BILL NUMBER: AB 1366 CHAPTERED 09/28/05 CHAPTER 360 FILED WITH SECRETARY OF STATE SEPTEMBER 28, 2005 APPROVED BY GOVERNOR SEPTEMBER 28, 2005 PASSED THE ASSEMBLY SEPTEMBER 7, 2005 PASSED THE SENATE SEPTEMBER 6, 2005 AMENDED IN SENATE AUGUST 31, 2005 AMENDED IN SENATE AUGUST 15, 2005 AMENDED IN SENATE JUNE 23, 2005 AMENDED IN ASSEMBLY APRIL 7, 2005 INTRODUCED BY Assembly Member Lieber FEBRUARY 22, 2005 An act to amend Section 42127.8 of, and to add Section 84041 to, the Education Code, relating to community colleges. LEGISLATIVE COUNSEL'S DIGEST AB 1366, Lieber Community colleges: fiscal accountability: County Office Fiscal Crisis and Management Assistance Team. Existing law establishes the California Community Colleges under the administration of the Board of Governors of the California Community Colleges. Under existing law, community college districts throughout the state provide instruction at the campuses they operate and maintain. Existing law provides for an annual audit of each community college district, and requires the board of governors to establish standards and procedures to encourage sound fiscal management practices by community college districts. Existing law establishes the County Office Fiscal Crisis and Management Assistance Team (FCMAT), which consists of persons having extensive experience in school district budgeting, accounting, data processing, telecommunications, risk management, food services, pupil transportation, purchasing and warehousing, facilities maintenance and operation, and personnel administration, organization, and staffing. Among other duties, FCMAT provides fiscal management assistance at the request of any school district or county office of education. A FCMAT unit is selected and governed by a 23-member governing board with prescribed membership. This bill would add the Chancellor of the California Community Colleges or his or her designee and a member of a community college district governing board chosen by the chancellor to the FCMAT governing board, thus increasing its membership to 25. The bill would authorize the board of governors to request the FCMAT to assist a community college district to establish or maintain sound financial and budgetary conditions and to comply with principles of sound fiscal management. The bill would specify the conditions under which the board of governors would be authorized to request the FCMAT to assist a community college district under the bill. The bill would require that the costs of any activities undertaken by the FCMAT pursuant to this bill would be paid, as specified, by the district that was assisted by the FCMAT. The bill would require the FCMAT to submit a progress report to the affected district, to the board of governors, and to the chancellor at least every 6 months, or more frequently if that is required by the chancellor. In the event that an assignment is made under this bill for the purpose of providing management or fiscal crisis intervention, or both, for a community college district where a crisis presents an imminent threat to the fiscal integrity and security of that district, the bill would require the chancellor to submit a report, including specified data, to the board of governors. The bill would authorize community college districts to request the FCMAT to provide specified services, at that district's expense, as specified, irrespective of whether the board of governors has requested the FCMAT to assist the district in that instance. The bill would require the board of governors to develop and adopt any regulations that are necessary for the implementation of the bill. The bill would incorporate additional changes in Section 42127.8 of the Education Code proposed by SB 430 that would become operative only if SB 430 and this bill are both chaptered and become effective on or before January 1, 2006, and this bill is chaptered last. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 42127.8 of the Education Code is amended to read: 42127.8. (a) The governing board provided for in subdivision (b) shall establish a unit to be known as the County Office Fiscal Crisis and Management Assistance Team. The team shall consist of persons having extensive experience in school district budgeting, accounting, data processing, telecommunications, risk management, food services, pupil transportation, purchasing and warehousing, facilities maintenance and operation, and personnel administration, organization, and staffing. The Superintendent may appoint one employee of the department to serve on the unit. The unit shall be operated under the immediate direction of an appropriate county office of education selected jointly, in response to an application process, by the Superintendent and the Secretary for Education. (b) The unit established under subdivision (a) shall be selected and governed by a 25-member governing board consisting of one representative chosen by the California County Superintendents Educational Services Association from each of the 11 county service regions designated by the association, 11 superintendents of school districts chosen by the Association of California School Administrators from each of the 11 county service regions, one representative from the State Department of Education chosen by the Superintendent of Public Instruction, the Chancellor of the California Community Colleges or his or her designee, and one member of a community college district governing board chosen by the chancellor. The governing board of the County Office Fiscal Crisis and Management Assistance Team shall select a county superintendent of schools to chair the unit. (c) (1) The Superintendent may request the unit to provide the assistance described in subdivision (b) of Section 1624, Section 1630, Section 33132, subdivision (b) of Section 42127.3, subdivision (c) of Section 42127.6, Section 42127.9, and subdivision (a) of Section 42238.2, and to review the fiscal and administrative condition of any county office of education, school district, or charter school. (2) The Board of Governors of the California Community Colleges may request the unit to provide the assistance described in Section 84041. (d) In addition to the functions described in subdivision (c), the unit shall do all of the following: (1) Provide fiscal management assistance, at the request of any school district or county office of education, or, pursuant to subdivision (g) of Section 84041, at the request of any community college district. Each school district or county office of education receiving that assistance shall be required to pay the onsite personnel costs and travel costs incurred by the unit for that purpose, pursuant to rates determined by the governing board established under subdivision (b). The governing board