CALIFORNIA STATUTES AND CODES
SECTIONS 17550-17571
GOVERNMENT CODE
SECTION 17550-17571
17550. Reimbursement of local agencies and school districts for
costs mandated by the state shall be provided pursuant to this
chapter.
17551. (a) The commission, pursuant to the provisions of this
chapter, shall hear and decide upon a claim by a local agency or
school district that the local agency or school district is entitled
to be reimbursed by the state for costs mandated by the state as
required by Section 6 of Article XIII B of the California
Constitution.
(b) Except as provided in Sections 17573 and 17574, commission
review of claims may be had pursuant to subdivision (a) only if the
test claim is filed within the time limits specified in this section.
(c) Local agency and school district test claims shall be filed
not later than 12 months following the effective date of a statute or
executive order, or within 12 months of incurring increased costs as
a result of a statute or executive order, whichever is later.
(d) The commission, pursuant to the provisions of this chapter,
shall hear and decide upon a claim by a local agency or school
district filed on or after January 1, 1985, that the Controller has
incorrectly reduced payments to the local agency or school district
pursuant to paragraph (2) of subdivision (d) of Section 17561.
17552. This chapter shall provide the sole and exclusive procedure
by which a local agency or school district may claim reimbursement
for costs mandated by the state as required by Section 6 of Article
XIII B of the California Constitution.
17553. (a) The commission shall adopt procedures for receiving
claims filed pursuant to this article and Section 17574 and for
providing a hearing on those claims. The procedures shall do all of
the following:
(1) Provide for presentation of evidence by the claimant, the
Department of Finance, and any other affected department or agency,
and any other interested person.
(2) Ensure that a statewide cost estimate is adopted within 12
months after receipt of a test claim, when a determination is made by
the commission that a mandate exists. This deadline may be extended
for up to six months upon the request of either the claimant or the
commission.
(3) Permit the hearing of a claim to be postponed at the request
of the claimant, without prejudice, until the next scheduled hearing.
(b) All test claims shall be filed on a form prescribed by the
commission and shall contain at least the following elements and
documents:
(1) A written narrative that identifies the specific sections of
statutes or executive orders and the effective date and register
number of regulations alleged to contain a mandate and shall include
all of the following:
(A) A detailed description of the new activities and costs that
arise from the mandate.
(B) A detailed description of existing activities and costs that
are modified by the mandate.
(C) The actual increased costs incurred by the claimant during the
fiscal year for which the claim was filed to implement the alleged
mandate.
(D) The actual or estimated annual costs that will be incurred by
the claimant to implement the alleged mandate during the fiscal year
immediately following the fiscal year for which the claim was filed.
(E) A statewide cost estimate of increased costs that all local
agencies or school districts will incur to implement the alleged
mandate during the fiscal year immediately following the fiscal year
for which the claim was filed.
(F) Identification of all of the following:
(i) Dedicated state funds appropriated for this program.
(ii) Dedicated federal funds appropriated for this program.
(iii) Other nonlocal agency funds dedicated for this program.
(iv) The local agency's general purpose funds for this program.
(v) Fee authority to offset the costs of this program.
(G) Identification of prior mandate determinations made by the
Commission on State Mandates or a predecessor agency that may be
related to the alleged mandate.
(H) Identification of a legislatively determined mandate pursuant
to Section 17573 that is on the same statute or executive order.
(2) The written narrative shall be supported with declarations
under penalty of perjury, based on the declarant's personal
knowledge, information, or belief, and signed by persons who are
authorized and competent to do so, as follows:
(A) Declarations of actual or estimated increased costs that will
be incurred by the claimant to implement the alleged mandate.
(B) Declarations identifying all local, state, or federal funds,
or fee authority that may be used to offset the increased costs that
will be incurred by the claimant to implement the alleged mandate,
including direct and indirect costs.
(C) Declarations describing new activities performed to implement
specified provisions of the new statute or executive order alleged to
impose a reimbursable state-mandated program. Specific references
shall be made to chapters, articles, sections, or page numbers
alleged to impose a reimbursable state-mandated program.
(D) If applicable, declarations describing the period of
reimbursement and payments received for full reimbursement of costs
for a legislatively determined mandate pursuant to Section 17573, and
the authority to file a test claim pursuant to paragraph (1) of
subdivision (c) of Section 17574.
(3) (A) The written narrative shall be supported with copies of
all of the following:
(i) The test claim statute that includes the bill number or
executive order, alleged to impose or impact a mandate.
(ii) Relevant portions of state constitutional provisions, federal
statutes, and executive orders that may impact the alleged mandate.
(iii) Administrative decisions and court decisions cited in the
narrative.
(B) State mandate determinations made by the Commission on State
Mandates or a predecessor agency and published court decisions on
state mandate determinations made by the Commission on State Mandates
are exempt from this requirement.
(4) A test claim shall be signed at the end of the document, under
penalty of perjury by the claimant or its authorized representative,
with the declaration that the test claim is true and complete to the
best of the declarant's personal knowledge, information, or belief.
The date of signing, the declarant's title, address, telephone
number, facsimile machine telephone number, and electronic mail
address shall be included.
(c) If a completed test claim is not received by the commission
within 30 calendar days from the date that an incomplete test claim
was returned by the commission, the original test claim filing date
may be disallowed, and a new test claim may be accepted on the same
statute or executive order.
(d) In addition, the commission shall determine whether an
incorrect reduction claim is complete within 10 days after the date
that the incorrect reduction claim is filed. If the commission
determines that an incorrect reduction claim is not complete, the
commission shall notify the local agency and school district that
filed the claim stating the reasons that the claim is not complete.
