to annually reportbegin delete informationend delete to the Legislaturebegin delete estimated amountsend deletebegin insert certain fiscal informationend insert necessary to calculate the amount of the transfer from the General Fund to the Budget Stabilization Account for that fiscal year, and would require certain of these estimates to be included in the annual Budget Act. Commencing with the 2017-18 fiscal year, the measure would require the department to provide updated estimates for each of the 2 preceding fiscal years, calculated separately, for the purpose of determining the maximum allowable transfer from the General Fund to the Budget Stabilization Account for each of these fiscal years.

This measure would prohibit the balance in the Budget Stabilization Account from exceeding 10% of estimated General Fund proceeds of taxes. It also wouldbegin delete authorizeend deletebegin insert limitend insert the use of funds, that otherwise would be transferred to the account,begin delete forend deletebegin insert toend insert appropriation forbegin delete other designated fiscal obligations of the state, including, but not limited to, payment of payable claims for mandated costs, payment of unfunded pension liabilities and prefunding of other postemployment benefits, and reduction of existing bonded indebtednessend deletebegin insert the funding of infrastructure, as defined in a specified statute, including deferred maintenanceend insert.

This measure would establish the Public School System Stabilization Account, to provide a reserve for public school funding. Commencing with the 2015-16 fiscal year and pursuant to specified calculations, the Controller would transfer certain moneys from the General Fund into the Public School System Stabilization Account, for subsequent allocation to school districts and community college districts in fiscal years for which the minimum state funding obligation under Proposition 98 falls below specified levels. The measure would prohibit the transfer of moneys into the Public School System Stabilization Account for a fiscal year for which a maintenance factor is created under Proposition 98 or before a previously determined maintenance factor has been fully reimbursed. The measure would also prohibit the transfer of funds into the account in a fiscal year in which provisions of Proposition 98 have been suspended.

The funds transferred into the Public School System Stabilization Account under the measure in a fiscal year would be counted toward the state’s annual funding obligation for that fiscal year under Proposition 98, rather than in a fiscal year in which those funds are allocated. The measure would authorize the Controller to utilize funds in the account, that he or she determines to be unnecessary to meet foreseeable obligations, to help manage General Fund daily cash flow needs if that use does not interfere with the purpose of the account.

Existing provisions of the California Constitution authorize the Governor to issue a proclamation declaring an emergency in specified circumstances.

This measure would authorize the Legislature, upon the Governor’s proclamation declaring a budget emergency, as described, to enact a statute that returns funds from the Budget Stabilization Account to the General Fund for appropriation to address the budget emergency, appropriates funds in the Public School System Stabilization Account for the support of school districts and community college districts, or suspends or reduces the transfer of funds from the General Fund to the Budget Stabilization Account or the Public School System Stabilization Account.

Existing law requires the Secretary of State to submit ACA 4 of the 2009-10 Regular Session, a proposed legislative constitutional amendment relating to state finance, to the voters at the November 4, 2014, statewide general election.

This bill would direct the Secretary of State to withdraw ACA 4 from the ballot.

Vote: 23. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

P4    1Resolved by the Assembly, the Senate concurring, That the
2Legislature of the State of California at its 2013-14 Second
3Extraordinary Session, commencing on the twenty-fourth day of
4April 2014, two-thirds of the membership of each house
P5    1concurring, hereby directs the Secretary of State to withdraw, from
2the consideration of the people of the State of California, Assembly
3Constitutional Amendment No. 4 of the 2009-10 Regular Session
4(Resolution Chapter 174 of the Statutes of 2010); and

5WHEREAS, The Legislature of the State of California hereby
6finds and declares that the intent of this proposed constitutional
7amendment is to repay state debt and protect the state from the
8negative effects of economic downturns; and

9WHEREAS, This measure will ensure that future revenue spikes
10from capital gains will be deposited into the state’s Budget
11Stabilization Account and be used to stabilize program funding
12when revenues decline; and

13WHEREAS, This measure will establish a reserve for school
14funding to prevent education cuts and teacher layoffs while
15maintaining current guaranteed levels of school funding; and

16WHEREAS, Multi-year budgeting will allow for better planning
17for the future; now, therefore, be it

18Resolved, That the Legislature, hereby proposes to the people
19of the State of California, that the Constitution of the State be
20amended as follows:

21

First--  

That Section 12.5 is added to Article IV thereof, to read:

22

Sec. 12.5.  

