BILL ANALYSIS �
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CONCURRENCE IN SENATE AMENDMENTS
AB 103 (Budget Committee)
As Amended May 7, 2012
Majority vote. Budget Bill Appropriation Takes Effect
Immediately
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|ASSEMBLY: | |(February 22, |SENATE: |34-2 |(May 7, 2012) |
| | |2011) | | | |
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(vote not relevant)
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.
The Senate amendments delete the Assembly version of this bill,
and instead:
1)Authorize 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)Allow 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)Allow 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)Subject 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 ; and,
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
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deferral of California Work Opportunity and Responsibility
to Kids ( 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.
5)Schedule 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; and,
f) $900 million shall be deferred in March 2013 and repaid
in its entirety in April 2013.
6)Include 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)Require the California Department of Education (CDE) to delay
certification of final June apportionment payments for 2011-12
to account for additional redevelopment agencies (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)Modify higher-education payments to smooth payment over the
fiscal year as follows:
a) Authorizes the State to pay only one-twelfth (1/12) of
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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; and,
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 payments within the CSU's
appropriations limit.
9)Authorize 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; and,
c) Authorizes the deferral of $100 million from October
2012 to January 2013.
10)Include a hardship clause to exempt community college
districts that cannot raise funds to cover their necessary
expenses during those time periods.
11)Authorize, in addition to the payment smoothing deferral of a
$250 million payment to the CSU with repayment mandated in
April 2013.
12)Add 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.
AS PASSED BY THE ASSEMBLY , this bill expressed the intent of the
Legislature to enact statutory changes relating to the Budget
Act of 2011.
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 ensures 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
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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
been in prior budgets.
Analysis Prepared by : Misty Feusahrens / BUDGET / (916)
319-2099
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