History of California's Mandated Cost Process:

SB 90

State reimbursement for state mandated activities originated with the Property Tax Relief Act of 1972.

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 the State.

Proposition 4

In 1979, voters approved Proposition 4, which added Article XIII B to the California Constitution and superseded the SB 90 legislation.

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 funds to reimburse the associated costs, with certain exceptions.

Definition of "Mandated Cost"

Government Code Section 17514 states "Costs mandated by the State" means any increased cost which a local agency or school district is required to incur as a result of a statute enacted on or after January 1, 1975, or any executive order implementing any statute enacted on or after January 1, 1975 which mandates a new program or higher level of service of an existing program.

The California Supreme Court further defined mandated costs as only being applicable when a program is administered locally, carries out a uniquely governmental function of providing services to the public, and does not generally apply to all state residents or entities.