BILL NUMBER: AB 139 CHAPTERED
BILL TEXT
CHAPTER 620
FILED WITH SECRETARY OF STATE OCTOBER 9, 2001
APPROVED BY GOVERNOR OCTOBER 8, 2001
PASSED THE ASSEMBLY SEPTEMBER 13, 2001
PASSED THE SENATE SEPTEMBER 10, 2001
AMENDED IN SENATE AUGUST 27, 2001
AMENDED IN SENATE JULY 18, 2001
AMENDED IN SENATE JULY 3, 2001
AMENDED IN ASSEMBLY MAY 16, 2001
AMENDED IN ASSEMBLY MAY 7, 2001
AMENDED IN ASSEMBLY MAY 1, 2001
INTRODUCED BY Assembly Members Florez and Aroner
JANUARY 24, 2001
An act to amend Sections 1240, 1241.5, 42127.6, and 42638 of the
Education Code, relating to public school finance.
LEGISLATIVE COUNSEL'S DIGEST
AB 139, Florez. County Superintendent of Schools: fiscal duties.
Existing law requires the superintendent of schools of each county
to perform prescribed duties, including, but not limited to,
visiting and examining each school in his or her county.
This bill would, in addition, require that the superintendent of
schools of each county annually present a report, as prescribed,
regarding fiscal solvency of any district with a disapproved budget,
qualified interim certification, or negative interim certification,
or that has been determined at any time to be in a position of fiscal
uncertainty, as specified.
Existing law authorizes the county superintendent to audit at any
time and report, as prescribed, regarding the expenditures and
internal controls of a school district.
This bill would, in addition, authorize a review or audit if the
county superintendent has reason to believe that fraud,
misappropriation of funds, or other illegal fiscal practices may have
occurred that merit examination, as prescribed. The bill would make
conforming changes.
Existing law requires the county superintendent of schools, among
other things, to conduct a study of the financial and budgetary
conditions of the school district, as necessary, to ensure that the
district meets its financial obligations.
This bill would provide that the study of the financial and
budgetary condition include, but not be limited to, a review of
internal controls.
By establishing these additional requirements, this bill would
impose a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement, including the creation of a State Mandates Claims Fund
to pay the costs of mandates that do not exceed $1,000,000 statewide
and other procedures for claims whose statewide costs exceed
$1,000,000.
This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1240 of the Education Code is amended to read:
1240. The superintendent of schools of each county shall do all
of the following:
(a) Superintend the schools of his or her county.
(b) Maintain responsibility for the fiscal oversight of the school
district in his or her county pursuant to the authority granted by
this code.
(c) Visit and examine each school in his or her county at
reasonable intervals to observe its operation and to learn of its
problems. He or she may annually present a report of the state of
the schools in his or her county, and of his or her office,
including, but not limited to, his or her observations while visiting
the schools, to the board of education and the board of supervisors
of his or her county.
(d) Distribute all laws, reports, circulars, instructions, and
blanks that he or she may receive for the use of the school officers.
(e) Annually present a report to the school district board and the
Superintendent of Public Instruction regarding the fiscal solvency
of any school district with a disapproved budget, qualified interim
certification, or a negative interim certification, or that has been
determined at any time to be in a position of fiscal uncertainty
pursuant to Section 42127.6.
(f) Keep in his or her office the reports of the Superintendent of
Public Instruction.
(g) Keep a record of his or her official acts, and of all the
proceedings of the county board of education, including a record of
the standing, in each study, of all applicants for certificates who
have been examined, which shall be open to the inspection of any
applicant or his or her authorized agent.
(h) Enforce the course of study.
(i) Enforce the use of state textbooks and of high school
textbooks regularly adopted by the proper authority.
(j) Preserve carefully all reports of school officers and
teachers.
(k) Deliver to his or her successor, at the close of his or her
official term, all records, books, documents, and papers belonging to
the office, taking a receipt for them, which shall be filed with the
State Department of Education.
(l) (1) Submit two reports during the fiscal year to the county
board of education in accordance with the following:
(A) The first report shall cover the financial and budgetary
status of the county office of education for the period ending
October 31. The second report shall cover the period ending January
31. Both reports shall be reviewed by the county board of education
and approved by the county superintendent of schools no later than 45
days after the close of the period being reported.
(B) As part of each report, the superintendent shall certify in
writing whether or not the county office of education is able to meet
its financial obligations for the remainder of the fiscal year and,
based on current forecasts, for two subsequent fiscal years. The
certifications shall be classified as positive, qualified, or
negative, pursuant to standards prescribed by the Superintendent of
Public Instruction, for the purposes of determining subsequent state
agency actions pursuant to Section 1240.1. For purposes of this
subdivision, a negative certification shall be assigned to any county
office of education that, based upon current projections, will be
unable to meet its financial obligations for the remainder of the
fiscal year or for the subsequent fiscal year. A qualified
certification shall be assigned to any county office of education
that may not meet its financial obligations for the current fiscal
year or two subsequent fiscal years. A positive certification shall
be assigned to any county office of education that will meet its
financial obligations for the current fiscal year and subsequent two
fiscal years. In accordance with those standards, the Superintendent
of Public Instruction may reclassify any certification. If a county
office of education receives a negative certification, the
Superintendent of Public Instruction, or his or her designee, may
exercise the authority set forth in subdivision (c) of Section 1630.
