BILL NUMBER: ACAX2 1	CHAPTERED
	BILL TEXT

	CHAPTER  1
	FILED WITH SECRETARY OF STATE  MAY 16, 2014
	PASSED THE SENATE  MAY 15, 2014
	PASSED THE ASSEMBLY  MAY 15, 2014
	AMENDED IN ASSEMBLY  MAY 12, 2014

INTRODUCED BY   Assembly Member John A. Pérez
   (Coauthors: Assembly Members Achadjian, Atkins, Chávez, Conway,
Cooley, Fox, Gatto, Gorell, Harkey, Linder, Medina, Muratsuchi,
Olsen, Quirk-Silva, Salas, and Wilk)
   (Coauthors: Senators Anderson, Berryhill, Cannella, Corbett, De
León, Fuller, Gaines, Galgiani, Hernandez, Hill, Huff, Jackson, Leno,
Nielsen, Steinberg, Vidak, and Wolk)

                        APRIL 24, 2014

   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 IV thereof, and by
adding Sections 21 and 22 to, and repealing and adding Section 20 of,
Article XVI thereof, relating to state finance.


	LEGISLATIVE COUNSEL'S DIGEST


   ACA 1, 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.
   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
Stabilization Account, and would require the Controller, commencing
with the 2015-16 fiscal year and each fiscal year thereafter, to
transfer from the General Fund to the account 1.5% of the estimated
amount of General Fund revenues for that fiscal year. Commencing with
the 2015-16 fiscal year, this measure would also 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.
   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.
   This measure would require the Department of Finance, commencing
with the 2015-16 fiscal year, to annually report to the Legislature
certain fiscal information 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 would limit the use of funds, that
otherwise would be transferred to the account, to appropriation for
the funding of infrastructure, as defined in a specified statute,
including deferred maintenance.
   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.



   Resolved by the Assembly, the Senate concurring, That the
Legislature of the State of California at its 2013-14 Second
Extraordinary Session, commencing on the twenty-fourth day of April
2014, two-thirds of the membership of each house concurring, hereby
directs the Secretary of State to withdraw, from the consideration of
the people of the State of California, Assembly Constitutional
Amendment No. 4 of the 2009-10 Regular Session (Resolution Chapter
174 of the Statutes of 2010); and
   WHEREAS, The Legislature of the State of California hereby finds
and declares that the intent of this proposed constitutional
amendment is to repay state debt and protect the state from the
negative effects of economic downturns; and
   WHEREAS, This measure will ensure that future revenue spikes from
capital gains will be deposited into the state's Budget Stabilization
Account and be used to stabilize program funding when revenues
decline; and
   WHEREAS, This measure will establish a reserve for school funding
to prevent education cuts and teacher layoffs while maintaining
current guaranteed levels of school funding; and
   WHEREAS, Multi-year budgeting will allow for better planning for
the future; now, therefore, be it
   Resolved, That the Legislature, hereby proposes to the people of
the State of California, that the Constitution of the State be
amended as follows:
  First--  That Section 12.5 is added to Article IV thereof, to read:

      Sec. 12.5.  Within 10 days following the submission of a budget
pursuant to subdivision (a) of Section 12, following the proposed
adjustments to the Governor's Budget required by subdivision (e) of
Section 13308 of the Government Code or a successor statute, and
following the enactment of the budget bill, or as soon as feasible
thereafter, the Director of Finance shall submit to the Legislature
both of the following:
   (a) Estimates of General Fund revenues for the ensuing fiscal year
and for the three fiscal years thereafter.
   (b) Estimates of General Fund expenditures for the ensuing fiscal
year and for the three fiscal years thereafter.
  Second--  That Section 20 of Article XVI thereof is repealed.
  Third--  That Section 20 is added to Article XVI thereof, to read:
      SEC. 20.  (a) (1) The Budget Stabilization Account is hereby
created in the General Fund.
   (2) For the 2015-16 fiscal year and each fiscal year thereafter,
based on the Budget Act for the fiscal year, the Controller shall
transfer from the General Fund to the Budget Stabilization Account,
no later than October 1, a sum equal to 1.5 percent of the estimated
amount of General Fund revenues for that fiscal year.
