Commission on State Mandates: state mandates.

Assembly Member Hadwick's proposal to modify California's state mandate reimbursement procedures would revise how the State Controller notifies and processes claim adjustments for local agencies and school districts. The legislation changes the timing requirement for adjustment notifications from 30 days after remittance advice to 30 days after any audit or review determination.

The bill establishes new options for local agencies and school districts to address reduced reimbursements identified through audits. These entities could choose to offset reduced amounts against their existing unpaid reimbursement claims or remit payment directly to the Controller. For reduced claims, the Controller would apply interest at the Pooled Money Investment Account rate, calculated from the initial payment date until the overpayment resolution.

The measure maintains existing audit timeframes, requiring the Controller to initiate audits within three years of claim filing or amendment and complete them within two years of initiation. When no initial payment has been made on a claim, the audit window begins upon first payment. The legislation preserves the Controller's authority to adjust payments without limitation in cases involving fraudulent intent or when audit delays result from a claimant's willful acts or inability to reach settlement terms.