BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 110|
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CONFERENCE REPORT NO. 1
Bill No: AB 110
Author: Blumenfield (D)
Amended: 5/28/13 in Senate
Vote: 21
CONFERENCE COMMITTEE : 6-2, 6/11/13
AYES: Senator Leno, Senator De Leon, Senator Hancock,
Assemblymember Blumenfield, Assemblymember Mitchell,
Assemblymember Skinner
NOES: Senator Emmerson, Assemblymember Gorell
SUBJECT : Budget Act of 2013
SOURCE : Author
DIGEST : This bill contains the 2013-14 Budget Act as reported
out by the 2013 Conference Committee on the Budget. The 2013-14
Budget Act authorizes General Fund expenditures of $96.3
billion. The Budget assumes nearly $98 billion in total General
Fund resources and a $1.1 billion reserve.
Conference Committee Amendments delete the prior version of the
bill, which expressed the intent of the Legislature to enact the
Budget Act of 2013, and instead add the current language to
provide for the support of state government for the 2013-14
fiscal year.
ANALYSIS : On June 10, 2013, the Budget Conference Committee
completed its work to reconcile the Senate and the Assembly
versions of the 2013-14 Budget. The Conference Committee built
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upon the extensive work of both the Senate Budget and Fiscal
Review Committee and the Assembly Budget Committee. Working
from the general framework of the Governor's budget and May
Revision, the Legislature incorporated significant and important
budgetary and policy changes to the state's expenditure plan.
January Budget. The Governor proposed a budget on January 10,
2013 that was balanced with respect to revenues and
expenditures, reflecting major improvement in the state's
finances following years of multi-billion dollar budget
deficits. The budget contained major proposals in education,
including a new funding formula for financing schools and
additional General Fund investment for higher education. It
also proposed a major expansion of Medi-Cal under the federal
health care reform law. The proposed budget focused on paying
down budgetary debt from past years and included several
measures that would result in establishing a $1 billion reserve.
May Revision . The Governor released his May Revision to the
budget on May 14. The revised budget reflected a forecast of
weaker projected tax collections then expected in January, and
proposed considerable adjustments to projected revenues and
proposed expenditures in both the current and budget years. The
May Revision maintained the $1.1 billion reserve initially
proposed in January. The overall budgetary framework continued
to be balanced over the five-year forecast period and the plan
maintained the policy of debt reduction, reducing the "wall of
debt" to less than $5 billion by 2016-17.
Conference Version . The Budget Conference Committee version of
the budget adopts the Governor's general budgetary framework.
The Conference version of the budget is based on the Governor's
May Revision state revenue estimates, as well as the May
Revision's Proposition 98 guarantee level, but adopts revised
forecasts of local property tax revenues. The Conference
version contains a reserve level that is virtually identical to
the reserve in the Governor's May Revision at $1.1 billion.
The Conference version generally funds the major spending
priorities that were contained in both the Assembly and Senate
versions of the budget. However, in many cases the scope of
those priorities were trimmed or phased-in over multiple years
in order fit spending within the May Revision's revenue
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projections and avoid projected out-year budget shortfalls. The
budget year costs of those priorities was largely paid for
through updated assumptions on property tax revenues (which
offset General Fund costs for schools), as well as savings
identified by the Legislature during dozens of budget hearings
throughout the year.
Major Highlights of the Conference Report
I. Fiscal Framework
The Conference version of the budget maintains the overall
fiscal framework of the Governor's proposal, with
conservative revenue estimates, continued debt retirement, a
projected balanced approach in the out-years, and a $1.1
billion reserve.
A. Revenues - The Conference version is based on the
Governor's May Revision General Fund revenue forecast and
updated property tax estimates. Both the Assembly and
Senate had based their versions of the budget on higher
revenue projections of the Legislative Analyst's Office,
but had incorporated additional reserves to guard against
potential revenue risk.
B. Reserve - The Conference version estimates a $1.1
billion reserve, which is identical to the May Revision
level. Both the Assembly and Senate versions had somewhat
higher reserves, largely as a result of the LAO's higher
revenue projections.
C. Wall of Debt - The Conference version pays-down the
same amount of the non-Proposition 98 "Wall of Debt" as in
the May Revision. In addition, the Conference version
pays off about $2 billion of the K-14 education deferrals
within Proposition 98. This level of deferral payments is
less than proposed in the May Revision, but is equal to
the amount proposed in the Governor's January budget.
