BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
827 (De La Torre)
Hearing Date: 08/30/2010 Amended: 08/27/2010
Consultant: Mark McKenzie Policy Vote: L Gov 4-0
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BILL SUMMARY: AB 827, an urgency measure, would prohibit a
local agency from executing or renewing a contract after January
1, 2011 with "excluded employees" (those who are not subject to
specified collective bargaining provisions, including at-will
employees) that includes any of the following:
Automatic renewal of the contract.
Automatic compensation increases that exceed a cost-of-living
adjustment.
Automatic compensation increases that are linked to another
contract, as specified.
A maximum cash settlement that exceeds 18 months of salary
plus health benefits.
The bill would also require a local agency to complete a
performance review prior to increasing compensation for an
excluded employee, except cost-of-living adjustments, and
require the records, procedures, and actions related to the
compensation increase to conform to requirements of the Public
Records Act and the Ralph M. Brown Act.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Local mandate unknown, potentially significant
state-General
reimbursable costs (see staff comments)
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
AB 827 is one of a number of bills that address the controversy
surrounding compensation paid to officials in the City of Bell,
a small city with 38,867 residents, after voters approved a city
charter in 2005. Through public records requests, the Los
Angeles Times reported that Bell's City Manager received total
annual compensation of over $1.5 million, and some city council
members were being paid close to $100,000 per year for a
part-time office. More recent reports revealed that Bell
officials illegally raised property taxes in 2007 to cover
rising pension costs for its employees.
In response to the salary scandal, the State Controller (SCO)
announced new reporting requirements for cities and counties.
Current law requires local governments to report summary fiscal
information on general revenues and expenditures to the SCO;
payroll information is not listed as a separate category. Under
the proposed requirements, cities and counties would provide
salary information for each classification of elected official
and public employee in October of each year, which would be
posted on the SCO website each November. Existing law provides
that every employment contract between a state or local agency
and any public official or employee is a public record.
This bill is intended to increase public disclosure of local
agency employment contracts with excluded employees by banning
automatic contract renewal, automatic
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AB 827 (De La Torre)
compensation increases, and excessive severance payments, as
well as requiring performance reviews prior to increasing
compensation. The bill would also explicitly require the
records, procedures, and actions related to a compensation
increase to conform to requirements of the Public Records Act
and the Ralph M. Brown Act.
AB 827 would expand the duties of public officials, thereby
creating a reimbursable state-mandated local program. The
bill's requirements would apply to all local public agencies,
including general law cities, charter cities, counties, school
districts, and special districts, and would require changes to
the hiring and employment practices related to unrepresented and
at-will employees. Depending on the agency, this could apply to
only a few executive level employees, but some larger agencies
could have numerous at-will employees beyond the executive staff
level, which could involve substantial staff time in larger
agency human resources departments as well as legal staff time
to revise contract procedures. Total reimbursable mandate costs
are unknown, and would depend upon whether affected agencies
submit a successful claim for reimbursement. These costs would
likely be relatively minor for many agencies, but since the bill
applies to over 6000 entities, total statewide costs could be
significant. If ten percent of these agencies incur costs of
over $1,000, and a successful reimbursement claim is filed,
total statewide costs would exceed $600,000. Most of these
costs would be one-time, with minor ongoing costs.