BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 392
                                                                  Page  1

          Date of Hearing:   May 1, 2013

                                  Mike Gatto, Chair

              AB 392 (Jones-Sawyer) - As Introduced:  February 15, 2013 

          Policy Committee:                              Local  

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              


          This bill changes 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  

           FISCAL EFFECT  

          Minor cost savings to the State Controller.


           1)Purpose  .  According to the author, when an appropriation for  
            local reimbursements 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, the State Controller, points to the Budget Act of  
            2009 in which $1,000 was appropriated for the Mandate  
            Reimbursement Process program for school districts.  According  
            to the Controller's office, 795 eligible claims totaling $16.4  


                                                                  AB 392
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            million 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.

           2)Background  .  In 1979, the voters amended the California  
            Constitution by adding a requirement for 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 allocated 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  
            reimbursement claims 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.  If the 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.  

           3)Application of bill limited  .   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 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.


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            In addition, the deletion of the reporting requirement is not  
            likely to have a significant impact because Section  
            17562(b)(1) requires the Controller to report to the  
            Legislature on mandate reimbursements, including partial  

           4)There is no registered opposition to this bill  .

           Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081