State cash position very strong at end of 2023-24 fiscal year
Over $118 billion of "available cash on hand" across hundreds of state accounts
At the end of the 2023-24 fiscal year (June 30, 2024), California’s state treasury had over $118 billion of “available cash on hand”—up from about $112 billion one year prior. The $118 billion consists of a $15 billion ending cash balance in the state’s main operating account, the General Fund, and $103 billion of “borrowable” balances across hundreds of other state accounts, including reserves, rainy day funds, and special funds. This summary is derived from the monthly cash report issued by the State Controller.
Cash Position Consistently Strong in Recent Years. State government’s funds on hand are elevated as a result of the temporary selective spending “freeze” implemented in late April to preserve budget-balancing options for June 2024 budget negotiations. But this is a minor factor in the overall cash condition, which has remained very strong despite the state’s revenue challenges of the past 18 months. The growth of large budget reserves, combined with cautious budgeting of state special funds and multiyear disbursement periods for recent years’ large appropriations, has transformed the state’s once awful cash position into one of consistent strength over the last several years. Thankfully, recent strength in the cash position meant some of the worst responses to past General Fund deficits—such as delayed payments to vendors, tax refund recipients, and some state workers—have not recurred recently.
State General Fund Borrows From 700+ Other State Accounts. Most of the state’s General Fund receipts come in the latter part of the fiscal year, while General Fund disbursements occur more evenly throughout the year. Like most governments, the state must manage cash resources to account for these seasonal variations in receipts and disbursements. As a result, California’s General Fund routinely borrows from more than 700 of the state’s approximately 1,500 other funds and accounts for cash management purposes. These funds hold the borrowable balances referenced above. In addition to this “internal borrowing,” the state also can borrow externally—for example, from municipal bond investors via short-term revenue anticipation notes (RANs)—to manage seasonal cash variations. The state issued RANs in every year but one between 1983 and 2014, but no RANs have been required during the past decade.
Treasurer Has Leading Role in Managing State Fund Balances. In general, state treasury funds are managed in the Pooled Money Investment Account (PMIA). The State Treasurer’s Office manages PMIA pursuant to statute, with oversight from the Pooled Money Investment Board (the Treasurer, the Controller, and the Director of Finance). The state, as well as some local governments, invest in the PMIA. Most PMIA resources are held in U.S. Treasuries and agency obligations, which are sometimes called cash equivalents as they generally can be readily converted into cash, given investors’ perceptions of their safety and liquidity. As of June 30, 2024, the PMIA’s portfolio totaled an estimated $178 billion. (The PMIA technically includes state General Fund and reserve resources, as well as the state’s Surplus Money Investment Fund and the Local Agency Investment Fund.)
General Fund Deficit and Strong Cash Balances? Some ask why the state has had to address General Fund deficits in recent years while maintaining a robust cash position. The focus of the annual state budget process is balancing the General Fund budget. It is accounted for separately from other state funds, and those other funds currently make up the vast majority of the borrowable balances in the PMIA. Section 12 of Article IV of the California Constitution requires annual enactment of a balanced General Fund budget, based on the revenue estimate included in the annual budget act and estimates of enacted spending and available reserves. Continued disbursements of recent years’ appropriations, as well as the planned use of reserves and selected balances in other state funds, likely will reduce the state’s overall cash balances over the next few years. If, however, state General Fund revenues grow due to strength in the stock market or growth in Silicon Valley tech investments, the state’s cash position could remain steady or improve even more.