Within 10 days following the submission of a budget
23pursuant to subdivision (a) of Section 12, following the proposed
24adjustments to the Governor’s Budget required by subdivision (e)
25of Section 13308 of the Government Code or a successor statute,
26and following the enactment of the budget bill, or as soon as
27feasible thereafter, the Director of Finance shall submit to the
28Legislature both of the following:

29(a) Estimates of General Fund revenues for the ensuing fiscal
30year and for the three fiscal years thereafter.

31(b) Estimates of General Fund expenditures for the ensuing
32fiscal year and for the three fiscal years thereafter.

33

Second--  

That Section 20 of Article XVI thereof is repealed.

34

Third--  

That Section 20 is added to Article XVI thereof, to read:

35

SEC. 20.  

(a) begin insert(1)end insertbegin insertend insert The Budget Stabilization Account is hereby
36created in the General Fund.

begin insert

37(2) For the 2015-16 fiscal year and each fiscal year thereafter,
38based on the Budget Act for the fiscal year, the Controller shall
39transfer from the General Fund to the Budget Stabilization
40Account, no later than October 1, a sum equal to 1.5 percent of
P6    1the estimated amount of General Fund revenues for that fiscal
2year.

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3(b) (1) For the 2015-16 fiscal year and each fiscal year
4thereafter, based on the Budget Act for the fiscal year, the
5Department of Finance shall provide to the Legislature all of the
6following information:

7(A) An estimate of the amount of General Fund proceeds of
8taxes that may be appropriated pursuant to Article XIII B for that
9fiscal year.

10(B) (i) An estimate of that portion of the General Fund proceeds
11of taxes identified in subparagraph (A) that is derived from personal
12income taxes paid on net capital gains.

13(ii) The portion of the estimate in clause (i) that exceedsbegin delete 6.5end deletebegin insert 8end insert
14 percent of the estimate made under subparagraph (A).

15(C) That portion of the state’s funding obligation under Section
168 that results from including the amount calculated under clause
17(ii) of subparagraph (B), if any, as General Fund proceeds of taxes.

18(D) The amount of any appropriations described inbegin delete subdivision
19(g) in lieu of all or part of the transfer to the Budget Stabilization
20Account.end delete
begin insert clause (ii) of subparagraph (B) of paragraph (1) of, or
21subparagraph (C) of paragraph (2) of, subdivision (c), that are
22made from the revenues described in clause (ii) of subparagraph
23(B) of this paragraph.end insert

24(E) The amount resulting from subtracting the combined values
25calculated under subparagraphs (C) and (D) from the value
26calculated under clause (ii) of subparagraph (B). If less than zero,
27the amount shall be considered zero for this purpose.

28(F) The lesser of the amount calculated under subparagraph (E)
29or the amount of transfer resulting in the balance in the Budget
30Stabilization Account reaching the limit specified in subdivision
31(e).begin delete This is the maximum amount that may be transferred to the
32Budget Stabilization Account.end delete

33(2) In the 2016-17 fiscal year, with respect to the 2015-16 fiscal
34year only, and in the 2017-18 fiscal year and each fiscal year
35thereafter, separately with respect to each of the two next preceding
36fiscal years, the Department of Finance shall calculate all of the
37following, using the same methodology used for the relevant fiscal
38year, and provide those calculations to the Legislature:

P7    1(A) An updated estimate of the amount of General Fund
2proceeds of taxes that may be appropriated pursuant to Article
3XIII B.

4(B) (i) An updated estimate of that portion of the General Fund
5proceeds of taxes identified in subparagraph (A) that is derived
6from personal income taxes paid on net capital gains.

