BILL NUMBER: SCA 10	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Strickland
   (Principal coauthor: Senator Wyland)
   (Coauthors: Senators Anderson, Dutton, Gaines, La Malfa, Runner,
and Walters)
   (Coauthors: Assembly Members Gorell, Jeffries, and Wagner)

                        MARCH 15, 2011

   A resolution to propose to the people of the State of California
an amendment to the Constitution of the State, by repealing and
adding Article XIII B thereof, and by amending Section 8.5 of Article
XVI thereof, relating to expenditure limits.


	LEGISLATIVE COUNSEL'S DIGEST


   SCA 10, as introduced, Strickland.  Expenditure limit.
   (1) Existing provisions of the California Constitution prohibit
the annual appropriations subject to limitation, as defined, of any
entity of state or local government from exceeding its adjusted
annual appropriations limit. These provisions also require 50% of the
excess revenues received by the state in a fiscal year and the
fiscal year immediately following it to be transferred and allocated,
from a fund established for that purpose, to the State School Fund,
and the remaining 50% of those excess revenues to be returned by a
revision of tax rates or fee schedules within the next 2 subsequent
fiscal years.
   This measure would repeal those provisions, and instead would
limit total state General Fund and special fund expenditures to an
annual increase that is based, as provided, on the percentage change
in the cost of living and the percentage change in state population.
The measure would require excess revenues to be allocated in
prescribed amounts to a reserve account, to the State School Fund,
and to personal income taxpayers.
   (2) Existing provisions of the California Constitution require
that whenever the Legislature or any state agency mandates a new
program or higher level of service on any local government, the state
provide a subvention of funds to reimburse the local government for
the costs of the program or increased level of service, with
specified exceptions.
   This measure would amend these provisions to, among other things,
prohibit the filing of a claim for reimbursement for any mandate if
no claim for that reimbursement is filed within a 2-year period
following the effective date of the mandate.
   Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.



   Resolved by the Senate, the Assembly concurring, That the
Legislature of the State of California at its 2011-12 Regular Session
commencing on the sixth day of December 2010, two-thirds of the
membership of each house concurring, hereby proposes to the people of
the State of California that the Constitution of the State be
amended as follows:
  First--  That Article XIII B thereof is repealed.
  Second--  That Article XIII B is added thereto, to read:
      ARTICLE XIII B

