|Budget Issue:||Explore Alternatives to Mandate Reimbursement Process Mandate|
|Program:||Commission on State Mandates|
|Finding or Recommendation:||Direct the administration to work with local governments to explore alternative methods of reimbursing local governments for the cost of filing for mandate claims, with the objective of reducing costs and restoring reimbursement to local governments.|
State law created the Commission on State Mandates (CSM) and established processes by which the CSM resolves disputes regarding the existence of state-reimbursable mandates and adopts methodologies local governments use to calculate the amount they may claim as reimbursement.
CSM Process Determined to Be a Reimbursable Mandate. In the 1980s, the CSM determined, in Mandate Reimbursement Process I,that local agencies are entitled to reimbursement for the administrative costs of filing successful mandate test claims and reimbursement claims. The Mandate Reimbursement Process I mandate has been suspended or inoperative in each fiscal year since 2005-06. (In 2006, in response to legislative changes to mandate law, the CSM reconsidered the Mandate Reimbursement Process I mandate and determined it was no longer reimbursable. In 2009, an appellate court ruling overturned the CSM’s redetermination.)
Mandate Test Claim Process Changed. In 2004, the Legislature enacted Chapter 890, Statutes of 2004 (AB 2856, Laird) which, among other things, required mandate test claims submitted to the CSM to specify (1) the estimated cost of implementing the alleged mandate for the claimant, as well as local governments statewide, (2) other funding sources or local government fee authority that could be used to offset the costs of the alleged mandate, and (3) prior mandate determinations that may be related to the alleged mandate.
Changes to Test Claim Processes Determined to Be a Mandate. In 2010, the CSM determined, in Mandate Reimbursement Process II, that the above-described changes to the mandate test claim process are a state-reimbursable mandate. The Legislature has suspended this mandate since 2010-11.
The Governor proposes to continue suspension of this mandate in 2013-14, making the previously described requirements of Chapter 890 optional for local governments in 2013-14. The CSM’s statewide cost estimate reports no costs associated with implementing this mandate, as no valid reimbursement claims were submitted during the initial filing period.
The Legislature’s decision as to whether or not to suspend this mandate should tie to its treatment of the Mandate Reimbursement Process I mandate. That is, if the Legislature intends to continue suspending the Mandate Reimbursement Process I mandate—as proposed by the Governor—it logically follows that the Mandate Reimbursement Process II mandate should be suspended as well.
From an intergovernmental relations standpoint, however, we have concerns with the continued suspension of the Mandate Reimbursement Process I and II mandates. Specifically, complying with the mandate reimbursement process as defined in state law is the only means for local governments to seek reimbursement for carrying out a state-reimbursable mandate. Although suspending the Mandate Reimbursement Process I and II mandates technically makes local government compliance with this process optional, local governments remain compelled to comply with this process to ensure they are successful in obtaining reimbursement for mandates as provided under the State Constitution. For this reason, we advise against continual suspension of the Mandate Reimbursement Process mandates. Instead, we recommend the Legislature direct the administration to work with local governments to explore alternative methods of reimbursing local governments for the cost of filing for mandates claims, with the objective of reducing their costs.