BILL ANALYSIS
AB 827
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 827 (De La Torre)
As Amended August 27, 2010
2/3 vote. Urgency
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|ASSEMBLY: | |(May 28, 2009) |SENATE: |37-0 |(August 30, |
| | | | | |2010) |
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(vote not relevant)
Original Committee Reference: L. GOV.
SUMMARY : Prohibits automatic renewal provisions in the contract
of an excluded employee, prohibits automatic salary increases in
these contracts, unless it is a cost-of-living adjustment,
without the vote of a legislative body, and requires a
performance review to occur prior to increasing the salary of an
excluded employee.
The Senate amendments delete the Assembly version of this bill,
and instead:
1)Prohibit, on or after January 1, 2011, any contract executed
or renewed between a local agency and an excluded employee to
provide for any of the following:
a) An automatic renewal of the contract;
b) An automatic increase in compensation that exceeds a
cost-of-living adjustment;
c) An automatic increase in compensation that is linked to
another contract, including an agreement entered into
pursuant to the Meyers-Milias-Brown Act or the Education
Code's employee relations provisions; or,
d) A maximum cash settlement that exceeds the amounts
established in existing law.
2)Define "compensation" as any of the following:
a) Annual salary or stipend;
b) Local agency payments to the filer's deferred
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compensation or defined benefit plans;
c) Automobile and equipment allowances;
d) Supplemental incentive and bonus payments; or,
e) Local agency payments to the filer that are in excess of
the standard benefits that the local agency offers for all
other employees.
3)Require the local agency, before a local agency may increase
the compensation of an excluded employee, to complete a
performance review of the excluded employee.
4)Provide that the records, procedures, and actions shall
conform to the requirements of law, including, but not limited
to, the Public Records Act (PRA) and the Ralph M. Brown Act
(Brown Act).
5)State that a performance review of an excluded employee is not
necessary if the compensation increase is only a
cost-of-living adjustment.
6)Define "excluded employee" as any person who is or will be
employed by, and report directly to, the legislative body of a
local agency and who is not subject to the Meyers-Milias-Brown
Act or the Education Code's employee relations provisions.
7)State that "excluded employee" includes any person who
performs governmental duties for a local agency pursuant to a
contract with that local agency and any person who is
considered an at-will employee.
8)Define "local agency" as a county, city, whether general law
or chartered, city and county, town, school district,
municipal corporation, district, political subdivision, or any
board, commission or agency thereof, or other local public
agency.
9)Define "cost-of-living" as the Consumer Price Index that
applies to a local agency, as calculated by the Department of
Finance using a formula developed by the Department of
Industrial Relations.
10)Make legislative findings and declarations that the fiscal
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integrity and stability of local government agencies in this
state, including charter cities, has a direct impact on the
long-term well-being of all the residents of this state and
therefore declare that the disclosure of compensation to
officers and designated employees is an issue of statewide
concern and not a municipal affair and therefore shall apply
to charter cities.
11)Add an urgency clause allowing the measure to take effect
immediately upon enactment.
EXISTING LAW :
1)Governs, under the Meyers-Milias-Brown Act, labor-management
relations and collective bargaining in California local
government.
2)Governs, under portions of the Education Code, school
districts and community college districts' employee relations.
3)Provides that collective bargaining and representation
procedures generally do not apply to executive employees such
as county administrators, city managers, special district
managers, school superintendents, community college presidents
that are employed by, and report directly to, local elected
governing boards.
4)Requires, under the Brown Act, that all meetings of a
legislative body of a local agency be open and public and all
persons be permitted to attend unless a closed session is
authorized.
5)Requires, at least 72 hours before a regular meeting, the
legislative body of the local agency, or its designee, to post
an agenda containing a brief general description of each item
of business to be transacted or discussed at the meeting,
including items to be discussed in closed session.
6)Authorizes a legislative body of a local agency to hold closed
sessions with the local agency's designated representatives
regarding the salaries, salary schedules, or compensation paid
in the form of fringe benefits of its represented and
unrepresented employees, and, for represented employees, any
other matter within the statutorily provided scope of
representation.
