(1)Existing law generally imposes various reporting duties on entities that receive state and federal funds, including, among others, requiring each state agency, department, and entity to provide its employer identification number to the Treasurer.

This bill would require a local agency that receives federal funds that are subject to an expiration date date, and recurrently and persistently fails to spend a substantial amount of those funds by the expiration date, as provided, to submit a written report to the local agencys legislative body no later than one year before after the funding expiration date with a summary of how funds have been expended and a plan for the remaining funds to be expended if, at that time, at least 50% of federal funds have yet to be expended. an enumeration of the amount of funds returned, a summary of the reasons the funds were returned, and an analysis of policy or operational changes required to ensure that relevant federal funds are spent timely in the future. The bill would require the local agencys legislative body to include the report on the agenda of a public meeting. By imposing additional duties on local agencies, the bill would impose a state-mandated local program. The bill would apply these provisions to specified types of grants, and only where the local agency returns at least $10,000,000 from a single federal allocation.

(2)The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.

(1)Existing law generally imposes various reporting duties on entities that receive state and federal funds, including, among others, requiring each state agency, department, and entity to provide its employer identification number to the Treasurer.

This bill would require a state or local agency that receives federal funds that are subject to an expiration date to submit a written report to the Legislature or the local agencys legislative body, respectively, body no later than one year before the funding expiration date with a summary of how funds have been expended and a plan for the remaining funds to be expended if, at that time, at least 50% of federal funds have yet to be expended. The bill would require the local agencys legislative body to include the report on the agenda of a public meeting. By imposing additional duties on local agencies, the bill would impose a state-mandated local program.

(2)The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.

(3)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, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

(1)Existing law generally imposes various reporting duties on entities that receive state and federal funds, including, among others, requiring each state agency, department, and entity to provide its employer identification number to the Treasurer.

This bill would require a state or local agency that receives federal funds that are subject to an expiration date to submit a written report to the Legislature or the local agencys legislative body, respectively, no later than one year before the funding expiration date with a summary of how funds have been expended and a plan for the remaining funds to be expended. expended if, at that time, at least 50% of federal funds have yet to be expended. The bill would require the local agencys legislative body to include the report on the agenda of a public meeting. By imposing additional duties on local agencies, the bill would impose a state-mandated local program.

(2)The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.

(3)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, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

(1)Existing law requires an appropriation of state funds to be immediately available for encumbrance or expenditure during the specified period, or, if not otherwise limited by law, for three years after the date upon which it first became available for encumbrance or expenditure. Existing law generally imposes various reporting duties on entities that receive state and federal funds, including, among others, requiring each state agency, department, and entity to provide its employer identification number to the Treasurer.

This bill would require a state or local agency that receives state or federal funds that are subject to an expiration date to submit a written report to the Legislature within or the local agencys legislative body, respectively, no later than one year of before the funding expiration date with a summary of how funds have been expended and a plan for the remaining funds to be expended. The bill would require the local agencys legislative body to include the report on the agenda of a public meeting. By imposing additional duties on local agencies, the bill would impose a state-mandated local program.

(2)The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.

(3)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, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

Existing law requires the United States flag and the California flag to be prominently displayed during any and all games and performances of every kind that take place in open air sites.

This bill would make nonsubstantive changes to that provision.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

AB 1713 (Gipson) - Local agencies: federal funds: reports

Bill Summary:

AB 1713 would require a local agency that receives specified federal grant funding subject to an expiration date, and repeatedly fails to spend at least 25 percent of the funds, to submit a written report to its legislative body that would be included on the agenda of a public meeting.

Fiscal Impact:

• Unknown, potentially significant local costs for cities, counties, and special districts to prepare specified reports that provide for an accounting of federal expenditures and analyses of potential changes to more timely spend federal funds, and include those reports on the agenda of a public meeting. Costs associated with these requirements may be state-reimbursable, subject to a determination by the Commission on State Mandates. (General Fund)

Background:

California receives billions of dollars every year from the federal government for a variety of services, some of which flows to the State while other funds go to local government either through the Budget Act or directly through a variety of mechanisms, including via formula or competitive grants. According to the Department of Finance, the amount of federal funds appropriated through the Budget Act has grown from approximately $8 billion dollars in 1976-77 to an estimated $136 billion in 2023-24, including $119 billion for “local assistance.” The Legislative Analyst’s Office reports that local governments received about $18 billion in federal funds, both through direct payments to local governments ($8 billion) as well as from funds allocated through the state budget process ($10 billion) in the 2014-15 budget year.