   (b) (1) For the 2015-16 fiscal year and each fiscal year
thereafter, based on the Budget Act for the fiscal year, the
Department of Finance shall provide to the Legislature all of the
following information:
   (A) An estimate of the amount of General Fund proceeds of taxes
that may be appropriated pursuant to Article XIII B for that fiscal
year.
   (B) (i) An estimate of that portion of the General Fund proceeds
of taxes identified in subparagraph (A) that is derived from personal
income taxes paid on net capital gains.
   (ii) The portion of the estimate in clause (i) that exceeds 8
percent of the estimate made under subparagraph (A).
   (C) That portion of the state's funding obligation under Section 8
that results from including the amount calculated under clause (ii)
of subparagraph (B), if any, as General Fund proceeds of taxes.
   (D) The amount of any appropriations described in clause (ii) of
subparagraph (B) of paragraph (1) of, or subparagraph (C) of
paragraph (2) of, subdivision (c), that are made from the revenues
described in clause (ii) of subparagraph (B) of this paragraph.
   (E) The amount resulting from subtracting the combined values
calculated under subparagraphs (C) and (D) from the value calculated
under clause (ii) of subparagraph (B). If less than zero, the amount
shall be considered zero for this purpose.
   (F) The lesser of the amount calculated under subparagraph (E) or
the amount of transfer resulting in the balance in the Budget
Stabilization Account reaching the limit specified in subdivision
(e).
   (2) In the 2016-17 fiscal year, with respect to the 2015-16 fiscal
year only, and in the 2017-18 fiscal year and each fiscal year
thereafter, separately with respect to each of the two next preceding
fiscal years, the Department of Finance shall calculate all of the
following, using the same methodology used for the relevant fiscal
year, and provide those calculations to the Legislature:
   (A) An updated estimate of the amount of General Fund proceeds of
taxes that may be appropriated pursuant to Article XIII B.
   (B) (i) An updated estimate of that portion of the General Fund
proceeds of taxes identified in subparagraph (A) that is derived from
personal income taxes paid on net capital gains.
   (ii) That portion of the updated estimate in clause (i) that
exceeds 8 percent of the updated estimate made under subparagraph
(A).
   (C) The updated calculation of that portion of the state's funding
obligation under Section 8 that results from including the updated
amount calculated under clause (ii) of subparagraph (B), if any, as
General Fund proceeds of taxes.
   (D) The amount of any appropriations described in clause (ii) of
subparagraph (B) of paragraph (1) of, or subparagraph (C) of
paragraph (2) of, subdivision (c), that are made from the revenues
described in clause (ii) of subparagraph (B) of paragraph (1).
   (E) The amount resulting from subtracting the combined values
calculated under subparagraphs (C) and (D) from the value calculated
under clause (ii) of subparagraph (B). If less than zero, the amount
shall be considered zero for this purpose.
   (F) The amount previously transferred for the fiscal year by the
Controller from the General Fund to the Budget Stabilization Account
pursuant to subdivisions (c) and (d).
   (G) The lesser of (i) the amount, not less than zero, resulting
from subtracting, from the amount calculated under subparagraph (E),
the value of any suspension or reduction of transfer pursuant to
paragraph (1) of subdivision (a) of Section 22 previously approved by
the Legislature for the relevant fiscal year, and the amount
previously transferred for that fiscal year by the Controller as
described in subparagraph (F), or (ii) the amount of transfer
resulting in the balance in the Budget Stabilization Account reaching
the limit as specified in subdivision (e).
   (c) (1) (A) By October 1 of the 2015-16 fiscal year and each
fiscal year thereafter to the 2029-30 fiscal year, inclusive, based
on the estimates set forth in the annual Budget Act pursuant to
paragraphs (2) and (3) of subdivision (h), and the sum identified in
paragraph (2) of subdivision (a), the Controller shall transfer
amounts from the General Fund and the Budget Stabilization Account,
pursuant to a schedule provided by the Director of Finance, as
provided in subparagraph (B).