annually shall distribute rate information to each school district and county office of education. (2) Facilitate training for members of the governing board of the school district, district and county superintendents, chief financial officers within the district, and schoolsite personnel whose primary responsibility is to address fiscal issues. Training services shall emphasize efforts to improve fiscal accountability and expand the fiscal competency of local agencies. The unit shall use state professional associations, private organizations, and public agencies to provide guidance, support, and the delivery of any training services. (3) Facilitate fiscal management training through the 11 county service regions to county office of education staff to ensure that they develop the technical skills necessary to perform their fiduciary duties. The governing board established pursuant to subdivision (b) shall determine the extent of the training that is necessary to comply with this paragraph. (4) Produce a training calendar, to be disseminated semiannually to each county service region, that publicizes all of the fiscal training services that are being offered at the local, regional, and state levels. (e) The governing board shall reserve not less than 25 percent, nor more than 50 percent, of its revenues each year for expenditure for the costs of contracts and professional services as management assistance to school districts or county superintendents of schools in which the board determines that a fiscal emergency exists. (f) The governing board established under subdivision (b) may levy an annual assessment against each county office of education that elects to participate under this section in an amount not to exceed twenty cents ($0.20) per unit of total average daily attendance for all school districts within the county. The revenues collected pursuant to that assessment shall be applied to the expenses of the unit. (g) The governing board established under subdivision (b) may pay to the department, from any available funds, a reasonable amount to reimburse the department for actual administrative expenses incurred in the review of the budgets and fiscal conditions of school districts and county superintendents of schools. (h) When employed as a fiscal adviser by the department pursuant to Section 1630, employees of the unit established pursuant to subdivision (a) shall be considered employees of the department for purposes of errors and omissions liability insurance. (i) (1) The unit shall request and review applications to establish regional teams of education finance experts throughout the state. (2) To the extent that funding is provided for purposes of this subdivision in the annual Budget Act or through another appropriation, regional teams selected by the Superintendent, in consultation with the unit, shall provide training and technical expertise to school districts and county offices of education facing fiscal difficulties. (3) The regional teams shall follow the standards and guidelines of and remain under the general supervision of the governing board established under subdivision (b). (4) It is the intent of the Legislature that, to the extent possible, the regional teams be distributed geographically throughout the various regions of the state in order to provide timely, cost-effective expertise to school districts, county offices of education, and community college districts throughout the state. SEC. 1.5. Section 42127.8 of the Education Code is amended to read: 42127.8. (a) The governing board provided for in subdivision (b) shall establish a unit to be known as the County Office Fiscal Crisis and Management Assistance Team. The team shall consist of persons having extensive experience in school district budgeting, accounting, data processing, telecommunications, risk management, food services, pupil transportation, purchasing and warehousing, facilities maintenance and operation, and personnel administration, organization, and staffing. The Superintendent may appoint one employee of the department to serve on the unit. The unit shall be operated under the immediate direction of an appropriate county office of education selected jointly, in response to an application process, by the Superintendent and the Secretary for Education. (b) The unit established under subdivision (a) shall be selected and governed by a 25-member governing board consisting of one representative chosen by the California County Superintendents Educational Services Association from each of the 11 county service regions designated by the association, 11 superintendents of school districts chosen by the Association of California School Administrators from each of the 11 county service regions, one representative from the State Department of Education chosen by the Superintendent of Public Instruction, the Chancellor of the California Community Colleges or his or her designee, and one member of a community college district governing board chosen by the chancellor. The governing board of the County Office Fiscal Crisis and Management Assistance Team shall select a county superintendent of schools to chair the unit. (c) (1) The Superintendent may request the unit to provide the assistance described in subdivision (b) of Section 1624, Section 1630, Section 33132, subdivision (b) of Section 42127.3, subdivision (c) of Section 42127.6, Section 42127.9, and subdivision (a) of Section 42238.2, and to review the fiscal and administrative condition of any county office of education, school district, or charter school. (2) A county superintendent of schools may request the unit to review the fiscal or administrative condition of a school district or charter school under his or her jurisdiction. (3) The Board of Governors of the California Community Colleges may request the unit to provide the assistance described in Section 84041. (d) In addition to the functions described in subdivision (c), the unit shall do all of the following: (1) Provide fiscal management assistance, at the request of any school district, charter school, or county office of education, or, pursuant to subdivision (g) of Section 84041, at the request of any community college district. Each school district, charter school, or county office of education receiving that assistance shall be required to pay the onsite personnel costs and travel costs incurred by the unit for that purpose, pursuant to rates determined by the governing board established under subdivision (b). The governing board annually shall distribute rate information to each school district, charter school, and county office of education. (2) Facilitate training for members of the governing board of the school district, district and county superintendents, chief financial officers