BILL ANALYSIS
AB 164
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Date of Hearing: April 29, 2009
ASSEMBLY COMMITTEE ON EDUCATION
Julia Brownley, Chair
AB 164 (Mendoza) - As Amended: April 22, 2009
SUBJECT : School districts: compensation of district
superintendents.
SUMMARY : Limits the authority of school governing boards to
buy-out district superintendent contracts; and, authorizes
school governing boards to provide the superintendent an
alternate position in the district until the end of the contract
term. Specifically, this bill requires, commencing January 1,
2010, school district governing boards to include each of the
following provisions in any contract for the services of a
district superintendent:
1)The governing board shall have the authority to terminate the
superintendent at any time during the term of contract.
However, if the amount owing to the superintendent pursuant to
the contract is less than fifty thousand dollars, the
governing board shall have the option of either of the
following:
a) Releasing the former superintendent from any further
responsibilities with the district. If the district
chooses to release the former superintendent the former
superintendent shall agree that any income he or she earns
during the term of the contract as the superintendent or
chief executive officer of a school district in the United
States shall be offset from the amount otherwise owed to
the former superintendent under the contract.
b) Providing the former superintendent with a full-time
position with the district for which he or she is
qualified. If this option is chosen by the governing
board, the superintendent shall serve in that capacity for
the remainder of the term of the contract and shall be
compensated in accordance with the contract. If the former
superintendent declines to take the position, he or she
shall be deemed to be in breach of the contract and the
district shall be relieved of any obligation to compensate
the former superintendent.
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2)If the governing board terminates the superintendent and the
amount owing to the superintendent pursuant to the contract is
more than fifty thousand dollars, the governing board shall
provide the former superintendent with a full-time position
with the district for which he or she is qualified. If this
option is chosen by the governing board, the superintendent
shall serve in that capacity for the remainder of the term of
the contract and shall be compensated in accordance with that
contract. If the former superintendent declines to take the
position, he or she shall be deemed to be in breach of the
contract and the district shall be relieved of any obligation
to compensate the former superintendent.
3)The superintendent shall receive no retirement, medical,
dental, or other benefits that would exceed the benefits that
any certificated employee of that district receives. The
district may compensate a former superintendent for any
retirement, medical, dental or other benefits actually earned
during the term of the contract.
EXISTING LAW requires that all contracts of employment between
an employee and a local agency include a provision that states
if the contract is terminated, the maximum cash settlement that
an employee may receive shall be equal to the monthly salary of
the employee multiplied by the number of months left on the
unexpired term of the contract, but not more than 18 months.
(Government Code 53260)
FISCAL EFFECT : This bill is keyed non-fiscal.
COMMENTS : This bill would ban school district superintendent
contract settlements or buy-outs unless the amount remaining on
a superintendent contract is less than $50,000. The bill would
further authorize school district governing boards to terminate
a superintendent contract and provide the superintendent an
alternative full time position in the district at the same
salary for the remainder of the contract term. If the
superintendent declines the alternative position, the school
board is relieved of any obligation to compensate the
superintendent. Existing law authorizes local agencies (which
include school districts and community college districts) to pay
contract settlements up to the amount of the employee's monthly
salary multiplied by 18. This means that school district
governing boards and superintendents may enter into a contract
which allows for a settlement of up to 18 months of salary
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payment or the number of months left in the contract, whichever
is less.
This bill also requires school district boards to include in any
district superintendent contract a provision that the district
superintendent shall not receive retirement, medical, dental, or
other benefits that would exceed the benefits of a certificated
employee. It is unclear how this provision would be
implemented. It is also unclear what the author's intent is by
requiring this contract provision. What specific benefits is
the author trying to prohibit superintendents from receiving?
For example, would this provision prohibit a school board from
providing a superintendent a cell phone, if the district doesn't
also offer certificated employees a cell phone? One could argue
it is essential for district superintendents to be on-call 24
hours a day and therefore they would need to carry a cell phone.
The committee should consider whether this provision is overly
broad.
