BILL NUMBER: AB 165	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 13, 2011

INTRODUCED BY   Assembly Member Lara
   (  Coauthor:   Assembly Member 
 John A. Pérez   Coauthors:   Assembly
Members   Alejo,   Davis,   Roger
Hernández,   and John A. Pérez  )

                        JANUARY 20, 2011

   An act to amend Sections 14501, 35186, and 41020 of, and to add
Article 5.5 (commencing with Section 49010) to Chapter 6 of Part 27
of Division 4 of Title 2 of, the Education Code,   and to amend
Section 905 of the Government Code,   relating to 
school   pupil  fees, and declaring the urgency
thereof, to take effect immediately.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 165, as amended, Lara. Pupil fees.
   (1) Existing law requires the Legislature to provide for a system
of common schools by which a free school shall be kept up and
supported in each district. Existing law prohibits a pupil enrolled
in school from being required to pay a fee, deposit, or other charge
not specifically authorized by law.
   This bill would prohibit a school district, school, or other
entity working under the supervision of, or in coordination with, a
district or school from imposing a pupil fee, as defined, for
participation in educational activities, as defined, as specified.
The bill would provide that this prohibition is not to be interpreted
to prohibit  an entire school, class, sports team, or club
from voluntarily participating in fundraising or to prohibit
  solicitation of voluntary donations, voluntary
participation in fundraising activities, or  school districts
and schools from providing pupils prizes or other recognition for
voluntarily participating in fundraising activities. The bill would
specify that these provisions  apply to all public schools,
including, but not limited to, charter schools and alternative
schools,  are declarative of existing law  ,  and
should not be interpreted to prohibit a school district or school
from imposing a fee, deposit, or other charge otherwise allowed by
law. 
   The bill would require the governing board of a local educational
agency, commencing with the 2011-12 fiscal year, to hold a public
hearing or hearings, as specified, to make a determination, through a
resolution, as to whether unlawful pupil fees have been, or are
being, charged within its jurisdiction. If the governing board
determines that an unlawful pupil fee was charged, the bill would
require the governing board to describe specified things in the
resolution. By imposing additional duties on local educational
agencies, this bill would impose a state-mandated local program.

   (2) Existing law requires the Controller, in consultation with the
Department of Finance and the State Department of Education, to
develop a plan to review and report on financial and compliance
audits, and with representatives of other entities, to recommend the
statements and other information to be included in the audit reports
filed with the state by local educational agencies  ,  and
to propose the content of an audit guide.
   This bill would require a compliance audit  , commencing with
audits of the 2011-12 fiscal year,  to include the verification
of compliance with the prohibition against the imposition of pupil
fees for participation in educational activities in violation of
specified law.  Notwithstanding specified law, the bill would
require this verification to be added to the audit guide as soon as
possible and would allow the adoption of emergency regulations to
achieve that goal. 
   (3) Existing law requires a school district to use its uniform
complaint process to help identify and resolve any deficiencies
related to instructional materials, emergency or urgent facilities
conditions that pose a threat to the health and safety of pupils or
staff, teacher vacancy or misassignment, and intensive instruction
and services provided to pupils who have not passed one or both parts
of the high school exit examination after the completion of grade
12. Existing law provides certain complainants the right to file an
appeal to the Superintendent of Public Instruction, who is required
to provide a written report to the State Board of Education that
describes the basis for the complaint and, as appropriate, proposes a
remedy. A notice regarding the appropriate subjects of a complaint
is required to be posted in each classroom in each school in the
school district and a complaint regarding those deficiencies is
required to be filed with the principal of the school or his or her
designee, except as specified.
   This bill also would require a school district  and a charter
school  to use its uniform complaint process to help identify
and resolve any deficiencies related to the imposition of pupil fees
for participation in educational activities, as those terms are
defined. The bill would also provide persons with a complaint
regarding the imposition of pupil fees the right to file an appeal to
the Superintendent and would require the Superintendent to provide
the written report to the state board and the complainant no later
than 30 working days after the appeal was received by the
Superintendent.  The bill would require that a remedy
proposed in the Superintendent's report regarding the imposition of
an unlawful pupil fee shall include, but not be limited to, requiring
  If the report finds a violation, the bill would
require the Superintendent to require  the offending school
district  , charter school,  or school to fully reimburse
all affected pupils, parents, or guardians. The bill would also
require the classroom notice to include certain information about the
prohibition against charging pupil fees for participation in
educational activities. The bill would require a local
educational   agency to establish local policies and
procedures, post notices, and implement the uniform complaint process
provisions regarding the imposition of pupil fees for participation
in educational activities by January 1, 2012.  By imposing
additional duties on school districts, this bill would impose a
state-mandated local program.
   (4) Existing law requires a county superintendent of schools to
provide for an audit of all funds under his or her jurisdiction and
requires the governing board of a local educational agency to either
provide for an audit of the books and accounts of the local
educational agency or make arrangements with the county
superintendent of schools having jurisdiction over the local
educational agency to provide for that auditing. Existing law
requires a county superintendent of schools to be responsible for
reviewing the audit exceptions contained in an audit of a local
educational agency under his or her jurisdiction related to specified
topics, and determining whether the exceptions were either corrected
or an acceptable plan of correction was developed. Existing law
requires the county office of education to review certain audit
exceptions upon submission and receipt of a final audit report.
Existing law requires the Superintendent of Public Instruction to be
responsible for ensuring that local educational agencies have either
corrected or developed plans of correction for specified audit
exceptions.
   This bill, commencing with the  2010-11  
2011-12  audit of local educational agencies, would require the
county superintendent of schools to also include in the review of
audit exceptions those audit exceptions related to the imposition of
pupil fees for participation in educational activities in violation
of specified law, and to determine whether the exceptions are either
corrected or an acceptable plan of correction is developed.  The
bill would prohibit an audit exception related to the imposition of
pupil fees from being deemed corrected until the local educational
agency fully reimburses all affected parents, guardians, and pupils,
with interest.  The bill would also require the county office of
education to review audit exceptions relating to the imposition of
unlawful pupil fees.  The bill would require the auditor to
notify the Controller, among others, if the auditor determines that
an exception related to the imposition of unlawful pupil fees has not
been corrected, or the local educational agency has a new audit
exception related to those unlawful pupil fees, and would require the
Controller   If, in an audit for a subsequent year, the
auditor finds an uncorrected or new audit exception related to the
imposition of unlawful pupil fees, the bill would require the auditor
to make a specified disclosure and would require the county office
of education  to withhold certain payments to the local
educational agency until the agency provides reimbursement, as
specified.  The bill would also require the Superintendent to
ensure that local educational agencies have either corrected or
developed plans of correction for audit exceptions related to the
imposition of unlawful pupil fees.  By imposing additional
duties on local educational agencies, this bill would impose a
state-mandated local program. 
   (5) Existing law excepts certain claims from the requirement that
all claims for money or damages against local public entities be
presented in accordance with specified law.  
   This bill would additionally except specified claims for
reimbursement of pupil fees for participation in educational
activities.  
   (5) 
    (6)  The California Constitution requires the state to
reimburse local agencies and school districts for certain costs
mandated by the state. Statutory provisions establish procedures for
making that reimbursement.
   This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions. 
   (6) 
    (7)  This bill would declare that it is to take effect
immediately as an urgency statute.
   Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 14501 of the Education Code is amended to read:

   14501.  (a) As used in this chapter, "financial and compliance
audit" shall be consistent with the definition provided in the
"Standards for Audits of Governmental Organizations, Programs,
Activities, and Functions" promulgated by the Comptroller General of
the United States. Financial and compliance audits conducted under
this chapter shall fulfill federal single audit requirements.
   (b) As used in this chapter, "compliance audit" means an audit
that ascertains and verifies whether or not funds provided through
apportionment, contract, or grant, either federal or state, have been
properly disbursed and expended as required by law or regulation or
both and includes the verification of each of the following:
   (1) The reporting requirements for the sufficiency of textbooks or
instructional materials, or both, as defined in Section 60119.
   (2) Teacher misassignments pursuant to Section 44258.9.
   (3) The accuracy of information reported on the School
Accountability Report Card required by Section 33126. The
requirements set forth in paragraphs (1) and (2) and this paragraph
shall be added to the audit guide requirements pursuant to
subdivision (b) of Section 14502.1.
   (4)  (A)    Compliance with  Section
49011   Article 5.5 (commencing with Section 49010) of
Chapter 6 of Part 27 of Division 4 of Title 2  and Section 5 of
Article IX of the California Constitution  .   ,
commencing with audits of the 2011-12 fiscal year, notwithstanding
subdivision (b) of Section 14502.1. 
    (B) The requirements of this paragraph shall be added to the
audit guide requirements as soon as possible. To meet this goal, the
process for adopting emergency regulations provided for in Section
11346.1 of the Government Code may be followed. 
  SEC. 2.  Section 35186 of the Education Code is amended to read:
   35186.  (a) A school district shall use the uniform complaint
process it has adopted as required by Chapter 5.1 (commencing with
Section 4600) of  Division 1 of  Title 5 of the California
Code of Regulations, with modifications, as necessary, to help
identify and resolve any deficiencies related to instructional
materials, emergency or urgent facilities conditions that pose a
threat to the health and safety of pupils or staff, teacher vacancy
or misassignment, intensive instruction and services provided
pursuant to Section 37254 to pupils who have not passed one or both
parts of the high school exit examination after the completion of
grade 12, and the imposition of pupil fees for participation in
educational activities.  A charter school shall use the uniform
complaint process it has adopted as required by Chapter 5.1
(commencing with Section 4600) of Division 1 of Title 5 of the
California Code of Regulations, with modifications, as necessary, to
help identify and resolve any deficiencies related to the imposition
of pupil fees for participation in educational activities. 
   (1) A complaint may be filed anonymously. A complainant who
identifies himself or herself is entitled to a response if he or she
indicates that a response is requested. A complaint form shall
include a space to mark to indicate whether a response is requested.
