BILL ANALYSIS
AB 2082
Page 1
ASSEMBLY THIRD READING
AB 2082 (Committee on Education)
As Amended May 28, 2010
Majority vote
EDUCATION 9-0 APPROPRIATIONS 17-0
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|Ayes:|Brownley, Nestande, |Ayes:|Fuentes, Conway, Ammiano, |
| |Ammiano, Arambula, | |Bradford, Charles |
| |Carter, Eng, Miller, | |Calderon, Coto, Davis, |
| |Norby, Torlakson | |Monning, Ruskin, Harkey, |
| | | |Miller, Nielsen, Norby, |
| | | |Skinner, Solorio, |
| | | |Torlakson, Torrico |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Implements three changes related to the state's
reimbursement process for educational mandates by streamlining
the process for hearing incorrect reduction claims (IRCs),
providing for future legislative review of new mandates, and
clarifying the information on educational mandates that the
Legislative Analyst (LAO) is required to provide the
Legislature. Specifically, this bill :
1)Requires the Commission on State Mandates (CSM) to transfer
all pending IRCs filed by local educational agencies (LEAs),
excluding community college districts, to the Education Audits
Appeal Panel (EAAP) by July 1, 2011.
2)Deems those transferred IRCs to have been appealed to the
EAAP, and requires the EAAP to hold a hearing on or before:
a) June 30, 2012 for IRCs filed prior to January 1, 2005;
b) June 30, 2013 for IRCs filed on or after January 1, 2005
and prior to January 1, 2007;
c) June 30, 2014 for IRCs filed on or after January 1, 2007
and prior to January 1, 2008; or,
d) June 30, 2015 for IRCs filed on or after January 1, 2008
and prior to July 1, 2011.
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3)Requires any IRC filed by a LEA, excluding community college
districts, commencing with the 2011-12 fiscal year, to be
filed as an appeal with the EAAP within 60 days of
notification by the State Controller (Controller) that the
claim has been reduced.
4)Requires the EAAP to hold a hearing within 60 days of the
receipt of the IRC filed as an appeal, and to adjudicate that
appeal in a manner similar to the panel's treatment of other
education audit appeals.
5)Authorizes both LEAs filing IRCs as appeals and the EAAP to
consolidate similar claims made by multiple K-12 LEAs into a
single consolidated claim, as specified.
6)Prohibits the CSM from ordering a reconsideration of all or
part of any IRC that is eligible to be filed as an appeal with
the Education Audits Appeal Panel.
7)States legislative intent that statutes creating a
reimbursable state mandate on LEAs be periodically reviewed,
and that the Legislature consider recommendations on whether
those statutes should be amended, repealed, or remain
unchanged.
8)Requires that the LAO review and report to the policy and
fiscal committees in both legislative houses on each
reimbursable state mandate relating to K-12 LEAs; also
specifies the information to be provided in the report,
including a summary of the mandate, its statutory source,
related fiscal information, and recommendations as to whether
the mandate should be amended, repealed, or remain unchanged.
9)Requires the Legislative Counsel, in drafting a bill or
amendment that imposes a state mandated local program on a
K-12 LEA, to include a provision that repeals the state
mandated local program on a local educational agency, or makes
the requirement inoperative, five years after the date on
which the requirement becomes operative, unless the person
requesting the bill or amendment directs the Legislative
Counsel to do otherwise.
EXISTING LAW :
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1)Requires the state, under the California Constitution, to
provide a subvention of funds to reimburse local governments,
including LEAs, 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
test claims and claims for reimbursement of these costs with
the CSM and the Controller.
3)Requires the LAO to submit a report to the Joint Legislative
Budget Committee and legislative fiscal committees on the
mandates reported by the CSM, and requires that report to make
recommendations as to whether the mandate should be repealed,
funded, suspended, or modified.
4)Establishes the EAAP in order to allow local education
agencies to appeal specified audit findings to a
quasi-judicial panel; also establishes a process and deadlines
that govern EAAP's actions and provide due process to
appellants, and requires the membership of EAAP to consist of
the SPI, the Director of DOF, and the Executive Director of
the Fiscal Crisis Management Assistance Team.
FISCAL EFFECT : According to the Assembly Appropriations
Committee: 1) General Fund (GF) administrative costs to the
Controller, of approximately $200,000, in the first year;
according to Controller, approximately $180,000 of this cost
would be on-going.; 2) potential GF administrative costs, likely
between $250,000 and $600,000, to the EAAP to review IRC
appeals; and 3) potential GF administrative cost savings of at
least $300,000 to the CSM.
COMMENTS : 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. In 1984, the Legislature created the CSM,
as a quasi-judicial body, to decide test claims alleging that
the State 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
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estimates. The CSM is also authorized to hear IRCs from local
agencies if the Controller reduces reimbursement claims upon
audit and the claimant chooses to dispute that reduction. The
CSM consists of the State Treasurer, the Controller, 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. No current member of the CSM is
an elected member of a LEA board.
In October 2009, after conducting a follow-up of its 2003 audit
on state mandates, the California State Auditor issued a report
concerning state mandate determination and payment processes.
According to this audit report, "while the Commission on State
Mandates has made progress in reducing its backlog of test
claims for state mandates, the continuing backlog is large."
The auditor finds that high workload and insufficient resources
exist at the CSM, and goes on to say that, "This situation,
combined with the long time that elapses before the Commission
makes determinations, means that substantial costs will continue
to build before the Legislature has the information it needs to
take any necessary action." Three findings or recommendations
of the State Auditor form the basis for the proposals in this
bill.
1)A backlog of pending IRCs, effectively appeals of those
audited reductions, exists. CSM currently reports 158 pending
IRCs, with 40 of those claims filed by K-12 LEAs; these
pending K-12 claims amount to over $15 million. The State
Auditor feels that this backlog undermines accountability in
the mandate process, leads to an understatement of the State's
liability, "keeps the Legislature from being able to assess
the true cost of mandates," and potentially keeps money out of
the hands of LEAs.
2)Problems can arise when new required activities for local
entities are established "?without effective evaluation of the
potential breadth or cost of the activities." Increasing
information available to the Legislature on the impacts of
educational mandates appears to be called for.
3)"Problems can arise due to the lack of state control of
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mandate activities undertaken by local entities and the
tendency for programs to diverge from original intentions or
lose their usefulness over time." The State Auditor
recommends the sunsetting of each mandate, so as to enable a
legislative "reassessment of mandate activities and costs" at
a later time.
According to the authors, "the intent of this bill is to
implement changes in the mandate process in order to 1) reduce
the impact of ineffective and unnecessary mandates placed on
LEAs, 2) reduce the long-term liability to the state for mandate
reimbursements, and 3) streamline the process and reduce the
workload of the CSM so as to shrink processing time for all
claims."
It should be noted that the EAAP may have similar staffing
issues related to the redirected workload associated with
hearing IRCs filed by K-12 LEAs as exists with the CSM; however,
EAAP is statutorily required to hear appeals before it within 90
days of the filing of that appeal, has historically stayed
current with its caseload, and has the ability to expand
capacity by contracting with the Office of Administrative
Hearings for support in the form of hearings and recommended
decisions provided by Administrative Law Judges who are
experienced working with the EAAP on matters of education law
and finance.
Analysis Prepared by : Gerald Shelton / ED. / (916) 319-2087
FN: 0004665