The local agency or school district shall have 30 days to complete
the claim. The commission shall serve a copy of the complete
incorrect reduction claim on the Controller. The Controller shall
have no more than 90 days after the date the claim is delivered or
mailed to file any rebuttal to an incorrect reduction claim. The
failure of the Controller to file a rebuttal to an incorrect
reduction claim shall not serve to delay the consideration of the
claim by the commission.
17554. With the agreement of all parties to the claim, the
commission may waive the application of any procedural requirement
imposed by this chapter or pursuant to Section 17553. The authority
granted by this section includes the consolidation of claims and the
shortening of time periods.
17555. (a) Not later than 30 days after hearing and deciding upon a
test claim pursuant to subdivision (a) of Section 17551, and
determining the amount to be subvened to local agencies and school
districts for reimbursement pursuant to subdivision (a) of Section
17557, the commission shall notify the appropriate Senate and
Assembly policy and fiscal committees, the Legislative Analyst, the
Department of Finance, and the Controller of that decision.
(b) For purposes of this section, the "appropriate policy
committee" means the policy committee that has jurisdiction over the
subject matter of the statute, regulation, or executive order, and in
which bills relating to that subject matter would have been heard.
17556. The commission shall not find costs mandated by the state,
as defined in Section 17514, in any claim submitted by a local agency
or school district, if, after a hearing, the commission finds any
one of the following:
(a) The claim is submitted by a local agency or school district
that requests or previously requested legislative authority for that
local agency or school district to implement the program specified in
the statute, and that statute imposes costs upon that local agency
or school district requesting the legislative authority. A resolution
from the governing body or a letter from a delegated representative
of the governing body of a local agency or school district that
requests authorization for that local agency or school district to
implement a given program shall constitute a request within the
meaning of this subdivision. This subdivision applies regardless of
whether the resolution from the governing body or a letter from a
delegated representative of the governing body was adopted or sent
prior to or after the date on which the statute or executive order
was enacted or issued.
(b) The statute or executive order affirmed for the state a
mandate that has been declared existing law or regulation by action
of the courts. This subdivision applies regardless of whether the
action of the courts occurred prior to or after the date on which the
statute or executive order was enacted or issued.
(c) The statute or executive order imposes a requirement that is
mandated by a federal law or regulation and results in costs mandated
by the federal government, unless the statute or executive order
mandates costs that exceed the mandate in that federal law or
regulation. This subdivision applies regardless of whether the
federal law or regulation was enacted or adopted prior to or after
the date on which the state statute or executive order was enacted or
issued.
(d) The local agency or school district has the authority to levy
service charges, fees, or assessments sufficient to pay for the
mandated program or increased level of service. This subdivision
applies regardless of whether the authority to levy charges, fees, or
assessments was enacted or adopted prior to or after the date on
which the statute or executive order was enacted or issued.
(e) The statute, executive order, or an appropriation in a Budget
Act or other bill provides for offsetting savings to local agencies
or school districts that result in no net costs to the local agencies
or school districts, or includes additional revenue that was
specifically intended to fund the costs of the state mandate in an
amount sufficient to fund the cost of the state mandate. This
subdivision applies regardless of whether a statute, executive order,
or appropriation in the Budget Act or other bill that either
provides for offsetting savings that result in no net costs or
provides for additional revenue specifically intended to fund the
costs of the state mandate in an amount sufficient to fund the cost
of the state mandate was enacted or adopted prior to or after the
date on which the statute or executive order was enacted or issued.
(f) The statute or executive order imposes duties that are
necessary to implement, or are expressly included in, a ballot
measure approved by the voters in a statewide or local election. This
subdivision applies regardless of whether the statute or executive
order was enacted or adopted before or after the date on which the
ballot measure was approved by the voters.
(g) The statute created a new crime or infraction, eliminated a
crime or infraction, or changed the penalty for a crime or
infraction, but only for that portion of the statute relating
directly to the enforcement of the crime or infraction.
17557. (a) If the commission determines there are costs mandated by
the state pursuant to Section 17551, it shall determine the amount
to be subvened to local agencies and school districts for
reimbursement. In so doing it shall adopt parameters and guidelines
for reimbursement of any claims relating to the statute or executive
order. The successful test claimants shall submit proposed parameters
and guidelines within 30 days of adoption of a statement of decision
on a test claim. The proposed parameters and guidelines may include
proposed reimbursable activities that are reasonably necessary for
the performance of the state-mandated program. At the request of a
successful test claimant, the commission may provide for one or more
extensions of this 30-day period at any time prior to its adoption of
the parameters and guidelines. If proposed parameters and guidelines
are not submitted within the 30-day period and the commission has
not granted an extension, then the commission shall notify the test
claimant that the amount of reimbursement the test claimant is
entitled to for the first 12 months of incurred costs will be reduced
by 20 percent, unless the test claimant can demonstrate to the
commission why an extension of the 30-day period is justified.
(b) In adopting parameters and guidelines, the commission may
adopt a reasonable reimbursement methodology.
(c) The parameters and guidelines adopted by the commission shall
specify the fiscal years for which local agencies and school
districts shall be reimbursed for costs incurred. However, the
commission may not specify in the parameters and guidelines any
fiscal year for which payment could be provided in the annual Budget
Act.
(d) (1) A local agency, school district, or the state may file a
written request with the commission to amend the parameters or
guidelines. The commission may, after public notice and hearing,
amend the parameters and guidelines. A parameters and guidelines
amendment submitted within 90 days of the claiming deadline for
initial claims, as specified in the claiming instructions pursuant to
Section 17561, shall apply to all years eligible for reimbursement
as defined in the original parameters and guidelines. A parameters
and guidelines amendment filed more than 90 days after the claiming
deadline for initial claims, as specified in the claiming
instructions pursuant to Section 17561, and on or before the claiming
deadline following a fiscal year, shall establish reimbursement
eligibility for that fiscal year.
