Back to the Report

More publications like . . .

Managing California’s Cash


Report

2009-10 Budget Analysis Series: California's Cash Flow Crisis

January 14, 2009 - Balancing the budget—by increasing state revenues and decreasing expenditures—is the most important way that the Legislature can shorten the duration and severity of the state’s cash flow crisis. Absent prompt action to begin addressing the state’s colossal budget gap and other measures discussed in this report specifically to help the state’s cash flows, state operations and payments will have to be delayed more and more over time. In the event that the Legislature and the Governor are unable to reach agreement to balance the budget by the summer of 2009, major categories of services and payments funded by the state may grind to a halt. This could seriously erode the confidence of the public—and investors—in our state government. To avoid this, it is urgent that the Legislature and the Governor act immediately to address the budgetary and cash crises that have put the state on the edge of fiscal disaster.

Report

California’s Cash Flow Crisis: May 2009 Update

May 7, 2009 - In part because state revenue collections have been weaker than expected since passage of the February budget package, major cash flow difficulties loom for California in the summer and fall of 2009. Without significant budget-balancing and cash management actions by the Legislature or unprecedented borrowing from the short-term credit markets, the state will not be able to pay many of its bills on time for much of 2009-10. Returning the budget to balance will be important to resolving the state's cash flow challenges. We recommend that the Legislature act quickly to address these challenges—by late June or early July at the latest. We also note that the state should be cautious about accepting additional federal assistance for the state's cash flow problems, especially given the strings that may be attached to such aid. (Five-minute video summary)

See also: May 22, 2009, Conference Committee Update: California's Cash Flow Crisis

Perspective

The Quiet Transformation in California’s Cash Management

August 29, 2019 - In this Fiscal Perspective, Legislative Analyst Gabriel Petek writes about how the building of large budget reserve balances has quietly transformed California’s cash management in recent years.

Report

[PDF] The 2017-18 Budget: Governor’s CalPERS Borrowing Proposal

May 16, 2017 -

As part of his May Revision, the Governor proposes the state borrow $6 billion from the Pooled Money Investment Account (PMIA) to make a one-time payment to reduce state pension liabilities at CalPERS. The Governor proposes that the state and General Fund and special funds repay this loan with interest over a period of about eight years.

As we discuss in this brief, we think the plan would probably save the state money over the long run, although uncertainties remain about the likelihood and magnitude of this benefit. However, the administration is asking the Legislature to approve a large commitment of public resources with insufficient consideration. The administration has provided few of the legal or quantitative analyses that the Legislature should expect when receiving a request of this magnitude and complexity. Moreover, the administration has introduced this proposal as part of the May Revision—with only weeks before the constitutional deadline for the Legislature to approve the budget. We doubt all of the issues we raise in the brief can be reviewed by the June 15 deadline. However, there is no reason that the Legislature must make a decision before June 15. We recommend the Legislature wait to act on this plan until after the administration has submitted more analysis. At that point, the Legislature could decide whether or not to approve the proposal.

Report

An Update on California’s Cash Management Situation

August 31, 2020 - Provides an update on California’s cash management situation, including recent developments in spring 2020 and the outlook for 2020-21.

Handout

[PDF] California's Cash and Debt Situation: Its Effect on Resources Projects

March 17, 2009 - Presented to Assembly Budget Subcommittee No. 3 on Resources

Report

The 2018-19 Budget: Repaying the CalPERS Borrowing Plan

April 4, 2018 - The 2017-18 budget package authorized a plan to borrow $6 billion from the Pooled Money Investment Account—an account that is essentially the state’s checking account—to make a one-time supplemental payment to the California Public Employees' Retirement System. All funds that make pension payments will repay the loan over the next decade or so. Authorizing legislation gives the administration some discretion over how funds will repay the loan, but the statute includes a variety of repayment requirements. In our view, while the basic elements of the administration’s repayment plan are reasonable, we have serious concerns about some choices the administration made. To address these concerns, in this report, we recommend a modified repayment approach that would: (1) be consistent with the authorizing legislation, (2) allocate repayment costs across funds appropriately and publicly, and (3) provide incentives to create more cost-effective outcomes.

Handout

[PDF] Administration's Cash Management Proposals

June 11, 2009 - Presented to Budget Conference Committee

Report

2009-10 Budget Analysis Series: Overview of the Governor’s Budget

January 8, 2009 - The Governor’s budget framework makes a good faith effort to close a colossal $40 billion budget gap. The Legislature, however, can improve the plan by making further use of the ballot, adopting more strategic programmatic reductions and revenue increases, and reducing the reliance on borrowing. There are no easy paths to solving the crisis. But it is urgent that the Legislature and Governor act immediately to address a budgetary and cash situation that has the state on the edge of fiscal disaster

Report

[PDF] California Update: The “Trigger” Mechanism

October 1, 1994 - As part ofthe 1994-95 budget package, the state put into place a so-called trigger mechanism. This mechanism was viewed as being necessary to ensure repayment of money borrowed from investors to finance the budget plan.

Report

Overview of the 2009-10 May Revision

May 21, 2009 - The Governor's estimate of a new $21 billion budget problem is reasonable. The May Revision proposals include major spending reductions and serious efforts for long–term state efficiencies and savings. By acting quickly and reducing reliance on some of the Governor’s riskiest proposals--such as financing $5.5 billion of the deficit by issuing revenue anticipation warrants--the Legislature can return the budget to balance, prevent another state cash crunch, and preserve core funding for what it deems to be California’s long–term priorities. To accomplish these goals, the Legislature now needs to cut lower–priority programs substantially or eliminate them. To address significant budget deficits forecast in future years, the Legislature also needs to begin work this year on measures that further improve the efficiency of state services for 2010–11 and beyond. (Note: the Appendix in the HTML version was corrected as of 2:30 p.m. on May 21, 2009.)

Report

The 2019-20 Budget: Structuring the Budget: Reserves, Debt and Liabilities

February 5, 2019 - This report considers the overall structure of the Governor’s budget to evaluate how well it prepares the state to address a future budget problem. We begin with background to explain the state budget structure, budget problems, and options for addressing budget problems. We also provide background on the state’s existing reserves and debts and liabilities. We then present some key considerations as the Legislature considers its overall budget structure. Finally, we present and assess each of the Governor’s major budget reserve and debt and liability proposals and offer some alternatives for legislative consideration.

2/5/19: Corrected total of state spending deferrals in Figure 5.

Report

[PDF] California Update: California’s Cash Crunch

March 1, 1994 - California Update: California’s Cash Crunch