7(ii) That portion of the updated estimate in clause (i) that exceeds
8begin delete 6.5end deletebegin insert 8end insert percent of the updated estimate made under subparagraph
9(A).

10(C) The updated calculation of that portion of the state’s funding
11obligation under Section 8 that results from including the updated
12amount calculated under clause (ii) of subparagraph (B), if any,
13as General Fund proceeds of taxes.

14(D) The amount of any appropriations described inbegin delete subdivision
15(g) in lieu of all or part of the transfer to the Budget Stabilization
16Account.end delete
begin insert clause (ii) of subparagraph (B) of paragraph (1) of, or
17subparagraph (C) of paragraph (2) of, subdivision (c), that are
18made from the revenues described in clause (ii) of subparagraph
19(B) of paragraph (1).end insert

20(E) The amount resulting from subtracting the combined values
21calculated under subparagraphs (C) and (D) from the value
22calculated under clause (ii) of subparagraph (B). If less than zero,
23the amount shall be considered zero for this purpose.

24(F) The amount previously transferred for the fiscal year by the
25Controller from the General Fund to the Budget Stabilization
26Account pursuant to subdivisions (c) and (d).

27(G) The lesser of (i) the amount, not less than zero, resulting
28from subtracting, from the amount calculated under subparagraph
29(E), the value of any suspension or reduction of transfer pursuant
30to paragraph (1) of subdivision (a) of Section 22 previously
31approved by the Legislature for the relevant fiscal year, and the
32amount previously transferred for that fiscal year by the Controller
33as described in subparagraph (F), or (ii) the amount of transfer
34resulting in the balance in the Budget Stabilization Account
35reaching the limit as specified in subdivision (e).begin delete This is the
36maximum amount that may be transferred to the Budget
37Stabilization Account for that fiscal year.end delete

38(c) (1) begin insert(A)end insertbegin insertend insert By October 1 of the 2015-16 fiscal year and each
39fiscal year thereafterbegin insert to the 2029-end insertbegin insert30 fiscal year, inclusiveend insert, based
40on the estimates set forth in the annual Budget Act pursuant to
P8    1paragraphsbegin delete (1) and (2)end deletebegin insert (2) and (3)end insert of subdivisionbegin delete (i)end deletebegin insert (h), and the
2sum identified in paragraph (2) of subdivision (a)end insert
, the Controller
3shall transfer amountsbegin delete betweenend deletebegin insert fromend insert the General Fund and the
4Budget Stabilization Account, pursuant to a schedule provided by
5the Director of Finance, as provided inbegin delete paragraph (2).end delete
6begin insert subparagraph (B).end insert

begin delete

7(2) In

end delete

8begin insert (B)end insertbegin insertend insertbegin insertNotwithstanding any other provision of this section, inend insert the
9fiscal year to which the Budget Act begin delete applies, the amount identified
10in subparagraph (F) of paragraph (1) of subdivision (b) shall be
11transferred from the General Fund to the Budget Stabilization
12Account, subject to any suspension or reduction of this transfer
13 pursuant to paragraph (1) of subdivision (a) of Section 22.end delete

14begin insert identified in subparagraph (A) applies:end insert

begin insert

15(i) Fifty percent of both the amount identified in paragraph (2)
16of subdivision (a), and the amount resulting from subtracting the
17value calculated under subparagraph (C) of paragraph (1) of
18subdivision (b) from the value calculated under clause (ii) of
19subparagraph (B) of paragraph (1) of subdivision (b), shall be
20transferred from the General Fund to the Budget Stabilization
21Account.

end insert
begin insert

22(ii) The remaining 50 percent shall be appropriated by the
23Legislature for one or more of the following obligations and
24purposes:

end insert
begin insert

25(I) Unfunded prior fiscal year General Fund obligations
26pursuant to Section 8 that existed on July 1, 2014.

end insert
begin insert

27(II) Budgetary loans to the General Fund, from funds outside
28the General Fund, that had outstanding balances on January 1,
292014.

