BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 2458 (Obernolte) - Courts: unexpended funds
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|Version: April 7, 2016 |Policy Vote: JUD. 7 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: August 1, 2016 |Consultant: Jolie Onodera |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 2458 would do the following:
Repeals the restriction on trial courts that limits the amount
of unexpended funds that may be carried over from the court's
operating budget from the prior fiscal year, and allows the
Judicial Council to authorize a trial court to carry
unexpended funds over from one fiscal year to the next.
Repeals the requirement for the Judicial Council to hold a
reserve of $10 million for trial court emergencies, and
repeals the requirement for the Judicial Council to report to
the Legislature and the Department of Finance on requests and
allocations made from the reserve.
Fiscal
Impact:
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Judicial Council/court operations : Minor administrative cost
savings (General Fund*) to the trial courts and the Judicial
Council due to the removal of the reserve restrictions and the
legislative reporting requirement.
Annual trial court expenditures : Unknown overall net impact
on future trial court expenditures, however, at a minimum,
lifting the restriction on the amount of carryover funding
from year to year will likely result in a shift of
expenditures potentially in the millions of dollars annually
to future fiscal years (General Fund*). Staff notes that the
authority to carry over unexpended funds is broad-based and
not restricted to carry over for specified purposes (i.e.,
facilities maintenance, technology improvements, information
systems development).
Future unanticipated emergencies : In the absence of
maintaining the $10 million reserve in the Trial Court Trust
Fund, any future unanticipated trial court emergencies that
cannot be covered by a trial court's own reserves could
potentially result in requests to the Judicial Council for
supplemental allocations at an additional cost to the General
Fund. Further, any supplemental funding may not be recoverable
from trial court base allocations as currently required under
existing law.
Override of budget trailer bill provisions : Staff notes this
bill amends Government Code § 68502.5 by repealing the $10
million reserve and associated reporting requirements recently
enacted into law by SB 843 (Committee on Budget and Fiscal
Review), the public safety budget trailer bill.
*Trial Court Trust Fund
Background: Prior to June 30, 2014, trial courts were authorized to carry
over all unexpended funds from their operating budgets from the
prior fiscal year. (Government Code § 77203 (a).) Due to the
enactment of SB 1021 (Committee on Budget and Fiscal Review)
Chapter 41/2012, the public safety budget trailer bill,
commencing June 30, 2014, a trial court was restricted to carry
over unexpended funds in an amount not to exceed one percent of
the court's operating budget from the prior fiscal year. The one
percent authorized to be carried over by trial courts exempts
certain funds from the calculation of the one percent cap, as
specified. (Government Code § 77203 (b).)
Existing law requires the Judicial Council to set a preliminary
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allocation for trial courts in July of each fiscal year. The
preliminary allocation is to include an estimate of available
trial court reserves as of June 30 of the prior fiscal year and
each court's preliminary allocation is to be offset by the
amount of reserves in excess of the amount authorized to be
carried over. In January of each fiscal year, after review of
available trial court reserves as of June 30 of the prior fiscal
year, the Judicial Council finalizes allocations to trial courts
and each court's finalized allocation is be offset by the amount
of reserves in excess of the amount authorized to be carried
over. (GC § 68502.5 (c)(2)(A).)
SB 843 (Committee on Budget and Fiscal Review) Chapter 33/2016,
the recently enacted public safety budget trailer bill (approved
by the Governor on June 27, 2016), requires the Judicial Council
to do the following:
Hold a reserve of $10 million in the Trial Court Trust
Fund to be available to trial courts for emergencies.
Administer the funds, and any funding allocated shall
be replenished on an annual basis from the trial court
base allocations.
Establish a process for trial courts to apply for
emergency funding.
No later than October 1 of each year, report to the
Legislature and to the Department of Finance all requests
and allocations made from the reserve for the preceding
year. (Government Code § 68502.5 (c)(2)(B)-(C).)
