BILL ANALYSIS �
AB 103
Page 1
Date of Hearing: May 7, 2012
ASSEMBLY COMMITTEE ON BUDGET
Bob Blumenfield, Chair
AB 103 (Budget Committee) - As Amended: May 7, 2012
SUBJECT : State Cash Resources
SUMMARY : Provides the necessary statutory changes in the area
of cash management and cash deferrals in order to ensure
sufficient cash reserves during the 2012-13 fiscal year.
Specifically, this bill :
1)Authorizes General Fund payments to be deferred starting in
July 2012, October 2012, and March 2013, except as specified.
The deferrals can be made for no more than 60 days, 90 days,
and 60 days, respectively.
2)Allows for the deferrals to be triggered off or repaid early,
in whole or in part, at such time as the State Treasurer,
State Controller, and Director of Finance determine sufficient
cash reserves are available.
3)Allows the deferrals to be moved forward to the prior month or
delayed to the subsequent month. The Joint Legislative Budget
Committee must be notified before changes can be made.
4)Subjects the following General Fund payments to the deferral
criteria outlined above along with the more detailed
payment-specific criteria listed below:
a. Supplementary Security Income/State Supplementary
Payments . Permits up to three deferrals of payments to
the federal government for Supplementary Security
Income/State Supplementary Payments (SSI/SSP) benefits .
b. Local Governments. Permits deferral of social
services and other payments to cities, counties, and
local governments not to exceed $1 billion. This may
include deferral of CalWORKs assistance payments and
other social services costs. The Administration has
stated that it does not anticipate resulting delays to
beneficiaries' receipt of assistance payments. Payments
to counties or cities with a population of less than
50,000 shall not be deferred.
AB 103
Page 2
5)Schedules a specific deferral plan for payments to K-12 local
educational agencies (LEAs) as follows:
a. $1.2 billion shall be deferred in July 2012.
b. $600 million shall be deferred in August 2012.
c. $800 million shall be deferred in October 2012.
d. $700 million of the deferral made in July 2012 shall
be paid in September 2012.
e. The remaining $1.9 billion of the deferrals made in
July, August, and October 2012 shall be paid in January
2013.
f. $900 million shall be deferred in March 2013 and
repaid in its entirety in April 2013.
6)Includes a hardship waiver process for LEAs who might not be
able to meet financial obligations if payments are deferred.
In order to be eligible for a hardship waiver, LEAs would need
to qualify for an emergency apportionment.
7)Requires the California Department of Education (CDE) to delay
certification of final June apportionment payments for 2011-12
to account for additional RDA-related property tax remittances
received through June 10, 2012. Because June apportionment
payments are currently deferred until July, this change would
delay certification of the second principal apportionment from
July 2, 2012 to July 15, 2012.
8)Modifies higher-education payments to smooth payment over the
fiscal year as follows:
a. Authorizes the State to pay only one-twelfth (1/12)
of the University of California (UC) annual appropriation
each month between July 2012 and April 2013. After April
2013, there are no limitations on payments within the
UC's appropriations limit.
b. Authorizes the State to pay only one-twelfth (1/12)
of the California State University (CSU) annual
appropriation each month between July 2012 and April
2013. After April 2013, there are no limitations on
AB 103
Page 3
payments within the CSU's appropriations limit.
9)Authorizes the following deferrals for California Community
Colleges:
a. Authorizes the deferral of a $150 million payment
from July 2012 to December 2012.
b. Authorizes the deferral of a $50 million payment
from September 2012 to January 2013.
c. Authorizes the deferral of $100 million from
October 2012 to January 2013.
10)Includes a hardship clause to exempt community college
districts that cannot raise funds to cover their necessary
expenses during those time periods.
11)Authorizes, in addition to the payment smoothing deferral of
a $250 million payment to the CSU with repayment mandated in
April 2013.
12)Adds one special fund to those eligible for cash flow
borrowing. Most special funds are already eligible for cash
flow borrowing, except where prohibited by the Constitution.
The fund is the Litigation Deposit Fund.
FISCAL EFFECT : This bill continues a similar cash deferral
schedule employed by the state in the last two years. This bill
helps the state avoid insolvency and ensure that payments are
made in a timely manner. This avoids significant future costs
related to interest and damages that could be owed if the state
failed to pay its bills. Furthermore, it also reduces the
state's external borrowing costs to a manageable level, thereby
saving the state millions of dollars in borrowing costs.
COMMENTS : Since 2010, the state has employed a version of the
intra-year deferrals of major cash payments to schools,
universities, and counties in an effort to conserve cash
resources and manage the external cash borrowing necessary to
ensure the solvency of the state.
Most of the payment deferrals proposed for 2012-13 are similar
to deferrals approved last year for 2011-12. However, the
deferrals to K-12 schools are significantly less than they have
AB 103
Page 4
been in prior budgets.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Misty Feusahrens / BUDGET / (916)
319-2099