end insert
begin insert

30(III) Payable claims for mandated costs incurred prior to the
312004-05 fiscal year that have not yet been paid, and that pursuant
32to paragraph (2) of subdivision (b) of Section 6 of Article XIII B
33are permitted to be paid over a term of years, as prescribed by
34law.

end insert
begin insert

35(IV) Unfunded liabilities for state-level pension plans and
36prefunding other postemployment benefits, in excess of current
37base amounts as established for the fiscal year in which the funds
38would otherwise be transferred to the Budget Stabilization Account.
39For the purpose of this subclause, current base amounts are those
40required to be paid pursuant to law, an approved memorandum
P9    1of understanding, benefit schedules established by the employer
2or entity authorized to establish those contributions for employees
3excluded or exempted from collective bargaining, or any
4combination of these. To qualify under this subclause, the
5appropriation shall supplement and not supplant funding that
6would otherwise be made available to pay for the obligations
7described in this subclause for the fiscal year or the subsequent
8fiscal year.

end insert
begin insert

9(2) (A) By October 1 of the 2030-31 fiscal year and each fiscal
10year thereafter, based on the estimates set forth in the annual
11Budget Act pursuant to paragraphs (2) and (3) of subdivision (h),
12the Controller shall transfer amounts from the General Fund to
13the Budget Stabilization Account, pursuant to a schedule provided
14by the Director of Finance, as provided in subparagraph (B).

end insert
begin insert

15(B) In the fiscal year to which the Budget Act identified in
16subparagraph (A) applies, both the amount identified in paragraph
17(2) of subdivision (a), and the amount resulting from subtracting
18the value calculated under subparagraph (C) of paragraph (1) of
19subdivision (b) from the value calculated under clause (ii) of
20subparagraph (B) of paragraph (1) of subdivision (b), shall be
21transferred from the General Fund to the Budget Stabilization
22Account.

end insert
begin insert

23(C) Notwithstanding any other provision of this section, the
24Legislature may appropriate up to 50 percent of both the amount
25identified in paragraph (2) of subdivision (a), and of the amount
26resulting from subtracting the value calculated under
27subparagraph (C) of paragraph (1) of subdivision (b) from the
28value calculated under clause (ii) of subparagraph (B) of
29paragraph (1) of subdivision (b), for one or more of the obligations
30and purposes described in clause (ii) of subparagraph (B) of
31paragraph (1).

end insert
begin insert

32(3) The transfers described in this subdivision are subject to
33suspension or reduction pursuant to paragraph (1) of subdivision
34(a) of Section 22.

end insert

35(d) By October 1 of the 2016-17 fiscal year and each fiscal year
36thereafter, based on the estimates set forth in the annual Budget
37Act pursuant to paragraphsbegin delete (3) and (4)end deletebegin insert (4) and (5)end insert of subdivision
38begin delete (i)end deletebegin insert (h)end insert, the Controller shall transfer amounts between the General
39Fund and the Budget Stabilization Account pursuant to a schedule
40provided by the Director of Finance, as follows:

P10   1(1) If the amount in subparagraph (G) of paragraph (2) of
2subdivision (b) is greater than zero, transfer that amount from the
3General Fund to the Budget Stabilization Account, subject to any
4suspension or reduction of this transfer pursuant to paragraph (1)
5of subdivision (a) of Section 22.

6(2) If the amount described in subparagraph (F) of paragraph
7(2) of subdivision (b) is greater than the amount calculated under
8subparagraph (E) of paragraph (2) of subdivision (b), transfer that
9excess amount from the Budget Stabilization Account back to the
10General Fund.