The state and local governments in California are also in the midst of a historic infusion federal funds as the nation recovers from the COVID-19 pandemic, including funds from the American Rescue Plan Act (ARPA) and Infrastructure, Investment and Jobs Act (IIJA). California has received more than $43 billion in ARPA funds that must be fully spent by December 31, 2026. California is estimated to potentially draw an additional $30 billion or more under IIJA in the coming years with specific requirements and expenditure deadlines. Federal funds not spent by applicable deadlines generally revert back to the federal government.

Proposed Law:

AB 1713 would require cities, counties, and special districts to submit a specified written report to its legislative body, which must then include the report on the agenda of a public meeting, if the local agency receives certain federal funds and fails to spend at least 25 percent of those funds for at least two of three consecutive allocations from a federal grant program. The report must be submitted to the legislative body within one year of the funding expiration date and must include an enumeration of the amount of funds returned, a summary of the reasons the funds were returned, and an analysis of the policy or operational changes that would be required to ensure that the funds are spent timely in the future. The requirements of this bill would only apply to nonformula-funded, competitive, and discretionary federal grant programs when a local agency returns at least $10 million to the federal government from a single federal allocation.

Staff Comments:

The requirements of this bill would apply to the state’s 58 counties, 482 cities, and nearly 6,000 special districts. It is unclear how many local agencies would be subject to the reporting requirements in a given year, but each local agency may need to initiate additional administrative controls to track expenditures and reversions from each federal grant allocation in addition to the reporting and auditing requirements that may be required as a condition of receiving federal funds. Some local costs incurred as a result of this bill may be state-reimbursable, should a local agency file a successful claim for reimbursement with the Commission on State Mandates.

-- END --

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Anna M. Caballero, Chair

2023 - 2024 Regular

Local agencies: federal funds: reports

Requires local agencies receiving federal funds subject to an expiration date to report to their legislative bodies with a summary of expenditures to date and a plan to expend remaining funds.

Background

Federal funds and local government.  California receives billions of dollars every year from the federal government for a variety of services some of which flows to the State while other funds go to local government either through the Budget Act or directly through a variety of mechanisms, including via formula or competitive grants. According to the Congressional Research Service, the number of federal funding grants for which state and local governments were eligible in 2018 was over 1,200. According to the Department of Finance, the amount of federal funds appropriated through the Budget Act has grown from approximately $8 billion dollars in 1976-77 to an estimated $136 billion in 2023-24, including $119 billion for “local assistance.” According to the Legislative Analyst’s Office (LAO), in 2014-15, local governments received about $18 billion in federal funds, both through direct payments to local governments ($8 billion) as well as from funds allocated through the state budget process ($10 billion). Given the growth in the amount of federal funds included in the state budget in recent years, and recent substantial outlays by the federal government for infrastructure, it is likely that local governments in California are currently receiving $25 billion or more in federal funds every year.

Monitoring Administrative Spending. Typically state and local governments closely monitor their federal funds. If state and local agencies don’t perform necessary tasks to draw down federal funds, they won’t have resources necessary for building, planning, implementing, and administering a program budget. As a result, program administrators frequently practice what is known as a “FIFO” or “first in, first out” expenditure and accounting process so as to maximize the likelihood that program funds are spent before the life of the funds expires. Under the FIFO method, funds that are received earlier, typically expire earlier than other funds received later and as such are typically spent before other funds with later expiration dates.

Pointing to the City of Los Angeles returning $150 million in federal funding for providing shelter and supportive services back to the federal Department of Housing and Urban Development because the City did not spend funds by a deadline, the author wants to require local agencies to report on expenditures and provide a plan for the spend-down of federal funds whenever less than 50 percent of the federal funds for a program are spent a year prior to the expiration date of the funds. 

Proposed Law

Assembly Bill 1713 requires a local agency that receives federal funds subject to an expiration date to submit a written report to its legislative body whenever at least 50 percent of allocated federal funds are not expended a year before the fund’s expiration date. The report must summarize expenditures made up until then, as well as include a plan to spend remaining monies. The report must be provided to the legislative body of the local agency and be placed on the agenda at a public meeting of the legislative body.