If Section 48985 is otherwise applicable, the response, if requested,
and report shall be written in English and the primary language in
which the complaint was filed. All complaints and responses are
public records.
   (2) The complaint form shall specify the location for filing a
complaint. A complainant may add as much text to explain the
complaint as he or she wishes.
   (3) Except as provided pursuant to paragraph (4), a complaint
shall be filed with the principal of the school or his or her
designee. A complaint about problems beyond the authority of the
school principal shall be forwarded in a timely manner but not to
exceed 10 working days to the appropriate school district  or
charter school  official for resolution.
   (4) A complaint regarding any deficiencies related to intensive
instruction and services provided pursuant to Section 37254 to pupils
who have not passed one or both parts of the high school exit
examination after the completion of grade 12 shall be submitted to
the district official designated by the district superintendent. A
complaint may be filed at the school district office, or it may be
filed at the schoolsite and shall be immediately forwarded to the
designee of the district superintendent.
   (b) The principal or the designee of the district superintendent
 or charter school  , as applicable, shall make all
reasonable efforts to investigate any problem within his or her
authority. The principal or designee of the district superintendent
 or charter school  shall remedy a valid complaint within a
reasonable time period but not to exceed 30 working days from the
date the complaint was received. The principal or designee of the
district superintendent  or charter school  shall report to
the complainant the resolution of the complaint within 45 working
days of the initial filing. If the principal makes this report, the
principal shall also report the same information in the same
timeframe to the designee of the district superintendent  or
charter school  .
   (c) A complainant not satisfied with the resolution of the
principal or the designee of the district superintendent  or
charter school  has the right to describe the complaint to the
governing board of the school district  or charter school 
at a regularly scheduled hearing of the governing board. As to
complaints involving a condition of a facility that poses an
emergency or urgent threat, as defined in paragraph (1) of
subdivision (c) of Section 17592.72, or complaints involving the
imposition of pupil fees for participation in educational activities,
a complainant who is not satisfied with the resolution proffered by
the principal or the designee of the district superintendent  or
charter school  has the right to file an appeal to the
Superintendent, who shall provide a written report to the state board
and the complainant no later than 30 working days after the date the
appeal was received by the Superintendent describing the basis for
the complaint and, as appropriate, a proposed remedy for the issue
described in the complaint. If the report finds that a school
district  ,   charter school, or school has
unlawfully imposed a pupil fee for participation in educational
activities, the  Superintendent's remedy shall include, but
not necessarily be limited to, requiring the school district
  Superintendent shall require the school district,
charter school,  or school to fully reimburse all affected
pupils, parents, or guardians with interest, as calculated in
subparagraph  (D)   (B)  of paragraph
 (1)   (3)  of subdivision  (m)
  (i)  of Section 41020.
   (d) A school district  or charter school  shall report
summarized data on the nature and resolution of all complaints on a
quarterly basis to the county superintendent of schools and the
governing board of the school district  or charter school  .
The summaries shall be publicly reported on a quarterly basis at a
regularly scheduled meeting of the governing board of the school
district  or charter school  . The report shall include the
number of complaints by general subject area with the number of
resolved and unresolved complaints. The complaints and written
responses shall be available as public records.
   (e) The procedure required pursuant to this section is intended to
address all of the following  in school districts, and the
complaints described in paragraph (5) in charter schools  :
   (1) A complaint related to instructional materials as follows:
   (A) A pupil, including an English learner, does not have
standards-aligned textbooks or instructional materials or
state-adopted or district-adopted textbooks or other required
instructional material to use in class.
   (B) A pupil does not have access to instructional materials to use
at home or after school.
   (C) Textbooks or instructional materials are in poor or unusable
condition, have missing pages, or are unreadable due to damage.
   (2) A complaint related to teacher vacancy or misassignment as
follows:
   (A) A semester begins and a teacher vacancy exists.
   (B) A teacher who lacks credentials or training to teach English
learners is assigned to teach a class with more than 20-percent
English learner pupils in the class. This subparagraph does not
relieve a school district from complying with state or federal law
regarding teachers of English learners.
   (C) A teacher is assigned to teach a class for which the teacher
lacks subject matter competency.
   (3) A complaint related to the condition of facilities that pose
an emergency or urgent threat to the health or safety of pupils or
staff as defined in paragraph (1) of subdivision (c) of Section
17592.72 and any other emergency conditions the school district
determines appropriate and the requirements established pursuant to
subdivision (a) of Section 35292.5.
   (4) A complaint related to the provision of intensive instruction
and services pursuant to paragraphs (4) and (5) of subdivision (d) of
Section 37254.
   (5) A complaint related to the imposition of pupil fees for
participation in educational activities.
   (f)  (1)  In order to identify appropriate subjects of
complaint, a notice shall be posted in each classroom in each school
in the school district notifying parents, guardians, pupils, and
teachers of the following: 
   (1) 
    (A)  There should be sufficient textbooks and
instructional materials. For there to be sufficient textbooks and
instructional materials each pupil, including English learners, must
have a textbook or instructional materials, or both, to use in class
and to take home. 
   (2) 
    (B)  School facilities must be clean, safe, and
maintained in good repair. 
