BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 93|
|Office of Senate Floor Analyses | |
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CONFERENCE REPORT NO. 1
Bill No: AB 93
Author: Weber (D)
Proposed: 6/11/15
Vote: 21
CONFERENCE COMMITTEE: 4-2, 6/9/15
AYES: Senator Leno, Senator Lara, Assemblymember Weber,
Assemblymember Bloom
NOES: Senator Nielsen, Assemblymember Melendez
SUBJECT: Budget Act of 2015
SOURCE: Author
DIGEST: This bill contains the 2015-16 Budget Act, as it was
reported out by the 2015 Conference Committee on the Budget.
This bill authorizes General Fund expenditures of $117.5 billion
and assumes $119.9 billion in total General Fund resources.
Under the Budget, there would be combined total reserves in the
Budget Stabilization Account (BSA) and the Special Fund for
Economic Uncertainties (SFEU) of $5.7 billion.
Conference Committee Amendments delete the prior version of this
bill, which expressed legislative intent to enact the Budget Act
of 2015, and instead add the current language.
ANALYSIS: On June 9, 2015, the Budget Conference Committee
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completed its work to reconcile the Senate and Assembly versions
of the 2015-16 Budget. The Conference Committee built upon the
extensive framework of both the Senate Budget and Fiscal Review
Committee and the Assembly Budget Committee in establishing the
Legislature's version of the Budget. 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 expenditure plan.
JANUARY BUDGET
The Governor's Budget included $114.8 billion in General Fund
revenues and other resources and $113.3 billion in total General
Fund expenditures ($66.3 billion in non-Proposition 98 and $47.0
billion in Proposition 98), provided for a $534 million SFEU and
set aside an additional $1.2 billion for the BSA. Expenditures
in 2015-16 were proposed to be about $1.6 billion higher than
revised 2014-15 expenditures. The Budget also included the
continuation of established efforts to pay down budgetary debt
from past years, and as set forth through the passage of
Proposition 2. Significant additional funding was proposed for
K-14 education, higher education, and debt repayment, with some
increases for health and human services, and corrections and
rehabilitation. Additional resources that allowed for measured
expansions and workload growth are the result of positive
revenue growth based on the general economic upturn.
MAY REVISION
On May 14, the Governor released his May Revision for 2015-16.
The Governor projected General Fund expenditures of $115.3
billion, revenues of $115.0 billion, and an SFEU of $1.1
billion. Compared to January, the revenues represented an
increase of $1.7 billion and the reserve level an increase of
$579 million. In addition, the Governor adjusted some
assumptions in the current year and budget year regarding
expenditures in certain programs. The May Revision reflected a
significant increase in the Proposition 98 guarantee, based on
robust revenues and a significantly greater General Fund cost.
The Governor's overall budgetary framework continued to be
balanced over most of the forecast period and the budget plan
would continue to reduce the budgetary and other obligations.
The proposal continued to include a deposit to the BSA of three
percent of revenues, with a diversion of half that amount to
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retire certain long-term budget debt.
