BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 1504 (Kehoe) - claims and judgments against the state:
interest
Amended: As Introduced/proposed Policy Vote: Not Applicable
Urgency: No Mandate: No
Hearing Date: April 12, 2012 Consultant:
Bob Franzoia
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: This bill would provide that no interest is
payable on the amount allowed by the California Victim
Compensation and Government Claims Board (board) on a claim if
payment of the claim is subject to approval of an appropriation
by the Legislature. However, if an appropriation is made for
the payment of a claim, interest on the amount appropriated
commences to accrue 180 days after the effective date of the law
by which the appropriation is enacted.
The bill would delete provisions requiring the accrual of
interest on the amount appropriated for the payment of a claim
and on a claim that is not subject to approval of an
appropriation by the Legislature, setting the rate of interest,
and authorizing these terms to be varied by written agreement.
This bill would provide that interest shall commence to accrue
on the amount of a judgment or settlement commencing 180 days
from the date of the final judgment or settlement.
This bill would make a minor reporting change.
Fiscal Impact: Minor, if any, interest savings on claims
approved by the board.
Unknown interest savings on future judgments and
settlements.
Background: The State Board of Control was established in 1945.
It was revised and renamed the Victim Compensation and
Government Claims Board by Chapter 1016/2000 (AB 2491, Jackson).
Government Code 13928 requires the board to ensure that all
claims have been approved by the board, and for which there
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exists no legally available appropriation, are submitted for
legislative approval at least twice during each calendar year.
In general, the board will approve claims in November and in
February. Those claims are reported to the chairs of the
Appropriations Committees who introduce bills appropriating
General Funds and special funds to pay the claims. These bills
may appropriate funds in amounts to the penny for tens to
hundreds of claims, usually stale dated warrants. Government
Code 906 provides for the payment of interest on claims approved
by the board for which an appropriation has been made beginning
30 days after the effective date of the law by which the
appropriation is enacted.
The Department of Justice will generally request two bills each
year of the legislative session to pay judgments and settlement
awards which may be approved in state or federal court at any
time during the calendar year.
Government Code 965.5 (a) provides that a judgment for the
payment of money against the state or a state agency is
enforceable until ten years after the time the judgment becomes
final or, if the judgment is payable in installments, until ten
years after the final installment becomes due.
Staff Comments: Because judgments and settlements may be
approved at any time during the calendar year, the Legislature
is limited in how quickly it can respond with legislation to
appropriate the necessary funds. Recently, one claim incurred
approximately $45,000 in interest costs while the Legislature
was in recess and another approximately $60,000 by the time the
bill appropriating funds for the settlement award was chaptered.
Related Legislation: SB 1558 (Kehoe) would appropriate $2.6
million from the General Fund and the Federal Trust Fund to pay
a settlement. SB 1558 is on today's agenda.
Proposed Author Amendments:
Amendment 1
On page 3, strike out lines 10 to 21, inclusive, and
insert:
(b) Except as otherwise provided in this subdivision, no
interest is payable on the amount allowed on the claim if
payment of the claim is subject to approval of an appropriation
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Page 2
by the Legislature. If an appropriation is made for the payment
of a claim described in this subdivision, interest on the amount
appropriated for the payment of the claim commences to accrue
180 days after the effective date of the law by which the
appropriation is enacted.
Amendment 2
On page 6, strike out lines 3 to 10, inclusive, and insert:
Interest on the amount of a judgment or settlement for the
payment of money against the state shall commence to accrue 180
from the date of the final judgment or settlement. This
subdivision does not apply to any claim approved by the
California Victim Compensation and Government Claims Board.
Revised 3/11/2012