   (3) 
    (C)  There should be no teacher vacancies or
misassignments as defined in paragraphs  (2) and (3)
  (3) and (5)  of subdivision (h). 
   (4) 
    (D)  Pupils shall not be charged fees, including
security deposits, or be required to purchase materials or equipment,
to participate in a class or an extracurricular activity. 
   (5) 
    (E)  Pupils who have not passed the high school exit
examination by the end of grade 12 are entitled to receive intensive
instruction and services for up to two consecutive academic years
after completion of grade 12 or until the pupil has passed both parts
of the high school exit examination, whichever comes first, pursuant
to paragraphs (4) and (5) of subdivision (d) of Section 37254. The
information in this paragraph, which is to be included in the notice
required pursuant to this subdivision, shall only be included in
notices posted in classrooms in schools with grades 10 to 12,
inclusive. 
   (6) 
    (F)  The location at which to obtain a form to file a
complaint in case of a shortage  of complaint forms  .
Posting a notice downloadable from the Internet Web site of the
department shall satisfy this  posting  requirement. 
   (2) In order to identify appropriate subjects of complaint, a
notice shall be posted in each classroom of each charter school
notifying parents, guardians, pupils, and teachers of both of the
following:  
   (A) Pupils shall not be charged fees, including security deposits,
or be required to purchase materials or equipment, to participate in
a class or an extracurricular activity.  
   (B) The location at which to obtain a form to file a complaint in
case of a shortage of complaint forms. Posting a notice downloadable
from the Internet Web site of the department shall satisfy this
posting requirement. 
   (g)  (1)    A local educational agency shall
establish local policies and procedures, post notices, and implement
this section on or before January 1, 2005. 
   (2) A local educational agency shall establish local policies and
procedures, post notices, and implement the provisions of this
section regarding the imposition of pupil fees for participation in
educational activities on or before January 1, 2012. 
   (h) For purposes of this section, the following definitions apply:

   (1) "Educational activity" has the same meaning as specified in
subdivision (a) of Section 49010.
   (2) "Good repair" has the same meaning as specified in subdivision
(d) of Section 17002.
   (3) "Misassignment" means the placement of a certificated employee
in a teaching or services position for which the employee does not
hold a legally recognized certificate or credential or the placement
of a certificated employee in a teaching or services position that
the employee is not otherwise authorized by statute to hold.
   (4) "Pupil fees" has the same meaning as specified in subdivision
(b) of Section 49010.
   (5) "Teacher vacancy" means a position to which a single
designated certificated employee has not been assigned at the
beginning of the year for an entire year or, if the position is for a
one-semester course, a position to which a single designated
certificated employee has not been assigned at the beginning of a
semester for an entire semester.
  SEC. 3.  Section 41020 of the Education Code is amended to read:
   41020.  (a) It is the intent of the Legislature to encourage sound
fiscal management practices among local educational agencies for the
most efficient and effective use of public funds for the education
of children in California by strengthening fiscal accountability at
the district, county, and state levels.
   (b) (1) Not later than the first day of May of each fiscal year,
each county superintendent of schools shall provide for an audit of
all funds under his or her jurisdiction and control and the governing
board of each local educational agency shall either provide for an
audit of the books and accounts of the local educational agency,
including an audit of income and expenditures by source of funds, or
make arrangements with the county superintendent of schools having
jurisdiction over the local educational agency to provide for that
auditing.
   (2) A contract to perform the audit of a local educational agency
that has a disapproved budget or has received a negative
certification on any budget or interim financial report during the
current fiscal year or either of the two preceding fiscal years, or
for which the county superintendent of schools has otherwise
determined that a lack of going concern exists, is not valid unless
approved by the responsible county superintendent of schools and the
governing board.
   (3) If the governing board of a local educational agency has not
provided for an audit of the books and accounts of the local
educational agency by April 1, the county superintendent of schools
having jurisdiction over the local educational agency shall provide
for the audit of each local educational agency.
   (4) An audit conducted pursuant to this section shall comply fully
with the Government Auditing Standards issued by the Comptroller
General of the United States.
   (5) For purposes of this section, "local educational agency" does
not include community colleges.
   (c) Each audit conducted in accordance with this section shall
include all funds of the local educational agency, including the
student body and cafeteria funds and accounts and any other funds
under the control or jurisdiction of the local educational agency.
Each audit shall also include an audit of pupil attendance
procedures.
   (d) All audit reports for each fiscal year shall be developed and
reported using a format established by the Controller after
consultation with the Superintendent and the Director of Finance.
   (e) (1) The cost of the audits provided for by the county
superintendent of schools shall be paid from the county school
service fund and the county superintendent of schools shall transfer
the pro rata share of the cost chargeable to each district from
district funds.
   (2) The cost of the audit provided for by a governing board shall
be paid from local educational agency funds. The audit of the funds
under the jurisdiction and control of the county superintendent of
schools shall be paid from the county school service fund.
   (f) (1) The audits shall be made by a certified public accountant
or a public accountant, licensed by the California Board of
Accountancy, and selected by the local educational agency, as
applicable, from a directory of certified public accountants and
public accountants deemed by the Controller as qualified to conduct
audits of local educational agencies, which shall be published by the
Controller not later than December 31 of each year.