CONFERENCE VERSION
The Conference Report on the 2015-16 Budget was adopted on June
9, 2015. The Conference Committee approved various conference
actions between June 1 and June 9, 2015 that, when combined with
previous actions taken in both the Senate and Assembly, comprise
the Conference version of the 2015-16 Budget Act. The Conference
version balances the need for additional public investment in
child care, education, health care and other programs, with the
necessity of maintaining the state's fiscal stability through
increased reserves and debt reduction. The General Fund budget
summary for the Legislature's version of the Budget, compared to
the Governor's May Revision, is shown in the following table:
---------------------------------------------------------------
| Conference Committee Version |
| General Fund Summary |
| (Dollars in Millions) |
---------------------------------------------------------------
---------------------------------------------------------------
| | May Revision | Conference |
| | | Version |
---------------------------------------------------------------
|---------------------------+--------+--------+--------+--------|
| |Revised |Proposed|Revised |Proposed|
| | | | | |
|---------------------------+--------+--------+--------+--------|
| |2014-15 |2015-16 |2014-15 |2015-16 |
|---------------------------+--------+--------+--------+--------|
|Prior Year Balance | $5,589| $2,359| $5,709| $2,620|
|---------------------------+--------+--------+--------+--------|
| Revenues and Transfers | 111,307| 115,033| 111,348| 117,297|
|---------------------------+--------+--------+--------+--------|
|Total Resources Available |$116,896|$117,392|$117,056|$119,917|
| | | | | |
|---------------------------+--------+--------+--------+--------|
| Non-Proposition 98 | 64,929| 65,892| 64,861| *67,507|
|Expenditures | | | | |
|---------------------------+--------+--------+--------+--------|
| Proposition 98 | 49,608| 49,416| 49,576| 50,000|
|Expenditures | | | | |
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|---------------------------+--------+--------+--------+--------|
|Total Expenditures |$114,537|$115,308|$114,436|$117,507|
| | | | | |
|---------------------------+--------+--------+--------+--------|
|Fund Balance | | $2,084| $2,620| $2,411|
| |$2,359 | | | |
|---------------------------+--------+--------+--------+--------|
| Reserve for | 971| 971| 971| 971|
|Liquidation of | | | | |
|Encumbrances | | | | |
---------------------------------------------------------------
| Special Fund for | 1,389| 1,113| 1,649| 1,440|
|Economic Uncertainties | | | | |
|---------------------------+--------+--------+--------+--------|
|Budget Stabilization | $1,606| $3,460| $1,606|$4,220 |
|Account | | | | |
---------------------------------------------------------------
*Includes $760 million of unallocated debt repayment.
Overall Resources, Expenditures and Reserves
The Conference Committee's version of the Budget includes total
General Fund expenditures of $117.5 billion for 2015-16, an
expenditure level which is roughly $2.2 above the May Revision
levels. This amount includes an additional $760 million pay-down
of Proposition 2 debt, and $1.4 billion in additional program
expenditures. The total represents an increased level of
spending (not including the additional expenditures on debt
retirement) over that of the May Revision of approximately 1.2
percent.
The Conference version of the Budget adopts the LAO's revenue
assumptions for 2015-16 of $116.3 billion, which is $3.1 billion
higher than the May Revision, and somewhat higher property taxes
that offset Proposition 98 spending. The Conference plan
provides for increased reserves, similar to the Governor's plan,
and continues to pay down long-term and budgetary debt. In
addition, the Conference version balances these actions with
additional targeted prudent investments in education, health
care, and other areas that will improve the state's human and
social capital.
The Conference Committee's version of the Budget provides for
$5.7 billion in general reserves, comprising combined amounts
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attributable to the SFEU plus deposits to the BSA. This
represents an amount about $1.1 billion above the reserve totals
presented in the May Revision. In addition, under the Conference
Committee plan, the state will have higher reserves and bigger
operating surpluses in the out-years than projected in the May
Revision.
Expenditure Highlights
The Budget package represents a comprehensive approach to
continue restoring essential educational, social service and
health programs, while maintaining the state's solid fiscal
outlook. Specifically, the Conference Committee funding plan
provides resources for many of its priorities, especially in the
areas of child care, human services, health, and higher
education. The architecture for the plan begins with much of the
Governor's base level funding, but makes distinctive and
important changes in program spending reflecting the
Legislature's priorities.
Early Education and Childcare. A centerpiece of the Conference
Committee plan is a $409 million ($147 million Proposition 98
General Fund, $262 million General Fund) reinvestment in the
state's childcare and early learning system. The approved plan
includes $242 million ($112 million Proposition 98 General Fund,
$130 million General Fund) for increases in center-based,
voucher, and license-exempt rates; as well as $116 million ($10
million Proposition 98 General Fund and $107 million General
Fund) for 27,000 slots for preschool and alternative payment
programs. This initiative couples well with the Governor's
proposed earned income tax credit, which provides a refundable
tax credit for low-income wage earners.
