Commission on State Mandates: state mandates.

Assembly Member Hadwick's proposal to modify California's state mandate reimbursement procedures focuses on streamlining how local agencies and school districts receive notifications about claim adjustments and manage reduced reimbursements. The legislation amends existing audit and review processes overseen by the State Controller's Office for claims submitted by local entities seeking reimbursement for state-mandated costs.

The bill revises notification requirements for reimbursement adjustments, mandating that the Controller inform claimants in writing within 30 days of any audit or review-based adjustment, rather than tying this timeline to remittance advice issuance. These notifications must specify adjusted claim components, modified amounts, applicable interest charges, and reasoning behind the adjustments. The measure also introduces new options for handling reduced reimbursements, allowing the Controller to permit local agencies and school districts to either offset reductions against other unpaid claims or remit funds directly.

Under the legislation, interest rates on reduced claims would align with the Pooled Money Investment Account rate, applying from the initial payment date until the overpayment is resolved. The bill maintains existing provisions regarding audit timelines, requiring initiation within three years of claim filing and completion within two years of commencement. It preserves the Controller's authority to adjust payments in cases involving fraudulent intent, willful delays, or failed settlement negotiations.