Legislative Analyst's Office Analysis of the 2001-02 Budget Bill

State Treasurer (0950)

The State Treasurer has a number of responsibilities related to the management of the state's financial assets. These responsibilities include:

• Providing custody for all money and securities belonging to or held by the state.
• Investing temporarily idle funds.
• Paying warrants and checks drawn by the State Controller.
• Preparing, selling, and redeeming the state's general obligation and revenue bonds.
• Preventing the issuance of unsound securities by irrigation, water storage, and certain other districts.

The Governors's budget proposes expenditures totaling $23 million for the Treasurer's office in 2001-02, which represents a decrease of 3 percent from the current-year's expenditures. The request includes $10.3 million from the General Fund, a 4 percent decrease from 2000-01. This decrease is primarily a result of elimination of excess vacant positions and a decrease in operating expenses.

Additional Funds Not Needed to Fill Vacant Positions

We recommend the Legislature delete $244,000 under Item 0950-001-0001 because the budget already includes funding for the positions which are proposed to be filled. (Delete $244,000 in Item 0950-001-0001.)

The Governor's budget includes a request for $244,000 from the General Fund to fill two currently vacant positions to administer an expansion of the Time Deposit Program. However, the office already has authorization for the positions and its budget already includes the necessary funds to fill the positions. It is not clear if the office has redirected the funds previously approved by the Legislature. If this is the case, the office should explain what was done and why resources are needed in that area. At this time, however, we recommend the Legislature delete $244,000 in Item 0950-001-0001.

Modified Workload Does Not Justify More Staff

We recommend the Legislature delete $351,000 in Item 0950-001-0001 because the office has not justified an increase in workload. (Delete $351,000 in Item 0950-001-0001.)

The Governor's budget includes a request for $351,000 from the General Fund and four new positions to manage a variable interest rate general obligation bond program as authorized by Chapter 522, Statutes of 1999 (SB 997, Brulte). The program is an alternative financing option instead of the traditional fixed interest rate program. The Treasurer indicates a need for additional staff in order to administer the program. However, it is not clear that additional workload will be generated or that additional resources are necessary. The Treasurer will not be issuing a significantly larger amount of bonds. As variable rate bonds are issued, fixed rate bond issuance will decrease, resulting in minimal, if any, increase in workload. Consequently, some of the resources currently directed to the fixed rate program can be used for the variable rate program. Therefore, we recommend the Legislature delete $351,000 in Item 0950-001-0001.