BILL ANALYSIS �
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THIRD READING
Bill No: AB 106
Author: Assembly Budget Committee
Amended: 3/14/11 in Senate
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
SENATE BUDGET & FISCAL REVIEW COMMITTEE : 11-5, 3/16/11
AYES: Leno, Alquist, DeSaulnier, Evans, Liu, Lowenthal,
Rubio, Simitian, Wright, Hancock, Wolk
NOES: Huff, Emmerson, Fuller, Anderson, La Malfa
SUBJECT : Budget Act of 2011: Cash Management
SOURCE : Author
DIGEST : This bill provides the necessary statutory
changes in the area of cash management and cash deferrals
in order to ensure sufficient cash reserves during the
2011-12 fiscal year.
Senate Floor Amendments of 3/14/11 delete the prior version
of the bill and insert the current language relating to
cash management.
ANALYSIS : This trailer bill contains the following major
amendments related to cash management. Most of the payment
deferrals proposed for 2011-12, are similar to deferrals
approved last year for 2010-11.
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1. Scheduled Deferrals - General . Authorizes General Fund
payments to be deferred starting in July 2011, October
2011, and March 2012, except as specified below. The
deferrals can be made for no more than 60 days, 90 days
and 60 days, respectively. These deferrals may 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. The deferrals can be moved forward to
the prior month or delayed to the subsequent month.
However, the Joint Legislative Budget Committee must be
notified before changes can be made. The following
General Fund payments are subject 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.
Deferrals of Mental Health Services Act payments are
not counted towards the $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
less than 50,000 shall not be deferred.
2. Scheduled Deferrals - K-12 Education
A. Schedules a specific deferral plan for payments
to K-12 local educational agencies (LEAs) :
Both July and August 2011 payments of $1.4
billion shall be deferred.
The October 2011 payment of $2.4 billion
shall be deferred.
In September 2011, $700 million of the July
deferral shall be paid.
In January 2012, $4.5 billion from the
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remaining July, August, and October deferrals
shall be paid.
In March 2012, $1.4 billion shall be
deferred and paid in April 2012.
A. Includes a hardship waiver process for LEAs who
might not be able 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. Required payments of
temporary revenue anticipation notes or other
short-term debt issued for cash flow purposes in
2010-11 shall be considered expenditure obligations.
3. Payment Smoothing . Modifies higher-education payments
to smooth payment over the fiscal year.
A. University of California (UC) - Authorizes the
State to pay only one-twelfth (1/12) of the UC's
annual appropriation each month between July 2011
and April 2012. After April 2012, there are no
limitations on payments within the UC's
appropriations limit.
B. California State University (CSU) - Authorizes
the State to pay only one-twelfth (1/12) of the
CSU's annual appropriation each month between July
2011 and April 2012. After April 2011, there are no
limitations on payments within the CSU's
appropriations limit.
4. Other Deferrals and Adjustments .
A. Transportation . Due to the approval of
Proposition 22 on the November 2010 ballot, repeals
the section that authorizes the deferral of
apportionments to local governments for the Highway
Users Tax Account revenues. Deferrals of the local
share of gasoline excise tax revenue are now
prohibited by the Constitution.
B. CSU . In addition to the payment smoothing,
authorizes deferral of a $250 million payment to the
CSU with repayment mandated in April 2012.
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C. California Community Colleges - Authorizes the
deferral of a $200 million payment from July 2011 to
October 2011. Authorizes the deferral of a $100
million payment from March 2012 to May 2012.
Includes a hardship clause to exempt those community
college districts that cannot raise funds to cover
their necessary expenses during those time periods.
5. Authorize Cashflow Borrowing from additional Special
Funds . This bill adds four special funds to those
eligible for cashflow borrowing. Most special funds
are already eligible for cashflow borrowing, except
where prohibited by the Constitution. The funds are
the Education Protection Account, the Local Revenue
Fund 2011, the Immediate and Critical Needs Account of
the State Court Facilities Construction Fund, and the
Hospital Quality Assurance Revenue Fund.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
DLW:kc 3/17/11 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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