BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 103|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
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|327-4478 | |
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THIRD READING
Bill No: AB 103
Author: Assembly Budget Committee
Amended: 7/11/11 in Senate
Vote: 27
PRIOR VOTES NOT RELEVANT
SUBJECT : Budget Trailer Bill: Cash Management Loans
SOURCE : Author
DIGEST : This bill makes statutory changes relating to
State funds and cash-flow borrowing.
Senate Floor Amendments of 7/11/11 delete the previous
version of the bill concerning taxes and revenues and
places current language concerning state funds and
cash-flow borrowing.
ANALYSIS : The bill does the following:
1.Creates the State Agency Investment Fund . This bill
creates a new special fund for the receipt of deposits
from state agencies with moneys not currently required by
law to be deposited in the Pooled Money Investment
Account. While not limited to these entities, the
University of California, the California State
University, the California Community Colleges, and the
Judicial Council are listed as potential depositors.
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2.Provides favorable interest earnings for voluntary
deposits. Since deposits into the fund would be
voluntary for the public institutions of higher learning
and the Judicial Council, a favorable interest rate is
offered to incentivize deposits. The interest rate would
be set at the Pooled Money Investment Account rate plus
an enhanced amount. The total interest rate is intended
to be higher than what the entities are currently
receiving from their deposits elsewhere, but lower than
the interest rate the State would pay for Revenue
Anticipation Notes (RANs), which is external cash-flow
borrowing. The special rate would be set by the Director
of Finance in consultation with the Treasurer and through
discussion with the depositors.
3.Provides for new cash-flow borrowing and budget savings.
Funds in the State Agency Investment Fund would be deemed
borrowable by the General Fund for cash-flow purposes.
By creating this new borrowable, the annual amount of
external borrowing, or RAN borrowing, can be reduced.
Because the interest rate paid for the State Agency
Investment Fund will be less than the RAN interest rate,
the State will realize General Fund savings from reduced
interest costs.
4.Limits deposits into the State Agency Investment Fund.
This bill limits deposits from an agency to amounts of no
less than $500 million, and limits cumulative deposits to
no more than $10 billion from all depositors.
5.Roles of the Director of Finance and Treasurer. The
terms and conditions of the deposits into the State
Agency Investment Fund would be set by the Director of
Finance in consultation with the Treasurer. This
consultation is exempt from the requirements of the
Administrative Procedure Act. The funds deposited would
be invested by the Treasurer in investments authorized
under current law for the Pooled Money Investment
Account.
6.Funds continuously appropriated for repayment of
deposits. The funds in the State Agency Investment Fund
would be continuously appropriated for repayment by the
Controller of the principal and interest subject to the
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terms set the Director of Finance in consultation with
the Treasurer.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
The bill would have the following fiscal impact:
Provides new cash-flow borrowing from State funds : The
Administration believes this bill would create additional
cash-flow borrowables from State funds in the range of $1.7
billion. Annual external cash-flow borrowing, or RANs, can
range up to $10 billion, so the resulting reduction to
external cash-flow borrowing in the range of $1.7 billion
would be significant.
General Fund savings : These provisions would reduce
General Fund interest costs by the degree that interest
provided for the State Agency Investment Fund is less than
interest charged for RANs. The General Fund savings would
likely be in the low millions of dollars.
DLW:nl 7/11/11 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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