    (B) Notwithstanding any other provision of this section, in the
fiscal year to which the Budget Act identified in subparagraph (A)
applies:
   (i) Fifty percent of both the amount identified in paragraph (2)
of subdivision (a), and the amount resulting from subtracting the
value calculated under subparagraph (C) of paragraph (1) of
subdivision (b) from the value calculated under clause (ii) of
subparagraph (B) of paragraph (1) of subdivision (b), shall be
transferred from the General Fund to the Budget Stabilization
Account.
   (ii) The remaining 50 percent shall be appropriated by the
Legislature for one or more of the following obligations and
purposes:
   (I) Unfunded prior fiscal year General Fund obligations pursuant
to Section 8 that existed on July 1, 2014.
   (II) Budgetary loans to the General Fund, from funds outside the
General Fund, that had outstanding balances on January 1, 2014.
   (III) Payable claims for mandated costs incurred prior to the
2004-05 fiscal year that have not yet been paid, and that pursuant to
paragraph (2) of subdivision (b) of Section 6 of Article XIII B are
permitted to be paid over a term of years, as prescribed by law.
   (IV) Unfunded liabilities for state-level pension plans and
prefunding other postemployment benefits, in excess of current base
amounts as established for the fiscal year in which the funds would
otherwise be transferred to the Budget Stabilization Account. For the
purpose of this subclause, current base amounts are those required
to be paid pursuant to law, an approved memorandum of understanding,
benefit schedules established by the employer or entity authorized to
establish those contributions for employees excluded or exempted
from collective bargaining, or any combination of these. To qualify
under this subclause, the appropriation shall supplement and not
supplant funding that would otherwise be made available to pay for
the obligations described in this subclause for the fiscal year or
the subsequent fiscal year.
   (2) (A) By October 1 of the 2030-31 fiscal year and each fiscal
year thereafter, based on the estimates set forth in the annual
Budget Act pursuant to paragraphs (2) and (3) of subdivision (h), the
Controller shall transfer amounts from the General Fund to the
Budget Stabilization Account, pursuant to a schedule provided by the
Director of Finance, as provided in subparagraph (B).
   (B) In the fiscal year to which the Budget Act identified in
subparagraph (A) applies, both the amount identified in paragraph (2)
of subdivision (a), and the amount resulting from subtracting the
value calculated under subparagraph (C) of paragraph (1) of
subdivision (b) from the value calculated under clause (ii) of
subparagraph (B) of paragraph (1) of subdivision (b), shall be
transferred from the General Fund to the Budget Stabilization
Account.
   (C) Notwithstanding any other provision of this section, the
Legislature may appropriate up to 50 percent of both the amount
identified in paragraph (2) of subdivision (a), and of the amount
resulting from subtracting the value calculated under subparagraph
(C) of paragraph (1) of subdivision (b) from the value calculated
under clause (ii) of subparagraph (B) of paragraph (1) of subdivision
(b), for one or more of the obligations and purposes described in
clause (ii) of subparagraph (B) of paragraph (1).
   (3) The transfers described in this subdivision are subject to
suspension or reduction pursuant to paragraph (1) of subdivision (a)
of Section 22.
   (d) By October 1 of the 2016-17 fiscal year and each fiscal year
thereafter, based on the estimates set forth in the annual Budget Act
pursuant to paragraphs (4) and (5) of subdivision (h), the
Controller shall transfer amounts between the General Fund and the
Budget Stabilization Account pursuant to a schedule provided by the
Director of Finance, as follows:
   (1) If the amount in subparagraph (G) of paragraph (2) of
subdivision (b) is greater than zero, transfer that amount from the
General Fund to the Budget Stabilization Account, subject to any
suspension or reduction of this transfer pursuant to paragraph (1) of
subdivision (a) of Section 22.
   (2) If the amount described in subparagraph (F) of paragraph (2)
of subdivision (b) is greater than the amount calculated under
subparagraph (E) of paragraph (2) of subdivision (b), transfer that
excess amount from the Budget Stabilization Account back to the
General Fund.