11(e) Notwithstanding any other provision of this section, the
12amount of a transfer to the Budget Stabilization Account pursuant
13tobegin insert paragraph (2) of subdivision (a) andend insert subdivisions (c) and (d)
14for any fiscal year shall not exceed an amount that would result in
15a balance in the account that, when the transfer is made, exceeds
1610 percent of the amount of General Fund proceeds of taxes for
17the fiscal year estimated pursuant to subdivision (b). For any fiscal
18year, General Fund proceeds of taxes that, but for this paragraph,
19would have been transferred to the Budget Stabilization Account
20may be expended only for infrastructure, as defined by Section
2113101 of the Government Code, as that section read on January
221, 2014, including deferred maintenance begin delete thereon, or to pay down
23obligations or avoid debt as specified in subdivision (g).end delete
begin insert thereon.end insert

24(f) The funds described in subdivision (b) as General Fund
25proceeds of taxes are General Fund proceeds of taxes for purposes
26of Section 8 for the fiscal year to which those proceeds are
27attributed, but are not deemed to be additional General Fund
28proceeds of taxes on the basis that the funds are thereafter
29transferred from the Budget Stabilization Account to the General
30Fund.

begin delete

31(g) In lieu of the entire transfer, or a portion thereof, to the
32Budget Stabilization Account from the General Fund pursuant to
33subdivisions (c) and (d), the Legislature may appropriate funds
34from the General Fund for the following obligations and purposes:

35(1) Unfunded prior fiscal year General Fund obligations pursuant
36to Section 8 that existed on July 1, 2014.

37(2) Budgetary loans to the General Fund, from funds outside
38the General Fund, that had outstanding balances on January 1,
392014.

P11   1(3) Payable claims for mandated costs incurred prior to the
22004-05 fiscal year that have not yet been paid, and that pursuant
3to paragraph (2) of subdivision (b) of Section 6 of Article XIII B
4are permitted to be paid over a term of years, as prescribed by law.

5(4) Unfunded liabilities for state-level pension plans and
6prefunding other postemployment benefits, in excess of current
7base amounts as established for the fiscal year in which the funds
8would otherwise be transferred pursuant to subdivisions (c) and
9(d). For the purpose of this paragraph, current base amounts are
10those required to be paid pursuant to law, an approved
11memorandum of understanding, benefit schedules established by
12the employer or entity authorized to establish those contributions
13for employees excluded or exempted from collective bargaining,
14or any combination of these. To qualify as appropriation in lieu
15of the transfer, the appropriation must supplement and not supplant
16funding that would otherwise be made available to pay for the
17obligations described in this paragraph for the fiscal year.

18(5) Elimination of unexercised authority to contract for future
19indebtedness, by appropriating substitute funding for debts and
20liabilities authorized by law in accordance with Section 1.
21Substitute funding appropriated pursuant to this paragraph shall
22not exceed the amount of the indebtedness authorized by the law
23less the amount of indebtedness actually contracted for at the time
24of the appropriation. The funds appropriated pursuant to this
25paragraph shall reduce the amount of the indebtedness authorized
26by law only to an amount not less than the amount contracted for
27under that authority at the time of the appropriation.

28(h)

end delete

29begin insert(g)end insert The Controller may utilize funds in the Budget Stabilization
30Account, that he or she determines to currently be unnecessary for
31the purposes of this section, to help manage General Fund daily
32cash flow needs. Any use pursuant to this subdivision shall not
33interfere with the purposes of the Budget Stabilization Account.

begin delete

34(i)

end delete

35begin insert(h)end insert The annual Budget Act shall include the estimates described
36in all of the following:

begin insert

37(1) Paragraph (2) of subdivision (a).

end insert
begin delete

38(1)

end delete

39begin insert(2)end insert Clause (ii) of subparagraph (B) of paragraph (1) of
40subdivision (b).

begin delete

P12   1(2)

end delete

2begin insert(3)end insert Subparagraph (F) of paragraph (1) of subdivision (b).

begin delete

3(3)

end delete

4begin insert(4)end insert Clause (ii) of subparagraph (B) of paragraph (2) of
5subdivision (b).

begin delete

6(4)

end delete

7begin insert(5)end insert Subparagraph (G) of paragraph (2) of subdivision (b).