   (2) Commencing with the 2003-04 fiscal year and except as provided
in subdivision (d) of Section 41320.1, it is unlawful for a public
accounting firm to provide audit services to a local educational
agency if the lead audit partner, or coordinating audit partner,
having primary responsibility for the audit, or the audit partner
responsible for reviewing the audit, has performed audit services for
that local educational agency in each of the six previous fiscal
years. The Education Audits Appeal Panel may waive this requirement
if the panel finds that no otherwise eligible auditor is available to
perform the audit.
   (3) It is the intent of the Legislature that, notwithstanding
paragraph (2), the rotation within public accounting firms conform to
provisions of the federal Sarbanes-Oxley Act of 2002 (P.L. 107-204;
15 U.S.C. Sec. 7201 et seq.), and upon release of the report required
by the act of the Comptroller General of the United States
addressing the mandatory rotation of registered public accounting
firms, the Legislature intends to reconsider the provisions of
paragraph (2). In determining which certified public accountants and
public accountants shall be included in the directory, the Controller
shall use the following criteria:
   (A) The certified public accountants or public accountants shall
be in good standing as certified by the Board of Accountancy.
   (B) The certified public accountants or public accountants, as a
result of a quality control review conducted by the Controller
pursuant to Section 14504.2, shall not have been found to have
conducted an audit in a manner constituting noncompliance with
subdivision (a) of Section 14503.
   (g) (1) The auditor's report shall include each of the following:
   (A) A statement that the audit was conducted pursuant to standards
and procedures developed in accordance with Chapter 3 (commencing
with Section 14500) of Part 9 of Division 1 of Title 1.
   (B) A summary of audit exceptions and management improvement
recommendations.
   (C) Each audit of a local educational agency shall include an
evaluation by the auditor on whether there is substantial doubt about
the ability of the local educational agency to continue as a going
concern for a reasonable period of time. This evaluation shall be
based on the Statement of Auditing Standards (SAS) No. 59, as issued
by the AICPA regarding disclosure requirements relating to the
ability of the entity to continue as a going concern.
   (2) To the extent possible, a description of correction or plan of
correction shall be incorporated in the audit report, describing the
specific actions that are planned to be taken, or that have been
taken, to correct the problem identified by the auditor. The
descriptions of specific actions to be taken or that have been taken
shall not solely consist of general comments such as "will implement,"
"accepted the recommendation," or "will discuss at a later date."
   (h) Not later than December 15, a report of each local educational
agency audit for the preceding fiscal year shall be filed with the
county superintendent of schools of the county in which the local
educational agency is located, the department, and the Controller.
The Superintendent shall make any adjustments necessary in future
apportionments of all state funds, to correct any audit exceptions
revealed by those audit reports.
   (i) (1) Commencing with the 2002-03 audit of local educational
agencies pursuant to this section and subdivision (d) of Section
41320.1, each county superintendent of schools shall be responsible
for reviewing the audit exceptions contained in an audit of a local
educational agency under his or her jurisdiction related to
attendance, inventory of equipment, internal control, and any
miscellaneous items, and determining whether the exceptions have been
either corrected or an acceptable plan of correction has been
developed.
   (2) Commencing with the 2004-05 audit of local educational
agencies pursuant to this section and subdivision (d) of Section
41320.1, each county superintendent of schools shall include in the
review of audit exceptions performed pursuant to this subdivision
those audit exceptions related to use of instructional materials
program funds, teacher misassignments pursuant to Section 44258.9,
information reported on the school accountability report card
required pursuant to Section 33126 and shall determine whether the
exceptions are either corrected or an acceptable plan of correction
has been developed.
   (3)  (A)    Commencing with the  2010-11
  2011-12  audit of local educational agencies
pursuant to this section and subdivision (d) of Section 41320.1, each
county superintendent of schools shall include in the review of
audit exceptions performed pursuant to this subdivision those audit
exceptions related to the imposition of pupil fees for participation
in educational activities in violation of Section 49011 and Section 5
of Article IX of the California Constitution and shall determine
whether the exceptions are either corrected or an acceptable plan of
correction has been developed. 
   (B) An audit exception related to the imposition of these pupil
fees shall not be deemed corrected until the local educational agency
has, at a minimum, fully reimbursed all affected parents, guardians,
and pupils, with interest. The amount of the interest shall be
calculated based on the date the unlawful fee was collected and the
applicable interest rate applied to the actual cash held in the local
educational agency's bank account. 
   (j) Upon submission of the final audit report to the governing
board of each local educational agency and subsequent receipt of the
audit by the county superintendent of schools having jurisdiction
over the local educational agency, the county office of education
shall do all of the following:
   (1) Review audit exceptions related to attendance, inventory of
equipment, internal control, and other miscellaneous exceptions.
Attendance exceptions or issues shall include, but not be limited to,
those related to revenue limits, adult education, and independent
study.
   (2) Review audit exceptions related to the imposition of pupil
fees for participation in educational activities in violation of
Section 49011 and Section 5 of Article IX of the California
Constitution.