(2) For purposes of this subdivision, the request to amend
parameters and guidelines may be filed to make any of the following
changes to parameters and guidelines, consistent with the statement
of decision:
(A) Delete any reimbursable activity that has been repealed by
statute or executive order after the adoption of the original or last
amended parameters and guidelines.
(B) Update offsetting revenues and offsetting savings that apply
to the mandated program and do not require a new legal finding that
there are no costs mandated by the state pursuant to subdivision (e)
of Section 17556.
(C) Include a reasonable reimbursement methodology for all or some
of the reimbursable activities.
(D) Clarify what constitutes reimbursable activities.
(E) Add new reimbursable activities that are reasonably necessary
for the performance of the state-mandated program.
(F) Define what activities are not reimbursable.
(G) Consolidate the parameters and guidelines for two or more
programs.
(H) Amend the boilerplate language. For purposes of this section,
"boilerplate language" means the language in the parameters and
guidelines that is not unique to the state-mandated program that is
the subject of the parameters and guidelines.
(e) A test claim shall be submitted on or before June 30 following
a fiscal year in order to establish eligibility for reimbursement
for that fiscal year. The claimant may thereafter amend the test
claim at any time, but before the test claim is set for a hearing,
without affecting the original filing date as long as the amendment
substantially relates to the original test claim.
(f) In adopting parameters and guidelines, the commission shall
consult with the Department of Finance, the affected state agency,
the Controller, the fiscal and policy committees of the Assembly and
Senate, the Legislative Analyst, and the claimants to consider a
reasonable reimbursement methodology that balances accuracy with
simplicity.
17557.1. (a) Notwithstanding any other provision of this part,
within 30 days of the commission's adoption of a statement of
decision on a test claim, the test claimant and the Department of
Finance may notify the executive director of the commission in
writing of their intent to follow the process described in this
section to develop a reasonable reimbursement methodology and
statewide estimate of costs for the initial claiming period and
budget year for reimbursement of costs mandated by the state in
accordance with the statement of decision. The letter of intent shall
include the date on which the test claimant and the Department of
Finance will submit a plan to ensure that costs from a representative
sample of eligible local agency or school district claimants are
considered in the development of a reasonable reimbursement
methodology.
(b) This plan shall also include all of the following information:
(1) The date on which the test claimant and Department of Finance
will provide to the executive director an informational update
regarding their progress in developing the reasonable reimbursement
methodology.
(2) The date on which the test claimant and Department of Finance
will submit to the executive director the draft reasonable
reimbursement methodology and proposed statewide estimate of costs
for the initial claiming period and budget year. This date shall be
no later than 180 days after the date the letter of intent is sent by
the test claimant and Department of Finance to the executive
director.
(c) At the request of the test claimant and Department of Finance,
the executive director may provide for up to four extensions of this
180-day period.
(d) The test claimant or Department of Finance may notify the
executive director at any time that the claimant or Department of
Finance no longer intends to develop a reasonable reimbursement
methodology pursuant to this section. In this case, paragraph (2) of
subdivision (a) of Section 17553 and Section 17557 shall apply to the
test claim. Upon receipt of this notification, the executive
director shall notify the test claimant of the duty to submit
proposed parameters and guidelines within 30 days under subdivision
(a) of Section 17557.
17557.2. (a) A reasonable reimbursement methodology developed
pursuant to Section 17557.1 or a joint request for early termination
of a reasonable reimbursement methodology shall have broad support
from a wide range of local agencies or school districts. The test
claimant and Department of Finance may demonstrate broad support from
a wide range of local agencies or school districts in different
ways, including, but not limited to, obtaining endorsement by one or
more statewide associations of local agencies or school districts and
securing letters of approval from local agencies or school
districts.
(b) No later than 60 days before a commission hearing, the test
claimant and Department of Finance shall submit to the commission a
joint proposal that shall include all of the following:
(1) The draft reasonable reimbursement methodology.
(2) The proposed statewide estimate of costs for the initial
claiming period and budget year.
(3) A description of the steps the test claimant and the
Department of Finance undertook to determine the level of support by
local agencies or school districts for the draft reasonable
reimbursement methodology.
(4) An agreement that the reasonable reimbursement methodology
developed and approved under this section shall be in effect for a
period of five years unless a different term is approved by the
commission, or upon submission to the commission of a letter
indicating the Department of Finance and test claimant's joint
interest in early termination of the reasonable reimbursement
methodology.
(5) An agreement that, at the conclusion of the period established
in paragraph (4), the Department of Finance and the test claimant
will consider jointly whether amendments to the methodology are
necessary.
(c) The commission shall approve the draft reasonable
reimbursement methodology if review of the information submitted
pursuant to Section 17557.1 and subdivision (b) of this section
demonstrates that the draft reasonable reimbursement methodology and
statewide estimate of costs for the initial claiming period and
budget year have been developed in accordance with Section 17557.1
and meet the requirements of subdivision (a). The commission
thereafter shall adopt the proposed statewide estimate of costs for
the initial claiming period and budget year. Statewide cost estimates
adopted under this section shall be included in the report to the
Legislature required under Section 17600 and shall be reported by the
commission to the appropriate Senate and Assembly policy and fiscal
committees, the Legislative Analyst, and the Department of Finance
not later than 30 days after adoption.
(d) Unless amendments are proposed pursuant to this subdivision,
the reasonable reimbursement methodology approved by the commission
pursuant to this section shall expire after either five years, any
other term approved by the commission, or upon submission to the
commission of a letter indicating the Department of Finance's and
test claimant's joint interest in early termination of the reasonable
reimbursement methodology.
(e) The commission shall approve a joint request for early
termination of a reasonable reimbursement methodology if the request
meets the requirements of subdivision (a). If the commission approves
a joint request for early termination, the commission shall notify
the test claimant of the duty to submit proposed parameters and
guidelines to the commission pursuant to subdivision (a) of Section
17557.