D. Out-years - Like the May Revision, and the Assembly
and Senate versions, the Conference version shows that the
budget would be balanced with operating surpluses every
year through the forecast period ending 2016-17.
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II. Major Programs and Spending
The Conference version of the budget includes significant
changes to the Governor's major proposals in education and
health care services, and also increases expenditures in
selected high priority areas identified by the Legislature.
A. Overhaul of Education Financing Structure - The
Conference version includes the Governor's proposed "Local
Control Funding Formula" (LCFF), beginning in 2013-14.
The Conference version modifies several aspects of the
formula, however, including providing higher "base
grants," and adds substantial provisions related to school
district accountability.
B. Medi-Cal Expansion - The Conference version assumes
implementation of the proposed expansion of health care
coverage under the federal Affordable Care Act. The
package includes a broader array of services (particularly
for mental health and substance abuse) than originally
proposed in the May Revision. Overall costs for the
expansion (above the May Revision) are estimated to be $70
million in the budget year, increasing to about $190
million by 2016-17.
C. Mental Health - The Conference version includes $206
million ($142 million General Fund one-time) for a major
investment in mental health services, including additional
residential treatment capacity, crisis treatment teams,
and triage personnel.
D. Medi-Cal Dental Benefits - The Conference version
restores a version of Medi-Cal dental services, beginning
in May 2014.
E. CalWORKs - The Conference version includes a new
mechanism for funding annual CalWORKs grant adjustments
and provides for additional services for CalWORKs
recipients funded from redirecting growth in the 1991
Realignment to a new family support account.
F. Higher Education - The Conference version includes the
May Revision's major spending increases for the University
of California, California State University, and the
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community colleges. In addition, it includes a new
scholarship program for students with annual family
incomes of up to $150,000. The new scholarship program
would begin in 2014-15 with General Fund costs of $106
million, growing to about $300 million in four to five
years.
G. Proposition 98 K-12 Education - In addition to the
LCFF highlighted above, the Conference version includes a
one-time funding of $1.25 billion to assist school
districts in implementing the Common Core standards (this
amount is $250 million greater than the May Revision).
The Conference version also includes a major $250 million
one-time investment to create a career technical education
pathways grant program.
H. Judicial Branch - Included in the Conference version
is an additional $63 million for the judicial branch. Of
this amount, $60 million would go to trial courts, and the
remainder would go to the state appellate courts, Supreme
Court and Habeas Corpus Resource Center.
I. Proposition 39 - Counts nearly all $428 million of the
energy efficiency portion of Proposition 39 revenues
toward the Proposition 98 minimum guarantee, with
remaining revenue provided to non-98 programs. Of the
$428 million for energy programs, $381 million is directed
to K-12 school, and $47 million for community colleges.
The following table shows the key features of the various budget
plans:
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| Budget |May | Senate | Assembly |Conference |
| Category |Revision | Version | Version |Version |
|------------+-----------+----------+----------+----------------|
|General |2012-13: |2012-13: |2012-13: |2012-13: |
|Fund |$95.7 | |$96.7 |$95.7 billion |
|expenditures|billion |$96.7 |billion | |
| | |billion | |2013-14: |
| |2013-14: | |2013-14: |$96.3 billion |
| |$96.4 |2013-14: |$98.3 | |
| |billion | |billion | |
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| | |$98.2 | | |
| | |billion | | |
|------------+-----------+----------+----------+----------------|
|General |2012-13: |LAO |LAO |May Revision |
|Fund |$98.2 |revenue |revenue |revenue |
|revenue |billion |projection|projection|projections |
|projections | |s ($3.2 |s | |
| |2013-14: |billion | | |
| |$97.2 |above May | | |
| |billion |Revision) | | |
|------------+-----------+----------+----------+----------------|
|Reserve |$1.1 |$1.5 |$1.3 |$1.1 billon |
| |billion |billion |billion | |
|------------+-----------+----------+----------+----------------|
|"Wall of |$2.2 |$2.2 |$2.1 |$2.2 billion |
|Debt" |billion |billion |billion | |
|repayment | | | | |
|(Non-Prop | | | | |
|98) | | | | |
|------------+-----------+----------+----------+----------------|
|Major |-- |Mental |CalWORKs: |Mental health: |
