The concept of state reimbursement to local agencies and school districts for state mandated activities originated with the Property Tax Relief Act of 1972 (Senate Bill 90, Chapter 1406, Statutes of 1972), known as SB 90. The primary purpose of the Act was to limit the ability of local agencies and school districts to levy taxes. To offset these limitations, the Legislature declared its intent to reimburse local agencies and school districts for the costs of new programs or increased levels of service mandated by state government. The Legislature authorized the State Board of Control to hear and decide upon claims requesting reimbursement for costs mandated by the state.
In 1979, voters approved Proposition 4, which added article XIII B to the California Constitution and superseded the SB 90 legislation. Article XIII B imposed appropriation limits on the tax proceeds of both state and local governments. Section 6 of article XIII B requires that whenever the Legislature or any state agency mandates a new program or higher level of service on local government, the state must provide a subvention of funds to reimburse the associated costs, with certain exceptions.
To implement section 6 of article XIII B, the Legislature enacted Government Code section 17500 under Chapter 1459, Statutes of 1984. On January 1, 1985, the Commission was created to succeed the State Board of Control. The Commission is a quasi-judicial body whose primary responsibility is to hear and decide test claims that allege that the Legislature or a state agency imposed a reimbursable state mandate program upon local government. Additionally, the Commission hears and decides claims alleging that the State Controller's Office has incorrectly reduced payments to a local agency or school district.
In 1993, SB 1033 imposed a new duty upon the Commission to review county applications for a finding of significant financial distress. The Commission must complete its review of the application, conduct a quasi-legislative hearing, and determine if the applicant county is facing such distress within a statutory time frame. An affirmative finding by the Commission permits the county to ultimately decide whether to reduce general assistance benefits. In 1995, additional statutory changes resulting from Senate Bill 11 set timelines for the Commission to complete all actions on a test claim. These timelines were revised by Assembly Bill 1963, an urgency bill effective September 22, 1998.
Originally, the Commission was composed of five members: the State Controller, State Treasurer, Director of the Department of Finance, Director of the Office of Planning and Research, and a public member with experience in public finance. Effective January 1, 1997, two local elected official positions were added to the Commission. The Governor may appoint a governing board member of a school district, a city council member, or a member of a county or city and county board of supervisors to the local elected official positions, provided that no more than one member shall come from the same category. The public member and the two local elected officials are subject to Senate confirmation and serve for a term of four-years, subject to reappointment.