(f) At least one year before the expiration of a reasonable
reimbursement methodology, the commission shall notify the Department
of Finance and the test claimant that they may do one of the
following:
(1) Jointly propose amendments to the reasonable reimbursement
methodology by submitting the information described in paragraphs
(1), (3), and (4) of subdivision (b), and providing an estimate of
the mandate's annual cost for the subsequent budget year.
(2) Jointly propose that the reasonable reimbursement methodology
remain in effect.
(3) Allow the reasonable reimbursement methodology to expire and
notify the commission that the test claimant will submit proposed
parameters and guidelines to the commission pursuant to subdivision
(a) of Section 17557 to replace the reasonable reimbursement
methodology.
(g) The commission shall either approve the continuation of the
reasonable reimbursement methodology or approve the jointly proposed
amendments to the reasonable reimbursement methodology if the
information submitted in accordance with paragraph (1) of subdivision
(d) demonstrates that the proposed amendments were developed in
accordance with Section 17557.1 and meet the requirements of
subdivision (a) of this section.
17558. (a) The commission shall submit the adopted parameters and
guidelines or a reasonable reimbursement methodology approved
pursuant to Section 17557.2 to the Controller. As used in this
chapter, a "reasonable reimbursement methodology" approved pursuant
to Section 17557.2 includes all amendments to the reasonable
reimbursement methodology. When the Legislature declares a
legislatively determined mandate in accordance with Section 17573 in
which claiming instructions are necessary, the Department of Finance
shall notify the Controller.
(b) Not later than 60 days after receiving the adopted parameters
and guidelines, a reasonable reimbursement methodology from the
commission, or notification from the Department of Finance, 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 shall request assistance from the
Department of Finance and may request the assistance of other state
agencies. The claiming instructions shall be derived from the test
claim decision and the adopted parameters and guidelines, reasonable
reimbursement methodology, or statute declaring a legislatively
determined mandate.
(c) The Controller shall, within 60 days after receiving amended
parameters and guidelines, an amended reasonable reimbursement
methodology 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
17557, Section 17557.2, or after any decision or order of the
commission pursuant to Section 17559, or after any action by the
Legislature pursuant to Section 17573. In preparing revised claiming
instructions, the Controller may request the assistance of other
state agencies.
17558.5. (a) A reimbursement claim for actual costs filed by a
local agency or school district pursuant to this chapter is subject
to the initiation of an audit by the Controller no later than 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. In any case, an audit shall be
completed not later than two years after the date that the audit is
commenced.
(b) The Controller may conduct a field review of any claim after
the claim has been submitted, prior to the reimbursement of the
claim.
(c) 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.
(d) 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.
(e) 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.
17558.6. It is the intent of the Legislature that the Commission on
State Mandates review its process by which local agencies may appeal
the reduction of reimbursement claims on the basis that the
reduction is incorrect in order to provide for a more expeditious and
less costly process.
17558.7. (a) If the Controller reduces a claim approved by the
commission, the claimant may file with the commission an incorrect
reduction claim pursuant to regulations adopted by the commission.
(b) A claimant eligible to file an incorrect reduction claim may
file a consolidated incorrect reduction claim on behalf of other
claimants whose claims for reimbursement under the same mandate are
alleged to have been incorrectly reduced if all of the following
apply:
(1) The method, act, or practice that the claimant alleges led to
the reduction has led to similar reductions of other parties' claims,
and all of the claims involve common questions of law or fact.
(2) The common questions of law or fact among the claims
predominate over any matter affecting only an individual claim.
(3) The consolidation of similar claims by individual claimants
would result in consistent decisionmaking by the commission.
(4) The claimant filing the consolidated claim would fairly and
adequately protect the interests of the other claimants.
(c) A claimant that seeks to file a consolidated incorrect
reduction claim shall, at the time it files an incorrect reduction
claim, on a form provided by the commission, notify the commission of
its intent to file a consolidated incorrect reduction claim.
(d) Within 10 days after receipt of an incorrect reduction claim
and notice of intent to consolidate, the commission shall request
that the Controller provide the commission and the claimant with a
list of claimants for whom the Controller has reduced similar claims
under the same mandate. Upon receipt of this list from the
Controller, the claimant may notify the claimants on the list and
other interested parties of its intent to file a consolidated
incorrect reduction claim.
(e) Within 30 days of receipt of the notice of intent to
consolidate from the original claimant, on a form provided by the
commission, any other eligible claimant shall file with the
commission its notice of intent to join the consolidated incorrect
reduction claim, which shall include a copy of the remittance advice
or other notice from the Controller of the claim reduction, and one
copy of the reimbursement claims for which an incorrect reduction is
alleged.
(f) The commission shall notify each claimant that files an intent
to join the consolidated incorrect reduction claim that it may opt
out of the consolidated claim and not be bound by any determination
made on that consolidated claim. A claimant may opt out of a
consolidated claim no later than 15 days after the state agency files
comments on the consolidated claim. A claimant that opts out of the
consolidated claim, in order to preserve its right to challenge a
reduction made by the Controller on that same mandate, shall file an
individual incorrect reduction claim pursuant to commission
requirements, no later than one year after opting out or within the
statute of limitations under the commission's regulations.
(g) The commission shall adopt regulations establishing procedures
for receiving a consolidated incorrect reduction claim pursuant to
this section and for providing a hearing on a consolidated claim.
17558.8. (a) The commission may, on its own initiative, consolidate
incorrect reduction claims filed with the commission by different
claimants under the same mandate if all of the following apply:
(1) The same method, act, or practice is alleged to have led to
the reduction in each claim, and all of the claims involve common
questions of law or fact.
(2) The common questions of law or fact among the claims
predominate over any matter affecting only an individual claim.
