BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1473| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) |Version: | |327-4478 | | ------------------------------------------------------------ UNFINISHED BUSINESS Bill No: SB 1473 Author: Wyland (R) Amended: 6/23/10 Vote: 21 SENATE EDUCATION COMMITTEE : 8-0, 4/21/10 AYES: Romero, Huff, Alquist, Hancock, Liu, Price, Simitian, Wyland NO VOTE RECORDED: Maldonado SENATE FLOOR : 34-0, 5/3/10 (Consent) AYES: Aanestad, Ashburn, Cedillo, Cogdill, Corbett, Correa, Cox, Denham, DeSaulnier, Ducheny, Dutton, Florez, Hancock, Harman, Hollingsworth, Huff, Kehoe, Leno, Liu, Lowenthal, Negrete McLeod, Oropeza, Padilla, Pavley, Price, Romero, Runner, Simitian, Strickland, Walters, Wolk, Wright, Wyland, Yee NO VOTE RECORDED: Alquist, Calderon, Steinberg, Wiggins, Vacancy, Vacancy ASSEMBLY FLOOR : 76-0, 7/1/10 (Consent) - See last page for vote SUBJECT : School facilities bond proceeds: performance audits SOURCE : California League of Bond Oversight Committees\ Howard Jarvis Taxpayers Association DIGEST : This bill requires that the constitutionally CONTINUED SB 1473 Page 2 required performance audit established by initiative measure (Proposition 39, November 2000) be conducted in accordance with Government Auditing Standards issued by the Comptroller General of the United States. Assembly Amendments made clarifying changes. ANALYSIS : Article XI, Section 18 of the California Constitution, as amended by voter initiative measure (Proposition 39, November 2000) authorizes a school district, community college district, or county office of education to incur bond indebtedness for the construction, reconstruction, rehabilitation, or replacement of school facilities, with the approval of 55 percent of the voters of the district or county. Article XIII A provides that this vote threshold only applies if, among other things, the local bond measure includes a specific list of school projects to be funded and requires the authorizing board to conduct annual, independent financial and performance audits until all bond funds have been spent to ensure they are used exclusively for the projects listed in the measure. Current law provides that a Citizen's Oversight Committee be established to, among other things, receive and review copies of the constitutionally required annual independent financial and performance audits. Current law requires every country superintendent of schools to provide for an audit of all funds under his or her jurisdiction and control and the governing board of each local educational agency to either provide for an audit of its books and accounts or make arrangements with its county superintendent of schools to provide for the audit. Current law also requires the audit fully comply with the Government Auditing Standards issued by the Comptroller General of the United States. This bill requires that the annual independent performance audit required as the result of the passage of Proposition 39 be conducted in accordance with the Government Auditing Standards issued by the Comptroller General of the United States. Comments SB 1473 Page 3 Need for the Bill . According to the author's office, while Proposition 39 required, and the Education Code current requires both annual financial and annual performance audits for funds connected to bonds issued under the provisions of Proposition 39, the standards and methodologies to use with the performance audits have never been defined. Government Auditing Standards . Government Auditing Standards (the "Yellow Book") contains standards for audits of government organizations, programs, activities, and functions, and of government assistance received by contractors, nonprofit organizations, and other nongovernmental organizations. These standards, often referred to as Generally Accepted Government Auditing Standards (GAGAS), are to be followed by auditors and audit organizations when required by law, regulation, agreement, contract, or policy. These standards pertain to auditors' professional qualifications, the quality of audit effort, and the characteristics of professional and meaningful audit reports. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 4/28/10) California League of Bond Oversight Committees (co-source) Howard Jarvis Taxpayers Association (co-source) Board of Governors of the California Community Colleges California Association of School Business Officials OPPOSITION : (Verified >) > ARGUMENTS IN SUPPORT : According to the California Association of School Business Officials, "While Proposition 39 clearly called for school districts and community college districts to complete annual performance audits to ensure that funds from 55 percent bonds were spent on the projects specified in the local bond measure, it was silent as to what standards those audits were to SB 1473 Page 4 meet. Since GAGAS if the standard used by school districts on their annual financial audits, it makes sense to clarify that performance audits for these local bond funds should also meet GAGAS standards." ARGUMENTS IN OPPOSITION : > ASSEMBLY FLOOR : AYES: Adams, Ammiano, Anderson, Arambula, Bass, Beall, Bill Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield, Bradford, Brownley, Buchanan, Caballero, Charles Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore, Eng, Evans, Feuer, Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick, Gatto, Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight, Lieu, Logue, Bonnie Lowenthal, Mendoza, Miller, Monning, Nava, Nestande, Niello, Nielsen, Norby, V. Manuel Perez, Portantino, Ruskin, Salas, Saldana, Silva, Skinner, Smyth, Solorio, Audra Strickland, Swanson, Torlakson, Torres, Torrico, Tran, Villines, Yamada NO VOTE RECORDED: Fletcher, Ma, John A. Perez, Vacancy CPM:cm 7/2/10 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE SUPPORT/OPPOSITION: NONE RECEIVED **** END ****