BILL NUMBER: SB 1323	ENROLLED
	BILL TEXT

	PASSED THE ASSEMBLY  JUNE 13, 2002
	PASSED THE SENATE  APRIL 4, 2002
	AMENDED IN SENATE  MARCH 7, 2002

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, 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, as defined, 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.


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 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.
  SEC. 3.  Section 53760 of the Government Code is repealed.
  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
county, city, district, public authority, public agency, or other
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 local public entities.
  SEC. 5.  Section 53761 of the Government Code is repealed.
  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 exercise powers
under applicable federal bankruptcy law 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 in accordance with 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) An order under federal bankruptcy law that is binding upon the
holders and owners of all of the outstanding refunding bonds
affected.