BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 112 HEARING: 4/6/11
AUTHOR: Liu FISCAL: Yes
VERSION: 3/7/11 TAX LEVY: No
CONSULTANT: Lui
STATE MANDATE CLAIMS
Gives the State Controller's more time to issue state
mandate claiming instructions. Amends the definition of
boilerplate language.
Background and Existing Law
In 1979, voters amended the California Constitution,
requiring the state to reimburse local agencies for the
costs of new state mandated local programs or higher levels
of service. In 1984, the Legislature created the
Commission on State Mandates, a quasi-judicial body that
decides local agencies' test claims for reimbursement. If
the Commission identifies a state-mandated program from the
test claim, the Commission adopts parameters and
guidelines, defines what activities will be reimbursed, and
adopts statewide cost estimates.
The Commission on State Mandates is working through a
backlog of 242 test claims; some date from 2002. The
mandate process is lengthy and complex:
Test claims . After the new or higher level program
is implemented, an agency has one year to submit a
test claim to the Commission. The agency can submit a
test claim up to two years following the program, with
a 20% deduction of the first year's costs.
Parameters and guidelines . If the Commission
determines that a test claim is a reimbursable
mandate, the local agency must propose "parameters and
guidelines" within 30 days. Parameters and guidelines
define what activities are reimbursable.
Statewide cost estimate . After the Commission
adopts parameters and guidelines, it estimates
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statewide costs. These estimates are reported to the
Legislature and form the basis for how the State
Controller pays reimbursement claims.
Claiming instructions . After the Commission adopts
the parameters and guidelines, the Controller has 60
days to issue claiming instructions. If a program is
ongoing, these claiming instructions form the basis
for local agency's annual reimbursement claims.
Before issuing claiming instructions, the Controller's
office researches each claim and receives public
comments from stakeholders.
Reduction claims . Local agencies can file
incorrect reduction claims, requests to amend the
Commission on State Mandates' parameters and
guidelines, and requests to review claiming
instructions.
In 2010, the Clovis Unified School District won its court
appeal against the State Controller, who had reduced
reimbursement claims for Clovis' four state-mandated
programs for 1998 to 2003. The District argued that
because the Controller used a different definition of
source documents in performing the audit, the new set of
parameters and guidelines could not be applied for the
years 1998 to 2003.
After the Clovis case, the Controller revised its
parameters and guidelines and its boilerplate language,
text that is not unique to any claim. These changes
affected 37 programs: 21 local governments, 12 school
districts, and four community colleges. Currently, if any
part of the parameters and guidelines are amended, the
filing period for reimbursement claims re-opens. Any local
agency can claim reimbursements for previously unclaimed
expenses. Local agencies that may have forgotten to file
reimbursement claims for any previous fiscal year can file
claims for costs incurred for previous years.
Proposed Law
Senate Bill 112 extends the State Controller's time limit
to issue claiming instructions from 60 days to 90 days.
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SB 112 tightens the definition of the Controller's
boilerplate language, referring to language that does not
increase or decrease reimbursable cost. If the Controller
amends the parameters and guidelines, the bill limits the
eligible filing period for local agencies to the fiscal
year in which the parameters and guidelines were adopted.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . SB 112 increases the time the
State Controller can issue claiming instructions for a
state reimbursable mandate from 60 days to 90 days after
the Commission adopts parameters and guidelines. The
30-day extension gives the Controller more time to program
e-filing reports, research the claim, write thorough
claiming instructions, and receive public comments from
state agencies and interested parties. In response to the
37 programs whose parameters and guidelines have been
amended and could retroactively submit claims for unclaimed
expenses, SB 112 tightens the definition of boilerplate
language to prevent claimants from claiming costs incurred
in previous fiscal years. SB 112 will not allow claimants
to file new claims after the deadline has passed or to
amend old claims to increase costs when the parameters and
guidelines were used to update boilerplate language.
2. Missed deadlines = no responsibilities ? The California
Constitution entitles local agencies and school districts
to compensation for their costs of state mandated programs.
By reducing the opportunity for cities, counties, special
districts, and school districts to claim previously
unclaimed expenses when parameters and guidelines change,
local agencies and school districts are stuck footing the
bill for years when reimbursement could help offset their
costs. Though local agencies should be responsible for
filing claims on time, why should the state deplete local
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coffers without reimbursement?
3. Loose ends . The State Controller argues that the 37
cases of amended boilerplate language highlight an existing
loophole for programs or agencies to retroactively claim
older expenditures. However, because the Controller did
not open up the claiming period for these programs, none
used the perceived loophole. The question remains of how
many programs or agencies have actually profited from this
loophole. Should the Legislature fix a problem that may
exist only in outstanding circumstances?
4. A seven year itch . The Commission on State Mandates
and State Controller have more than seven years of unpaid
reimbursement claims. To address the backlog, the
Commission, its 11-person staff, and the Controller have
prioritized and consolidated claims and have settled
lengthy reduction claims outside of the formal process.
Would granting the State Controller an additional 30-day
extension to issue claiming instructions hamper local
agencies and school districts from receiving much-needed
funds?
Support and Opposition (3/31/11)
Support : State Controller John Chiang.
Opposition : Unknown.