Committee Considerations . The committee should consider how
this measure would be implemented. Does it make sense to
authorize a district to provide a superintendent an alternative
position within the district for the remainder of the contract?
For example, does it make sense for any employer who has decided
to terminate an employee, to at the same time, offer that
employee an alterative position in the same organization? Would
that employee experience undo public criticism among their
peers? How would it affect the performance of a new
superintendent if the former superintendent still works in the
district? In addition, under this measure a district could end
up compensating two superintendents at the same time for up to
four years. Can districts afford to compensate two
superintendents for a potentially long period of time? While
the alternative job may pay a substantial salary, the district
would inevitably be paying the superintendent more to perform
that new position than they would usually pay anyone else in
that position. This would establish a net loss for the
district, which could be equal to or more than an amount the
district would otherwise pay the superintendent according to an
early termination clause in the contract. For example, if the
superintendent's salary is $250,000 and the alternative position
usually pays $100,000, the district could end up paying the
additional $150,000 for 3 years which totals $450,000 whereas
paying the superintendent an early termination amount equal to
18 months salary would be only $375,000.
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The bill specifies that commencing on January 1, 2010 the
governing board of a school district shall include these
provisions in any contract for the services of a district
superintendent. This means that all existing superintendent
contracts would need to be redrafted by January 1, 2010 to
include the provisions in this measure. The committee should
consider whether the provisions in the bill should apply to
existing contracts or only new contracts established after
January 1, 2010.
How are Superintendent Contracts Usually Drafted ? Independently
elected school boards are authorized to enter into a contact
with district superintendents, including assistant
superintendents in some cases. It is unclear if this bill would
also apply to assistant superintendents as well. Superintendent
contracts typically include the following terms: a contract term
of between one and four years; salary; a stipend for doctorate
degrees; a process for evaluation; a contract termination
clause; an automobile and cell phone allowance; vacation and
sick time; and, possibly moving expenses. If districts were no
longer allowed to offer a termination clause, this would
essentially eliminate the term of employment in the contract and
would question the need for a contract at all. Since it is
unrealistic for a superintendent to take an alternative position
in the same district, superintendents would be at-will employees
who could be terminated at any time without severance. The
committee should consider the implications of eliminating
superintendent buy-outs; how that would affect the contracting
ability of local school boards; and, their ability to attract
top quality superintendents.
Local Control Issues . If elected school boards have the
authority to determine the length of time a superintendent shall
be paid if the contract is terminated early, up to the
equivalent of 18 months of salary, aren't these local school
board members held accountable by the voters who elected them?
If constituents of school board members are unhappy with the
actions of the school board, they have the right to work to get
the members unelected. Should the Legislature intervene to
limit the flexibility afforded to school boards, when elected
school board members are held accountable by the voters that
elected them?
Other State Policies . The California School Boards Association
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(CSBA) surveyed other states and received 19 responses. Florida
limits buyouts to one year, Kentucky and Mississippi prohibit
buy-outs, and Texas reduces state funding to a district if a
district buys out a superintendent contract and the amount of
the buy-out exceeds one year of salary and benefits. All other
states indicated no restrictions.
The author sites the following examples of recent superintendent
buy-outs: Alum Rock Union School District negotiated a $300,000
severance package for a superintendent in 2008 even though the
terms of the contract only obligated the school district to pay
$200,000. Alum Rock Union School District also negotiated
superintendent buyouts in 2001 and again in 2004. In December
2008, Los Angeles Unified School District negotiated a severance
package with its superintendent worth over $500,000. The
severance package included payment for salary, housing expenses,
and an annual expense account.
According to the author, AB 164 is needed in order to stop the
wasteful spending associated with superintendent buy-outs. It
is unacceptable for school districts to divert funds away from
the needs of students in order to provide a golden parachute for
an administrator. Buy-outs amounting to hundreds of thousands
of dollars represent lost opportunities for our children. This
is money that could have been used to pay for teachers,
textbooks, tutoring, or a large variety of other vital needs.
