BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 741 (Cannella) - California Fairs: Funding
Amended: April 24, 2013 Policy Vote: Ag 5-0; GO 9-1
Urgency: Yes Mandate: No
Hearing Date: May 23, 2013 Consultant: Robert Ingenito
SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Bill Summary: SB 741, an urgency measure, would make several
substantive and clarifying changes to current law related to the
operation, oversight, and funding of the network of California
fairs.
Fiscal Impact: This bill could result in a reduction to the
California Department of Food and Agriculture's (CDFA's) budget
by an unspecified amount. The bill also would reduce CDFA's
responsibilities with respect to fairs, by a lesser, unknown
amount, resulting in a potential cost pressure, the extent of
which is unknown.
Furthermore, the bill would require CDFA to submit an annual
expenditure plan for the review and approval of the Joint
Committee on Fairs Allocation and Classification. CDFA estimates
this additional workload would require $60,000 (special funds)
for one-half of one position (including salaries, benefits and
equipment).
Background: There are a total of 78 fairs statewide. This
network of fairs is composed of 52 district agricultural
associations (DAA), 23 county fairs, 2 citrus fruit fairs, and
The California Exposition and State Fair (Cal Expo). DAAs are
state government entities that are governed by nine-member
gubernatorial appointed boards of directors. In contrast,
county fairs are county government or not-for-profit
organizations; citrus fruit fairs are not-for-profit
organizations; and Cal Expo is a state agency.
The Division of Fairs and Expositions within the California
Department of Food and Agriculture (CDFA) provides fiscal and
policy oversight for the network of California fairs, and the
Department of General Services (DGS) provides oversight for use
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of state property, procurement, and services contracts.
Prior to 2009, funding for these fairs was supported in part by
horse racing license fees. Beginning in 2009, $32 million was
continuously appropriated from the General Fund into the Fairs
and Exposition (F&E) Fund to provide funding for the network of
fairs. However, the General Fund support was eliminated in the
2011-12 budget, thus requiring the fairs to be self-sufficient.
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Proposed Law: This measure, among other things, would have the
following impacts to CDFA:
Consolidates revenue generated by fairs and horse racing
associations to be deposited into the F&E Fund, to be
continuously appropriated and allocated to fairs for
specified purposes.
Stipulates that not more than 10 percent of the
remaining unallocated balance in the F&E Fund may be used
during any year by CDFA's Division of Fairs and Expositions
for oversight and administration purposes involving the
network of California fairs.
Repeals the requirement that CDFA spend up to $100,000
on fair exhibits and up to $15,000 on fair judges annually.
Requires the Secretary of Food and Agriculture
(Secretary) to annually project available monies in the F&E
Fund and advise the Joint Committee on Fairs, Allocation,
and Classification of the administrative budget of the
Division of Fairs and Expositions and the additional staff
and resources necessary to oversee the network of
California fairs. Also, requires the Secretary to prepare
an annual expenditure plan for the F&E Fund for review and
approval by the Joint Committee.
Repeals an existing requirement that all state
designated fairs have their books and accounts audited
annually and instead requires that all fairs that receive
money from the F&E Fund have their accounts examined and
reviewed annually and audited every three years by an
independent auditor rather than CDFA.
Requires fair boards with annual budgets exceeding $5
million to conduct an annual audit by an independent
certified public accountant selected by the board. Fair
boards with annual budgets of less than $5 million must
have their accounts reviewed annually and audited every
three years by an independent certified public accountant
selected by the board. Also, permits CDFA to require an
audit sooner than referenced above if it deems it necessary
to protect the interests of any fair.
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Repeals an existing requirement that fair boards must
receive approval of the CDFA before they can file a
lawsuit, or settle a lawsuit for more than $10,000.
Eliminates the requirement that the CDFA and the DGS
must approve all contracts, purchases or leases of land or
other property by the fair boards.
Repeals the requirement that fair boards provide CDFA
written notification prior to entering into any agreement
that: (a) exceeds $100,000, (b) exists for a period greater
than two years, or (c) builds permanent structures on the
property.
Staff Comments: As noted above, the bill would provide that no
more than 10 percent of the funds available in the F&E Fund may
be used during any year by CDFA to provide oversight and
administration of the network of fairs. CDFA's proposed 2013-14
budget includes $1.3 million to provide such oversight and
administration. If this bill was enacted, roughly $300,000 in
F&E funding would available to CDFA in 2013-14, a reduction to
the department's budget of about $1 million.
Also as noted above, the bill also would eliminate some of
CDFA's current-law duties with respect to fairs. The
dollar-value of these duties is unknown; however, because the
amount of funding being extracted from CDFA is greater than the
value of the duties being removed from the department, a cost
pressure in the range of hundreds of thousands of dollars would
develop to maintain CDFA's ability to oversee fairs as required.
Author's Amendments would (1) eliminate the cap on CDFA's
administrative fees, and (2) clarify the process to be used by
district agricultural associations for the procurement of goods.
Additionally, the amendments provide authority for the Governor
to remove an appointee for cause within one year of appointment.