BILL ANALYSIS �
SB 112
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Date of Hearing: June 15, 2011
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
SB 112 (Liu) - As Amended: March 7, 2011
SENATE VOTE : 40-0
SUBJECT : State mandates: claiming instructions.
SUMMARY : Requires any amendment of the parameters and
guidelines boilerplate language for purposes of state
reimbursement of any claim relating to a statute or executive
order that does not increase or decrease reimbursable costs to
limit the eligible filing period commencing with the fiscal year
in which the amended parameters and guidelines were adopted.
Specifically,
this bill :
1)Requires any amendment of the parameters and guidelines
boilerplate language for purposes of state reimbursement of
any claim relating to a statute or executive order that does
not increase or decrease reimbursable costs to limit the
eligible filing period commencing with the fiscal year in
which the amended parameters and guidelines were adopted.
2)Increases from 60 to 90 days the time period the State
Controller (Controller) has, after receiving the adopted
parameters and guidelines, a reasonable reimbursement
methodology from the Commission on State Mandates
(Commission), or notification from the Department of Finance,
to issue claiming instructions for each mandate that requires
state reimbursement to assist local agencies and school
districts in claiming costs to be reimbursed.
3)Increases from 60 to 90 days the time period the Controller
has, after receiving amended parameters and guidelines, an
amended reasonable reimbursement methodology from the
Commission or other information necessitating a revision of
the claiming instructions, to prepare and issue revised
claiming instructions for mandates that require state
reimbursement that have been established by the Commission, or
after any decision or order of the Commission, or after any
action by the Legislature.
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EXISTING LAW :
1)Authorizes a local agency, school district, or the state to
file a written request with the Commission to amend the
parameters and guidelines, including a request to amend the
boilerplate language.
2)Defines boilerplate language to mean the language in the
parameters and guidelines that is not unique to the
state-mandated program that is the subject of the parameters
and guidelines.
3)Requires the Controller, no later than 60 days after receiving
the adopted parameters and guidelines, a reasonable
reimbursement methodology from the Commission, or notification
from the Department of Finance, to issue claiming instructions
for each mandate that requires state reimbursement to assist
local agencies and school districts in claiming costs to be
reimbursed.
4)Requires the Controller, within 60 days after receiving
amended parameters and guidelines, an amended reasonable
reimbursement methodology from the Commission or other
information necessitating a revision of the claiming
instructions, to prepare and issue revised claiming
instructions for mandates that require state reimbursement
that have been established by the Commission, or after any
decision or order of the Commission, or after any action by
the Legislature.
FISCAL EFFECT : Unknown
COMMENTS :
1)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, 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 is working through a backlog of 51 test claims in
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addition to 192 other matters pending before the Commission,
such as proposed parameters and guidelines and requests to
review claiming instructions. Some of these matters date from
2002. The mandate process is lengthy and complex:
a) Test claims. After the new or higher level program is
implemented, a local 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.
b) Parameters and guidelines. If the Commission determines
a test claim is a reimbursable mandate, the local agency is
required to propose parameters and guidelines within 30
days. Parameters and guidelines define what activities are
reimbursable.
c) Statewide cost estimate. After the Commission adopts
parameters and guidelines, it estimates statewide costs.
These estimates are reported to the Legislature and form
the basis for how the Controller pays reimbursement claims.
d) 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 the local
agency's annual reimbursement claims. Before issuing
claiming instructions, the Controller's office researches
each claim and receives public comments from stakeholders.
e) Audits. The Controller may audit a reimbursement claim
filed by a local agency or school district within three
years of the claim's filing or last amendment. If the
Controller reduces a specific reimbursement claim via an
audit, the local agency may file an Incorrect Reduction
Claim with the Commission.
f) Reduction claims. Local agencies can file incorrect
reduction claims, requests to amend the Commission's
parameters and guidelines, and requests to review claiming
instructions.
2)According to the author, the Controller, within 60 days, is
required to issue claiming instructions for each mandate that
requires state reimbursement with the Controller soliciting
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input from state agencies and interested parties before
issuing new or amended claiming instructions. The author says
extending the timeline to 90 days would provide more
opportunities for input, further refine the process, and
result in more streamlined and cost-effective outcomes.
Additionally, the author says SB 112 would require any
amendment to boilerplate language that does not increase or
decrease the reimbursable cost to be limited to the eligible
filing period, commencing with the fiscal year in which the
guidelines were adopted.
3)Following the Controller's action using a new auditing rule
that reduced reimbursement claims for school districts' four
state-mandated programs for 1998 to 2003, seven school
districts filed a lawsuit to declare the new set of parameters
and guidelines could not be applied because the Controller
used a regulation that did not conform to the Administrative
Procedure Act. The court of appeal, in Clovis Unified School
District v. Chiang (2010) 188 Cal.App.4th 794, ruled in the
school districts' favor, saying the Controller had used an
invalid underground regulation when performing those audits,
but the Controller could re-audit the relevant reimbursement
claims based on the documentation requirements of the
parameters and guidelines and claiming instructions when the
mandate costs were incurred.
After Clovis Unified, the Controller revised its parameters and
guidelines and its boilerplate language. 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 reopens. 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.
SB 112 would limit a local agency's filing period when there is
an amendment to the boilerplate language and that amendment
does not increase or decrease reimbursable costs to the fiscal
year in which the amendment was adopted. The Committee may
wish to consider whether reducing the opportunity for local
agencies to claim previously unclaimed expenses when
parameters and guidelines change would unfairly result in
local agencies footing the bill for years when reimbursement
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could help offset their costs.
4)Support arguments: Supporters might argue this loophole
allowing parameters and guidelines to be reopened should be
closed so the filing period is not indefinite.
Opposition arguments: Opposition might argue local agencies
should not be left footing the bill on a state mandate when
there is a revision to the parameters and guidelines.
REGISTERED SUPPORT / OPPOSITION :
Support Opposition
None on file None on file
Analysis Prepared by : Jennifer Klein Baldwin / L. GOV. /
(916) 319-3958