BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Alan Lowenthal, Chair
2011-2012 Regular Session
BILL NO: SB 64
AUTHOR: Liu
AMENDED: April 6, 2011
FISCAL COMM: Yes HEARING DATE: April 13, 2011
URGENCY: No CONSULTANT: Daniel Alvarez
NOTE : This bill has been referred to the Committees on
Education and Governance and Finance. A "do pass" motion
should include referral to the Committee on Governance and
Finance.
.
SUBJECT : State mandates, procedures for school district
mandate test claims.
SUMMARY
This bill 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 the Commission on State
Mandates (CSM) by providing recommendations, as specified.
The bill attempts to streamline the current process of K-12
mandate identification, determination of cost estimates,
review of existing mandate parameters and guidelines, and
possible appeals.
BACKGROUND
The California Constitution requires the state to provide a
subvention of funds to reimburse 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
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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 and adopt parameters and guidelines
for payment of claims. The CSM is required to consult with
the 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:
1) Differs from current law by requiring the CSM to adopt
procedures for receiving and determining mandate test
claims filed specifically by school districts. The
procedures also differ by requiring that a
determination of whether a mandate exists (statement
of decision) by the CSM is adopted within 12 months
after the receipt of a test claim by a school
district, including a statewide costs estimate if the
CSM determines a mandate exists. In addition,
extensions, up to six months, of the process are no
longer allowed.
2) Requires the CSM to establish a school district test
claim advisory committee. The members of the advisory
committee would include officials from the Department
of Finance, State Department of Education, State
Controller's office, and representatives of school
agencies, including, but not limited to, chief
business officials, board members, and
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superintendents.
3) Requires CSM consult , within three months of a school
district filing of a test claim, with the advisory
committee regarding, among other things:
a) Any new activities and costs or
modifications of existing activities
and costs allegedly arising from the specific
statutes or executive orders identified in the
test claim.
b) A statewide cost estimate of increased costs
that school districts
will incur to implement the alleged mandate.
c) Identification of dedicated state, federal,
or other non-local funds
dedicated to this program.
d) Identification of prior mandates that may be
related to the alleged
mandate.
4) Clarifies the relationship between the advisory
committee and the CSM by maintaining that the CSM
prepares an analysis and proposed statement of
decision for each test claim filed by a school
district. The CSM is responsible for any legal
analysis necessary for the CSM to make a determination
regarding whether the test claim contains reimbursable
mandates.
In addition, the analysis shall include, where
appropriate, recommendations from the advisory
committee regarding activities and costs arising from
the statutes or executive orders specified in the test
claim, including a statewide estimate of costs.
5) Requires the advisory committee to develop proposed
parameters and guidelines, on behalf of the school
district test claimant, for establishing reimbursable
costs, once a determination has been made that a
mandate exists (statement of decision) by the CSM. The
advisory committee is required to submit the
parameters and guidelines within 30 days after the
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statement of decision is made by the CSM.
6) Requires the CSM, for purposes of a school district
test claim, to adopt parameters and guidelines
reflecting the following reimbursement methodology
preferences in serial order:
a) A unit rate reasonable reimbursement
methodology;
b) A standard rate reasonable reimbursement
methodology as
appropriate to a particular mandate;
c) Actual costs parameters and guidelines.
7) Permits the advisory committee to file a request to
amend the parameters and guidelines.
8) Requires the advisory committee to review parameters
and guidelines of a school district test claim at
least once every three years.
9) Permits the advisory committee, as a substitute for a
school district test claimant, to develop a reasonable
reimbursement methodology and statewide estimate of
costs for the initial claiming period and budget year,
as specified. This process takes place with the
Department of Finance.
STAFF COMMENTS
1) Need for the bill . In 2010, the Legislative Analyst
generally concluded that virtually every aspect of the
K-14 mandate system is broken and that an overhaul is
needed. This bill intends to create a more streamline
approach to review mandate test claims, promote a
collaborative process for educators and state control
agencies to resolve most mandate questions without
litigation or excessive delays and require routine
reviews of mandated costs guidelines so that
inequities or excessive costs are avoided.
2) Additional background . In 1979, Proposition 4 amended
the California Constitution by adding Article XIII B,
Section 6 requiring the state to reimburse local
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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
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.