   (e) Notwithstanding any other provision of this section, the
amount of a transfer to the Budget Stabilization Account pursuant to
paragraph (2) of subdivision (a) and subdivisions (c) and (d) for any
fiscal year shall not exceed an amount that would result in a
balance in the account that, when the transfer is made, exceeds 10
percent of the amount of General Fund proceeds of taxes for the
fiscal year estimated pursuant to subdivision (b). For any fiscal
year, General Fund proceeds of taxes that, but for this paragraph,
would have been transferred to the Budget Stabilization Account may
be expended only for infrastructure, as defined by Section 13101 of
the Government Code, as that section read on January 1, 2014,
including deferred maintenance thereon.
   (f) The funds described in subdivision (b) as General Fund
proceeds of taxes are General Fund proceeds of taxes for purposes of
Section 8 for the fiscal year to which those proceeds are attributed,
but are not deemed to be additional General Fund proceeds of taxes
on the basis that the funds are thereafter transferred from the
Budget Stabilization Account to the General Fund.
   (g) The Controller may utilize funds in the Budget Stabilization
Account, that he or she determines to currently be unnecessary for
the purposes of this section, to help manage General Fund daily cash
flow needs. Any use pursuant to this subdivision shall not interfere
with the purposes of the Budget Stabilization Account.
   (h) The annual Budget Act shall include the estimates described in
all of the following:
   (1) Paragraph (2) of subdivision (a).
   (2) Clause (ii) of subparagraph (B) of paragraph (1) of
subdivision (b).
   (3) Subparagraph (F) of paragraph (1) of subdivision (b).
   (4) Clause (ii) of subparagraph (B) of paragraph (2) of
subdivision (b).
   (5) Subparagraph (G) of paragraph (2) of subdivision (b).
  Fourth--  That Section 21 is added to Article XVI thereof, to read:

      SEC. 21.  (a) The Public School System Stabilization Account is
hereby created in the General Fund.
   (b) On or before October 1 of each fiscal year, commencing with
the 2015-16 fiscal year, based on the amounts identified in the
annual Budget Act pursuant to subdivision (b) of Section 20, the
Controller shall transfer, pursuant to a schedule provided by the
Director of Finance, amounts from the General Fund to the Public
School System Stabilization Account as follows:
   (1) (A) For the 2015-16 fiscal year, and for each fiscal year
thereafter, any positive amount identified in subparagraph (C) of
paragraph (1) of subdivision (b) of Section 20 shall be transferred
from the General Fund to the Public School System Stabilization
Account in the amount calculated under subparagraph (B), subject to
any reduction or suspension of this transfer pursuant to any other
provision of this section or paragraph (3) of subdivision (a) of
Section 22.
   (B) The Director of Finance shall calculate the amount by which
the positive amount identified in subparagraph (C) of paragraph (1)
of subdivision (b) of Section 20, in combination with all other
moneys required to be applied by the State for the support of school
districts and community college districts for that fiscal year
pursuant to Section 8, exceeds the sum of the total allocations to
school districts and community college districts from General Fund
proceeds of taxes appropriated pursuant to Article XIII B and
allocated local proceeds of taxes in the prior fiscal year, plus any
allocations from the Public School System Stabilization Account in
the prior fiscal year, less any transfers to the Public School System
Stabilization Account pursuant to this section in the prior fiscal
year and any revenues allocated pursuant to subdivision (a) of
Section 8.5, adjusted for the percentage change in average daily
attendance and adjusted for the higher of the change in the cost of
living pursuant to paragraph (1) of subdivision (e) of Section 8 of
Article XIII B or the cost of living adjustment applied to school
district and community college district general purpose
apportionments.
   (2) (A) Commencing with the 2016-17 fiscal year, and for each
fiscal year thereafter, to the extent the amount calculated under
this paragraph exceeds the amounts previously transferred by the
Controller from the General Fund to the Public School System
Stabilization Account for a preceding fiscal year, any positive
amount calculated pursuant to subparagraph (C) of paragraph (2) of
subdivision (b) of Section 20 for that fiscal year shall be
transferred from the General Fund to the Public School System
Stabilization Account in the amount calculated under subparagraph
(B), subject to any reduction or suspension of this transfer pursuant
to any other provision of this section or paragraph (3) of
subdivision (a) of Section 22.
