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AB-637 State-mandated local programs.(2003-2004)

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CALIFORNIA LEGISLATURE— 2003–2004 REGULAR SESSION

Assembly Bill
No. 637

Introduced  by  Assembly Member Harman

February 19, 2003

An act to amend Sections 17525, 17529, 17558, 17558.5, 17560, 17610, 17615.7, and 17616 of, and to add Sections 17527.5 and 17616.1 to, the Government Code, relating to state-mandated local programs.


LEGISLATIVE COUNSEL'S DIGEST


AB 637, as introduced, Harman. State-mandated local programs.
(1) Existing law establishes the 7-member Commission on State Mandates. Under existing law, 2 of the 7 members appointed by the Governor are to be from 3 categories representing the governing entity of a city, county, or city and county, or school district. Existing law provides that a commission member is to receive a per diem of $100 for each day actually spent, and be reimbursed for actual and necessary expenses incurred, in the discharge of official duties.
This bill would provide for the appointment of an alternate member who would be required to attend all commission meetings as a nonvoting member and the alternate member would be required to vote as a member if either of the regular members representing local government is absent or does not vote or if the position of a regular member representing local government is vacant. The bill would extend the reimbursement of actual and necessary expenses and the per diem to an alternate commission member.
(2) Existing law authorizes the commission to appoint an attorney for the commission and requires the attorney to represent and appear for the commission in all actions and proceedings involving any question under provisions relating to state-mandated local costs.
This bill instead would authorize the attorney for the commission to represent and appear for the commission in all actions and proceedings in which the commission is authorized to appear. The bill would prohibit the commission from being represented or appearing in any court action or proceeding involving test claims, incorrect reduction of claims, or other matters involving quasi-judicial decisions of the commission.
(3) Existing law requires the commission to adopt procedures for receiving claims by local agencies and school districts for reimbursement of the costs of new programs and higher level of services mandated by the Legislature or by a state agency.
The bill would revise the time period by which a local agency or school district may file an annual reimbursement claim or amend a claim for reimbursement or file a claim for actual costs in specified circumstances.
(4) Under existing law, a reimbursement claim is subject to the initiation of an audit by the Controller no later than 3 years after the date that the actual reimbursement claim is filed or last amended, whichever is later.
This bill would require that any audit or review by the Controller must be commenced within a 2-year period, and must be completed and a final audit report issued prior to the date that is 3 years after the date that the actual reimbursement claim is filed or last amended, whichever is later.
(5) Existing law requires the removal of a mandated program that is modified or amended by the Legislature or by executive order to significantly affect the costs of the program from the State Mandates Apportionment System.
This bill would provide that if a local entity or school district requests that a program be removed from the system, that program shall be removed only for the purposes of the requesting local entity or school district. The bill would require the commission to complete its review of any State Mandates Apportionment System issue within 6 months of a claimant filing the request.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 17525 of the Government Code is amended to read:

17525.
 (a) There is hereby created the Commission on State Mandates, which shall consist of seven members as follows:
(1) The Controller.
(2) The Treasurer.
(3) The Director of Finance.
(4) The Director of the Office of Planning and Research.
(5) A public member with experience in public finance, appointed by the Governor and approved by the Senate.
(6) Two members from the following three categories appointed by the Governor and approved by the Senate, provided that no more than one member shall come from the same category:
(A) A city council member.
(B) A member of a county or city and county board of supervisors.
(C) A governing board member of a school district as defined in Section 17519.
(7) One alternate member appointed by the Governor and approved by the Senate from the category specified in paragraph (6) that was not used in the appointments made pursuant to that paragraph. The alternate member shall attend all meetings of the commission as a nonvoting member of the commission except that the alternate member shall vote as a member if either of the regular members from the categories specified in paragraph (6) is absent or does not vote or if the position of a regular member from the categories specified in paragraph (6) is vacant.
(b) Each member or alternate member appointed pursuant to paragraph (5) or (6), (6), or (7) of subdivision (a) shall be subject to both of the following:
(1) The member or alternate member shall serve for a term of four years subject to renewal.
(2) The member or alternate member shall receive per diem of one hundred dollars ($100) for each day actually spent in the discharge of official duties and shall be reimbursed for any actual and necessary expenses incurred in connection with the performance of duties as a member of the commission.

SEC. 2.

 Section 17527.5 is added to the Government Code, to read:

17527.5.
 The commission shall not be represented or appear in any court action or proceeding involving test claims, incorrect reduction claims, or other matters involving quasi-judicial decisions of the commission.

