BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Alan Lowenthal, Chair
2011-2012 Regular Session
BILL NO: AB 202
AUTHOR: Brownley
AMENDED: May 16, 2011
FISCAL COMM: Yes HEARING DATE: June 22, 2011
URGENCY: No CONSULTANT:Daniel Alvarez
SUBJECT : Local educational agencies: reimbursable state
mandates.
SUMMARY
This bill implements changes related to the state's process
for the determination and reimbursement of educational
mandates that streamline the reimbursement process, provide
for future Legislative review of mandates, and clarify the
information on educational mandates that the Legislative
Analyst's Office (LAO) is required to provide the
Legislature.
BACKGROUND
The California Constitution requires the state to provide a
subvention of funds to reimburse costs to local
governments, including local educational entities, whenever
the Legislature, executive order, or a state agency through
adoption of regulations mandates a new program or higher
level of service, with specified exceptions. (Section 6 of
Article XIII B of the California Constitution)
Current law:
Specifies the process to determine whether or not a
reimbursable state mandate is created and establishes a
procedure for local governmental agencies, including local
education agencies (LEAs), to file claims for reimbursement
of these costs with the Commission on State Mandates (CSM)
that requires the Commission to hear and decide upon each
claim for reimbursement and then determine the amount to be
paid for reimbursement, adopt parameters and guidelines to
guide the payment of claims, and adopt a reasonable
reimbursement rate methodology (RRM). The CSM is required
AB 202
Page 2
to consult with the Department of Finance (DOF), among
other state officials, when adopting parameters and
guidelines for reimbursement.
In addition, current law requires the CSM to establish
procedures for dealing with incorrect reduction claims. The
State Controller may reduce the amount of any reimbursement
claim that it determines to be excessive or unreasonable.
If the State Controller takes such an action and the
claimant disputes it, the claimant may file an incorrect
reduction claim with the CSM. An incorrect reduction claim
alleges that the Controller incorrectly reduced the amount
paid on a reimbursement claim for a state-mandated program.
The CSM hears and decides whether the State's Controller
reduction was correct.
(Government Code � 17500 et. seq.)
ANALYSIS
This bill implements changes related to the state's process
for the determination and reimbursement of educational
mandates that streamline the reimbursement process, provide
for future Legislative review of mandates, and clarify the
information on educational mandates that the Legislative
Analyst's Office (LAO) is required to provide the
Legislature. More specifically, this bill:
1) Defines local education agency (LEA) for the purposes
of these provisions to mean a school district or
county office of education, but not a community
college district.
2) Expresses legislative intent that statues creating a
reimbursable state mandate for local educational
agencies (LEAs) be periodically reviewed and the
Legislature consider recommendations on whether these
statutes be amended, repealed, or remain unchanged.
3) Requires any state mandated local program that applies
to an LEA and becomes operative on or after January 1,
2012, to be inoperative on the date five years
following the operative date of the program.
4) Requires each bill the Legislative Counsel identifies
as an LEA state mandated local program to include a
comment in the bill digest that the program becomes
AB 202
Page 3
inoperative on the date five years following its
operative date, as specified.
5) Requires the State Controller to notify the
Legislature within 30 days of the date upon which the
Controller determines total reimbursement claims filed
in a fiscal year, on any mandate where the LEA test
claim exceeds the adopted statewide estimate of costs
for that mandate by more than 25 percent.
6) Requires the CSM to notify the Legislature within 30
days of the date upon which a test claim is filed by
an LEA, where the LEA submits a written narrative that
identifies the effective date and register number of
any regulation alleged to contain a mandate.
7) Authorizes an LEA test claimant to designate another
LEA for the purposes of drafting the parameters and
guidelines, developing the estimate of statewide
costs, and or negotiating a Reasonable Reimbursement
Methodology (RRM).
