BILL ANALYSIS
AB 917
Page 1
Date of Hearing: January 13, 2010
ASSEMBLY COMMITTEE ON EDUCATION
Julia Brownley, Chair
AB 917 (Nestande) - As Amended: January 5, 2010
SUBJECT : School districts: state mandates
SUMMARY : Requires either full funding for or suspension of
education related state-mandated local programs in each fiscal
year. Specifically, this bill :
1)Requires the Legislature, commencing with the 2009-10 fiscal
year and each year thereafter, to appropriate in the Budget
Act the full payable amount that has not been previously paid
for each mandate for which the costs of a school district
claimant have been determined in a preceding year to be
payable by the state.
2)Requires that, for any year in which the Legislature fails to
appropriate the amount required in 1) for any mandate, that
mandate shall be suspended by operation of law for that fiscal
year.
3)Authorizes payment over a term of five years for claims for
costs incurred prior to the 2007-08 fiscal year that have not
been reimbursed prior to the 2009-10 fiscal year.
4)Exempts the following mandates from these provisions:
a) Criminal background checks
b) Pupil expulsions
c) Pupil suspensions, expulsions, and expulsion appeals
d) High School Exit Exam
e) Charter Schools
f) Open Meetings Act / Brown Act Reform
EXISTING LAW :
1)Requires the state, under the California Constitution, to
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provide a subvention of funds to reimburse local governments,
including school districts, whenever the Legislature or a
state agency mandates a new program or higher level of
service, with specified exceptions.
2)Establishes a procedure for local government agencies to file
claims for reimbursement of these costs with the Commission on
State Mandates (CSM) and the State Controller (SCO).
3)Requires the CSM to hear and decide upon each claim for
reimbursement, to determine the amount to be subvened for
reimbursement, and to adopt parameters and guidelines to guide
the payment of claims.
4)Requires the CSM to consult with the Department of Finance
(DOF), among other state officials, when adopting parameters
and guidelines for reimbursement.
FISCAL EFFECT : Local assistance costs in the hundreds of
millions in General Fund Proposition 98 in each fiscal year if
claims for all education-related, state-mandated local programs
are fully funded.
COMMENTS : The concept of state reimbursement to local
agencies, including local education agencies (LEAs), for state
mandated activities originated with SB 90 (Dills), Chapter 1406,
Statutes of 1972, also known as the Property Tax Relief Act of
1972. The primary purpose of the Act was to limit the ability
of local agencies and school districts to levy taxes. To offset
these limitations, the Legislature declared its intent to
reimburse local agencies and school districts for the costs of
new programs or increased levels of service mandated by state
government. The Legislature authorized the State Board of
Control (BOC) to hear and decide upon claims requesting
reimbursement for costs mandated by the state.
In 1979, Proposition 4 amended the California Constitution by
adding Article XIII B, section 6 requiring 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; the BOC continued to hear claims under these
requirements. In 1984, the Legislature created the CSM, a
quasi-judicial body succeeding the BOC as the entity that
decides test claims alleging that the Legislature or a state
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agency imposed a reimbursable state-mandated local program. If
the CSM identifies a state-mandated program as eligible for
reimbursement, it adopts parameters and guidelines defining what
activities will be reimbursed and adopts statewide cost
estimates. The CSM is also authorized to hear claims from local
agencies for which the State Controller has incorrectly reduced
reimbursement claims. The CSM consists of the State Treasurer,
the SCO, the Director of DOF, the Director of the Office of
Planning and Research, two local elected officials (with the
restriction that they come from different categories of local
government, including school district governing boards, city
councils, or county boards of supervisors), and a public member
with experience in public finance.
The SCO is authorized to make payments for costs of mandated
programs from amounts appropriated by the annual Budget Act, by
the State Mandates Claims Fund, or by specific legislation. In
the event the appropriation is insufficient to pay claims in
full, claimants receive prorated payments in proportion to the
dollar amount of approved claims for the program. Balances of
prorated payments are made when supplementary funds become
available. The SCO reports the amounts of insufficient
appropriations to the State Department of Finance, the
Chairperson of the Joint Legislative Budget Committee, and the
Chairperson of the respective committee in each house of the
Legislature which considers appropriations, in order to assure
appropriation of these funds in the Budget Act. If these funds
cannot be appropriated on a timely basis in the Budget Act, this
information is transmitted to the CSM which will include these
amounts in its report to assure that an appropriation sufficient
to pay the claims is included in the next local government
claims bill or other appropriation bills. When the
supplementary funds are made available, the balances of each
claim are paid. A claimant is entitled to receive accrued
interest at the pooled money investment account rate if the
payment is made more than a specified period of time after the
claim filing deadline or the actual date of claim receipt,
whichever is later.