Copies of each certification, and of the report containing that
certification, shall be sent to the Superintendent of Public
Instruction at the time the certification is submitted to the county
board of education. Copies of each qualified or negative
certification, and of the report containing that certification, shall
be sent to the Controller at the time the certification is submitted
to the county board of education.
(2) All reports and certifications required under this subdivision
shall be in a format or on forms prescribed by the Superintendent of
Public Instruction, and shall be based on standards and criteria for
fiscal stability adopted by the State Board of Education pursuant to
Section 33127. The reports and supporting data shall be made
available by the county superintendent of schools to any interested
party upon request.
(3) This subdivision does not preclude the submission of
additional budgetary or financial reports by the superintendent to
the county board of education or to the Superintendent of Public
Instruction.
(4) The county superintendent of schools is not responsible for
the fiscal oversight of the community colleges in the county,
however, he or she may perform financial services on behalf of those
community colleges.
(m) When so requested, act as agent for the purchase of supplies
for the city and high school districts of his or her county.
(n) For purposes of Section 44421.5, report to the Commission on
Teacher Credentialing the identity of any certificated person who
knowingly and willingly reports false fiscal expenditure data
relative to the conduct of any educational program. This requirement
applies only if, in the course of his or her normal duties, the
county superintendent of schools discovers information that gives him
or her reasonable cause to believe that false fiscal expenditure
data relative to the conduct of any educational program has been
reported.
SEC. 2. Section 1241.5 of the Education Code is amended to read:
1241.5. (a) At any time during a fiscal year, the county
superintendent may audit the expenditures and internal controls of
school districts he or she determines to be fiscally accountable, and
shall conduct this audit in a timely and efficient manner. The
county superintendent shall report the findings and recommendation to
the governing board of the district within 45 days of completing the
audit. The governing board shall, no later than 15 days after
receipt of the report, notify the county superintendent of schools of
its proposed actions on the county superintendent's recommendation.
Upon review of the governing board report, the county
superintendent, at his or her discretion, may revoke the authority
for the district to be fiscally accountable pursuant to Section
42650.
(b) At any time during a fiscal year, the county superintendent
may review or audit the expenditures and internal controls of any
school district in his or her county if he or she has reason to
believe that fraud, misappropriation of funds, or other illegal
fiscal practices have occurred that merit examination. The review
or audit conducted by the county superintendent shall be focused on
the alleged fraud, misappropriation of funds, or other illegal fiscal
practices and shall be conducted in a timely and efficient manner.
The county superintendent shall report the findings and
recommendations to the governing board of the school district at a
regularly scheduled school district board meeting within 45 days of
completing the review, audit, or examination. The governing board of
the school district shall, no later than 15 calendar days after
receipt of the report, notify the county superintendent of its
proposed actions on the county superintendent's recommendations.
Upon review of the school district governing board report, the county
superintendent, at his or her discretion, and consistent with law,
may disapprove an order for payment of funds consistent with Section
42638.
SEC. 3. Section 42127.6 of the Education Code is amended to read:
42127.6. (a) If at any time during the fiscal year the county
superintendent of schools determines that a school district may be
unable to meet its financial obligations for the current or two
subsequent fiscal years or if a school district has a qualified
certification pursuant to Section 42131, he or she shall notify the
governing board of the school district and the Superintendent of
Public Instruction in writing of that determination and the basis for
the determination. The notification shall include the assumptions
used in making the determination and shall be available to the
public. The county superintendent of schools shall do any or all of
the following, as necessary, to ensure that the district meets its
financial obligations:
(1) Assign a fiscal expert, paid for by the county superintendent,
to advise the district on its financial problems.
(2) Conduct a study of the financial and budgetary conditions of
the district that shall include, but not be limited to, a review of
internal controls. If, in the course of this review, the county
superintendent determines that his or her office requires analytical
assistance or expertise that is not available through the district,
he or she may employ, on a short-term basis, with the approval of the
Superintendent of Public Instruction, staff, including certified
public accountants, to provide the assistance and expertise. The
school district shall pay 75 percent and the county office of
education shall pay 25 percent of these staff costs.
(3) Direct the school district to submit a financial projection of
all fund and cash balances of the district as of June 30 of the
current year and subsequent fiscal years as he or she requires.
(4) Require the district to encumber all contracts and other
obligations, to prepare appropriate cash-flow analyses and monthly or
quarterly budget revisions, and to appropriately record all
receivables and payables.
(5) Direct the district to submit a proposal for addressing the
fiscal conditions that resulted in the determination that the
district may not be able to meet its financial obligations.
(6) Withhold compensation of the members of the governing board
and the district superintendent for failure to provide requested
financial information. This action may be appealed to the
Superintendent of Public Instruction pursuant to subdivision (b).