8) Changes the process relating to development of an RRM,
as follows:
a) Provides for only one extension of 90 days,
in addition to the initial 180 days allowed for
the development of an RRM.
b) Eliminates the ability of an LEA test
claimant or DOF to unilaterally end the
development of an RRM once this process has
begun, and instead authorizes the parties to
jointly request that the RRM process be ended.
c) Establishes an arbitration process, if a
draft of an RRM is not submitted by the required
deadline or extended deadline, or a joint
notification requesting termination of the RRM
process has been submitted.
9) Requires all of the following to occur if an LEA test
claimant and the Department of Finance (DOF) notify
the executive director of the CSM that no further
progress in developing the RRM is possible:
AB 202
Page 4
a) The executive director declares the
development of the RRM is at an impasse and that
binding arbitration is necessary.
b) The executive director notifies the Chief
Executive Officer of Fiscal Crisis and Management
Assistance Team (FCMAT) the test claimant and DOF
are at an impasse.
c) Requires the LEA and DOF to give all
available support materials to the arbitrator
within 10 days of the declared impasse, including
but not limited to, estimates, local cost
projections, sample information, and input from
associations or other interested parties.
d) Requires the Chief Executive Officer of
FCMAT to serve as the sole arbitrator for the RRM
impasse and, within 90 days, mediate or arbitrate
a draft RRM and provide it to the LEA and DOF, as
specified.
e) Requires the LEA and DOF, within 30 days of
receiving the draft RRM from the arbitrator, to
jointly submit to the executive director the
draft RRM and proposed statewide estimate of
costs for the initial claiming period and budget
year.
10) Requires any LEA filing a reimbursement claim to
provide with the reimbursement claim a signed
certification from the superintendent attesting to the
accuracy of the data used to calculate the amount
claimed under the approved RRM.
11) Requires the Legislative Analyst's Office (LAO), in
addition, to information currently required in
statute, to also report at least once in each regular
session of the Legislature, on each LEA reimbursable
state mandate that meets the following criteria:
a) The Commission on State Mandates (CSM) has
determined the existence of a state reimbursable
mandate;
b) A claim for reimbursement has been filed
AB 202
Page 5
with the State Controller by a school district,
county office of education, or other eligible
LEA; and
c) The Legislature has not provided an
appropriation to fully fund current and pending
claims for reimbursement filed with the State
Controller.
12) Requires the LAO to include specified information in
the report, due to the Legislature on or before
January 1, following the adjournment of the regular
session for which the review was made on each mandate,
including:
a) A summary of the mandate and its statutory
source;
b) Fiscal information, including but not
limited to, the claims paid to date, unpaid
claims, pending claims, and the history of
appropriations for the mandate; and
c) Recommendations as to whether the mandate
should be amended, repealed or remain unchanged.
STAFF COMMENTS
1) Need for the bill . According to the author, "the
intent of this bill is to implement changes in the
mandate reimbursement process in order to: 1) reduce
the impact of ineffective and unnecessary mandates
placed on local educational agencies, 2) reduce the
long-term liability to the state for mandate
reimbursements, and 3) streamline the process and
reduce the workload of the CSM, other state agencies
and local educational agencies, so as to reduce
processing time and administrative costs for all
claims."
The motivation for the elements in this bill come from
an October 2009, California State Auditor report
concerning state mandate determination and payment
processes. According to this audit report, "while the
Commission on State Mandates has made progress in
reducing its backlog of test claims for state
AB 202
Page 6
mandates, the continuing backlog is large." The
auditor finds that high workload and insufficient
resources exist at the CSM, and goes on to say that,
"This situation, combined with the long time that
elapses before the Commission makes determinations,
means that substantial costs will continue to build
before the Legislature has the information it needs to
take any necessary action."
2) Automatic repeal or inoperability of education bills
keyed with a mandate . The State Auditor in their
October 2009 report, after discussion with other
states, points out that some mandates represent
permanent solutions to temporary problems. The Auditor
suggested the sunset of each mandate, to enable a
legislative "reassessment of mandate activities and
costs" at a later time. This measure makes any bill
that imposes a state-mandated local program on an LEA,
as determined by Legislative Counsel, to include an
automatic repeal or makes the requirement inoperative
five years following the date from which the
requirement becomes operative, unless the particular
bill includes a provision "?that expressly
notwithstands" this section in AB 202.