SEC. 3.

 Section 17529 of the Government Code is amended to read:

17529.
 (a) The commission may appoint as attorney to the commission an attorney at law of this state, who shall hold office at the pleasure of the commission. The attorney shall may represent and appear for the commission in all actions and proceedings involving any question under this part or under any order or act of the commission in which the commission is authorized to appear.

The

(b) The attorney shall advise the commission and each member of the commission, when so requested, in regard to all matters in connection with the powers and duties of the commission and the members thereof of the commission. The attorney shall generally perform all duties and services as attorney to the commission which the commission may require.

SEC. 4.

 Section 17558 of the Government Code is amended to read:

17558.
 (a) The commission shall submit the adopted parameters and guidelines to the Controller. All claims relating to a statute or executive order that are filed after the determination of the test claim pursuant to Section 17557 shall be transferred to the Controller who shall pay and audit the claims from funds made available for that purpose.
(b) Not later than 60 days after receiving the adopted parameters and guidelines from the commission, the Controller shall issue claiming instructions for each mandate that requires state reimbursement, to assist local agencies and school districts in claiming costs to be reimbursed. In preparing claiming instructions, the Controller may request the assistance of other state agencies. The claiming instructions shall be derived from the statute or executive order creating the mandate and the parameters and guidelines adopted by the commission.
(c) The Controller shall, within 60 days after receiving revised adopted parameters and guidelines from the commission or other information necessitating a revision of the claiming instructions, prepare and issue revised claiming instructions for mandates that require state reimbursement that have been established by commission action pursuant to Section 17555 or after any decision or order of the commission pursuant to Section 17551. In preparing revised claiming instructions, the Controller may request the assistance of other state agencies.

(d)This section shall become operative on July 1, 1996.

SEC. 5.

 Section 17558.5 of the Government Code is amended to read:

17558.5.
 (a) A (1) An initial reimbursement claim for actual costs or annual reimbursement claim filed by a local agency or school district pursuant to this chapter is subject to the initiation of an audit shall be considered true and correct unless audited or reviewed by the Controller no later than within three years after the date that the actual reimbursement claim is filed or last amended, whichever is later. However, if no funds are appropriated or no payment is made to a claimant for the program for the fiscal year for which the claim is filed, the time for the Controller to initiate an audit shall commence to run from the date of initial payment of the claim.
The audit or review shall be commenced within two years after the date that the actual reimbursement claim is filed or last amended. As used in this section “audit or reviewed” means that the audit or review is complete and a final audit report has been issued.
(2) The three-year deadline specified in paragraph (1) shall be tolled for any period of time during which the Controller is unable to proceed with an audit due to a local agency request or mutual agreement between the local agency and the Controller. A local agency shall have 60 days to respond to a request for data by the Controller.
(b) The Controller shall notify the claimant in writing within 30 days after issuance of a remittance advice of any adjustment to a claim for reimbursement that results from an audit or review. The notification shall specify the claim components adjusted, the amounts adjusted, interest charges on claims adjusted to reduce the overall reimbursement to the local agency or school district, and the reason for the adjustment. Remittance advices and other notices of payment action shall not constitute notice of adjustment from an audit or review.
(c) The interest rate charged by the Controller on reduced claims shall be set at the Pooled Money Investment Account rate and shall be imposed on the dollar amount of the overpaid claim from the time the claim was paid until overpayment is satisfied.
(d) Nothing in this section shall be construed to limit the adjustment of payments when inaccuracies are determined to be the result of the intent to defraud, or when a delay in the completion of an audit is the result of willful acts by the claimant or inability to reach agreement on terms of final settlement.

SEC. 6.

 Section 17560 of the Government Code is amended to read:

17560.
 Reimbursement for state-mandated costs may be claimed as follows:
(a) A local agency or school district may file do as prescribed in paragraph (1) or (2):
(1) (A) File an estimated reimbursement claim by January 15 of the fiscal year in which costs are to be incurred, and, by January 15 following that fiscal year incurred.
(B) If a local agency or school district files an estimated reimbursement claim, the local agency or school district shall file an annual reimbursement claim that details the costs actually incurred for that fiscal year; or it may comply year by January 15 following that fiscal year. However, if the local agency or school district timely filed an estimated reimbursement claim for a fiscal year, but fails to file an annual reimbursement claim for that fiscal year due to mistake, inadvertence, or excusable neglect, the local agency or school district may file an annual reimbursement claim for that fiscal year within 120 days after it is notified by the Controller that it has filed a valid estimated reimbursement claim, but has not filed an actual reimbursement claim.
(2) Comply with the provisions of subdivision (b) or (c).
(b) A local agency or school district may, by January 15 following the fiscal year in which costs are incurred, file an annual reimbursement claim that details the costs actually incurred for that fiscal year.
(c) In the event revised claiming instructions are issued by the Controller pursuant to subdivision (c) of Section 17558 between October 15 and January 15, a local agency or school district filing an annual reimbursement claim shall have until the last day of the month that contains the day that is 120 days following the issuance date of the revised claiming instructions to file a claim. In no circumstance shall a local agency or school district have less than 120 days following the issuance date of the revised claiming instructions to file a claim.

SEC. 7.

 Section 17610 of the Government Code is amended to read:

17610.
 (a) The costs arising from a statute containing a statement or executive order that the statute mandates a new program or higher level of service and specifying that reimbursement shall be made from the fund shall, upon certification of the estimated statewide cost by the commission to the Controller, be paid from the fund, provided that the estimated statewide cost of the claim for the initial reimbursement claims for each fiscal year does not exceed one million dollars ($1,000,000). This section shall constitute the sole authorization required to pay an initial reimbursement claim for which the estimated statewide cost of the claim does not exceed one million dollars ($1,000,000) for each fiscal year. The Controller shall receive, review, and pay reimbursement claims from the fund as the claims are received. Claims for initial reimbursement shall be filed with the Controller within 120 days from the date that the Controller issued claiming instructions on mandates funded by the fund. When paying a timely filed claim for initial reimbursement, the Controller shall withhold 20 percent of the amount of the claim until the claim is audited to verify the actual amount of the mandated cost. Any claim for initial reimbursement filed after the filing deadline shall be reduced by 10 percent of the amount which would have been allowed had the claim been timely filed, provided that the amount of this reduction shall not exceed one thousand dollars ($1,000). The Controller may withhold payment of any initial reimbursement claim filed after the filing deadline until the next deadline for funding claims unless sufficient funds are available to pay the claim after all timely filed claims have been paid.
(b) For purposes of this section, “estimated statewide cost” means the total amount of funds estimated to be necessary to reimburse all eligible local agencies and school districts for costs incurred as a result of the mandate during the first 12-month period following the operative date of the mandate.
(c) For purposes of this section, “costs arising from a statute” statute or executive order” means the total amount of funds necessary to reimburse eligible local agencies and school districts for costs incurred as a result of complying with a mandate for the fiscal years specified in the parameters and guidelines in accordance with Section 17557.

SEC. 8.

 Section 17615.7 of the Government Code is amended to read:

17615.7.
 (a) If a mandated program included in the State Mandates Apportionment System is modified or amended by the Legislature or by executive order, and the modification or amendment significantly affects the costs of the program, as determined by the commission, the program shall be removed from the State Mandate Mandates Apportionment System, and the payments reduced accordingly. Local entities or school districts may submit actual costs claims for a period of three years, after which the program may be considered for inclusion in the State Mandates Apportionment System, pursuant to the provisions of Section 17615.4.
(b) If a local entity or school district requests that a program be removed from the State Mandates Apportionment System, that program shall be removed from the State Mandates Apportionment System only for the purposes of the requesting local entity or school district.

SEC. 9.

 Section 17616 of the Government Code is amended to read:

17616.
 Notwithstanding the provisions of Section 2231 of the Revenue and Taxation Code, the Controller shall have the authority to do either or both of the following:
(a) Audit the fiscal years comprising the base year entitlement and issue the final audit report no later than three years after the year in which the base year entitlement is established. The results of such those audits shall be used to adjust the base year entitlements and any subsequent apportionments based on that entitlement, in addition to adjusting actual cost payments made for the base years audited.
(b) Verify that any local agency or school district receiving funds pursuant to this article is providing the reimbursed activities.

SEC. 10.

 Section 17616.1 is added to the Government Code, to read:

17616.1.
 The commission shall complete its review of any State Mandates Apportionment System issue, including, but not limited to, a request for inclusion in the system, removal from the system, review of an apportionment, or review of an established base year entitlement, within six months of a claimant filing the request.

SEC. 11.

 The Legislature finds and declares that the amendments made to Section 17558.5 of the Government Code by Section 5 of this act do not constitute a change in, but constitute a clarification of, existing law.