   (3) If a description of the correction or plan of correction has
not been provided as part of the audit required by this section, then
the county superintendent of schools shall notify the local
educational agency and request the governing board of the local
educational agency to provide to the county superintendent of schools
a description of the corrections or plan of correction by March 15.
   (4) Review the description of correction or plan of correction and
determine its adequacy. If the description of the correction or plan
of correction is not adequate, the county superintendent of schools
shall require the local educational agency to resubmit that portion
of its response that is inadequate.
   (k) Each county superintendent of schools shall certify to the
Superintendent and the Controller, not later than May 15, that his or
her staff has reviewed all audits of local educational agencies
under his or her jurisdiction for the prior fiscal year, that all
exceptions that the county superintendent was required to review were
reviewed, and that all of those exceptions, except as otherwise
noted in the certification, have been corrected by the local
educational agency or that an acceptable plan of correction has been
submitted to the county superintendent of schools. In addition, the
county superintendent shall identify, by local educational agency,
any attendance-related audit exception or exceptions involving state
funds, and require the local educational agency to which the audit
exceptions were directed to submit appropriate reporting forms for
processing by the Superintendent.
   (  l  ) (1) In the audit of a local educational agency
for a subsequent year, the auditor shall review the correction or
plan or plans of correction submitted by the local educational agency
to determine if the exceptions have been resolved. If not, the
auditor shall immediately notify the appropriate county office of
education and the department and restate the exception in the audit
report. After receiving that notification, the department shall
either consult with the local educational agency to resolve the
exception or require the county superintendent of schools to follow
up with the local educational agency.
   (2) If, in the audit of a local educational agency for a
subsequent year, the auditor determines that an exception related to
the imposition of pupil fees for participation in educational
activities in violation of Section 49011 and Section 5 of Article IX
of the California Constitution has not been corrected, or that the
local educational agency has a new audit exception related to the
imposition of pupil fees for participation in educational activities
in violation of Section 49011 and Section 5 of Article IX of the
California Constitution,  the auditor shall immediately
notify the appropriate county office of education, the Controller,
the Superintendent, and the Director of Finance. Upon receiving this
notification, the Controller shall   both of the
following shall occur:  
   (A) The auditor shall disclose the unresolved or new audit
exception, and the amount of withholding required pursuant to
subparagraph (B), in the audit report. 
    (B)     (i)     The
county office of education shall, based on the audit year's actual
expenditures,  withhold 1 percent of the amount 
authorized   expended  for administrative costs,
which                                          are expenditures coded
to general administrative functions (codes 7000 to 7999, inclusive)
pursuant to Procedure 325 of Section 300 of the California School
Accounting Manual, from the next principal apportionment to the local
educational agency, until the agency reimburses all pupil fees
collected in violation of Section 49011 and Section 5 of Article IX
of the California Constitution, with applicable interest, as provided
for in subparagraph  (D)   (B)  of
paragraph  (1)   (3)  of subdivision
 (m)   (i)  . 
   (ii) If the auditor is unable to calculate 1 percent of the
administrative costs of a charter school, or if the amount of pupil
fees for participation in educational activities collected by the
charter school is greater than the 1-percent administrative fee, then
an amount equal to the amount of pupil fees for participation in
educational activities collected, multiplied by 10, shall be
withheld.  
   (iii) The county office of education may request the Controller to
perform the withholding required pursuant to this subparagraph.

   (m) (1) The Superintendent shall be responsible for ensuring that
local educational agencies have either corrected or developed plans
of correction for any one or more of the following:
   (A) All federal and state compliance audit exceptions identified
in the audit.
   (B) Any exceptions that the county superintendent certifies as of
May 15 have not been corrected.
   (C) Any repeat audit exceptions that are not assigned to a county
superintendent to correct. 
   (D) All audit exceptions related to the imposition of pupil fees
for participation in educational activities in violation of Section
49011 and Section 5 of Article IX of the California Constitution. An
audit exception related to the imposition of these pupil fees shall
not be deemed corrected until the local educational agency has, as a
minimum, fully reimbursed all affected parents, guardians, and
pupils, with interest. The amount of the interest shall be calculated
based on the date the unlawful fee was collected and the applicable
interest rate applied to the actual cash held in the local
educational agency's bank account. 
   (2) In addition, the Superintendent shall be responsible for
ensuring that county superintendents of schools and each county board
of education that serves as the governing board of a local
educational agency either correct all audit exceptions identified in
the audits of county superintendents of schools and of the local
educational agencies for which the county boards of education serve
as the governing boards or develop acceptable plans of correction for
those exceptions.
   (3) The Superintendent shall report annually to the Controller on
his or her actions to ensure that school districts, county
superintendents of schools, and each county board of education that
serves as the governing board of a school district have either
corrected or developed plans of correction for any of the exceptions
noted pursuant to paragraph (1).