(3) The consolidation of similar claims by individual claimants
would result in consistent decisionmaking by the commission.
(b) The commission shall adopt regulations establishing procedures
for consolidation of incorrect reduction claims pursuant to this
section and for providing a hearing on a consolidated claim.
17559. (a) The commission may order a reconsideration of all or
part of a test claim or incorrect reduction claim on petition of any
party. The power to order a reconsideration or amend a test claim
decision shall expire 30 days after the statement of decision is
delivered or mailed to the claimant. If additional time is needed to
evaluate a petition for reconsideration filed prior to the expiration
of the 30-day period, the commission may grant a stay of that
expiration for no more than 30 days, solely for the purpose of
considering the petition. If no action is taken on a petition within
the time allowed for ordering reconsideration, the petition shall be
deemed denied.
(b) A claimant or the state may commence a proceeding in
accordance with the provisions of Section 1094.5 of the Code of Civil
Procedure to set aside a decision of the commission on the ground
that the commission's decision is not supported by substantial
evidence. The court may order the commission to hold another hearing
regarding the claim and may direct the commission on what basis the
claim is to receive a rehearing.
17560. Reimbursement for state-mandated costs may be claimed as
follows:
(a) A local agency or school district may, by February 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.
(b) In the event revised claiming instructions are issued by the
Controller pursuant to subdivision (c) of Section 17558 between
November 15 and February 15, a local agency or school district filing
an annual reimbursement claim shall have 120 days following the
issuance date of the revised claiming instructions to file a claim.
17561. (a) The state shall reimburse each local agency and school
district for all "costs mandated by the state," as defined in Section
17514 and for legislatively determined mandates in accordance with
Section 17573.
(b) (1) For the initial fiscal year during which these costs are
incurred, reimbursement funds shall be provided as follows:
(A) Any statute mandating these costs shall provide an
appropriation therefor.
(B) Any executive order mandating these costs shall be accompanied
by a bill appropriating the funds therefor, or alternatively, an
appropriation for these costs shall be included in the Budget Bill
for the next succeeding fiscal year. The executive order shall cite
that item of appropriation in the Budget Bill or that appropriation
in any other bill that is intended to serve as the source from which
the Controller may pay the claims of local agencies and school
districts.
(2) In subsequent fiscal years appropriations for these costs
shall be included in the annual Governor's Budget and in the
accompanying Budget Bill. In addition, appropriations to reimburse
local agencies and school districts for continuing costs resulting
from chaptered bills or executive orders for which claims have been
awarded pursuant to subdivision (a) of Section 17551 shall be
included in the annual Governor's Budget and in the accompanying
Budget Bill.
(c) The amount appropriated to reimburse local agencies and school
districts for costs mandated by the state shall be appropriated to
the Controller for disbursement.
(d) The Controller shall pay any eligible claim pursuant to this
section by October 15 or 60 days after the date the appropriation for
the claim is effective, whichever is later. The Controller shall
disburse reimbursement funds to local agencies or school districts if
the costs of these mandates are not payable to state agencies, or to
state agencies that would otherwise collect the costs of these
mandates from local agencies or school districts in the form of fees,
premiums, or payments. When disbursing reimbursement funds to local
agencies or school districts, the Controller shall disburse them as
follows:
(1) For initial reimbursement claims, the Controller shall issue
claiming instructions to the relevant local agencies and school
districts pursuant to Section 17558. Issuance of the claiming
instructions shall constitute a notice of the right of the local
agencies and school districts to file reimbursement claims, based
upon parameters and guidelines adopted by the commission, the
reasonable reimbursement methodology approved by the commission
pursuant to Section 17557.2, or statutory declaration of a
legislatively determined mandate and reimbursement methodology
pursuant to Section 17573.
(A) When claiming instructions are issued by the Controller
pursuant to Section 17558 for each mandate determined pursuant to
Section 17551 or 17573 that requires state reimbursement, each local
agency or school district to which the mandate is applicable shall
submit claims for initial fiscal year costs to the Controller within
120 days of the issuance date for the claiming instructions.
(B) When the commission is requested to review the claiming
instructions pursuant to Section 17571, each local agency or school
district to which the mandate is applicable shall submit a claim for
reimbursement within 120 days after the commission reviews the
claiming instructions for reimbursement issued by the Controller.
(C) If the local agency or school district does not submit a claim
for reimbursement within the 120-day period, or submits a claim
pursuant to revised claiming instructions, it may submit its claim
for reimbursement as specified in Section 17560. The Controller shall
pay these claims from the funds appropriated therefor, except the
Controller may take either of the following actions:
(i) Audit the records of any local agency or school district to
verify the actual amount of the mandated costs, the application of a
reasonable reimbursement methodology, or application of a
legislatively enacted reimbursement methodology under Section 17573.
(ii) Reduce any claim that the Controller determines is excessive
or unreasonable.
(2) In subsequent fiscal years each local agency or school
district shall submit its claims as specified in Section 17560. The
Controller shall pay these claims from funds appropriated therefor
except as follows:
(A) The Controller may audit any of the following:
(i) Records of any local agency or school district to verify the
actual amount of the mandated costs.
(ii) The application of a reasonable reimbursement methodology.
(iii) The application of a legislatively enacted reimbursement
methodology under Section 17573.
(B) The Controller may reduce any claim that the Controller
determines is excessive or unreasonable.
(C) The Controller shall adjust the payment to correct for any
underpayments or overpayments that occurred in previous fiscal years.