8

Fourth--  

That Section 21 is added to Article XVI thereof, to
9read:

10

SEC. 21.  

(a) The Public School System Stabilization Account
11is hereby created in the General Fund.

12(b) On or before October 1 of each fiscal year, commencing
13with the 2015-16 fiscal year, based on the amounts identified in
14the annual Budget Act pursuant to subdivision (b) of Section 20,
15the Controller shall transfer, pursuant to a schedule provided by
16the Director of Finance, amounts from the General Fund to the
17Public School System Stabilization Account as follows:

18(1) (A) For the 2015-16 fiscal year, and for each fiscal year
19thereafter, any positive amount identified in subparagraph (C) of
20paragraph (1) of subdivision (b) of Section 20 shall be transferred
21from the General Fund to the Public School System Stabilization
22Account in the amount calculated under subparagraph (B), subject
23to any reduction or suspension of this transfer pursuant to any other
24provision of this section or paragraph (3) of subdivision (a) of
25Section 22.

26(B) The Director of Finance shall calculate the amount by which
27the positive amount identified in subparagraph (C) of paragraph
28(1) of subdivision (b) of Section 20, in combination with all other
29moneys required to be applied by the State for the support of school
30districts and community college districts for that fiscal year
31pursuant to Section 8, exceeds the sum of the total allocations to
32school districts and community college districts from General Fund
33proceeds of taxes appropriated pursuant to Article XIII B and
34allocated local proceeds of taxes in the prior fiscal year, plus any
35allocations from the Public School System Stabilization Account
36in the prior fiscal year, less any transfers to the Public School
37System Stabilization Account pursuant to this section in the prior
38fiscal year and any revenues allocated pursuant to subdivision (a)
39of Section 8.5, adjusted for the percentage change in average daily
40attendance and adjusted for the higher of the change in the cost of
P13   1living pursuant to paragraph (1) of subdivision (e) of Section 8 of
2Article XIII B or the cost of living adjustment applied to school
3district and community college district general purpose
4apportionments.

5(2) (A) Commencing with the 2016-17 fiscal year, and for each
6fiscal year thereafter, to the extent the amount calculated under
7this paragraph exceeds the amounts previously transferred by the
8Controller from the General Fund to the Public School System
9Stabilization Account for a preceding fiscal year, any positive
10amount calculated pursuant to subparagraph (C) of paragraph (2)
11of subdivision (b) of Section 20 for that fiscal year shall be
12transferred from the General Fund to the Public School System
13Stabilization Account in the amount calculated under subparagraph
14(B), subject to any reduction or suspension of this transfer pursuant
15to any other provision of this section or paragraph (3) of
16subdivision (a) of Section 22.

17(B) The Director of Finance shall calculate the amount by which
18the positive amount identified in subparagraph (C) of paragraph
19(2) of subdivision (b) of Section 20, in combination with all other
20moneys required to be applied by the State for the support of school
21districts and community college districts for that fiscal year
22pursuant to Section 8, exceeds the sum of the total allocations to
23school districts and community college districts from General Fund
24proceeds of taxes appropriated pursuant to Article XIII B and
25allocated local proceeds of taxes in the prior fiscal year, plus any
26allocations from the Public School System Stabilization Account
27in the prior fiscal year, less any transfers to the Public School
28System Stabilization Account pursuant to this section in the prior
29fiscal year and any revenues allocated pursuant to subdivision (a)
30of Section 8.5, adjusted for the percentage change in average daily
31attendance and adjusted for the higher of the change in the cost of
32living pursuant to the paragraph (1) of subdivision (e) of Section
338 of Article XIII B or the cost of living adjustment applied to
34school district and community college district general purpose
35apportionments.

36(c) Commencing with the 2016-17 fiscal year, and for each
37fiscal year thereafter, if the amount calculated pursuant to
38subparagraph (C) of paragraph (2) of subdivision (b) of Section
3920 for a fiscal year is less than the amounts previously transferred
40by the Controller from the General Fund to the Public School
P14   1System Stabilization Account for that fiscal year, the amount of
2this difference shall be appropriated and allocated by the State
3from the Public School System Stabilization Account for the
4support of school districts and community college districts.