|General | |health: | $237 |$143 million |
|Fund | |$143 |million |(one-time) |
|spending | |million | |Medi-Cal |
|changes | | | |dental: $17 |
|($100 | |Medi-Cal |Middle |million (grows |
|million+) | |dental: |class |to $86 million |
|above May | |$131 |scholarshi|in 2014-15) |
|Revision | |million |p: $173 |Health care |
| | | |million |reform mental |
| | |Judiciary:| |health and |
| | | $100 |Judiciary:|substance use |
| | |million | $100 |disorder |
| | | |million |benefit: $70 |
| | | | |million (grows |
| | | | |to $150 million |
| | | | |in 2014-15) |
| | | | |CalWORKs: |
| | | | |$56 million, |
| | | | |growing |
| | | | |annually |
| | | | |(non-General |
| | | | |Fund) |
| | | | |Middle class |
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| | | | |scholarship: |
| | | | |$1 million |
| | | | |(grows to $107 |
| | | | |million in |
| | | | |2014-15) |
| | | | |Judiciary: |
| | | | |$63 million |
| | | | |(annual) |
|------------+-----------+----------+----------+----------------|
|Prop. 98 |$55.3 |$56.9 |$57.7 |$55.3 billion |
|total |billion |billion |billion | |
|funding | | | | |
|------------+-----------+----------+----------+----------------|
|Prop. 98 |$2.7 |$4.4 |$2.7 |$2 billion |
|deferral |billion |billion |billion | |
|payments | | | | |
|------------+-----------+----------+----------+----------------|
|Prop. 98 |-- |2012-13: |2012-13: |-- |
|"reserve" | |$619 |$700 | |
| | |million |million | |
| | | | | |
| | |2013-14: |2013-14: | |
| | |$1.1 |$500 | |
| | |billion |million | |
|------------+-----------+----------+----------+----------------|
|Major Prop. |LCFF: |LCFF: |LCFF: |LCFF: $2.1 |
|98 |$1.9 |$2.3 |$3.6 |billion |
|proposals |billion |billion |billion | |
| | |(SB 69) | | |
| | | | | |
| |Common |Common |Common |Common Core: |
| |Core: |Core: |Core: |$1.25 billion |
| |$1 billion |$1 |$1.5 | |
| | |billion |billion | |
| |Prop. 39: | | |Prop. 39: |
| |$464 |Prop. 39: |Prop. 39: |$456 million |
| |million | $464 | $464 | |
| | |million |million |CTE: $250 |
| | | | |million |
| | |CTE: | | |
| | |$250 | | |
| | |million | | |
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III. General Fund Summary
The Conference version of the budget results in modest
spending increases in Non-Proposition 98 spending for
high-priority investments identified by the Legislature. The
budget includes a lower General Fund commitment for
Proposition 98 spending as a result of the updated property
tax estimates which serves to increase the offset in state
education spending. The Conference version of the budget is
restrained with respect to new spending in the budget and
out-years. The General Fund budget summary for the
Conference version of the budget, compared to the Governor's
May Revision, is as follows:
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| General Fund Budget Summary (in Millions) |
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| | | | | |
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| | May Revision | Conference |
| | | Version |
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|--------------------------------+-------+--------+-------+--------|
| |Revised|Proposed|Revised|Proposed|
| | | | | |
|--------------------------------+-------+--------+-------+--------|
| |2012-13| 2013-14|2012-13| 2013-14|
| | | | | |
|--------------------------------+-------+--------+-------+--------|
|Prior Year Balance |-$1,658| $850|-$1,658| $872|
| | | | | |
|--------------------------------+-------+--------+-------+--------|
| Revenues and Transfers | 98,195| 97,235| 98,195| 97,098|
|--------------------------------+-------+--------+-------+--------|
|Total Resources Available | 96,537| 98,085| 96,537| 97,970|
|--------------------------------+-------+--------+-------+--------|
| Non-Proposition 98 | 55,233| 57,004| 55,211| 57,226|
|Expenditures | | | | |
|--------------------------------+-------+--------+-------+--------|
| Proposition 98 Expenditures | 40,454| 39,349| 40,454| 39,055|
|--------------------------------+-------+--------+-------+--------|
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|Total Expenditures | 95,687| 96,353| 95,665| 96,281|
|--------------------------------+-------+--------+-------+--------|
|Fund Balance | 850| 1,732| 872| 1,690|
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| Reserve for Liquidation | 618| 618| 618| 618|
|of Encumbrances | | | | |
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| Total Available Reserve | $232| $1,114| $254| $1,072|
|--------------------------------+-------+--------+-------+--------|
|Operating Surplus | $2,508| $882| $2,530|$818 |
| | | | | |
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FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
JA:k 6/12/13 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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