BILL ANALYSIS Ó
AB 582
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Date of Hearing: May 11, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 582 (Pan) - As Amended: April 14, 2011
Policy Committee: Local
GovernmentVote:8-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill requires the legislative body of a local agency to
publicly notice on two separate occasions a proposed
compensation increase of more than 5% for a city manager, deputy
city manager, county chief administrative officer, deputy chief
administrative officer, or similar employee.
The first notice is for general notice and nonvoting and
discussion purposes, and the second, in the event of a vote on
the matter, must be no less than 12 days after the first notice
if the compensation increase is deemed necessary by the
legislative body of the local agency.
FISCAL EFFECT
There are potentially significant reimbursable costs resulting
from this bill. There are almost 500 cities, 58 counties, 1000
school district and 4000 special districts. If each local
public agency has one mandate claim of $100 for preparing and
posting notices for a salary increase, the total reimbursable
costs of the bill would be almost $600,000.
COMMENTS
1)Purpose. According to the author, in the summer of 2010, the
Controller's audit of the City of Bell brought to light an
epidemic of misuse of public funds. The audit revealed
backroom payroll increases by the former chief administrative
officer, whose own pay multiplied to 11 times greater than his
starting salary. The city council authorized disproportionate
salary and benefit packages for other City of Bell officials.
AB 582
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The author says these backroom compensation issues do not
appear to be isolated to the City of Bell. By requiring two
public notices before compensation for designated senior
employees may be increased, the author says AB 582 promotes
greater transparency for taxpayers and makes local officials
more directly accountable for increasing executive officer
compensation.
2)Background. The Brown Act requires the meetings of local
governments' legislative bodies to be "open and public,"
thereby ensuring people's access to information so they may
retain control over the public agencies that serve them. The
Brown Act requires a local agency to post an agenda for a
regular meeting of its legislative body at least 72 hours
before the meeting in a location that is freely accessible to
members of the public. The Brown Act applies to general law
cities and counties as well as charter cities and counties.
Unrepresented employee compensation is not an allowed closed
session topic. However, a particular employee's performance
evaluation can be considered in a closed session so long as
the closed session is appropriately noticed.
3)Pay increases. Raises are not a large item in a local agency
budget. For example, the city manager of Sacramento earns
about $225,000. A 5 % raise is $11,250, a small amount
compared to the city's $360 million budget. The committee may
want to consider if the additional due process and cost is
justified by the potential scope of savings and benefits to
transparency.
4)Implementation considerations. AB 582 would require a
compensation increase of more than 5% for a city manager,
deputy city manager, county chief administrative officer,
deputy chief administrative officer or similar employee to be
publicly noticed twice with a vote on the matter to not occur
less than 12 days after the first notice. Some legislative
bodies meet infrequently and being required to twice notice a
discussion or vote on an executive officer's compensation
increase would mean, on a practical level, that employment
contract could not be approved for several months. A local
agency potentially could lose a valuable employee to the
private sector or a local agency that meets more frequently
because of the forced delay.
AB 582
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5)Amendments. AB 582 seems to do more than just requiring
noticing. It appears to require that a legislative body must
decide that a salary increase is necessary before being able
to award an increase of more than 5%. The term "necessary"
means "is absolutely essential." Keeping a valued employee is
rarely necessary but can be in the best interests of the
entity. The term "necessary" should be deleted.
Another potential issue is if the salary increase is awarded
pursuant to a contract that was valid before the enactment of
this bill. Subjecting the contracted increase to the bill's
provisions could impair an existing contract and open the
legislative body to claims of damages.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081