State Revenue Impact

No estimate

Comments

1. Purpose of the bill.  According to the author, “We as a Legislative Body should fully understand how the funds we and the federal government allocate are utilized. It is our responsibility to ensure those funds are used efficiently and to the maximum benefit of the people of California. For example, we should not be sending $150 million earmarked to reduce homelessness back to the federal government when we still have a pervasive homelessness crisis on our hands. There are countless local organizations and constituents in need of support that consistently fight for funding. It is unfair to those and others when already allocated funds go unspent, and then they must search elsewhere for support that could have changed their conditions for the better. This bill will increase transparency throughout all levels of government and hold all parties accountable for the stewardship of funds.”

2. Should all types of federal funds be treated the same? This bill treats all federal funds with an expiration date in the same manner even though federal expenditures have a wide variety of purposes, planned expenditure periods, and program and reporting requirements. Some funds are spent gradually, over time, on a rolling basis, but local agencies generally hold funds for infrastructure projects in reserve until they are paid out according to a schedule.

The Committee may wish to consider amending AB 1713 to require reporting only for particular types of federal funds and in particular circumstances, such as when there is a “recurrent and persistent” history of failure to spend those funds and only require reporting when a “substantial” amount of funds are being returned. The Committee may also wish to consider amending AB 1713 to set a threshold dollar amount of federal funds returned to trigger reporting requirements.

3. Should all local agencies be treated the same?  Local agencies in California range from small special districts with less than $100,000 in annual revenues to Los Angeles County, which manages more than $32 billion annually. Some jurisdictions, such as the County of Los Angeles, may receive billions in federal funds, while small cities may receive some or none. However, AB 1713’s mandate applies to all local agencies. It is unclear whether a requirement that applies to all of California’s 58 counties, 482 cities, and nearly 6,000 special districts will improve financial management practices.  The Committee may wish to consider amending AB 1713 to mandate reporting requirements only for local agencies with a history of capacity issues as evidenced in one of the following ways:

• The local agency has been designated as high risk pursuant to an audit conducted by the California State Auditor.
• The local agency has received a written notice from the Controller of the agency’s failure to timely submit the annual financial transaction report described in Section 53891.
• The local agency has a local agency official that has been found to have willfully and knowingly submitted a false annual financial transaction report described in Section 53891.

4. The Right Remedy? (1)  This bill’s stated intent is “ensuring transparency and adequate oversight of state and federal funding,” but it is not clear whether the reporting requirements will identify why local agencies don’t spend federal funds. Local agencies may be unable to spend federal funds for reasons having nothing to do with transparency and reporting.  For example, in the case of entitlement programs or other participant based services programs, enrollments could drop or need for services could wane. Additionally, eligibility rules could limit participation while state or federal “strings” attached to federal monies could also create structural barriers to timely expenditure. Procurement requirements might substantially slow the process of disbursement and spending. The Committee may wish to consider amending AB 1713 to require reporting only after an agency fails to spend funds and the funds are returned to the federal government, and to change the content of the mandated report to focus on:

• An enumeration of the amount of funds returned.
• A summary of the reasons why the funds were returned.
• An analysis of what policy or operational changes would be required to ensure that the relevant federal funds are spent timely in the future

5. The Right Remedy? (2)  For many federal programs, program reporting requirements already exist.  Sometimes these reporting requirements are designed to ensure compliance with state or federal rules, sometimes they are used to measure program efficacy, and sometimes they are used to record who is enrolling in and benefitting from programs.  For example, federal workforce programs require local workforce development boards to report to the state and federal government, detailed information about who is being enrolled in workforce programs, what services they are receiving, and whether or not the programs lead to employment.  For public works projects paid for with federal dollars, contractors have to report payroll information to ensure compliance with prevailing wage law. For other programs, like social safety net programs, program participant eligibility and demographic data is collected and reported to both the state and federal government. Local agencies administer federal and state programs according to rules set by those entities, and generally report data for these programs to their governing boards and the public. 

6. Worth the Cost?  AB 1713 generates additional information, but local agencies will incur potentially significant costs complying with its requirements, and may need to be reimbursed by the state.  According to opponents, including the League of Cities, the California State Association of Counties, the Urban Counties of California, and the Rural County Representatives of California “The level of oversight and reporting mandates proposed in AB 1713 would add considerable staffing costs for all local governments. Local agencies would likely be required to hire additional budgetary staff to track and report this information to their own legislative bodies. Extrapolated statewide, these costs could range in the millions to tens of millions of dollars annually.”

7. Charter cities. The California Constitution allows cities that adopt charters to control their own “municipal affairs.”  In all other matters, charter cities must follow the general, statewide laws.  Because the Constitution doesn't define “municipal affairs,” the courts determine whether a topic is a municipal affair or an issue of statewide concern.  AB 1713 says that its statutory provisions apply to charter cities.

8. Mandate.  The California Constitution requires the state to reimburse local governments for the costs of new or expanded state mandated local programs.  Because the bill increases requirements for local governments, Legislative Counsel says that the bill imposes a new state mandate. The bill requires the state to reimburse local agencies if the Commission on State Mandates determines that the bill imposes a reimbursable mandate.

Assembly Actions

Assembly Accountability and Oversight Committee: 6-0

Assembly Appropriations Committee: 11-0

Assembly Floor: 78-0

Support and Opposition

(6/30/23)

Support: None received.

Opposition: California Special Districts Association
California State Association of Counties 
City of Thousand Oaks
League of California Cities
Rural County Representatives of California
Urban Counties of California

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1713

Author:(Gipson)

As Amended Ver:May 18, 2023

Majority vote

SUMMARY

Requires a state or local agency that receives federal funds subject to an expiration date to submit a written report to the Legislature or the local agency's legislative body, respectively, with a summary on the status of expenditure of those funds if at least 50% of those funds remain unspent.

Major Provisions

1. Requires a state or local agency that receives federal funds subject to an expiration date to submit a written report to the Legislature or the local agency's legislative body, respectively, with a summary of how funds have been expended and the plan to expend the remaining funds.
2. Makes this reporting requirement applicable only if at least 50% of federal funds have yet to be expended one year prior to the expiration date.
3. For reports to a local agency, requires that local agency's legislative body to include the report on the agenda of a public meeting.
4. Finds and declares that ensuring transparency and adequate oversight of state and federal funding is a matter of statewide concern and is not a municipal affair, making the bill applicable to all cities, including charter cities.
5. Provides for reimbursement of state mandated costs incurred by local agencies and school districts.

COMMENTS

According to the Author

According to the author, this bill would increase accountability for how taxpayer funds are spent and help prevent loss of federal funds with expenditure deadlines. The author cites as an example that the City of Los Angeles returned $150 million in federal funding for providing shelter and supportive services back to the federal Department of Housing and Urban Development because funds were not spent by an expenditure deadline. "It is our responsibility to ensure those funds are used efficiently and to the maximum benefit of the people of California. We should not be sending $150 million earmarked to reduce homelessness back to the federal government when we still have a pervasive homelessness crisis on our hands. There are countless local organizations and constituents in need of support that consistently fight for funding. It is unfair to those and others when already allocated funds go unspent, and then they must search elsewhere for support that could have changed their conditions for the better. This bill will increase transparency throughout all levels of government and hold all parties accountable for the stewardship of funds."

Historic Amount of Federal Funds. Over $100 billion in the state budget is funded by the federal government. The state and local governments in California are also in the midst of a historic infusion federal funds as the nation recovers from the COVID-19 pandemic, including funds from the American Rescue Plan Act (ARPA) and Infrastructure, Investment and Jobs Act (IIJA). California has received more than $43 billion in ARPA funds that must be fully spent by December 31, 2026. California is estimated to potentially draw an additional $30 billion or more under IIJA in the coming years with specific requirements and expenditure deadlines. Federal funds not spent by applicable deadlines generally revert back to the federal government. This bill requires a state or local agency to provide a report to its legislative body one year prior to the expiration of federal funds, summarizing how funds have been expended and the plan to expend the remaining funds.

Arguments in Support

None on file.

Arguments in Opposition

None on file.

FISCAL COMMENTS

According to the Assembly Appropriations Committee:

1. Costs of an unknown, but potentially significant, amount across state agencies to provide a written report to the Legislature regarding specified allocations of federal funds subject to an expiration date (General Fund or special fund). Given the state's reliance on federal funding for a wide range of programs, this bill could result in a substantial volume of new reports if federal funds are not promptly expended.
2. By requiring a local agency to also submit the above-described specified report to its legislative body, which must then agendize the report at a public meeting, this bill may create a state-mandated local program. If the Commission on State Mandates determines the provisions of this bill create a new program or impose a higher level of service for which the state must reimburse local costs, the county could claim reimbursement from the state.

VOTES

ASM ACCOUNTABILITY AND ADMINISTRATIVE REVIEW: 6-0-1

YES: Petrie-Norris, Dixon, Davies, Stephanie Nguyen, Rodriguez, Wilson

ABS, ABST OR NV: Bains

ASM APPROPRIATIONS: 11-0-5

YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Papan, Pellerin, Weber, Ortega

ABS, ABST OR NV: Megan Dahle, Dixon, Mathis, Robert Rivas, Sanchez

UPDATED

VERSION: May 18, 2023

CONSULTANT: Jaccqueline Kinney / A. & A.R. / (916) 319-3600 FN: 0000859

Date of Hearing: May 10, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

ABPCA Bill Id:AB 1713

Author:(Gipson) – As Amended Ver:April 25, 2023

Urgency: No State Mandated Local Program: Yes Reimbursable: Yes

SUMMARY:

This bill requires a state or local agency that receives federal funds subject to an expiration date to submit a written report to the Legislature or the local agency’s legislative body, respectively, no later than one year before the funding expiration date, with a summary of how funds have been expended and the plan to expend the remaining funds.

A local agency’s legislative body must include the report on the agenda of a public meeting.

FISCAL EFFECT:

1. Costs of an unknown, but potentially significant, amount across state agencies to provide a written report to the Legislature regarding each allocation of federal funds subject to an expiration date (General Fund (GF) or special fund). Given the state’s reliance on federal funding for a wide range of programs, this bill could result in a substantial volume of new reports. Additionally, since the primary purpose of this bill is to require a report, this bill is eligible for this committee’s suspense file.
2. By requiring a local agency to submit a report to its legislative body, which must then agendize the report at a public meeting, this bill may create a state-mandated local program. If the Commission on State Mandates determines the provisions of this bill create a new program or impose a higher level of service for which the state must reimburse local costs, the county could claim reimbursement from the state.

COMMENTS:

1. Purpose. As an example of the need for this bill, the author cites that the City of Los Angeles returned $150 million in federal funding allocated to provide shelter and supportive services back to the federal government because funds were not spent by an expenditure deadline. According to the author:

It is unfair to those and others when already allocated funds go unspent, and then they must search elsewhere for support that could have changed their conditions for the better. This bill will increase transparency throughout all levels of government and hold all parties accountable for stewardship of funds.

1. Historic Amount of Federal Funds. Over $100 billion in the state budget is funded by the federal government. The state and local governments in California are also in the midst of a historic infusion federal funds as the nation recovers from the COVID-19 pandemic, including funds from the American Rescue Plan Act (ARPA) and Infrastructure, Investment and Jobs Act (IIJA). California has received more than $43 billion in ARPA funds that must be fully spent by December 31, 2026. California is estimated to potentially draw an additional $30 billion or more under IIJA in the coming years with specific requirements and expenditure deadlines. Federal funds not spent by applicable deadlines generally revert back to the federal government. This bill requires a state or local agency to provide a report to its legislative body one year prior to the expiration of federal funds, summarizing how funds have been expended and the plan to expend the remaining funds.

Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081

Date of Hearing: April 19, 2023

ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW

Cottie Petrie-Norris, Chair

ABPCA Bill Id:AB 1713 (

Author:Gipson) – As Amended Ver:March 23, 2023

SUBJECT: State and local agencies: state and federal funds: reports

SUMMARY: This bill would require a state or local agency that receives state or federal funds subject to an expiration date to report to the Legislature, within one year of the funding expiration date, a summary of how funds have been spent and a plan for spending the remaining funds. Specifically, this bill would:

1. Require a state or local agency that receives state or federal funds that are subject to an expiration date to report to the Legislature within one year of the funding expiration date a summary of how funds have been expended and a plan for how the remaining funds are to be expended.
2. Find and declare that ensuring transparency and adequate oversight of state and federal funding is a matter of statewide concern and is not a municipal affair, thereby making the bill’s requirements applicable to all cities, including charter cities.
3. Provide for reimbursement of state mandated costs incurred by local agencies and school districts.