5(d) Notwithstanding any other provision of this section, the
6amount transferred to the Public School System Stabilization
7Account pursuant to subdivision (b) for a fiscal year shall not
8exceed the amount by which the amount of state support calculated
9pursuant to paragraph (1) of subdivision (b) of Section 8 exceeds
10the amount of state support calculated pursuant to paragraph (2)
11of subdivision (b) of Section 8 for that fiscal year. If the amount
12of state support calculated pursuant to paragraph (1) of subdivision
13(b) of Section 8 does not exceed the amount of state support
14calculated pursuant to paragraph (2) of subdivision (b) of Section
158 for a fiscal year, no amount shall be transferred to the Public
16School System Stabilization Account pursuant to subdivision (b)
17for that fiscal year.

18(e) Notwithstanding any other provision of this section, no
19amount shall be transferred to the Public School System
20Stabilization Account pursuant to subdivision (b) for a fiscal year
21for which a maintenance factor is determined pursuant to
22subdivision (d) of Section 8.

23(f) Notwithstanding any other provision of this section, no
24amount shall be transferred to the Public School System
25Stabilization Account pursuant to subdivision (b) until the
26maintenance factor determined pursuant to subdivisions (d) and
27(e) of Section 8 for fiscal years prior to the 2014-15 fiscal year
28has been fully allocated. Transfers may be made beginning in the
29fiscal year following the fiscal year in which it is determined, based
30on the Budget Act for that fiscal year, that this condition will be
31met. If a transfer is made for a fiscal year for which it is later
32determined that this condition has not been met, the amount of the
33transfer shall be appropriated and allocated from the Public School
34System Stabilization Account for the support of school districts
35and community college districts. No transfer shall be made for a
36year for which it was determined, based on the Budget Act for that
37fiscal year, that this condition would not be met but was
38subsequently determined to have been met in that year or a prior
39fiscal year.

P15   1(g) Notwithstanding any other provision of this section, no
2amount shall be transferred to the Public School System
3Stabilization Account for any fiscal year for which any of the
4provisions of subdivision (b) of Section 8 are suspended pursuant
5to subdivision (h) of Section 8.

6(h) Notwithstanding any other provision of this section, for any
7fiscal year, the amount of a transfer to the Public School System
8Stabilization Account pursuant to subdivision (b) shall not exceed
9an amount that would result in a balance in the account that is in
10excess of 10 percent of the total allocations to school districts and
11community college districts from General Fund proceeds of taxes
12appropriated pursuant to Article XIII   B and allocated local proceeds
13of taxes for that fiscal year pursuant to Section 8. For any fiscal
14year, General Fund proceeds of taxes that, but for this subdivision,
15would have been transferred to the Public School System
16Stabilization Account shall be applied by the State for the support
17of school districts and community colleges.

18(i) In any fiscal year in which the amount required to be applied
19by the State for the support of school districts and community
20college districts for that fiscal year pursuant to Section 8 is less
21than the total allocations to school districts and community college
22districts from General Fund proceeds of taxes appropriated pursuant
23to Article XIII   B and allocated local proceeds of taxes in the prior
24fiscal year, plus any allocations from the Public School System
25Stabilization Account in the prior fiscal year, less any transfers to
26the Public School System Stabilization Account in the prior fiscal
27year and any revenues allocated pursuant to subdivision (a) of
28Section 8.5, adjusted for the percentage change in average daily
29attendance and adjusted for the higher of the change in the cost of
30living pursuant to paragraph (1) of subdivision (e) of Section 8 of
31Article XIII   B or the cost of living adjustment applied to school
32district and community college district general purpose
33apportionments, the amount of the deficiency shall be appropriated
34and allocated by the State from the Public School System
35Stabilization Account for the support of school districts and
36community college districts.

