Why do bills have reimbursement disclaimers that can be ignored?

A common provision that readers may notice while reading a California bill is that, at the end of the Legislative Counsel’s Digest, there are four “Digest Keys,” which identify the vote required for passage of the bill, whether the bill contains an appropriation, whether the bill will be re-referred to a fiscal committee, and whether the bill contains a mandated local program. This last bill key will appear as either “Local Program: no” or “Local Program: yes.”

To begin, what is a mandated local program? Both the California Constitution and the California Government Code describe in detail a state-mandated local program. As a result of these laws, a California bill is identified as mandating or not mandating a local program that may require reimbursement of costs by the state.

The Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Article 13B was added to the Constitution by Proposition 4 on the November 6, 1979 ballot. It contains fifteen sections, including Section 6, which deals with state-mandated local programs:

Section 6 essentially provides that, whenever the Legislature or any state agency mandates a new program or higher level of service on any local government, the State must provide a subvention of funds to reimburse that local government for the costs of the program or increased level of service, except that the Legislature may, but need not, provide a subvention of funds for the mandates. This applies to a mandate only as it affects a city, county, city and county, or special district.

Returning to the bill key, in crafting the language for new laws, the Legislature states explicitly whether or not a requirement is a “state-mandated local program,” a phrase that imposes new or increased requirements on local agencies. Of interest is that the Legislature does not have the final word on the subject. In other words, they do not decide which mandates are reimbursable. Instead, that task falls upon the Commission on State Mandates. This last point raises the question I posed at the outset of this article.

In addition to the constitutional provisions, statutory provisions establish procedures for making this reimbursement pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code. As a result, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs must be made pursuant to these statutory provisions.

Let’s look at some bill examples. The Legislative Counsel’s Digest will contain language similar to the following:

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for specified reasons.

The bill, in a “plus section” at the end, will contain a variation of the following disclaimer language:

No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act or because costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

OR

If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.

In most instances, the Legislature declares that no reimbursement is required by a bill because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by the new law. As a result, when reading bills, one most often finds “no” after the Local Program key after the Legislative Counsel’s Digest.

However, even if the Legislature deems a bill to not require reimbursement to local agencies or school districts, their statement in the bill does not actually make that determination. In other words, while the Legislature may state the costs associated with a bill do not need to be reimbursed, it is actually the State Mandates Commission that decides the question.

How does the Commission make this determination? The Commission has six statutory responsibilities, including:

• Test claims of local agencies and school districts that allege the existence of reimbursable state-mandated programs; and if a test claim is approved, adopt parameters and guidelines for claiming reimbursement and prepare a statewide cost estimate.
• Requests for mandate redeterminations that allege the state’s liability for a mandate has been modified based on a subsequent change in law.

The Commission publishes a Mandate Guide at this link: https://csm.ca.gov/docs/brochure.pdf. It explains, in part, that: “In enacting a statute or imposing an executive order, the Legislature, Governor, or a state agency may impose a new program or higher level of service on local agencies or school districts. If the statute or executive order does not contain sufficient funding and there are increased costs as a result of the change, affected local agencies and school districts may seek reimbursement by filing a test claim with the Commission on State Mandates.”

Because the Commission on State Mandates makes the final determination, does a California bill actually need to contain any mandate disclaimer language?

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