EXPENDITURE LIMIT


      SECTION 1.  (a) (1) The total expenditures made in a fiscal
year from the General Fund of the State and state special funds shall
not exceed the expenditure limit for that fiscal year, computed by
multiplying the sum of one plus the percentage change in the cost of
living and the percentage change in the state population by the total
expenditures from the General Fund and state special funds for the
immediately preceding fiscal year. However, if the total expenditures
in the prior fiscal year are less than the amount of the expenditure
limit for that year, then the expenditure limit for the next fiscal
year may equal, but not exceed, the amount of the expenditure limit
for the prior fiscal year.
   (2) As used in this section, "percentage change in the cost of
living," as applied to determine the expenditure limit for a fiscal
year, means the percentage change from April 1 of the prior year to
April 1 of the current year in the California Consumer Price Index
for all items, as determined by the Department of Industrial
Relations or its successor. For purposes of this calculation,
"current year" means the calendar year in which the fiscal year
commences.
   (b) The expenditure limit in subdivision (a) may be exceeded for a
fiscal year in an emergency, but any such excess spending shall not
be part of the expenditure base for purposes of determining the
amount of the expenditure limit pursuant to subdivision (a) for the
next fiscal year. As used in this subdivision, "emergency" means the
existence, as declared by the Governor, of conditions of disaster or
of extreme peril to the safety of persons and property within the
State, or parts thereof, caused by such conditions as attack or
probable or imminent attack by an enemy of the United States, fire,
flood, drought, storm, civil disorder, earthquake, or volcanic
eruption.
   (c) Any revenue that may not be expended in the current fiscal
year due to the expenditure limit in this section shall be allocated
as follows:
   (1) To the Special Reserve Account, which is hereby created in the
General Fund of the State, to the extent that this account contains
an amount less than or equal to 10 percent of the amount of the
expenditure limit for the current fiscal year. Notwithstanding any
other provision of this section, money in the Special Reserve Account
may be expended in an amount equal to the amount by which revenues
reported by the Department of Finance as being received by the State
during the fiscal year fall below the final revenue estimates for
that fiscal year, as provided in the Final Budget Summary published
by the Department of Finance or its successor document. Any funds
expended from the Special Reserve Account pursuant to this paragraph
are part of the expenditure base for the fiscal year in which the
expenditure is made, for the purposes of determining the expenditure
limit pursuant to subdivision (a) for the next fiscal year. Subject
to the 10-percent restriction set forth in this paragraph, any
unexpended balance in the reserve account, including any interest
earnings, shall carry over from one year to the next.
   (2) Revenue that exceeds the amount that may be deposited into the
Special Reserve Account shall be allocated as follows:
   (A) Fifty percent shall be transferred to a fund that is allocated
as provided in Section 8.5 of Article XVI.
   (B) Fifty percent shall be paid as a rebate to all personal income
taxpayers in proportion to their tax liability for the tax year that
encompasses the first half of the current fiscal year in which the
excess exists.
   (d) If the financial responsibility for providing services is
transferred, in whole or in part, from the state government to an
entity of local government, then the amount of the expenditure limit
in the year that the transfer is implemented shall be reduced by an
amount equal to the cost of providing the transferred services, to
prevent an effective increase in the level of allowable state
spending. For the purposes of this section, a transfer of financial
responsibility for providing services does not include any mandate of
a program or level of service for which reimbursement is required by
Section 3.
      SEC. 2.  (a) As used in Section 7.5 of Article IV, "the
percentage increase in the appropriations limit for the State
established pursuant to Article XIII B" means the percentage change
in California per capita personal income from the prior year, plus
(1) the percentage change in the State's population multiplied by the
percentage of state expenditures in the prior fiscal year made for
other than educational purposes for kindergarten and grades 1 to 12,
inclusive, and the community colleges, and (2) the percentage change
in the total statewide average daily attendance in kindergarten and
grades 1 to 12, inclusive, and the community colleges, multiplied by
the percentage of state expenditures in the prior fiscal year made
for educational purposes for kindergarten and grades 1 to 12,
inclusive, and the community colleges.
   (b) As used in Section 8 of Article XVI, "change in the cost of
living pursuant to paragraph (1) of subdivision (e) of Section 8 of
Article XIII B" means the percentage change in California per capita
personal income from the prior year.
      SEC. 3.  (a) Whenever the Legislature or any state agency
mandates a new program or higher level of service on any local
government, the State shall provide a subvention of funds to
reimburse the local government for the costs of that program or
increased level of services, except that the Legislature may, but is
not required to, provide that subvention of funds for the following
mandates:
   (1) A legislative mandate requested by the local government
affected.
   (2) Legislation defining a new crime or changing an existing
definition of a crime.
   (3) A legislative mandate enacted prior to January 1, 1975, or an
executive order or regulation initially implementing legislation
enacted prior to January 1, 1975.
   (b) A claim may not be filed for reimbursement pursuant to
subdivision (a) for any mandate if more than two years have passed
since the effective date of the mandate and no claim for that
reimbursement was filed in that period.
   (c) For the purposes of this section, "local government" means a
city, county, city and county, school district, special district,
authority, or other political subdivision of or within the State.
   (d) (1) For any fiscal year for a mandate for which the costs of a
local government claimant have been determined in a preceding fiscal
year to be payable by the State pursuant to law, the Legislature
shall either appropriate, in the annual Budget Act, the full payable
amount that has not been previously paid, or suspend the operation of
the mandate for the fiscal year for which the annual Budget Act is
applicable in a manner prescribed by law.
   (2) Payable claims for costs incurred prior to the 2004-05 fiscal
year that have not been paid prior to the 2005-06 fiscal year may be
paid over a term of years, as prescribed by law.
   (3) This subdivision applies to a mandate only as it affects a
city, county, city and county, or special district.
   (4) This subdivision shall not apply to a requirement to provide
or recognize any procedural or substantive protection, right,
benefit, or employment status of any local government employee or
retiree, or of any local government employee organization, that
arises from, affects, or directly relates to future, current, or past
local government employment and that constitutes a mandate subject
to this section.
   (e) Ad valorem property tax revenues shall not be used to
reimburse a local government for the costs of a new program or higher
level of service.
  Third--  That Section 8.5 of Article XVI thereof is amended to
read:
      SEC. 8.5.  (a) In addition to the amount required to be applied
for the support of school districts and community college districts
pursuant to Section 8, the Controller shall during each fiscal year
transfer and allocate all revenues available pursuant to 
subparagraph (A) of  paragraph  1   (2)
 of subdivision  (a)   (c)  of Section
 2   1  of Article XIII B to that portion
of the State School Fund restricted for elementary and high school
purposes, and to that portion of the State School Fund restricted for
community college purposes, respectively, in proportion to the
enrollment in school districts and community college districts
respectively.
   (1) With respect to funds allocated to that portion of the State
School Fund restricted for elementary and high school purposes, no
transfer or allocation of funds pursuant to this section shall be
required at any time that the Director of Finance and the
Superintendent of Public Instruction mutually determine that current
annual expenditures per student equal or exceed the average annual
expenditure per student of the 10 states with the highest annual
expenditures per student for elementary and high schools, and that
average class size equals or is less than the average class size of
the 10 states with the lowest class size for elementary and high
schools.
   (2) With respect to funds allocated to that portion of the State
School Fund restricted for community college purposes, no transfer or
allocation of funds pursuant to this section shall be required at
any time that the Director of Finance and the Chancellor of the
California Community Colleges mutually determine that current annual
expenditures per student for community colleges in this State equal
or exceed the average annual expenditure per student of the 10 states
with the highest annual expenditures per student for community
colleges. 
   (b) Notwithstanding the provisions of Article XIII B, funds
allocated pursuant to this section shall not constitute
appropriations subject to limitation.  
   (c) 
    (b)  From any funds transferred to the State School Fund
pursuant to subdivision (a), the Controller shall each year allocate
to each school district and community college district an equal
amount per enrollment in school districts from the amount in that
portion of the State School Fund restricted for elementary and high
school purposes and an equal amount per enrollment in community
college districts from that portion of the State School Fund
restricted for community college purposes. 
   (d) 
    (c)  All revenues allocated pursuant to subdivision (a)
shall be expended solely for the purposes of instructional
improvement and accountability as required by law. 
   (e) 
    (d)  Any school district maintaining an elementary or
secondary school shall develop and cause to be prepared an annual
audit accounting for  such   those  funds
and shall adopt a School Accountability Report Card for each school.