within the district, and schoolsite personnel whose primary responsibility is to address fiscal issues. Training services shall emphasize efforts to improve fiscal accountability and expand the fiscal competency of local agencies. The unit shall use state professional associations, private organizations, and public agencies to provide guidance, support, and the delivery of any training services. (3) Facilitate fiscal management training through the 11 county service regions to county office of education staff to ensure that they develop the technical skills necessary to perform their fiduciary duties. The governing board established pursuant to subdivision (b) shall determine the extent of the training that is necessary to comply with this paragraph. (4) Produce a training calendar, to be disseminated semiannually to each county service region, that publicizes all of the fiscal training services that are being offered at the local, regional, and state levels. (e) The governing board shall reserve not less than 25 percent, nor more than 50 percent, of its revenues each year for expenditure for the costs of contracts and professional services as management assistance to school districts or county superintendents of schools in which the board determines that a fiscal emergency exists. (f) The governing board established under subdivision (b) may levy an annual assessment against each county office of education that elects to participate under this section in an amount not to exceed twenty cents ($0.20) per unit of total average daily attendance for all school districts within the county. The revenues collected pursuant to that assessment shall be applied to the expenses of the unit. (g) The governing board established under subdivision (b) may pay to the department, from any available funds, a reasonable amount to reimburse the department for actual administrative expenses incurred in the review of the budgets and fiscal conditions of school districts, charter schools, and county superintendents of schools. (h) When employed as a fiscal adviser by the department pursuant to Section 1630, employees of the unit established pursuant to subdivision (a) shall be considered employees of the department for purposes of errors and omissions liability insurance. (i) (1) The unit shall request and review applications to establish regional teams of education finance experts throughout the state. (2) To the extent that funding is provided for purposes of this subdivision in the annual Budget Act or through another appropriation, regional teams selected by the Superintendent, in consultation with the unit, shall provide training and technical expertise to school districts, charter schools, and county offices of education facing fiscal difficulties. (3) The regional teams shall follow the standards and guidelines of and remain under the general supervision of the governing board established under subdivision (b). (4) It is the intent of the Legislature that, to the extent possible, the regional teams be distributed geographically throughout the various regions of the state in order to provide timely, cost-effective expertise to school districts, charter schools, county offices of education, and community college districts throughout the state. SEC. 2. Section 84041 is added to the Education Code, to read: 84041. (a) The board of governors may request the County Office Fiscal Crisis and Management Assistance Team (FCMAT) established pursuant to Section 42127.8 to assist a community college district to establish or maintain sound financial and budgetary conditions and to comply with principles of sound fiscal management. (b) The board of governors may recommend additional persons with expertise in community college fiscal accountability to serve as part of a FCMAT operation for the purposes of this section. (c) The board of governors may request FCMAT to assist a community college district as follows: (1) Whenever regulations adopted by the board of governors authorize contracting for a management review of the district and its educational programs or an audit of the financial conditions of the district. (2) To provide management or fiscal crisis intervention, or both, for a community college district where a crisis presents an imminent threat to the fiscal integrity and security of that district. In these cases, the FCMAT shall have the authority, subject to regulations adopted by the board of governors, to stay or rescind any action of the district's governing board that is inconsistent with the district's fiscal integrity and security. (d) The FCMAT shall submit a progress report to the affected district, to the board of governors, and to the chancellor at least every six months, or more frequently if that is required by the chancellor. (e) Each community college district that receives assistance at the request of the board of governors under subdivision (a), (b), (c), or (d) shall be required to pay the full cost incurred by the unit for these purposes. (f) If the board of governors requests the assistance of the FCMAT pursuant to paragraph (2) of subdivision (c), the chancellor shall provide the board of governors with a report that includes all of the following: (1) An assessment of which events or activities led to the crisis. (2) An action plan for addressing the deficiencies of the district. (3) A process for assessing district progress in correcting deficiencies. (4) Benchmarks that indicate the presence of local capacity to manage the fiscal responsibilities of the district. (g) (1) Irrespective of whether the FCMAT has been requested by the board of governors to assist a district under this section, a district may request the FCMAT to do either or both of the following at district expense, in accordance with paragraph (2): (A) Provide fiscal management assistance. (B) Facilitate training for members of the district governing board and for any district employees whose responsibilities include addressing fiscal issues. Training services shall emphasize efforts to improve fiscal accountability and to expand the fiscal competency of the trainees. (2) Each community college district that receives assistance at its request under this subdivision shall be required to pay the full cost incurred by the unit for that purpose. (h) The board of governors shall develop and adopt any regulations that are necessary for the implementation of this section. SEC. 3. Section 1.5 of this bill incorporates amendments to Section 42127.8 of the Education Code proposed by both this bill and SB 430. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2006, (2) each bill amends Section 42127.8 of the Education Code, and (3) this bill is enacted after SB 430, in which case Section 1 of this bill shall not become operative.