   (n) To facilitate correction of the exceptions identified by the
audits issued pursuant to this section, commencing with 2002-03
audits pursuant to this section, the Controller shall require
auditors to categorize audit exceptions in each audit report in a
manner that will make it clear to both the county superintendent of
schools and the Superintendent which exceptions they are responsible
for ensuring the correction of by a local educational agency. In
addition, the Controller annually shall select a sampling of county
superintendents of schools and perform a followup of the audit
resolution process of those county superintendents of schools and
report the results of that followup to the Superintendent and the
county superintendents of schools that were reviewed.
   (o) County superintendents of schools shall adjust subsequent
local property tax requirements to correct audit exceptions relating
to local educational agency tax rates and tax revenues.
   (p) If a governing board or county superintendent of schools fails
or is unable to make satisfactory arrangements for the audit
pursuant to this section, the Controller shall make arrangements for
the audit and the cost of the audit shall be paid from local
educational agency funds or the county school service fund, as the
case may be.
   (q) Audits of regional occupational centers and programs are
subject to the provisions of this section.
   (r) This section does not authorize examination of, or reports on,
the curriculum used or provided for in any local educational agency.

   (s) Notwithstanding any other provision of law, a nonauditing,
management, or other consulting service to be provided to a local
educational agency by a certified public accounting firm while the
certified public accounting firm is performing an audit of the agency
pursuant to this section must be in accord with Government
Accounting Standards, Amendment No. 3, as published by the United
States General Accounting Office.
  SEC. 4.  Article 5.5 (commencing with Section 49010) is added to
Chapter 6 of Part 27 of Division 4 of Title 2 of the Education Code,
to read:

      Article 5.5.  Pupil Fees


   49010.  For purposes of this article, the following terms have the
following meanings:
   (a) "Educational activity" means an activity that constitutes an
integral fundamental part of elementary and secondary education, or
that amounts to a necessary element of a school activity, including,
but not limited to, curricular and extracurricular activities.
   (b) "Pupil fee" means a fee, deposit, or other charge imposed on
pupils, or a pupil's parents or guardians, in violation of Section
49011 and Section 5 of Article IX of the California Constitution,
which require educational activities to be provided free of charge to
all pupils without regard to their families' ability or willingness
to pay fees or request special waivers, as provided for in Hartzell
v. Connell (1984) 35 Cal.3d 899. A pupil fee includes, but is not
limited to, all of the following:
   (1) A fee charged to a pupil as a condition for registering for
school or classes, or as a condition for participation in a class or
an extracurricular activity, regardless of whether the class or
activity is elective or compulsory, or is for credit.
   (2) A security deposit, or other payment, that a pupil is required
to make to obtain a lock, locker, book, class apparatus, musical
instrument, uniform, or other materials or equipment.
   (3) A purchase that a pupil is required to make to obtain
materials, supplies, equipment, or uniforms associated with an
educational activity.
   49011.  (a) A school district, school, or other entity working
under the supervision of, or in coordination with, a district or
school shall not impose a pupil fee for participation in educational
activities.
   (b) All of the following requirements apply to the prohibition
identified in subdivision (a):
   (1) All supplies, materials, and equipment needed to participate
in educational activities shall be provided to pupils free of charge.

   (2) A waiver process shall not render an otherwise impermissible
pupil fee permissible.  
   (2) A fee waiver policy shall not make a pupil fee permissible.

   (3) School districts and schools shall not establish a two-tier
educational system by requiring a minimal educational standard and
also offering a second, higher educational standard that pupils may
only obtain through payment of a fee or purchase of additional
supplies that the school district or school does not provide.
   (4) A school district or school shall not offer course credit or
privileges related to educational activities in exchange for money or
donations of goods or services from a pupil or a pupil's parents or
guardians, and a school district or school shall not remove course
credit or privileges related to educational activities, or otherwise
discriminate against a pupil, because the pupil or the pupil's
parents or guardians did not or will not provide money or donations
of goods or services to the school district or school.
   (c) This article shall not be interpreted to prohibit  an
entire school, class, sports team, or club from voluntarily
participating in fundraising or to prohibit  
solicitation of voluntary donations of funds or property, vol 
 untary participation in fundraising activities, or  school
districts and schools from providing pupils prizes or other
recognition for voluntarily participating in fundraising activities.

   (d) This article applies to all public schools, including, but not
limited to, charter schools and alternative schools.  
   (d) 
    (e)  This article is declarative of existing law and
shall not be interpreted to prohibit a school district or school from
imposing a fee, deposit, or other charge otherwise allowed by law.

   49012.  (a) Commencing with the 2011-12 fiscal year, the governing
board of a local educational agency, including charter schools,
shall take both of the following actions:
   (1) (A) The governing board shall hold a public hearing or
hearings for which the governing board shall encourage participation
by parents, teachers, and members of the community interested in the
affairs of the local educational agency, and shall make a
determination, through a resolution, based on evidence gathered
through a review of the policies and practices at all schools within
its jurisdiction, as to whether pupil fees for participation in
educational activities have been charged, or are being charged,
within its jurisdiction in the current fiscal year in violation of
Section 49011 and Section 5 of Article IX of the California
Constitution.
