BILL ANALYSIS �
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UNFINISHED BUSINESS
Bill No: SB 79
Author: Senate Budget and Fiscal Review Committee
Amended: 7/11/11
Vote: 21
SENATE VOTES NOT RELEVANT
ASSEMBLY FLOOR : 46-27, 07/11/11 - See last page for vote
SUBJECT : State funds
SOURCE : Author
DIGEST : This bill provides the necessary statutory
changes relating to state funds and cash-flow borrowing
necessary for the 2011-12 Budget Act.
Assembly Amendments delete the Senate version of the bill
which expressed the intent of the Legislature to enact
statutory changes to the Budget Act of 2011 and instead
places the current language into the bill concerning state
funds.
ANALYSIS : This bill:
1.Creates the State Agency Investment Fund (SAIF) in the
State Treasury. The SAIF will receive moneys from state
agencies not currently required by law to be deposited in
the Pooled Money Investment Account (PMIA). State
agencies includes any state office, officer, department,
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division, bureau, board, commission, organization, or
agency, including, but not limited to, the University of
California, the California State University, the
California Community Colleges, and the Judicial Council.
2.Specifies that each agency shall deposit not less than
$500 million and that the total amount of moneys from all
sources deposited in the SAIF shall not exceed $10
billion, and:
A. Terms and conditions of investment including size
of deposit, length of time of deposit, and
availability of fund withdrawals would be set by the
Director of Finance in consultation with the
treasurer; and,
B. Moneys would be used for investments authorized by
existing statutory authority relating to the PMIA and
would be borrowable by the General Fund (GF) for cash
flow purposes. Repayment of borrowing would be a
priority payment of the GF.
1.Establishes that the rate of interest paid by the SAIF
would consist of a base rate (equal to the rate paid for
PMIA investments), plus an enhanced amount. The enhanced
amount would be determined by the Director of Finance, in
consultation with the Treasurer, and added to the base
amount. Funds in the SAIF would be continuously
appropriated for repayment by the State Controller.
2.Adds an appropriation allowing this bill to take effect
immediately upon enactment.
Comments
It is anticipated that the interest rate paid on the SAIF
would fall between the PMIA rate and the prevailing rate
paid on external borrowing through the issuance of Revenue
Anticipation Notes. The state would realize some GF saving
based on the interest rate "break," and state agencies will
receive an enhanced return over what they would receive
from the PMIA. Savings from this initiative are dependent
on the actual amount invested in the fund, and the extent
to which these amounts can off-set more expensive external
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borrowing.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
By creating a new fund for the deposit of cash by state
agencies, the state can reduce its external borrowing by an
amount up to $1.7 billion. This will add additional
flexibility for cash flow management and result in savings
equal to the differential between borrowing from SAIF and
borrowing through the credit markets through the issuance
of Revenue Anticipation Notes.
ASSEMBLY FLOOR : 46-27, 07/11/11
AYES: Alejo, Allen, Ammiano, Atkins, Block, Blumenfield,
Bonilla, Bradford, Brownley, Buchanan, Butler, Charles
Calderon, Campos, Carter, Cedillo, Chesbro, Davis,
Dickinson, Eng, Feuer, Fong, Fuentes, Galgiani, Gatto,
Gordon, Hall, Hayashi, Hill, Huber, Hueso, Huffman, Lara,
Bonnie Lowenthal, Ma, Mendoza, Monning, Pan, Perea, V.
Manuel P�rez, Skinner, Solorio, Torres, Wieckowski,
Williams, Yamada, John A. P�rez
NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly,
Fletcher, Beth Gaines, Garrick, Grove, Hagman, Halderman,
Harkey, Jeffries, Jones, Knight, Logue, Mansoor, Miller,
Morrell, Nestande, Nielsen, Norby, Olsen, Silva, Smyth,
Valadao, Wagner
NO VOTE RECORDED: Beall, Furutani, Gorell, Roger
Hern�ndez, Mitchell, Portantino, Swanson
DLW:nl 7/12/11 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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