Existing reimbursable mandates for local education agencies
cover a wide variety of activities. According to the
Legislative Analyst's Office (LAO), the 2009-10 Budget Act
provides an appropriation of $1,000 for each of 41 mandated
local programs in the area of education for Kindergarten through
community college and for other local education agencies funded
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under Proposition 98. In addition, five mandates are unfunded
but suspended, and five other mandates are unfunded in the
budget. Also according to the LAO, district costs of
administering these mandated programs are projected to be
approximately $225 million in 200-10; pending claims could
increase this annual cost to $425 million in the coming months.
Given the current funding crisis, however, funds to cover those
costs may not be appropriated in the near future. Limiting the
funding provided in the budget for mandate reimbursements, with
the knowledge that unpaid claimants would be reimbursed for the
untimely payment with accrued interest, has been an important
aspect of the state's approach to dealing with the fiscal
problems it has faced in this decade.
The California School Board Association's Education Legal
Alliance and five local education agencies filed suit in 2007 to
challenge California's authority to defer compensation to
schools for programs that the state requires them to perform,
but does not fund. The lawsuit, filed with the San Diego County
Superior Court, sought to compel the state to comply with its
constitutional obligation to fully reimburse the cost of all
state mandated local programs that create new programs or
increased levels of service. In December 2008, the court found
the that the California Constitution requires the state to
budget full reimbursement of local governments, including school
districts, for the cost of state-imposed mandates, and ordered
the state to fully fund mandated programs in the future. The
state of California is seeking to overturn this decision; a
final decision by the 4th District Court of Appeal in San Diego
is not expected until mid-2010.
The intent of this bill is to suspend many of the mandates
imposed by the state, when the state fails to provide full
funding for those mandates in the prior fiscal year. The
provisions of this bill would not apply to specified mandate
claims, including criminal background checks, pupil expulsions,
pupil suspensions, and expulsion appeals, High School Exit Exam,
Charter Schools, and Open Meetings Act/Brown Act Reform.
Unfortunately this bill does apply to a number of other mandated
programs, the suspension of which would likely have consequences
that place students, school employees, and school districts at
risk and that clearly run counter to the Legislature's
priorities. For example, consider the health risks that would
arise from suspending the mandates requiring schools to check
the records of new students for Hepatitis B immunization, to
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complete pupil health or scoliosis screenings, or to remove and
dispose of dangerous chemicals with an elapsed shelf life from
school sites. The financial health of school districts could
also be at issue, though it would not be clear since the fiscal
reporting requirements, that provide district financial
information to county superintendents and requires those
superintendents to report on school districts, would be
suspended if an appropriation to fully cover the costs of this
reporting mandate were not made. A final example lies at the
core of the employment relationship between local education
agencies and the staff, certificated and classified, that
provide the services within those agencies; the entire
requirement of collective bargaining would be suspended in any
year in which an appropriation was not made to fully fund this
mandate.
For each of these examples, and any other of the mandates that
could be suspended under the provisions of this bill, it is
important to note that an appropriation under California law
requires a two-thirds vote in both houses of the Legislature and
the signature (or passive approval) of the Governor. As a
result, this bill effectively requires a two-thirds vote and
Governor's approval to occur each year in order for many
statutorily required educational programs and activities to be
operative. If either house of the Legislature falls short of
the two-thirds majority or if the Governor, unilaterally, uses
the line-item veto power of that office, then an appropriation
for any mandate would fall short of this bill's standard and
those statutory program requirements would cease to exist for
that year.
Previous legislation : AB 1222 (Laird and Silva), Chapter 329,
Statutes of 2007, revises the criteria required to be met for
the reasonable reimbursement methodology for state mandates. AB
2856 (Laird), Chapter 890, Statutes of 2004, authorizes the COSM
to adopt reimbursement methodologies for mandates that place
greater emphasis on the use of unit costs and other
approximations of local costs, and stated the intent to
streamline the documentation and reporting process for mandates.
SCA 4 (Torlakson), Res. Chapter 133, Statutes of 2004, requires
the Legislature to either appropriate full funding for or
suspend the operation of the mandate in that fiscal year, with
the exception of education or employment mandates. Proposition
4 amended the California Constitution in 1979 to established
this intent as a requirement. SB 90 (Dills), Chapter 1406,
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Statutes of 1972, expressed the Legislature's intent to
reimburse local agencies and school districts for the costs of
new programs or increased levels of service mandated by state
government.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : Gerald Shelton / ED. / (916) 319-2087