Though an automatic trigger that would make a
prospective LEA mandate inoperable is one way to
activate the recommendation of the State Auditor and
force the reintroduction and passage of legislation
that initially creates a mandate; arguably, the
additional reporting by the Legislative Analyst, as
envisioned in this measure, should promote the regular
"evaluation" of each mandate. In addition, one
Legislature cannot bind a future Legislature. If this
provision is "notwithstood" or not included (per an
author's instructions) on a regular basis would the
state end up with a better review process? Finally,
does this approach limit legislative prerogative by
pre-supposing an automatic repeal / sunset time limit
of five years? As such, staff recommends an amendment
striking this section from the measure, on page 12,
strike lines 11 through 26.
3) Technical amendment necessary to avoid chaptering
problems. SB 194 (Local Government Committee) is the
AB 202
Page 7
annual local government omnibus technical cleanup
measure; among other things it amends Government Code
Section 17562 (b) (1). This section of the government
code is also being amended by AB 202, in order to
avoid chaptering out problems; staff recommends a
technical amendment to harmonize the changes between
the two measures be striking the last sentence in
Government Code Section 17562 (b) (1) - this would be
consistent with the change contemplated in SB 194.
4) Additional background . In 1979, Proposition 4 amended
the California Constitution by adding Article XIII B,
Section 6 requiring the state to reimburse local
governments for the cost of new programs or higher
levels of service mandated by the Legislature or any
state agency. In 1984, the Legislature created the
Commission on State Mandates (CSM), as a
quasi-judicial body, to decide test claims alleging
that the State imposed a reimbursable state-mandated
local program. If the CSM identifies a state-mandated
program as eligible for reimbursement, it adopts
parameters and guidelines defining what activities
will be reimbursed and adopts statewide cost
estimates. The CSM is also authorized to hear
incorrect reductions claims (IRCs) from local agencies
if the Controller reduces reimbursement claims upon
audit and the claimant chooses to dispute that
reduction. From beginning to end, the mandate
determination process is sometimes excessively
lengthy, often taking five years or more to be
resolved by the CSM.
In November 2004, state voters approved Proposition
1A, which requires the Legislature to appropriate
funds in the annual budget to pay outstanding mandate
claims, "suspend" the mandate, or "repeal" the
mandate. However, these provisions apply to local
governments only and - by definition - do not include
school districts or community colleges.
The CSM consists of the State Treasurer, the State
Controller, the Director of DOF, the Director of the
Office of Planning and Research, two local elected
officials (with the restriction that they come from
different categories of local government, including
school district governing boards, city councils, or
AB 202
Page 8
county boards of supervisors), and a public member
with experience in public finance. No current member
of the CSM is an elected member of a LEA board.
5) Previous legislation . AB 2082 (Assembly Committee on
Education), similar to this measure with regard to
provisions relating to legislative review of new
mandates and the information on educational mandates
the Legislative Analyst Office (LAO) is required to
provide the Legislature. This bill, at the request
of the author, remained in the Senate Education
committee.
6) Related legislation .
SB 64 (Liu), provides for a specialized mandate
test claim process for K-12 school districts that
has many of the same process elements as that for
local agencies, with the exception of creating a
school district test claim advisory committee tasked
with assisting CSM by providing recommendations, as
specified. This bill was held in the Senate
Appropriations Committee.
SB 887 (Emmerson) enacts the Streamlined
Temporary Mandate Process Act of 2011, a voluntary,
temporary, streamlined alternative mandate
reimbursement process for LEA from the 2011-12
through the 2014-15 fiscal years. This bill is in
the Senate Education Committee.
SUPPORT
California Association of School Business Officials
California School Boards Association
Small School Districts' Association
OPPOSITION
Public Advocates (unless amended)