BILL ANALYSIS
SENATE LOCAL GOVERNMENT COMMITTEE
Senator Richard K. Rainey, Chairman
BILL NO: AB 2684 HEARING: 7/5/00
AUTHOR: Bock FISCAL: Yes
VERSION: 5/17/00 CONSULTANT: Swenson
SAVINGS ALLOCATION PROGRAM
Background and Existing Law
California's 5,000 local agencies and school districts
provide a wide range of local services (roads, parks,
police, animal control) as well as many state mandated
programs (public health, social services). School
districts provide many special programs in addition to
basic education services.
Local officials often have ideas that would save money, but
the State does not have an incentive program to encourage
them to implement these good ideas.
Local agencies can file claims with the Commission on State
Mandates for reimbursement of state-mandated local
programs. Recognizing the cost saving potential in many
state mandated programs, it may be possible to provide
incentives for local agencies to improve efficiency by
rewarding them for cost-saving innovations in state
mandated local programs.
Proposed Law
Assembly Bill 2684 establishes a Savings Allocation Program
and requires the State Controller to develop administrative
procedures for the program following the provisions of the
Administrative Procedure Act.
AB 2684 permits a local agency or school district to submit
findings to the Controller identifying savings generated
from implementing a state mandated program. If the
Controller finds that the agency has reduced costs as a
result of efficiencies taken, the bill requires the
Controller to pay the agency an appropriate amount, up to
1/3 of the savings. The remainder goes to the State
General Fund after reimbursing the Controller's
administrative costs. The Program only applies to General
AB 2684 -- 5/17/00-- Page 2
Fund savings of actual cost mandates, and requires the
commission to review any appeals of the Controller's
decisions.
AB 2684 does not become operative until January 1, 2003.
Comments
1. Speak softly, carry a big carrot . Reducing costs and
improving productivity results in increased efficiency and
improved local programs. By recognizing and rewarding
local agencies' cost saving activities, AB 2684 provides an
incentive that encourages local agencies to come up with
creative and innovative cost saving ideas.
2. Administrative problems . The State Controller's Office
has identified several administrative problems with the
program created by AB 2684. The most troublesome issue is
defining and determining "cost savings as a result of
efficiencies taken." Baseline data on the cost of
state-mandated programs, particularly by jurisdiction, is
incomplete. In addition, it is nearly impossible to
determine savings generated by "efficiencies taken"
separate from other potential reasons for program cost
reductions. The Committee may wish to consider amendments
to allow for a workable calculation.
3. Details, details, details . AB 2684 tells the State
Controller to determine if local agencies have reduced
costs over a reasonable period of time and to hand out
money in appropriate amounts that don't exceed 1/3 of the
savings generated. Although the bill requires the
Controller to adopt formal regulations for the program, the
bill lacks the fundamental details of a reliable awards
program. The Committee may wish to consider amendments
requiring the Controller to adopt regulations that spell
out the eligibility standards and criteria for making
awards, plus the application procedures, deadlines, and
appeals process. The Committee should also consider adding
a sunset date and requiring the Controller to report on the
new program before it ends.
AB 2684 -- 5/17/00-- Page 3
4. A good model . The State Department of Personnel
Administration administers the State Merit Award Program.
Since 1950, this program has provided one-time cash awards
to state employees who submit successful cost-saving ideas
for state programs. The awards are based on a percentage
of the savings generated from implementing the cost-saving
idea. This program may serve as a good model for AB 2684's
proposed Savings Allocation Program.
5. Technical amendments . The Committee should adopt
technical amendments to avoid confusion and improve the
bill's implementation:
Terms . The bill refers to a "local agency" (page 2,
line 10), which probably means "county, city, county and
city, and special district," "reasonable period of time"
(page 2, line 16), and "efficiencies taken" (page 2, line
17), which are unclear, "commission" (page 2, lines 28 and
33), which probably means "Commission on State Mandates."
Timing . The bill delays the new program until
January 1, 2003. The Controller should begin preparing the
program on January 1, 2001, with full implementation on
January 1, 2003.
Assembly Actions
Assembly Local Government: 8-1
Assembly Appropriations: 21-0
Assembly Floor: 79-0
Support and Opposition (6/29/)
Support : California State Association of Counties.
Opposition : State Controller Kathleen Connell.