   (B) The public hearing or hearings shall take place on or before
the end of the eighth week after the first day pupils attend school
for that school year. For local educational agencies that operate
schools on a multitrack, year-round calendar, the hearing or hearings
shall be held on or before the end of the eighth week after the
first day pupils attend school for that school year on any tracks
that begin a school year in August or September.
   (2) If the governing board determines that a pupil fee for
participation in educational activities was charged, the governing
board shall describe, in the resolution, the pupil fees charged,
including the nature of each fee, the number of pupils affected by
each fee, and when all affected pupils, parents, or guardians
received full reimbursement with interest, as calculated in
subparagraph (B) of paragraph (3) of subdivision (i) of Section
41020. If pupil fees have not been fully reimbursed by the day of the
public hearing, the governing board shall set forth in the
resolution the actions that will be taken to ensure that all affected
pupils, parents, or guardians receive full reimbursements with
interest within 10 weeks of the beginning of the school year in which
the determination is made.
   (b) The governing board shall provide 10 days' notice of the
public hearing or hearings held pursuant to subdivision (a). The
notice shall contain the time, place, and purpose of the hearing and
shall be posted at the charter school or in three public places in
the school district. The hearing shall be held at a time that will
encourage the attendance of teachers and parents and guardians of
pupils who attend the charter school or the schools within the
district and shall not take place during, or immediately following,
school hours.
   (c) For the 2011-12 fiscal year, the public hearing or hearings
held pursuant to subdivision (a) shall take place as provided for in
subparagraph (B) of paragraph (1) of subdivision (a), or within eight
weeks from the date of the enactment of this section, whichever is
later. 
   SEC. 5.    Section 905 of the   Government
Code   is amended to read: 
   905.  There shall be presented in accordance with Chapter 1
(commencing with Section 900) and Chapter 2 (commencing with Section
910) all claims for money or damages against local public entities
except any of the following:
   (a) Claims under the Revenue and Taxation Code or other statute
prescribing procedures for the refund, rebate, exemption,
cancellation, amendment, modification, or adjustment of any tax,
assessment, fee, or charge or any portion thereof, or of any
penalties, costs, or charges related thereto.
   (b) Claims in connection with which the filing of a notice of
lien, statement of claim, or stop notice is required under any law
relating to liens of mechanics, laborers, or materialmen.
   (c) Claims by public employees for fees, salaries, wages, mileage,
or other expenses and allowances.
   (d) Claims for which the workers' compensation authorized by
Division 4 (commencing with Section 3200) of the Labor Code is the
exclusive remedy.
   (e) Applications or claims for any form of public assistance under
the Welfare and Institutions Code or other provisions of law
relating to public assistance programs, and claims for goods,
services, provisions, or other assistance rendered for or on behalf
of any recipient of any form of public assistance.
   (f) Applications or claims for money or benefits under any public
retirement or pension system.
   (g) Claims for principal or interest upon any bonds, notes,
warrants, or other evidences of indebtedness.
   (h) Claims that relate to a special assessment constituting a
specific lien against the property assessed and that are payable from
the proceeds of the assessment, by offset of a claim for damages
against it or by delivery of any warrant or bonds representing it.
   (i) Claims by the state or by a state department or agency or by
another local public entity or by a judicial branch entity.
   (j) Claims arising under any provision of the Unemployment
Insurance Code, including, but not limited to, claims for money or
benefits, or for refunds or credits of employer or worker
contributions, penalties, or interest, or for refunds to workers of
deductions from wages in excess of the amount prescribed.
   (k) Claims for the recovery of penalties or forfeitures made
pursuant to Article 1 (commencing with Section 1720) of Chapter 1 of
Part 7 of Division 2 of the Labor Code.
   (l) Claims governed by the Pedestrian Mall Law of 1960 (Part 1
(commencing with Section 11000) of Division 13 of the Streets and
Highways Code).
   (m) Claims made pursuant to Section 340.1 of the Code of Civil
Procedure for the recovery of damages suffered as a result of
childhood sexual abuse. This subdivision shall apply only to claims
arising out of conduct occurring on or after January 1, 2009.
   (n) Claims made pursuant to Section 701.820 of the Code of Civil
Procedure for the recovery of money pursuant to Section 26680. 
   (o) Claims made pursuant to Section 35186 of the Education Code
for reimbursement of pupil fees for participation in educational
activities. 
   SEC. 5.   SEC. 6.   If the Commission on
State Mandates determines that this act contains costs mandated by
the state, reimbursement to local agencies and school districts for
those costs shall be made pursuant to Part 7 (commencing with Section
17500) of Division 4 of Title 2 of the Government Code.
   SEC. 6.   SEC. 7.   This act is an
urgency statute necessary for the immediate preservation of the
public peace, health, or safety within the meaning of Article IV of
the Constitution and shall go into immediate effect. The facts
constituting the necessity are:
    In order to comply with a settlement agreement that
requires a good faith effort to obtain the enactment of legislation
that prevents and remedies the imposition of unlawful pupil fees as
soon as possible   In   order to protect and
enforce the right of pupils to attend free public schools pursuant to
Section 5 of Article IX of the California Constitution  , it is
necessary for this act to take effect immediately.