BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 827|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 827
Author: De La Torre (D)
Amended: 8/27/10 in Senate
Vote: 27 - Urgency
SENATE LOCAL GOVERNMENT COMMITTEE : 4-0, 8/30/10
AYES: Aanestad, Kehoe, DeSaulnier, Price
NO VOTE RECORDED: Vacancy
ASSEMBLY FLOOR : Not relevant
SUBJECT : Local public employees
SOURCE : Author
DIGEST : This bill prohibits a local agencys contract
executed or renewed on or after January 1, 2011 with an
"excluded employee" from containing: (1) an automatic
contract renewal, (2) an automatic compensation increase
that exceeds a cost-of-living adjustment, (3) an automatic
compensation increase that is linked to a third-party
contract, including agreements under the
Meyers-Milias-Brown Act or the Education Code's employee
relations provisions, and (4) a severance payment greater
than the amount allowed by current law. This bill requires
local agencies to complete a performance review before it
can increase the compensation of an "excluded employee."
This requirement does not apply to cost-of-living
adjustments.
CONTINUED
AB 827
Page
2
ANALYSIS : The Meyers-Milias-Brown Act governs local
governments' relations with their employees and portions of
the Education Code govern school districts and community
college districts' employee relations. These collective
bargaining and representation procedures generally do not
apply to executive employees, county administrators, city
managers, special district managers, school
superintendents, community college presidents, who are
employed by, and report directly to, local elected
governing boards.
The governing bodies of local agencies must ratify their
executive employees' contracts of employment in open
session and reflect those decisions in their minutes.
Copies of these employment contracts and settlement
agreements must be publicly available. When a contract
with an executive employee is terminated, the maximum cash
settlement that a local agency can pay is an amount equal
to 18 months' salary. If the executive's contract has less
than a year to run, then the amount can't exceed the
remaining expected salary. These provisions apply to
general law counties, general law cities, special
districts, school districts, and community college
districts (SB 1996, Hart, 1992).
The Ralph M. Brown Act requires local agencies' meetings to
be "open and public," with specific exceptions. For
example, a local agency's legislative body may meet in
closed session to consider the appointment, employment,
evaluation, discipline, or dismissal of an employee unless
the employee requests a public session. However, the Brown
Act prohibits local officials from taking final action in a
closed session on an unrepresented employee's compensation.
The California Public Records Act requires public records
to be open to inspection during office hours and gives
every person a right to inspect public records, with
specific exceptions. The Act also provides the procedures
for requesting copies of public records. Among the
specific exemptions are employment contracts between public
agencies and public officials or employees.
The City of Bell's contracts with its former city manager
provided for automatic annual renewals, plus automatic
CONTINUED
AB 827
Page
3
compensation increases of up to 12% a year. The contracts'
settlement agreements may exceed the statutory limits.
This bill prohibits a local agency's contract executed or
renewed on or after January 1, 2011 with an "excluded
employee" from containing:
? An automatic contract renewal.
? An automatic compensation increase that exceeds a
cost-of-living adjustment.
? An automatic compensation increase that is linked
to a third-party contract, including agreements under
the Meyers-Milias-Brown Act or the Education Code's
employee relations provisions.
? A severance payment greater than the amount allowed
by current law.
This bill requires local agencies to complete a performance
review before it can increase the compensation of an
"excluded employee." This requirement does not apply to
cost-of-living adjustments. The records, procedures, and
actions must follow current law, including the Brown Act
and the Public Records Act.
The bill defines its terms:
1. "Compensation" means:
? Annual salary or stipend.
? Local agency's payments for deferred compensation
or defined benefits program.
? Automobile and equipment allowances.
? Supplemental incentive and bonus payments.
? Local agency's payments in excess of standard
benefits.
1. "Cost of living" is the Consumer Price Index that
applies to the local agency, as calculated by the State
Department of Finance.
2. "Excluded employee" is a person who is or will be
employed by, and report directly to, a local agency's
legislative body and is not subject to the
Meyers-Milias-Brown Act or the Education Code's employee
CONTINUED
AB 827
Page
4
relations provisions.
3. "Local agency" means a county, city, city and county,
school district, district or other local public agency.
This bill contains legislative declarations in support of
applying its provisions to charter cities.
Comments
Reacting to the City of Bell's contracts with its former
city manager, AB 827 requires all local governments to
conduct performance reviews before hiking the compensation
of their key executive staff. Local professional leaders,
city managers, county executives, special district
managers, school superintendents, community college
presidents, must have performance reviews before their
employers give raises and expand benefits. The bill bans
so-called "evergreen contracts," forcing local governing
boards to connect top staffers' performance with their pay
decisions. The message behind this bill is plain and
simple. Whether it's the city council of a big charter
city or the board of directors of a tiny, rural public
cemetery district, governing bodies need to link their
compensation decisions to their evaluations of staff
performance.
In the early 1990s, reacting to the public perception that
school districts and other local governments were granting
overly-generous settlement payments to induce unpopular
executives to leave, the Legislature reined in the
practice. Under the 1992 Hart bill, the most that local
agencies can pay is an amount equal to 18 months' salary.
If the executive's contract has less than a year to run,
then the amount can't exceed the remaining expected salary.
The Hart legislation specifically applies to general law
cities and general law counties, but does not mention
charter cities and charter counties. This bill goes
further by prohibiting all local governments, including
charter cities and charter counties, from signing contracts
with executive staff that exceed the statutory limits on
cash settlements.
Related Legislation
CONTINUED
AB 827
Page
5
This bill is not the Legislature's only response to the
City of Bell's compensation decisions and practices which
became public this summer. There are at least six other
bills, including:
SB 501 (Correa) which is pending on the Assembly Floor.
AB 192 (Gatto) which is in the Senate Rules Committee for
re-referral.
AB 194 (Torrico) which is in the Senate Rules Committee for
re-referral.
AB 900 (de Le?n) which the Committee will also hear on
August 30.
AB 1955 (De La Torre) which the Committee passed on August
12.
AB 2064 (Huber) which is in the Senate Rules Committee for
re-referral.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/30/10)
Los Angeles County District Attorney
AGB:nl 8/30/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED