Copyright© 2006 by School Services of California, Inc.

                                      Volume 19                   For Publication Date: December 1, 2006             No. 25

$100 Million in Interest to Be Paid on Mandate Reimbursements
 

The State Controller’s Office (SCO) indicates that it will be cutting checks for interest payments on deferred mandate reimbursements over the next five weeks. In total, the SCO estimates that the interest payments could reach $100 million statewide. Current law requires the state to pay interest to local agencies that have not received reimbursements for mandated costs for at least one year following adoption of a statewide cost estimate (Government Code Section 17561.5). The interest rate is based on the state’s rate of earnings on idle cash, otherwise known as the Pooled Money Investment Account Rate. 

School districts will receive individual checks for each mandate for which they had a pending claim where payment was deferred. SCO staff estimate that the accumulated interest for some mandates could go back as far as July 1996. The SCO has set a goal of completing the interest payments by the end of the current calendar year and has assigned five additional staff to complete the project. 

The SCO just completed the interest disbursement for Emergency Procedures mandate, having allocated $2.3 million in interest payments. Unfortunately, in March of this year, the Commission on State Mandates ruled that these activities are no longer reimbursable, based on what appears to be a technical repositioning of the pertinent statutes within the Education Code (Emergency Procedures, Earthquake Procedures, and Disasters and Comprehensive School Safety, {CSM-4241}).

—Robert Miyashiro