EXISTING LAW:

1. Existing state law provides that an appropriation of funds from the state budget shall be immediately available for encumbrance or expenditure during the period specified, or, if not otherwise limited by law, for three years after the date upon which it first became available for encumbrance or expenditure. (Gov. Code Sec. 16304)
2. Existing state law provides that an appropriation of funds from the state budget containing the term “without regard to fiscal years” shall be available for encumbrance from year to year until expended. (Gov. Code Sec. 16304)
3. Existing law provides for an annual state budget process with numerous controls for monitoring and reporting on expenditure of appropriated funds by state and local agencies for their specified purpose and applicable time periods.
4. Existing federal law provides for disbursement of federal funds to state and local agencies with authorization for expenditure for a wide variety of purposes, sometimes with federal expenditure deadlines that, if missed, requires the unexpended funds to revert to the federal government.

FISCAL EFFECT: Unknown. This bill has not been analyzed by a fiscal committee.

COMMENTS:

1. Author Intent to Increase Transparency and Accountability. According to the author, this bill would increase accountability for how taxpayer funds are spent and help prevent loss of federal funds with expenditure deadlines. The author cites as an example that the City of Los Angeles returned $150 million in federal funding for providing shelter and supportive services back to the federal Department of Housing and Urban Development because funds were not spent by an expenditure deadline.^[1] “It is our responsibility to ensure those funds are used efficiently and to the maximum benefit of the people of California. We should not be sending $150 million earmarked to reduce homelessness back to the federal government when we still have a pervasive homelessness crisis on our hands. There are countless local organizations and constituents in need of support that consistently fight for funding. It is unfair to those and others when already allocated funds go unspent, and then they must search elsewhere for support that could have changed their conditions for the better. This bill will increase transparency throughout all levels of government and hold all parties accountable for the stewardship of funds.”
2. Historic Amount of Federal Funds. California is in the midst of a historic infusion of federal funds due to federal legislation enacted in the past few years, including, among others, the American Rescue Plan Act (“ARPA”) and the Infrastructure, Investment and Jobs Act (“IIJA”). As described in detail by the Department of Finance, California has received more than $43 billion in ARPA funds that must be fully spent by December 31, 2026.^[2] California is estimated to potentially draw an additional $30 billion or more under IIJA in the coming years with specific requirements and expenditure deadlines.^[3] Federal funds not spent by applicable deadlines generally revert back to the federal government.
3. Focus on Federal Funds. This bill would impose on all state and local agencies the requirement for a report to the Legislature regarding all state and federal funds with an expiration date. As drafted, the bill would conceivably apply even to all funds that flow to state and local agencies from each annual state budget. These state budget funds already are monitored under current law and processes of the Department of Finance, the Legislative Analyst’s Office and legislative budget committees. While the transparency and accountability goals this bill seeks to achieve are critical, a more targeted approach may be more effective and workable. The author’s primary focus is to prevent the loss of federal funds as in the Los Angeles example cited. Thus, especially given the current massive influx of federal funds to California with expenditure deadlines in the next few years, the committee may wish to consider amending this bill to narrow its focus to federal funds with an expenditure deadline.
4. Local Agency Reporting. For federal funds that flow directly to a local agency, such as certain ARPA funds, the governing body of that recipient local agency would be responsible for ensuring applicable federal expenditure deadlines are met. Thus, it may not be practical to require the local agency to submit a report to the Legislature on what has been spent and the plan to spend remaining federal funds. Accordingly, the committee may wish to consider amending this bill to instead require that the local agency submit the specified report to its governing body and, to ensure transparency, require the governing body to notice the report on the agenda of a public meeting.

REGISTERED SUPPORT / OPPOSITION:

Support

None received.

Opposition

None received.

Analysis Prepared by: Jacqueline Kinney / A. & A.R. / (916) 319-3600

1. L.A. agencies returned $150 million in federal homelessness funds - Los Angeles Times (latimes.com) ↑

2. State Fiscal Recovery Fund | Department of Finance ↑

3. Governor Newsom Statement on Passage of $1.2 Trillion Infrastructure Investment and Jobs Act by Congress | California Governor ↑