Prior to the enactment of SB 843, the Judicial Council was
required to set aside two percent of total funds appropriated
to the Trial Court Trust Fund in the annual Budget Act and
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required the funds to remain in the Trial Court Trust Fund to
be allocated to trial courts for unforeseen emergencies,
unanticipated expenses, or unavoidable funding shortfalls.
Proposed Law:
This bill would authorize the Judicial Council to allow a trial
court to carry unexpended funds over from one fiscal year to the
next, and repeals the existing provisions of law that limit the
carryover amount currently to one percent of the trial court's
prior year budget. Additionally, this bill:
Repeals the existing provisions of law that require the
Judicial Council to reserve $10 million in the Trial Court
Trust Fund to be available to trial courts for emergencies.
Repeals the requirement that the Judicial Council report
to the Legislature and Department of Finance regarding
requests and allocations made from the $10 million reserve
for emergencies.
Makes technical and other conforming changes.
Related
Legislation: SB 843 (Committee on Budget and Fiscal Review)
Chapter 33/2016, the public safety budget trailer bill, among
its numerous provisions, eliminated the mandatory two-percent
set aside for court emergencies and instead requires the
Judicial Council to hold a reserve of $10 million in the Trial
Court Trust Fund to be available to trial courts for
emergencies. SB 843 requires any funding allocated from the
reserve to be replenished on an annual basis from the trial
court base allocations.
Prior Legislation: SB 1021 (Committee on Budget and Fiscal
Review) Chapter 41/2012 established the one-percent reserve cap
on trial courts and established the two-percent set aside for
court emergencies.
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SB 75 (Committee on Budget and Fiscal Review) Chapter 31/2013,
the courts budget trailer bill, among its numerous provisions,
required the Judicial Council to include an estimate of the
available trial court reserves as of June 30 of the prior fiscal
year when setting its July preliminary allocation and to offset
each court's allocation by the amount of reserves in excess of
the amount authorized to be carried over, as specified. The bill
would similarly require the Judicial Council to finalize its
January allocations after review of available trial court
reserves as of June 30 of the prior fiscal year and to offset
each court's allocation as described above. SB 75 exempted
certain funds from the calculation of the one percent reserve
authorized to be carried over from the prior fiscal year.
Staff
Comments: By repealing the one percent cap on trial courts'
reserves that may be carried over from the courts' operating
budgets from the prior fiscal year, this bill could have an
unknown net impact on future trial court expenditures. At a
minimum, lifting the restriction on the amount of carryover
funding from year to year will likely result in a shift of
expenditures potentially in the millions of dollars annually to
future fiscal years. Staff notes that the authority to carry
over unexpended funds, while subject to Judicial Council
authorization, is statutorily broad-based and not restricted to
carry over for specified purposes.
In contrast, the Trial Court Budget Advisory Committee (TCBAC)
recently recommended in its report entitled, Trial Court
Allocations: Trial Court Reserves Held in the Trial Court Trust
Fund, (April 2016), that the Judicial Council adopt a process,
criteria, and required information for requesting that Trial
Court Trust Fund (TCTF) reduced allocations be retained in the
TCTF as restricted fund balances for the benefit of the
requesting courts. In doing so, the Committee reported TCTF fund
balances held on behalf of trial courts would allow courts to
prudently plan for and fund necessary court infrastructure
projects that would not be possible otherwise as an unintended
consequence of the one percent fund balance cap. The TCBAC
recommendations, which were approved the Judicial Council, would
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allow the TCTF fund balance to be held on behalf of a trial
court only for expenditures or projects that cannot be funded by
a court's annual budget or three-year encumbrance term and that
require multi-year savings to implement. Categories include but
are not limited to technology improvements or infrastructure,
facilities maintenance and repair, and court efficiencies
projects. The court request would be subject to submittal of
specified information and documents, and subsequent review and
approval. This process, which maintains the one percent reserve
cap on courts, would appear to enable courts to plan for and
fund longer-term projects while retaining Judicial Council
oversight of these activities.
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