BILL NUMBER: SB 1323 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Ackerman
JANUARY 29, 2002
An act to amend Section 41325 of the Education Code, to amend
Section 59125 of, to repeal Sections 43739 and 53761 of, and to
repeal and add Section 53760 of, the Government Code, and to amend
Sections 24767 and 25115 of the Water Code, relating to municipal
bankruptcy.
LEGISLATIVE COUNSEL'S DIGEST
SB 1323, as introduced, Ackerman. Municipal bankruptcy.
Under existing law, any taxing agency or instrumentality of the
state may file a petition and prosecute to completion bankruptcy
proceedings permitted under the laws of the United States.
This bill would, instead, authorize, except as provided by
statute, a local public entity in this state to file a petition and
exercise powers pursuant to the applicable federal bankruptcy law.
The bill would make other conforming changes and would make technical
changes to correct obsolete references.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 41325 of the Education Code is amended to read:
41325. (a) The Legislature finds and declares that when a school
district becomes insolvent and requires an emergency apportionment
from the state in the amount designated in this article, it is
necessary that the Superintendent of Public Instruction assume
control of the district in order to ensure the district's return to
fiscal solvency.
(b) It is the intent of the Legislature that the Superintendent of
Public Instruction, operating through an appointed administrator, do
all of the following:
(1) Implement substantial changes in the district's fiscal
policies and practices, including, if necessary, the filing of a
petition under Chapter 9 of the federal Bankruptcy Act
Code for the adjustment of indebtedness.
(2) Revise the district's educational program to reflect realistic
income projections, in response to the dramatic effect of the
changes in fiscal policies and practices upon educational program
quality and the potential for the success of all pupils.
(3) Encourage all members of the school community to accept a fair
share of the burden of the district's fiscal recovery.
(4) Consult, for the purposes described in this subdivision, with
the school district governing board, the exclusive representatives of
the employees of the district, parents, and the community.
(5) Consult with and seek recommendations from the county
superintendent of schools for the purposes described in this
subdivision.
SEC. 2. Section 43739 of the Government Code is repealed.
43739. Any city authorized to refund its indebtedness pursuant to
this article may file a petition under any bankruptcy law of the
United States. If the refunding of the city indebtedness is
authorized in the bankruptcy proceeding, the city may refund its
indebtedness pursuant to this article.
SEC. 3. Section 53760 of the Government Code is repealed.
53760. Any taxing agency or instrumentality of this State, as
defined in Section 81 of the act of Congress entitled "An act to
establish a uniform system of bankruptcy throughout the United
States," approved July 1, 1898, as amended, may file the petition
mentioned in Section 83 of the act and prosecute to completion all
proceedings permitted by Sections 81, 82, 83, and 84 of the act.
SEC. 4. Section 53760 is added to the Government Code, to read:
53760. (a) Except as otherwise provided by statute, a local
public entity in this state may file a petition and exercise powers
pursuant to applicable federal bankruptcy law.
(b) As used in this section, "local public entity" means any
entity, without limitation, that is a "municipality," as defined in
paragraph (40) of Section 101 of Title 11 of the United States Code
(Bankruptcy), or that qualifies as a debtor under any other federal
bankruptcy law applicable to political subdivisions of the state.
SEC. 5. Section 53761 of the Government Code is repealed.
53761. The State consents to the adoption of Sections 81, 82, 83,
and 84 by Congress and consents to their application to the taxing
agencies and instrumentalities of this State.
SEC. 6. Section 59125 of the Government Code is amended to read:
59125. A legislative body authorized to conduct a proceeding
pursuant to this chapter may file a petition and take all
actions required by any exercise powers under
applicable federal bankruptcy law for a district
formed under any improvement or acquisition law which provides for
the payment of the improvement or acquisition by special assessment
upon the property benefited as provided by Section
53760 .
SEC. 7. Section 24767 of the Water Code is amended to read:
24767. An agreement or plan may not be carried out pursuant to
this article until a proposal therefor is approved by the voters, and
a plan may not be carried out until it is either:
(a) Agreed to in writing by all of the holders of bonds and
warrants affected.
(b) Confirmed by a decree of any United States District
Court in accordance with the provision of the
National Bankruptcy Act, as amended federal bankruptcy
law .
SEC. 8. Section 25115 of the Water Code is amended to read:
25115. The approval of the holders of outstanding refunding bonds
affected by the modification shall be evidenced by either of the
following:
(a) The written consent of all of the owners and holders of the
bonds.
(b) A decree of any United States District Court in
accordance with the provisions of the National Bankruptcy Act, as
amended, which decree provides that the modification
An order under federal bankruptcy law that is binding upon the
holders and owners of all of the outstanding refunding bonds
affected.