   (B) The Director of Finance shall calculate the amount by which
the positive amount identified in subparagraph (C) of paragraph (2)
of subdivision (b) of Section 20, in combination with all other
moneys required to be applied by the State for the support of school
districts and community college districts for that fiscal year
pursuant to Section 8, exceeds the sum of the total allocations to
school districts and community college districts from General Fund
proceeds of taxes appropriated pursuant to Article XIII B and
allocated local proceeds of taxes in the prior fiscal year, plus any
allocations from the Public School System Stabilization Account in
the prior fiscal year, less any transfers to the Public School System
Stabilization Account pursuant to this section in the prior fiscal
year and any revenues allocated pursuant to subdivision (a) of
Section 8.5, adjusted for the percentage change in average daily
attendance and adjusted for the higher of the change in the cost of
living pursuant to the paragraph (1) of subdivision (e) of Section 8
of Article XIII B or the cost of living adjustment applied to school
district and community college district general purpose
apportionments.
   (c) Commencing with the 2016-17 fiscal year, and for each fiscal
year thereafter, if the amount calculated pursuant to subparagraph
(C) of paragraph (2) of subdivision (b) of Section 20 for a fiscal
year is less than the amounts previously transferred by the
Controller from the General Fund to the Public School System
Stabilization Account for that fiscal year, the amount of this
difference shall be appropriated and allocated by the State from the
Public School System Stabilization Account for the support of school
districts and community college districts.
   (d) Notwithstanding any other provision of this section, the
amount transferred to the Public School System Stabilization Account
pursuant to subdivision (b) for a fiscal year shall not exceed the
amount by which the amount of state support calculated pursuant to
paragraph (1) of subdivision (b) of Section 8 exceeds the amount of
state support calculated pursuant to paragraph (2) of subdivision (b)
of Section 8 for that fiscal year. If the amount of state support
calculated pursuant to paragraph (1) of subdivision (b) of Section 8
does not exceed the amount of state support calculated pursuant to
paragraph (2) of subdivision (b) of Section 8 for a fiscal year, no
amount shall be transferred to the Public School System Stabilization
Account pursuant to subdivision (b) for that fiscal year.
   (e) Notwithstanding any other provision of this section, no amount
shall be transferred to the Public School System Stabilization
Account pursuant to subdivision (b) for a fiscal year for which a
maintenance factor is determined pursuant to subdivision (d) of
Section 8.
   (f) Notwithstanding any other provision of this section, no amount
shall be transferred to the Public School System Stabilization
Account pursuant to subdivision (b) until the maintenance factor
determined pursuant to subdivisions (d) and (e) of Section 8 for
fiscal years prior to the 2014-15 fiscal year has been fully
allocated. Transfers may be made beginning in the fiscal year
following the fiscal year in which it is determined, based on the
Budget Act for that fiscal year, that this condition will be met. If
a transfer is made for a fiscal year for which it is later determined
that this condition has not been met, the amount of the transfer
shall be appropriated and allocated from the Public School System
Stabilization Account for the support of school districts and
community college districts. No transfer shall be made for a year for
which it was determined, based on the Budget Act for that fiscal
year, that this condition would not be met but was subsequently
determined to have been met in that year or a prior fiscal year.
   (g) Notwithstanding any other provision of this section, no amount
shall be transferred to the Public School System Stabilization
Account for any fiscal year for which any of the provisions of
subdivision (b) of Section 8 are suspended pursuant to subdivision
(h) of Section 8.
   (h) Notwithstanding any other provision of this section, for any
fiscal year, the amount of a transfer to the Public School System
Stabilization Account pursuant to subdivision (b) shall not exceed an
amount that would result in a balance in the account that is in
excess of 10 percent of the total allocations to school districts and
community college districts from General Fund proceeds of taxes
appropriated pursuant to Article XIII B and allocated local proceeds
of taxes for that fiscal year pursuant to Section 8. For any fiscal
year, General Fund proceeds of taxes that, but for this subdivision,
would have been transferred to the Public School System Stabilization
Account shall be applied by the State for the support of school
districts and community colleges.