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7)Prohibits closed sessions from including final action on the
proposed compensation of one or more unrepresented employees.
8)Requires all contracts of employment between an employee and a
local agency employer to include a provision which provides
that regardless of the term of the contract, if the contract
is terminated, the maximum cash settlement that an employee
may receive shall be an amount equal to the monthly salary of
the employee multiplied by the number of months left on the
unexpired term of the contract. However, if the unexpired term
of the contract is greater than 18 months, the maximum cash
settlement shall be an amount equal to the monthly salary of
the employee multiplied by 18.
9)Provides that in enacting the PRA, the Legislature, mindful of
the right of individuals to privacy, finds and declares that
access to information concerning the conduct of the people's
business is a fundamental and necessary right of every person
in this state.
10)Provides that every employment contract between a state or
local agency and any public official or public employee is a
public record.
AS PASSED BY THE ASSEMBLY , this bill authorized a county board
of supervisors to impose a fee, not to exceed estimated
reasonable costs as well as not to exceed $3 for the first page
and $1 for any subsequent page, for the archiving of historical
county records, including, but not limited to, records
pertaining to real property, local agency meetings and actions,
roads and other public works, and other records of general
public or historical interest.
FISCAL EFFECT : According to the Senate Appropriations
Committee, 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 10% 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.
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COMMENTS : In July of this year it was reported by the Los
Angeles Times that the City Manager in the City of Bell was
making nearly $1 million per year (salary and benefits)
according to public records. This bill is one of many bills
moving through the Legislature to respond to the egregious acts
that happened in the City of Bell.
This bill requires all local governments to conduct performance
reviews before raising the compensation of their executive level
staff. Under this bill, local professional leaders such as 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. This bill provides more
transparency to the process by which local agencies compensate
high level staff. 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.
The California Constitution gives cities the power to become
charter cities. The benefit of becoming a charter city is that
charter cities have supreme authority over "municipal affairs."
In other words, a charter city's law concerning a municipal
affair will trump a state law governing the same topic.
Personnel matters for the most part deemed a "municipal affair"
and are under the authority of the charter entity. Procedures
set forth in Meyers-Milias-Brown Act apply, but note, "[T]here
is a clear distinction between the substance of a public
employee labor issue and the procedure by which it is resolved.
Thus there is no question that 'salaries of local employees of a
charter city constitute municipal affairs and are not subject to
general laws.'" Voters for Responsible Retirement v. Board of
Supervisors, 8 Cal.4th 765, 781 (1994). The California Supreme
Court has observed local governments "function both as employers
and as democratic organs of government." (Seal Beach, supra, 36
Cal.3d at p. 599.) The court has upheld the Legislature's
regulation of public employee labor relations where "the burden
on the [local government's] democratic functions is minimal."
Procedural statutes do not conflict with the constitutional
powers of local governments because "the governing body of the
agency . . . retains the ultimate power to refuse an agreement
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and to make its own decision." (Seal Beach, supra, 36 Cal.3d at
p. 601.) A statute is substantive, however, if under its
provisions "the county's governing body does not retain the
ultimate power" to set employee compensation. (Riverside, supra,
30 Cal.4th at p. 289.) In 2009 the Court of Appeals in the
Sonoma County decision repeated the rule that "procedural
statutes do not conflict with the constitutional powers of local
governments." This bill's requirement that local governing
bodies conduct performance reviews before raising the
compensation of their key executive staff appears to be a
procedural statute that is within the Legislature's power to
require. However, the Legislature may wish to consider whether
the four contracting practices banned by this bill are
procedural or substantive.
Support arguments: Supporters might argue that the provisions
of this bill provide more transparency to the process by which
local agencies compensate high level staff. Supporters may
state that most private sector jobs require employee performance
review for increased compensation why shouldn't public sector
positions.
Opposition arguments: Opposition could argue that this bill is
an overreaction to the incident in Bell and that from
information gathered by informal surveys and discussions the
outrageous salaries and benefits provided to the City Manager in
Bell is a rarity.
The subject matter of this bill has not been heard in any
Assembly policy committee this legislative session.
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916)
319-3958
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