ABOLISHING FUNDS - 7455

An existing state fund may be abolished in one of two ways:

1. Abolishing Funds by Statute

   A bill that created a fund may set a repeal date for the fund. The fund would be abolished on the date specified in the statute unless a subsequent bill abolishes the fund before or extends the fund beyond the repeal date. If the enabling law does not include a repeal date, a subsequent bill signed into law may abolish an existing state fund. The fund is abolished on the effective date of the bill or on a future date specified in the statute.

   The legislation may also designate a successor fund for an abolished fund. If so, the assets and liabilities of the abolished fund are transferred to the successor fund. If no successor fund is named, the balance remaining would be transferred according to the provision of Government Code section 16346.

   When legislation repeals or abolishes a fund, agencies/departments should track the effective date of the abolishment to ensure all subsequent financial activity occur in the successor fund.  Otherwise, transactions posted to the abolished fund will require corrections and could have an impact on the Surplus Money Investment Fund (SMIF) earnings.

2. Abolishing Funds Administratively

A fund established by statute may be abolished administratively by Finance. Government Code section 13306 (b) allows Finance to abolish an existing state fund under the following conditions:

• The fund has had no fund-purpose activity for four years;
• The concurrence of the State Controller’s Office has been obtained; and
• Written notification has been sent to the Joint Legislative Budget Committee (JLBC). The abolition becomes effective 30 days after the date of the JLBC notification.

A fund established administratively by Finance pursuant to Government Code section 13306 (a), may also be abolished by Finance when the fund is no longer necessary to properly manage and account for the financial activities and resources of the state.

If an abolished fund is subsequently found to be needed, the fund may be reestablished by Finance, with the concurrence of the Controller.

An agency/department must work with their departmental budget analyst and the Finance budget analyst to request the abolition of a fund that is no longer needed. A request with the information listed below must be submitted to the Finance budget analyst.

1. Fund number and title
2. Reason/authorization/justification to abolish the fund
3. Specific statutory reference or legislation (with analysis, if available)
4. Proposed abolishment date
5. Requestor’s name and contact information
6. The disposition of remaining balance (if applicable)