BILL ANALYSIS �
AB 1583
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Date of Hearing: April 30, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1583 (Allen) - As Amended: April 3, 2014
Policy Committee: Accountability
and Administrative Review Vote: 13 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires the State Controller's Office (SCO) to
collect additional information from state agencies that maintain
bank accounts outside of the state treasury system and to
annually prepare and submit this information in a report to the
Department of Finance (DOF) and the Legislature. Specifically,
the report must include:
a)The name of the account
b)The source of authorization for establishing the account
c)The account balance
d)Cost recovery revenues deposited into the account.
FISCAL EFFECT
1)On-going costs to the State Controller's office in the $85,000
range ($45,000 GF) for 1 PY to update procedures and perform
the expanded duties.
2)Unknown, but likely significant, costs to state agencies to
compile and report the additional information.
3)Minor costs to DOF to update reporting forms.
COMMENTS
1)Purpose . This bill implements some of the legislative
recommendations made by the State Auditor in report released
in October, 2103. In that report, Accounts Outside the State's
Centralized Treasury System: Processes Exist to Safeguard
Money, but Controls for These Accounts Need Strengthening, the
AB 1583
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State Auditor made several internal recommendations to the
State Controller, State Treasurer, and the Department of
Finance for improvements in the tracking and oversight of
these accounts. Five of the six internal recommendations have
been fully implemented and the sixth is underway.
In addition, the State Auditor made recommendations to the
Legislature regarding improvements for monitoring outside
accounts. Among the findings was that the State Controller did
not adequately track which agencies have outside accounts nor
did they ensure that all agencies report, and thus, did not
identify omissions. This bill partially addresses one of the
two recommendations.
2)Background . While roughly $55 billion is in the possession or
control of the State (state money) and held in accounts in
banks that participate in California's Centralized Treasury
System (treasury system), 14% of all state money, or $9.3
billion, is in nearly 1,400 bank accounts outside the treasury
system. A relatively small number of accounts at three
agencies, the Sholarshare Investment Board, California State
University, and CalHFA, made up most of the state money
outside the treasury system as of June 30, 2012.
The treasury system was established to safeguard and maximize
the return on state money with control agencies such as the
Department of Finance, the State Controller, and the State
Treasurer all contributing to safeguarding these assets. State
departments, agencies, and other entities may need to
establish outside accounts because they must deal with funds
held in trust for others or to gain operational efficiencies.
To do so requires either express statutory authority or
authorization from the Department of Finance, and subjects the
agency to certain monitoring and reporting requirements.
The State Controller currently collects information on
accounts outside the state treasury system including account
names, source of authorization and balances. The State
Controller annually provides a comprehensive listing of this
information to the Governor's Office in the Budget/Legal Basis
Analysis Report.
3)Suggested Amendments . The SCO indicates clarification is
needed regarding the level of detail requested for cost
recovery revenues.
AB 1583
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Analysis Prepared by : Jennifer Swenson / APPR. / (916)
319-2081