BILL ANALYSIS �
AB 103
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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)
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|COMMITTEE VOTE: |14-9 |(May 15, 2012) |RECOMMENDATION: |concur |
|(Budget) | | | | |
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Original Committee Reference: BUDGET
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 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:
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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 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
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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 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.
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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 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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