37(j) Funds transferred to the Public School System Stabilization
38Account shall be deemed, for purposes of Section 8, to be moneys
39applied by the State for the support of school districts and
40community college districts in the fiscal year for which the transfer
P16   1is made, and not in the fiscal year in which moneys are
2appropriated from the account.

3(k) Nothing in this section shall be construed to reducebegin delete, or
4otherwise change,end delete
the amount of the moneys required to be applied
5by the State for the support of school districts and community
6college districts pursuant to Sections 8 and 8.5.

7(l) The Controller may utilize funds in the Public School System
8Stabilization Account, that he or she determines to currently be
9unnecessary for the purposes of this section, to help manage
10General Fund daily cashflow needs. Any use of funds by the
11Controller pursuant to this subdivision shall not interfere with the
12purposes of the Public School System Stabilization Account.

13

Fifth--  

That Section 22 is added to Article XVI thereof, to read:

14

Sec. 22.  

(a) Upon the Governor’s proclamation declaring a
15budget emergency and identifying the conditions constituting the
16emergency, the Legislature may pass a bill that does any of the
17following:

18(1) Suspends or reduces by a specified dollar amount for one
19fiscal year the transfer of moneys from the General Fund to the
20Budget Stabilization Account required by Section 20.

21(2) (A) Returns funds that have been transferred to the Budget
22Stabilization Account pursuant to Section 20 to the General Fund
23for appropriation to address the budget emergency.

24(B) Not more than 50 percent of the balance in the Budget
25Stabilization Account may be returned to the General Fund for
26appropriation pursuant to subparagraph (A) in any fiscal year,
27unless funds in the Budget Stabilization Account have been
28returned to the General Fund for appropriation in the immediately
29preceding fiscal year.

30(3) Suspends or reduces by a specified dollar amount for one
31fiscal year the transfer of moneys from the General Fund to the
32Public School System Stabilization Account required by Section
3321.

34(4) Appropriates funds transferred to the Public School System
35Stabilization Account pursuant to Section 21 and allocates those
36funds for the support of school districts and community college
37districts.

38(b) For purposes of this section, “budget emergency” means
39any of the following:

P17   1(1) An emergency declared by the Governor, within the meaning
2of paragraph (2) of subdivision (c) of Section 3 of Article XIII B.

begin delete

3(2) A fiscal emergency declared by the Governor, within the
4meaning of paragraph (1) of subdivision (f) of Section 10 of Article
5IV.

6(3) A determination by the Governor that the estimated resources
7for the ensuing fiscal year, after satisfying the requirements of
8Section 8 for that fiscal year, will not be adequate to fund
9expenditures, other than those necessary to satisfy the requirements
10of Section 8, at or above the current fiscal year expenditure levels,
11adjusted for both of the following:

12(A) The percentage change in the cost of living for the State,
13as measured by the California Consumer Price Index.

14(B) The percentage growth in the civilian population of the
15State.

end delete
begin insert

16(2) (A) A determination by the Governor that estimated
17resources are inadequate to fund General Fund expenditures for
18the current or ensuing fiscal year, after setting aside funds for the
19reserve for liquidation of encumbrances, at a level equal to the
20highest amount of total General Fund expenditures estimated at
21the time of enactment of any of the three most recent Budget Acts,
22adjusted for both of the following:

end insert
begin insert

23(i) The annual percentage change in the cost of living for the
24State, as measured by the California Consumer Price Index.

end insert
begin insert

25(ii) The annual percentage growth in the civilian population of
26the State pursuant to subdivision (b) of Section 7901 of the
27Government Code.

end insert
begin insert

28(B) The maximum amount that may be withdrawn for a budget
29emergency determined under this paragraph shall not exceed either
30an amount that would result in a total General Fund expenditure
31level for a fiscal year that is greater than the highest amount of
32total General Fund expenditures estimated at the time of enactment
33of any of the three most recent Budget Acts, as calculated pursuant
34to subparagraph (A), or any limit imposed by subparagraph (B)
35of paragraph (2) of subdivision (a).

end insert


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