BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 392 HEARING: 6/12/13
AUTHOR: Jones-Sawyer FISCAL: Yes
VERSION: 6/5/13 TAX LEVY: No
CONSULTANT: Weinberger
STATE MANDATED LOCAL PROGRAMS
Lets the State Controller use the most cost effective
allocation method for payment when the state budget
appropriates $1,000 or less for state-mandated program
reimbursement.
Background and Existing Law
In 1979, the voters amended the California Constitution,
requiring the state to reimburse local 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. The
Commission is a quasi-judicial body which decides test
claims alleging that the Legislature or a state agency
imposed a state-mandated local program. If the Commission
identifies a state-mandated program, it adopts parameters
and guidelines defining what activities will be reimbursed,
and adopts statewide cost estimates.
After receiving the adopted parameters and guidelines for a
mandate, the State Controller's Office (SCO) issues
claiming instructions to guide local agencies and school
districts in claiming reimbursable costs. The SCO
receives, pays, and audits reimbursement claims from local
agencies and school districts. The SCO can reduce
reimbursement claims it deems excessive or unreasonable.
The State Constitution requires the Legislature to either
appropriate funds in the budget bill to pay all outstanding
claims for a mandate, or suspend or repeal the mandate
(Proposition 1A, 2004). This requirement does not apply to
school and employee relations mandates. When the state
budget appropriates an amount that is insufficient to pay
all mandate reimbursement claims approved by the SCO, state
law requires the SCO to prorate claims in a specified
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manner (AB 1668, McAllister, 1986).
To reimburse the costs of state mandated school programs,
recent state budgets have typically appropriated only one
thousand dollars per program. SCO staff notes that
prorating the thousands of small payments that result from
such small appropriations is inefficient and costly. The
SCO wants the flexibility to pay mandate claims in a more
cost-effective manner when the state budget only
appropriates one thousand dollars or less for
reimbursements. The SCO also wants the Legislature to
repeal a duplicative reporting requirement relating to
prorated mandate claims.
Proposed Law
Assembly Bill 392 requires the State Controller to
determine the most cost-effective allocation method for
reimbursing approved claims for the costs of state-mandated
local programs when the state budget allocates one thousand
dollars or less for a program.
AB 392 repeals a requirement that the Controller must
report to the Director of Finance and the Chairperson of
specified legislative committees whenever the Controller
finds it necessary to prorate claims.
State Revenue Impact
No estimate.
Comment
Purpose of the bill . When the state budget appropriates an
amount that is insufficient to pay all claims for a state
mandate, the SCO must prorate the payments it makes to
claimants. When the budget appropriates $1,000 or less to
pay claims for a mandate, the administrative costs of
prorating hundreds of claims can far exceed the total value
of the reimbursements. The SCO cites one state mandated
local program for which it was forced to prorate $1,000 of
appropriated state funds among 520 eligible claimants. At
an estimated average cost of $22 per claim, this process
cost the SCO more than $11,000 to process payments that
AB 392 -- 6/5/13 -- Page 3
ranged from $1 to $10 for each of the 520 claimants. This
is not an isolated example. SCO staff notes that the
Budget Act of 2009 appropriated $1,000 to reimburse mandate
claims for each of 39 school district programs. The SCO
issued 1,861 warrants for claims related to those 39
programs, of which 1,626 were for less than five dollars.
AB 392 saves taxpayers money by preventing SCO staff and
local government staff from spending time processing state
mandate reimbursement payments that are worth less, in
total, than the administrative costs that they generate.
Assembly Actions
Assembly Local Government Committee: 9-0
Assembly Appropriations Committee:17-0
Assembly Floor: 75-0
Support and Opposition (6/6/13)
Support : State Controller John Chiang.
Opposition : Unknown.