3.9.3 Revenue Anticipation Notes

The State issues revenue anticipation notes (RANs) to manage cash flow. The RANs provide funds for expenditures early in a fiscal year and are paid from tax and other revenues received by the State later in the fiscal year. RANs are issued under California Government Code Section 17300 et seq. and a resolution adopted by the State Treasurer, are approved by the State Controller and the State Director of Finance, and may be issued as either fixed rate or variable rate obligations. RANs must mature within 120 days of the end of the fiscal year and they satisfy the Current Fiscal Year Exception to the constitutional debt limit because the State’s payment obligation is limited to unapplied money for the fiscal year in which the notes are issued. See Section 1.2.4.1, Current Fiscal Year Exception. “Unapplied money” means money in the State General Fund for which payment warrants have not been drawn, subject to a priority for amounts needed to support the State’s school system and public institutions of higher education, to pay the principal of and interest on State GO bonds and notes and to reimburse internal borrowings for the General Fund from other State funds to the extent required by law.