(3) 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 costs. All initial reimbursement claims for all fiscal years
required to be filed on their initial filing date for a
state-mandated local program shall be considered as one claim for the
purpose of computing any late claim penalty. Any claim for initial
reimbursement filed after the filing deadline shall be reduced by 10
percent of the amount that would have been allowed had the claim been
timely filed. The Controller may withhold payment of any late claim
for initial reimbursement until the next deadline for funded claims
unless sufficient funds are available to pay the claim after all
timely filed claims have been paid. In no case may a reimbursement
claim be paid if submitted more than one year after the filing
deadline specified in the Controller's claiming instructions on
funded mandates.
(e) (1) Except as specified in paragraph (2), for the purposes of
determining the state's payment obligation under paragraph (1) of
subdivision (b) of Section 6 of Article XIII B of the Constitution, a
mandate that is "determined in a preceding fiscal year to be payable
by the state" means any mandate for which the commission adopted a
statewide cost estimate pursuant to this part during a previous
fiscal year or that were identified as mandates by a predecessor
agency to the commission, or that the Legislature declared by statute
to be a legislatively determined mandate, unless the mandate has
been repealed or otherwise eliminated.
(2) If the commission adopts a statewide cost estimate for a
mandate during the months of April, May, or June, the state's payment
obligation under subdivision (b) of Section 6 of Article XIII B
shall commence one year after the time specified in paragraph (1).
17561.5. The payment of an initial reimbursement claim by the
Controller shall include accrued interest at the Pooled Money
Investment Account rate, if the payment is being made more than 365
days after adoption of the statewide cost estimate for an initial
claim. Interest shall begin to accrue as of the 366th day after
adoption of the statewide cost estimate for the initial claim.
Payment of a subsequent claim that was reported to the Legislature
pursuant to paragraph (2) of subdivision (b) of Section 17562 shall
include accrued interest at the Pooled Money Investment Account rate
for any unpaid amount remaining on August 15 following the filing
deadline. Interest shall begin to accrue on August 16 following the
filing deadline.
17561.6. A budget act item or appropriation pursuant to this part
for reimbursement of claims shall include an amount necessary to
reimburse any interest due pursuant to Section 17561.5.
17562. (a) The Legislature hereby finds and declares that the
increasing revenue constraints on state and local government and the
increasing costs of financing state-mandated local programs make
evaluation of state-mandated local programs imperative. Accordingly,
it is the intent of the Legislature to increase information regarding
state mandates and establish a method for regularly reviewing the
costs and benefits of state-mandated local programs.
(b) (1) The Controller shall submit a report to the Joint
Legislative Budget Committee and fiscal committees by October 31 of
each fiscal year beginning with the 2007-08 fiscal year. This report
shall summarize, by state mandate, the total amount of claims paid
per fiscal year and the amount, if any, of mandate deficiencies or
surpluses. This report shall be made available in an electronic
spreadsheet format. The report shall compare the estimated annual
cost of each mandate in the preceding fiscal year to the amount
determined to be payable by the state for that fiscal year.
(2) The Controller shall submit a report to the Joint Legislative
Budget Committee, the applicable fiscal committees, and the Director
of Finance by April 30 of each fiscal year. This report shall
summarize, by state mandate, the total amount of unpaid claims by
fiscal year that were submitted before April 1 of that fiscal year.
The report shall also summarize any mandate deficiencies or
surpluses. It shall be made available in an electronic spreadsheet,
and shall be used for the purpose of determining the state's payment
obligation under paragraph (1) of subdivision (b) of Section 6 of
Article XIII B of the California Constitution.
(c) After the commission submits its second semiannual report to
the Legislature pursuant to Section 17600, the Legislative Analyst
shall submit a report to the Joint Legislative Budget Committee and
legislative fiscal committees on the mandates included in the
commission's reports. The report shall make recommendations as to
whether the mandate should be repealed, funded, suspended, or
modified.
(d) In its annual analysis of the Budget Bill and based on
information provided pursuant to subdivision (b), the Legislative
Analyst shall report total annual state costs for mandated programs
and, as appropriate, provide an analysis of specific mandates and
make recommendations on whether the mandate should be repealed,
funded, suspended, or modified.
(e) (1) A statewide association of local agencies or school
districts or a Member of the Legislature may submit a proposal to the
Legislature recommending the elimination or modification of a
state-mandated local program. To make such a proposal, the
association or member shall submit a letter to the Chairs of the
Assembly Committee on Education or the Assembly Committee on Local
Government, as the case may be, and the Senate Committee on Education
or the Senate Committee on Local Government, as the case may be,
specifying the mandate and the concerns and recommendations regarding
the mandate. The association or member shall include in the proposal
all information relevant to the conclusions. If the chairs of the
committees desire additional analysis of the submitted proposal, the
chairs may refer the proposal to the Legislative Analyst for review
and comment. The chairs of the committees may refer up to a total of
10 of these proposals to the Legislative Analyst for review in any
year. Referrals shall be submitted to the Legislative Analyst by
December 1 of each year.
(2) The Legislative Analyst shall review and report to the
Legislature with regard to each proposal that is referred to the
office pursuant to paragraph (1). The Legislative Analyst shall
recommend that the Legislature adopt, reject, or modify the proposal.
The report and recommendations shall be submitted annually to the
Legislature by March 1 of the year subsequent to the year in which
referrals are submitted to the Legislative Analyst.
(3) The Department of Finance shall review all statutes enacted
each year that contain provisions making inoperative Section 17561 or
Section 17565 that have resulted in costs or revenue losses mandated
by the state that were not identified when the statute was enacted.
The review shall identify the costs or revenue losses involved in
complying with the statutes. The Department of Finance shall also
review all statutes enacted each year that may result in cost savings
authorized by the state. The Department of Finance shall submit an
annual report of the review required by this subdivision, together
with the recommendations as it may deem appropriate, by December 1 of
each year.
(f) It is the intent of the Legislature that the Assembly
Committee on Local Government and the Senate Committee on Local
Government hold a joint hearing each year regarding the following:
(1) The reports and recommendations submitted pursuant to
subdivision (e).