Superintendent buy-outs represent an irresponsible use of
taxpayer funds. It has been argued that buy-outs are needed to
provide stability for superintendents and that these buy-outs
help attract talent to these positions. AB 164 does nothing to
impede this candidate recruitment process.
Arguments in Support . The California Taxpayers' Association
supports the bill and argues, "It is important to limit pay for
work performed, to avoid waste of scarce taxpayer dollars. In
addition to ensuring that compensation levels are appropriate,
this bill would eliminate other fringe benefits that exceed what
a comparable job in civil service would provide. AB 164
furthers the goal of government efficiency and merits strong
support."
Capistrano Unified School District supports the bill and argues,
"The current economic downturn has forced school districts to
cut millions of dollars from their education programs and other
services. Therefore, it is unfeasible for districts to divert
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more precious funds away from the needs of students in order to
provide inordinate compensation to an administrator. The
Capistrano Unified Board of Trustees fully supports AB 164
because it channels education dollars to the state's most
important resource - our children."
United Teachers Los Angeles supports the bill and argues, "With
the current state of our economy, the deep cuts in education
funding and the current bail out of companies where CEO
compensation packages are out of hand we cannot continue the
financial drains by school districts who give termination
packages to superintendents that they cannot afford."
Arguments in Opposition . According to the California School
Boards Association, "Existing law already limits buy-outs. This
limits the use of public monies for buy-out purposes, and
affords school districts the flexibility to compete in the
market for superintendent and recruit the best person to fit
local circumstances. AB 164 would put California school
districts at a disadvantage in the recruitment of top
superintendents. AB 164 could force California school districts
to pay higher salaries and offer more in benefits to compensate
for a lack of job security. Also, top superintendents may be
reluctant to work in California."
According to the Association of California School Administrators,
"AB 164 would have a chilling impact on the careers of school
district superintendents. Having two superintendents
simultaneously working within the same school district could
undermine the education and governance for the district. Early
termination clauses are often more cost effective and certainly,
two superintendents with their entire salaries and benefits on
staff at the same time could lead to additional costs for the
district.
Unlike teachers, a superintendent can be released without cause.
School superintendents are at-will employees without any due
process rights. Under AB 164, a school board could
unilaterally, and without cause, terminate a multi-year
superintendent contract without compensation to the
superintendent. Current law allows for up to 18 months of a
superintendent's contract to be paid upon dismissal by the
board. Early termination clauses in a superintendent's contract
are often negotiated far below the 18 months. It is all too
common for a superintendent to be dismissed after a school board
election for the simple excuse that they just don't seem to fit
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any longer. Early termination clauses are not considered extra
pay nor are they a gift of public funds. They are damages paid
to an employee who is released at will with a breach of
contract. Without an early termination clause, the dismissed
superintendent would be forced to go to court and file a
wrongful discharge resulting in much higher costs to a school
district. In the past two years, ACSA's Professional Standards
Department has assisted 34 superintendents whose boards have
unilaterally and without cause terminated their contracts. We
can't expect superintendents to take positions of leadership
under the direction of an elected school board without a
contract that ensures an individual some protection. AB 164
eliminates that protection. ACSA believes [the] bill will have
a detrimental impact to attracting and retaining dynamic school
leaders whose role is a key factor in improving student
achievement."
Committee Amendment : If this bill is passed by the committee,
staff recommends the bill be amended to specify that benefits
including cell phone allowances and vehicle allowances be
excluded from section (c) in the measure.
REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees
(AFSCME)
California Taxpayers' Association
Capistrano Unified School District
United Teachers Los Angeles
Opposition
Association of California School Administrators
California Association of School Business Officials
California Association of Suburban School Districts
California School Boards Association
El Dorado Union High School District
Los Angeles Unified School District
Riverside County Schools Advocacy Association
San Francisco Unified School District
Small School Districts' Association
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Analysis Prepared by : Chelsea Kelley / ED. / (916) 319-2087