BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                  SB 1473|
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                              UNFINISHED BUSINESS


          Bill No:  SB 1473
          Author:   Wyland (R)
          Amended:  8/9/10
          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





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          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








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          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  :   (Unable to reverify at time of writing)

          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


           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  
          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."







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           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  8/17/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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