BILL ANALYSIS �
SB 898
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Date of Hearing: July 2, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 898 ( Cannella) - As Amended: June 25, 2014
Policy Committee: Banking &
FinanceVote: 12-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill requires every state agency, department, and entity to
provide its employer identification number to the Treasurer in
order to allow the Treasurer to monitor state money held outside
the State Treasury System.
FISCAL EFFECT
Negligible costs to the Treasurer and other state agencies and
departments.
COMMENTS
1) Purpose. According to the author, the Treasurer cannot track
directly accounts outside the State Treasury System, and must
rely on agencies to truthfully report the existence and
balances of those accounts. While the Treasurer has taken
administrative steps to require submission of employer
identification numbers, this bill strengthens that policy
through codification of the requirement.
2) Outside Accounts. State departments and agencies may seek
approval through statute or from the Department of Finance to
deposit moneys into accounts outside the State Treasury
System. Outside accounts can help departments and agencies
achieve benefits and efficiencies not available through the
State Treasury System, such as the ability to process credit
card payments.
According to a report issued by the California State Auditor
on October 15, 2013, there were approximately 1,400 bank
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accounts outside the State Treasury System, collectively
holding approximately $9.3 billion of state funds. Most of
these accounts were authorized by statute, and a significant
number of those with large balances were established to hold
funds in trust.
3) Recent Scandals. The Department of Parks and Recreation
recently discovered it held approximately $54 million in an
account outside the State Treasury System that had not been
reported. In 2012, 70 state parks were threatened with
closure in order to save $22 million. Non-profit fundraising
and reductions in administrative costs throughout the state
park system prevented those closures. Had the existence of
the outside account been known, much of those administrative
and fundraising efforts would likely have been avoided.
Following that event, it was further discovered that the
California Department of Forestry and Fire Protection had been
holding $3.6 million in an unknown account that should have
been used to fund legal settlements through the state's
General Fund.
4) Related Legislation.
a) SB 1074 (Knight ) makes it a misdemeanor, punishable by
up to one year in a county jail, or a $2,500 fine, or both,
for a state employee to knowingly transfer or use state
money outside of the State Treasury System without
statutory authority or Department of Finance approval. SB
1074 is before this committee today.
b) SB 1075 (Knight) requires the California Department of
Forestry and Fire Protection (CDF) to make an annual report
to the Legislature regarding any monies recovered in a
civil action and specifies that any monies recovered by CDF
in a civil action must be deposited into the state treasury
system. SB 1075 is before this committee today.
c) AB 1583 (Allen) requires the Controller to submit an
annual report to the Legislature on all funds maintained in
accounts outside the State Treasury System. AB 1583 is
pending on the Senate Floor.
Analysis Prepared by : Joel Tashjian / APPR. / (916) 319-2081
SB 898
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