(2) The reports submitted pursuant to Sections 17570, 17600, and
17601.
(3) Legislation to continue, eliminate, or modify any provision of
law reviewed pursuant to this subdivision. The legislation may be by
subject area or by year or years of enactment.
17563. Any funds received by a local agency or school district
pursuant to the provisions of this chapter may be used for any public
purpose.
17564. (a) No claim shall be made pursuant to Sections 17551,
17561, or 17573, nor shall any payment be made on claims submitted
pursuant to Sections 17551 or 17561, or pursuant to a legislative
determination under Section 17573, unless these claims exceed one
thousand dollars ($1,000). However, a county superintendent of
schools or county may submit a combined claim on behalf of school
districts, direct service districts, or special districts within
their county if the combined claim exceeds one thousand dollars
($1,000) even if the individual school district's, direct service
district's, or special district's claims do not each exceed one
thousand dollars ($1,000). The county superintendent of schools or
the county shall determine if the submission of the combined claim is
economically feasible and shall be responsible for disbursing the
funds to each school, direct service, or special district. These
combined claims may be filed only when the county superintendent of
schools or the county is the fiscal agent for the districts. All
subsequent claims based upon the same mandate shall only be filed in
the combined form unless a school district, direct service district,
or special district provides to the county superintendent of schools
or county and to the Controller, at least 180 days prior to the
deadline for filing the claim, a written notice of its intent to file
a separate claim.
(b) Claims for direct and indirect costs filed pursuant to Section
17561 shall be filed in the manner prescribed in the parameters and
guidelines or reasonable reimbursement methodology and claiming
instructions.
(c) Claims for direct and indirect costs filed pursuant to a
legislatively determined mandate pursuant to Section 17573 shall be
filed and paid in the manner prescribed in the Budget Act or other
bill, or claiming instructions, if applicable.
17565. If a local agency or a school district, at its option, has
been incurring costs which are subsequently mandated by the state,
the state shall reimburse the local agency or school district for
those costs incurred after the operative date of the mandate.
17567. In the event that the amount appropriated for reimbursement
purposes pursuant to Section 17561 is not sufficient to pay all of
the claims approved by the Controller, the Controller shall prorate
claims in proportion to the dollar amount of approved claims timely
filed and on hand at the time of proration. The Controller shall
adjust prorated claims if supplementary funds are appropriated for
this purpose.
In the event that the Controller finds it necessary to prorate
claims as provided by this section, the Controller shall immediately
report this action to the Department of Finance, the Chairperson of
the Joint Legislative Budget Committee, and the Chairperson of the
respective committee in each house of the Legislature which considers
appropriations in order to assure appropriation of these funds in
the Budget Act.
17568. If a local agency or school district submits an otherwise
valid reimbursement claim to the Controller after the deadline
specified in Section 17560, the Controller shall reduce the
reimbursement claim in an amount equal to 10 percent of the amount
that would have been allowed had the reimbursement claim been timely
filed, provided that the amount of this reduction shall not exceed
ten thousand dollars ($10,000). In no case shall a reimbursement
claim be paid that is submitted more than one year after the deadline
specified in Section 17560.
17570. (a) For purposes of this section the following definitions
shall apply:
(1) "Mandates law" means published court decisions arising from
state mandate determinations by the State Board of Control or the
Commission on State Mandates, or that address this part or Section 6
of Article XIII B of the California Constitution. "Mandates law" also
includes statutory amendments to this part and amendments to Section
6 of Article XIII B of the California Constitution.
(2) "Subsequent change in law" is a change in law that requires a
finding that an incurred cost is a cost mandated by the state, as
defined by Section 17514, or is not a cost mandated by the state
pursuant to Section 17556, or a change in mandates law, except that a
"subsequent change in law" does not include the amendments to
Section 6 of Article XIII B of the California Constitution that were
approved by the voters on November 2, 2004. A "subsequent change in
law" also does not include a change in the statutes or executive
orders that impose new state-mandated activities and require a
finding pursuant to subdivision (a) of Section 17551.
(3) "Test claim decision" means a decision of the Commission on
State Mandates on a test claim filed pursuant to Section 17551 or a
decision of the State Board of Control on a claim for state
reimbursement filed pursuant to Article 1 (commencing with Section
2201), Article 2 (commencing with Section 2227), and Article 3
(commencing with Section 2240) of Chapter 3 of Part 4 of Division 1
of the Revenue and Taxation Code prior to January 1, 1985.
(b) The commission may adopt a new test claim decision to
supersede a previously adopted test claim decision only upon a
showing that the state's liability for that test claim decision
pursuant to subdivision (a) of Section 6 of Article XIII B of the
California Constitution has been modified based on a subsequent
change in law.
(c) A local agency or school district, statewide association of
local agencies or school districts, or the Department of Finance, the
Controller, or other affected state agency may file a request with
the commission to adopt a new test claim decision pursuant to this
section.
(d) The commission shall adopt procedures for receiving requests
to adopt a new test claim decision pursuant to this section and for
providing notice and a hearing on those requests. The procedures
shall do all of the following:
(1) Specify that all requests for adoption of a new test claim
decision shall be filed on a form prescribed by the commission that
shall contain at least the following elements and documents:
(A) The name, case number, and adoption date of the prior test
claim decision.
(B) A detailed analysis of how and why the state's liability for
mandate reimbursement has been modified pursuant to subdivision (a)
of Section 6 of Article XIII B of the California Constitution based
on a subsequent change in law.
(C) The actual or estimated amount of the annual statewide change
in the state's liability for mandate reimbursement pursuant to
subdivision (a) of Section 6 of Article XIII B of the California
Constitution based on a subsequent change in law.
(D) Identification of all of the following, if relevant:
(i) Dedicated state funds appropriated for the program.