Any contract entered into by a county superintendent of schools
for the purposes of this subdivision is subject to the approval of
the Superintendent of Public Instruction.
(b) Within five days of the county superintendent making the
determination specified in subdivision (a), a school district may
appeal the basis of the determination, and any of the proposed
actions that the county superintendent has indicated that he or she
will take to further examine the financial condition of the district.
The Superintendent of Public Instruction shall sustain or deny any
or all parts of the appeal within 10 days.
(c) If, after taking the actions identified in subdivision (a),
the county superintendent determines that a district will be unable
to meet its financial obligations for the current or subsequent
fiscal year, he or she shall notify the school district governing
board and the Superintendent of Public Instruction in writing of that
determination and the basis for that determination. The
notification shall include the assumptions used in making the
determination and shall be available to the public.
(d) Within five days of the county superintendent making the
determination specified in subdivision (c), a school district may
appeal that determination to the Superintendent of Public
Instruction. The Superintendent of Public Instruction shall sustain
or deny the appeal within 10 days. If the governing board of the
school district appeals the determination, the county superintendent
of schools may stay any action of the governing board that he or she
determines is inconsistent with the district's ability to meet its
financial obligations for the current or subsequent fiscal year until
resolution of the appeal by the Superintendent of Public
Instruction.
(e) If the appeal described in subdivision (d) is denied or not
filed, or if the district has a negative certification pursuant to
Section 42131, the county superintendent, in consultation with the
Superintendent of Public Instruction, shall, as necessary to enable
the district to meet its financial obligation, do any or all of the
following:
(1) Develop and impose, in consultation with the Superintendent of
Public Instruction and the school district governing board, a budget
revision that will enable the district to meet its financial
obligations in the current fiscal year.
(2) Stay or rescind any action that is determined to be
inconsistent with the school district's ability to meet its
obligations for the current or subsequent fiscal year. This includes
any actions up to the point that the subsequent year's budget is
approved by the county superintendent of schools. The county
superintendent of schools shall inform the school district governing
board in writing of his or her justification for any exercise of
authority under this paragraph.
(3) Assist in developing, in consultation with the governing board
of the school district, a financial plan that will enable the
district to meet its future obligations.
(4) Assist in developing, in consultation with the governing board
of the school district, a budget for the subsequent fiscal year. If
necessary, the county superintendent of schools shall continue to
work with the governing board of the school district until the budget
for the subsequent year is adopted.
(5) As necessary, appoint a fiscal adviser to perform any or all
of the duties prescribed by this section on his or her behalf.
(f) Any action taken by the county superintendent of schools
pursuant to paragraph (1) or (2) of subdivision (e) shall be
accompanied by a notification that shall include the actions to be
taken, the reasons for the actions, and the assumptions used to
support the necessity for these actions.
(g) This section does not authorize the county superintendent to
abrogate any provision of a collective bargaining agreement that was
entered into by a school district prior to the date upon which the
county superintendent of schools assumed authority pursuant to
subdivision (e).
(h) The school district shall pay 75 percent and the county office
of education shall pay 25 percent of the administrative expenses
incurred pursuant to subdivision (e) or costs associated with
improving the district's financial management practices. The
Superintendent of Public Instruction shall develop, and distribute to
affected school districts and county offices of education, advisory
guidelines regarding the appropriate amount of administrative
expenses charged pursuant to this subdivision.
(i) Notwithstanding Section 42647 or 42650, or any other provision
of law, a county treasurer shall not honor any warrant when,
pursuant to Sections 42127 to 42127.5, inclusive, or pursuant to this
section, the county superintendent or the Superintendent of Public
Instruction, as appropriate, has disapproved that warrant or the
order on school district funds for which a warrant was prepared.
(j) Effective upon the certification of the election results for a
newly organized school district pursuant to Section 35763, the
county superintendent of schools may exercise any of the powers and
duties of this section regarding the reorganized school district and
the other affected school districts until the reorganized school
district becomes effective for all purposes in accordance with
Article 4 (commencing with Section 35530) of Chapter 3 of Part 21.
SEC. 4. Section 42638 of the Education Code is amended to read:
42638. (a) If the order is disapproved by the county
superintendent of schools, it shall be returned to the governing
board of the school district, except as otherwise provided in this
code for the registration of warrants, with a statement of his or her
reasons for disapproving the order.
(b) If the county superintendent determines that there is evidence
that fraud or misappropriation of funds has occurred, the county
superintendent shall notify the governing board of the school
district, the State Controller, the Superintendent of Public
Instruction, and the local district attorney.
SEC. 5. Notwithstanding Section 17610 of the Government Code, if
the Commission on State Mandates determines that this act contains
costs mandated by the state, reimbursement to local agencies and
school districts for those costs shall be made pursuant to Part 7
(commencing with Section 17500) of Division 4 of Title 2 of the
Government Code. If the statewide cost of the claim for
reimbursement does not exceed one million dollars ($1,000,000),
reimbursement shall be made from the State Mandates Claims Fund.