BILL ANALYSIS Ó
AB 392
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Date of Hearing: April 10, 2013
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 392 (Jones-Sawyer) - As Introduced: February 15, 2013
SUBJECT : State mandates: prorated claims.
SUMMARY : Makes changes to the allocation method and reporting
requirement for prorated state mandate claims. Specifically,
this bill :
1)Requires the State Controller to determine the most
cost-effective allocation method if $1,000 or less is
appropriated for a state mandated program.
2)Removes reporting requirements for the State Controller to
report prorated claims to the Department of Finance, the
Chairperson of the Joint Legislative Budget Committee, and the
Chairperson of the Budget Committee in each house of the
Legislature.
EXISTING LAW :
1)Requires the state, under the California Constitution, to
provide a subvention of funds whenever it mandates that a
local government undertake a new program or higher level of
service.
2)Allows local governments to apply to the Commission on State
Mandates for reimbursement of state-mandated local costs.
3)Requires the Legislature, if the claimant is a local
government, to either appropriate funds in the annual Budget
Act for the full payable amount that has not been previously
paid, or to suspend the mandate.
4)Requires that the reimbursement amount to local agencies and
school districts for costs mandated by the state be
appropriated to the State Controller for disbursement.
5)Requires the Controller, if the amount allocated by the Budget
Act is not sufficient to pay all claims approved by the
Controller, to prorate claims in proportion to the dollar
amount of approved claims timely filed and on hand at the time
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of proration.
6)Requires the Controller to submit the following reports:
a) Requires the Controller to report prorated claims to the
Department of Finance, the Chairperson of the Joint
Legislative Budget Committee, and the Chairperson of the
respective Budget Committee in each house of the
Legislature.
b) Requires the Controller to report to the Joint
Legislative Budget Committee and fiscal committees by
October 31 of each fiscal year a summary of the total
amount of claims paid per fiscal year and the amount of
mandate deficiencies or surpluses.
c) Requires the Controller to report to the Joint
Legislative Budget Committee and fiscal committees, and the
Director of Finance by April 30 of each fiscal year a
summary of the total amount of unpaid claims and any
mandate deficiencies or surpluses by fiscal year submitted
before April 1.
FISCAL EFFECT : Unknown
COMMENTS :
1)In 1979, Proposition 4 amended the California Constitution by
adding Article XIII B,
Section 6, which requires the state to reimburse local
governments for the cost of new programs or higher levels of
service mandated by the Legislature or any state agency. In
1984, the Legislature created the Commission on State
Mandates, a quasi-judicial agency,
as the entity that decides test claims alleging that the
Legislature or a state agency imposed
a reimbursable state-mandated local program. Once the
Commission hears a test claim and determines that the
governmental action constituted a reimbursable state mandate,
it then determines the amount to be subvened for the program.
Following the mandate determination, local agencies and school
districts may file reimbursement claims with the State
Controller to be reimbursed for the state-mandated programs.
The Controller pays and audits these claims, and can reduce
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reimbursement claims that are determined to be excessive or
unreasonable. While Article XIII B of the California
Constitution requires the state to provide a subvention of
funds whenever it mandates a local government undertake a new
program or higher level of service, it does not require the
Legislature to appropriate the necessary funds in the annual
Budget Act.
2)If this appropriation is not sufficient to reimburse all of
the claims approved by the Controller, current law requires
the Controller to prorate claims in proportion to the dollar
amount of approved claims filed timely and on hand at the time
of proration. This bill requires the Controller to determine
the most cost-effective allocation method if $1,000 or less is
appropriated for a state mandated program. Under the
provisions of this bill, if $1,000 or less is appropriated for
a state mandated program, the Controller would no longer be
required to proportionally reimburse claims between multiple
eligible claimants with approved claims.
3)The Committee may wish to ask the sponsor what criteria will
be used in determining which eligible claimants will take
priority for reimbursement of the limited appropriation
available at that time. This bill is sponsored by State
Controller John Chiang.
4)This bill also deletes reporting requirements that require the
Controller to report prorated claims to the Department of
Finance, the Chair of the Joint Legislative Budget Committee,
and the Chair of the Budget Committees in the Assembly and
Senate. Supporters of the bill argue that these reporting
requirements are duplicative and existing law already requires
the Controller to produce an annual report by October 31 which
contains the same information about prorated claims. Current
law requires the Controller to summarize, by state mandate,
the total amount of claims paid per fiscal year and the amount
of mandate deficiencies or surpluses in a report submitted to
the Joint Legislative Budget Committee and fiscal committees.
5)The Committee may wish to request that the author and sponsor
work with the Department of Finance on amending a code section
that contains a cross reference to the report that is being
deleted by this bill, specifically Government Code 17613.
Existing law allows the Director of Finance upon receipt of
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the report, deleted by this bill, to authorize the
augmentation of the amount available for expenditure to
reimburse costs mandated by the state.
6)According to the author, "When an appropriation is
substantially less than the total costs claimed, specifically
when the appropriation is $1,000 or less, the current payment
process is inefficient and time-consuming, and results in
payments to local entities that amount to less than the cost
of processing the payment." The sponsor points to the Budget
Act of 2009 in which $1,000 was appropriated for the Mandate
Reimbursement Process program for school districts. The
Controller's office cites 795 eligible claims totaling $16.4
million that were approved. After offsetting claims for
accounts receivable owed to the state, the Controller's Office
issued 761 warrants ranging from $1 to $6. The sponsor argues
that these small payments still require extensive staff time
and resources expended by both his office and school
districts.
7)While the provision of current law amended by this bill
includes references to local agencies, according to the
Controller's office, in practice the distribution of funds
when there is an appropriation of $1,000 or less for a state
mandated program has only been made to school districts and
community colleges. In November 2004, voters approved
Proposition 1A, which requires the Legislature to appropriate
funds in the annual budget to either pay outstanding mandate
claims, suspend the mandate, or repeal the mandate.
Proposition 1A applies to local governments only and does not
include school districts or community colleges.
8)Support arguments : Supporters argue that this bill allows the
Controller to use an allocation method that promotes
efficiency and cost savings.
Opposition arguments : None on file
REGISTERED SUPPORT / OPPOSITION :
Support
State Controller John Chiang [SPONSOR]
Opposition
AB 392
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None on file
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958