   (i) In any fiscal year in which the amount required to be applied
by the State for the support of school districts and community
college districts for that fiscal year pursuant to Section 8 is less
than the total allocations to school districts and community college
districts from General Fund proceeds of taxes appropriated pursuant
to Article XIII B and allocated local proceeds of taxes in the prior
fiscal year, plus any allocations from the Public School System
Stabilization Account in the prior fiscal year, less any transfers to
the Public School System Stabilization Account in the prior fiscal
year and any revenues allocated pursuant to subdivision (a) of
Section 8.5, adjusted for the percentage change in average daily
attendance and adjusted for the higher of the change in the cost of
living pursuant to paragraph (1) of subdivision (e) of Section 8 of
Article XIII B or the cost of living adjustment applied to school
district and community college district general purpose
apportionments, the amount of the deficiency shall be appropriated
and allocated by the State from the Public School System
Stabilization Account for the support of school districts and
community college districts.
   (j) Funds transferred to the Public School System Stabilization
Account shall be deemed, for purposes of Section 8, to be moneys
applied by the State for the support of school districts and
community college districts in the fiscal year for which the transfer
is made, and not in the fiscal year in which moneys are appropriated
from the account.
   (k) Nothing in this section shall be construed to reduce the
amount of the moneys required to be applied by the State for the
support of school districts and community college districts pursuant
to Sections 8 and 8.5.
   (l) The Controller may utilize funds in the Public School System
Stabilization Account, that he or she determines to currently be
unnecessary for the purposes of this section, to help manage General
Fund daily cashflow needs. Any use of funds by the Controller
pursuant to this subdivision shall not interfere with the purposes of
the Public School System Stabilization Account.
  Fifth--  That Section 22 is added to Article XVI thereof, to read:
      Sec. 22.  (a) Upon the Governor's proclamation declaring a
budget emergency and identifying the conditions constituting the
emergency, the Legislature may pass a bill that does any of the
following:
   (1) Suspends or reduces by a specified dollar amount for one
fiscal year the transfer of moneys from the General Fund to the
Budget Stabilization Account required by Section 20.
   (2) (A) Returns funds that have been transferred to the Budget
Stabilization Account pursuant to Section 20 to the General Fund for
appropriation to address the budget emergency.
   (B) Not more than 50 percent of the balance in the Budget
Stabilization Account may be returned to the General Fund for
appropriation pursuant to subparagraph (A) in any fiscal year, unless
funds in the Budget Stabilization Account have been returned to the
General Fund for appropriation in the immediately preceding fiscal
year.
   (3) Suspends or reduces by a specified dollar amount for one
fiscal year the transfer of moneys from the General Fund to the
Public School System Stabilization Account required by Section 21.
   (4) Appropriates funds transferred to the Public School System
Stabilization Account pursuant to Section 21 and allocates those
funds for the support of school districts and community college
districts.
   (b) For purposes of this section, "budget emergency" means any of
the following:
   (1) An emergency declared by the Governor, within the meaning of
paragraph (2) of subdivision (c) of Section 3 of Article XIII B.
   (2) (A) A determination by the Governor that estimated resources
are inadequate to fund General Fund expenditures for the current or
ensuing fiscal year, after setting aside funds for the reserve for
liquidation of encumbrances, at a level equal to the highest amount
of total General Fund expenditures estimated at the time of enactment
of any of the three most recent Budget Acts, adjusted for both of
the following:
   (i) The annual percentage change in the cost of living for the
State, as measured by the California Consumer Price Index.
   (ii) The annual percentage growth in the civilian population of
the State pursuant to subdivision (b) of Section 7901 of the
Government Code.
   (B) The maximum amount that may be withdrawn for a budget
emergency determined under this paragraph shall not exceed either an
amount that would result in a total General Fund expenditure level
for a fiscal year that is greater than the highest amount of total
General Fund expenditures estimated at the time of enactment of any
of the three most recent Budget Acts, as calculated pursuant to
subparagraph (A), or any limit imposed by subparagraph (B) of
paragraph (2) of subdivision (a).