3) School District Test Claim Advisory Committee . The
measure, as currently drafted creates an advisory
committee, as specified, to assist the CSM on various
aspects of a test claim process. However, the bill is
silent on the size and focus of the committee. Staff
recommends amendments that (1) limit the overall size
of the advisory committee to no more than seven
members - this will maintain a reasonable advisory
committee size, ensure thorough representation as
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envisioned by the author, and hopefully provide for a
more effective advisory committee; and (2) provide
that the advisory committee's "? focus shall be to
provide the CSM with recommendations relating to
school district test claims, incorrect reduction
claims, and other duties as prescribed in this
chapter."
4) The description of reimbursement methodologies needs
clarity . The measure requires the CSM to adopt
parameters and guidelines reflecting reimbursement
methodology preferences, as specified. However, it is
not clear from the language in the bill how the three
options are different from one another. Staff
recommends an amendment that provides better
descriptions of what is meant by each methodology.
On page 8, line 19 is recommended to read:
(1) A unit rate reimbursement methodology
including, but not limited to, a uniform reimbursement
amount per average daily attendance (ADA) or per
specified activity.
(2) A standard reimbursement methodology including,
but not limited to, reimbursement for costs related to
defined amounts of employee time per specified
activities, or based on a uniform formula or formulas
for costs related to specified activities.
(3) An actual cost reimbursement methodology, with
reimbursement only for actual costs related to
specified activities.
5) Inherent conflicts will need to be resolved . There
are two areas of conflict that need further discussion
and resolution.
The first conflict arises when the CSM is staff to the
newly established advisory committee, yet the CSM is
responsible for all legal drafting of parameters and
guidelines - the CSM is a small entity with
approximately 10 personnel - how is a firewall
achieved?
Second, the bill permits the advisory committee, as a
substitute for a school district test claimant, to
develop a reasonable reimbursement methodology and
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statewide estimate of costs for the initial claiming
period and budget year, as specified. This moves the
advisory committee from advising and recommending to
being an active participant in the outcome at various
decision points. Is this what is truly intended?
6) What happens to school district test claims currently
in the CSM process? This measure pursues changes that
are prospective in nature and presumably would not
impact the current backlog of test claims at the CSM,
as of March 24, 2011, there were 22 school district
test claims pending a hearing by the CSM. Some of
these test claims were originally filed as far back as
2003. The author may wish to pursue options that could
incorporate any existing test claim if those claimants
desire to take advantage of the possible change in the
test claim process envisioned by this measure.
7) 2010 Education Budget Trailer Bill (Chapter 724,
Statutes of 2010) contained language requiring the
Legislative Analyst Office to convene a working group
to consider the future of school district and
community college district mandates. Recommendations
regarding education mandates and the ways they should
be treated, including whether to preserve, modify, or
eliminate particular mandates was due March 15.
However, due to the accelerated process for the
adoption of the 2011 Budget, the release of the final
report has been delayed. Senate Budget Committee will
likely hold hearings later in the spring on the topic.
8) Pending legislation. SB 887 (Emmerson) establishes a
voluntary, temporary, alternative mandate
reimbursement process for local educational agencies
eligible for mandate reimbursement as of June 30,
2011, and to provide for the self-certification, with
independent oversight, of participant local
educational agencies in order to meet compliance
standards. The bill contains an unspecified
appropriation. The bill is scheduled to be heard in
this committee on April 27.
AB 202 (Brownley) requires a periodic review of
statutes creating a reimbursable state mandate, and a
determination by the Legislature whether they should
be amended, repealed or remain unchanged.
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AB 202, is similar to SB 64, in that it intends to
reduce administrative costs that the mandate process
places on local educational agencies; streamline
procedures and reduce workloads for everyone involved
to shrink processing time for claims; and reduce long
-term liability to the state for mandate
reimbursements. This bill is awaiting hearing in
Assembly Committee on Education
9) Prior legislation . AB 2082 (Committee on Education)
would have implemented three changes related to the
state's reimbursement process for educational mandates
by (1) shifting the process for hearing incorrect
reduction claims (IRCs), as specified, (2) providing
for future legislative review of new mandates, and (3)
clarifying the information on educational mandates
that the LAO is required to provide to the
Legislature. Testimony was taken, but the measure was
not voted on at the author's request.
SUPPORT
California Association of School Business Officers
California Association of Suburban School Districts
El Dorado County Superintendent of Schools
San Bernardino County District Advocates for Better Schools
(SANDABS) - represents all of the school districts in San
Bernardino County.
San Diego County Office of Education
OPPOSITION
None received.