K-14 Education. In K-14 education, the Conference plan for
Proposition 98 provides over $750 million more for K-14
education than the Governor's May Revision. The plan includes
$500 million for educator quality and effectiveness; provides
$500 million for adult education and $25 million for adult
education data; continues to provide one-time funds for mandate
claims/support of state-adopted academic content standards; and
augments the Governor's proposed local control funding formula
payments. For community colleges, the Conference plan increases
funding for Foster Youth Education Opportunity Program;
increases financial aid for community college students; and
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provides funding to help transform basic skills remediation
through researched-based best practices.
Higher Education. The Conference plan maximizes the state's
dollars in opening up opportunities for Californians. The plan:
For the University of California, provides an additional
$25 million contingent on increasing California resident
enrollment by 5,000 students, holding resident tuition flat
in 2015-16 and 2016-17 and redirecting non-resident
institutional aid to support resident students. Provides
additional student support services to increase the
graduation rates of low income and underrepresented
students; and provides $2.5 million for the implementation
of the California Dream Loan Program.
For California State University, provides an additional
$70 million; increases enrollment for California residents
by 10,400 students; provides additional support for student
services, course sections and tenure-track faculty;
reestablishes a California freshman eligibility study; and
provides $2.5 million for the implementation of the
California Dream Loan Program.
For Cal Grants, repeals the financial aid cuts for
students in private non-profit colleges; increases the
number of competitive Cal Grant awards by 16,250; and
increases the Cal Grant B access award to $1,796.
Additionally, the plan makes modifications to the Middle
Class Scholarship by adopting a four or five year
participation time-limit and an asset ceiling of $150,000.
Cap-and-Trade Expenditures. The Conference plan approves staff
resources necessary to continue existing workload related to
cap-and-trade expenditures, but rejects all of the discretionary
expenditure proposals, so that discussions continue to further
refine the state's expenditure plan for the 40 percent of the
cap-and-trade revenues that are not continuously appropriated
according to statute enacted last year.
Other Significant Investments and Initiatives. In other
important legislative initiatives, the plan funds additional
significant activities and programs:
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For In-Home Supportive Services, restores the seven
percent cut in hours and implements overtime payments.
For CalWORKs, eliminates the maximum family grant
provision and temporarily suspends the 24-month clock.
For immigration services, provides more funding for
non-profits to help undocumented immigrants with
documentation required under the President's deferred
action, and creates a fund to support the newly-created
Office of New Americans, which is charged with creating a
statewide strategic plan for the integration of
California's new Americans.
For foster youth and child welfare services, provides
$25 million General Fund to support foster parent
recruitment, retention, and support; $7 million General
Fund for housing supports for child welfare families, and
$3 million General Fund to support the federal
Strengthening Families Act.
For Medi-Cal, sets aside money to provide coverage to
undocumented children; provides funds for provider payment
increases; and restores most optional benefits, including
full adult dental benefits.
For developmental services, approves rate increases for
community-based providers and regional center operations
and sets requirements for the department when submitting
their plan to close one or more developmental centers.
For the Office of Emergency Services, adopts a fee
structure to create a response network for the transport of
hazardous materials by rail through the state.
For California veterans, appropriates an additional $3
million in General Fund to support County Veteran Service
Officers; and establishes 36 permanent positions within the
Department of Veterans Affairs to address the continued
federal claims backlog.
For the Department of Justice, establishes permanent
position authority within the Bureau of Firearms.
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For farmworker housing, provides nearly $20 million for
farmworker housing related programs.
For local government, includes approval of various
legislative changes that address several long-running
issues associated with state-local fiscal relations, and
will facilitate the completion of the wind-down of
redevelopment agencies.
The Conference Committee plan also reduces caseloads in
dependency court cases and provides some additional funding for
previously-authorized judicial positions and provides relatively
small - but vital - augmentations for other programs, such as
support for libraries, the arts council, and natural resources
programs.
FISCAL EFFECT: Appropriation: Yes Fiscal
Com.:YesLocal: No
SUPPORT: (Verified 6/15/15)
None received
OPPOSITION: (Verified 6/15/15)
None received
Prepared by:Mark Ibele / B. & F.R. / (916) 651-4103
6/15/15 12:25:34
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