(ii) Dedicated federal funds appropriated for the program.
(iii) Fee authority to offset the costs of the program.
(iv) Federal law.
(v) Court decisions.
(vi) State or local ballot measures and the corresponding date of
the election.
(E) All assertions of fact shall be supported with declarations
made under penalty of perjury, based on the declarant's personal
knowledge, information, or belief, and be signed by persons who are
authorized and competent to do so, including, but not limited to, the
following:
(i) Declarations of actual or estimated annual statewide costs
that will or will not be incurred to implement the alleged mandate.
(ii) Declarations identifying all local, state, or federal funds,
or fee authority that may or may not be used to offset the increased
costs that will or will not be incurred by claimants to implement the
alleged mandate or result in a finding of no costs mandated by the
state pursuant to Section 17556.
(iii) Declarations describing new activities performed to
implement specific provisions of the test claim statute or executive
order alleged to impose a reimbursable state-mandated program.
(F) Specific references shall be made to chapters, articles,
sections, or page numbers that are alleged to impose or not impose a
reimbursable state-mandated program.
(2) Require that a request for the adoption of a new test claim
decision be signed at the end of the document, under penalty of
perjury, by the requester or its authorized representative, along
with a declaration that the request is true and complete to the best
of the declarant's personal knowledge, information, or belief. The
procedures shall also require that the date of signing, the declarant'
s title, address, telephone number, facsimile machine telephone
number, and electronic mail address be included.
(3) Provide that the commission shall return a submitted request
that is incomplete to the requester and allow the requester to remedy
the deficiencies. The procedures shall also provide that the
commission may disallow the original filing if a complete request is
not received by the commission within 30 calendar days from the date
that the incomplete request was returned to the requester.
(4) Establish a two-step hearing process to consider requests for
adoption of a new test claim decision pursuant to this section. As
the first step, the commission shall conduct a hearing to determine
if the requester has made a showing that the state's liability
pursuant to subdivision (a) of Section 6 of Article XIII B of the
California Constitution has been modified based on a subsequent
change in law. If the commission determines that the requester has
made this showing, then pursuant to the commission's authority in
subdivision (b) of this section, the commission shall notice the
request for a hearing to determine if a new test claim decision shall
be adopted to supersede the previously adopted test claim decision.
(5) Provide for presentation of evidence and legal argument at the
hearings by the requester, interested parties, the Department of
Finance, the Controller, any other affected state agency, and
interested persons.
(6) Permit a hearing to be postponed at the request of any party,
without prejudice, until the next scheduled hearing.
(e) To implement the procedures described in subdivision (d), the
commission shall initially adopt regulations as emergency regulations
and, for purposes of Section 11349.6, the adoption of the
regulations shall be considered by the Office of Administrative Law
to be necessary for the immediate preservation of the public peace,
health and safety, and general welfare. Notwithstanding subdivision
(e) of Section 11346.1, the regulations shall be repealed within 180
days after their effective date, unless the commission complies with
Chapter 3.5 (commencing with Section 11340) of Part 1 as provided in
subdivision (e) of Section 11346.1.
(f) A request for adoption of a new test claim decision shall be
filed on or before June 30 following a fiscal year in order to
establish eligibility for reimbursement or loss of reimbursement for
that fiscal year.
(g) The commission shall notify interested parties, the
Controller, the Department of Finance, affected state agencies, and
the Legislative Analyst of any complete request for the adoption of a
new test claim decision that the commission receives.
(h) If the commission determines that the requester has made a
showing that the state's liability pursuant to subdivision (a) of
Section 6 of Article XIII B of the California Constitution has been
modified based on a subsequent change in law, and the commission
notices the request for a hearing to determine whether a new test
claim decision shall be adopted that supersedes a prior test claim
decision, the Controller shall notify eligible claimants that the
request has been filed with the commission and that the original test
claim decision may be superseded by a new decision adopted by the
commission. The notification may be included in the next set of
claiming instructions issued to eligible claimants.
(i) If the commission adopts a new test claim decision that
supersedes the previously adopted test claim decision, the commission
shall adopt new parameters and guidelines or amend existing
parameters and guidelines or reasonable reimbursement methodology
pursuant to Sections 17557, 17557.1, and 17557.2.
(j) Any new parameters and guidelines adopted or amendments made
to existing parameters and guidelines or a reasonable reimbursement
methodology shall conform to the new test claim decision adopted by
the commission.
(k) The Controller shall follow the procedures in Sections 17558,
17558.5, 17560, 17561, and 17561.5, as applicable, for a new test
claim decision adopted by the commission pursuant to this section.
(l) If the commission adopts a new test claim decision that will
result in reimbursement pursuant to Section 6 of Article XIII B of
the California Constitution because a cost is a cost mandated by the
state, as defined in Section 17514, the commission shall determine
the amount to be subvened to local agencies and school districts by
adopting a new statewide cost estimate pursuant to Section 17557.
(m) In addition to the reports required pursuant to Sections 17600
and 17601, the commission shall notify the Legislature within 30
days of adopting a new test claim decision that supersedes a prior
test claim decision and determining the amount to be subvened to
local agencies and school districts for reimbursement pursuant to
this section.
17570.1. As part of its review and consideration pursuant to
Sections 17581 and 17581.5, the Legislature may, by statute, request
that the Department of Finance consider exercising its authority
pursuant to subdivision (c) of Section 17570.
17571. The commission, upon request of a local agency or school
district, shall review the claiming instructions issued by the
Controller or any other authorized state agency for reimbursement of
mandated costs. If the commission determines that the claiming
instructions do not conform to the parameters and guidelines, the
commission shall direct the Controller to modify the claiming
instructions and the Controller shall modify the claiming
instructions to conform to the parameters and guidelines as directed
by the commission.