BILL NUMBER: AB 751 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Furutani
FEBRUARY 17, 2011
An act to amend Sections 1240, 1630, 42127.6, and 42131 of the
Education Code, relating to education finance.
LEGISLATIVE COUNSEL'S DIGEST
AB 751, as introduced, Furutani. Education finance.
(1) Existing law requires the county superintendent of schools to
report to the Superintendent of Public Instruction on the financial
condition of a county office of education or a school district if the
county superintendent determines the county office of education or a
school district may be unable to meet its financial obligations for
the current or 2 subsequent fiscal years or if a county office of
education or a school district has a qualified or negative
certification. Existing law requires the Superintendent of Public
Instruction to take at least one of certain actions, and all actions
that are necessary, to ensure that a county office of education meets
its financial obligations for the current and 2 subsequent fiscal
years. Existing law requires the county superintentient to take
similar actions with respect to school districts.
This bill would instead require a county superintendent of schools
to report to the Superintendent of Public Instruction on the
financial condition of the county office of education or a school
district if the county superintendent determines the county office of
education or a school district may be unable to meet its financial
obligations for the current or the subsequent fiscal year, rather
than for the current fiscal year and 2 subsequent fiscal years.
(2) Existing law requires the governing board of each school
district to clarify, in writing, within 45 days after the close of
the period being reported, whether the school district is able to
meet its financial obligations for the remainder of the fiscal year
and, based on current forecasts, for the subsequent fiscal year.
Existing law requires the county superintendent of schools to
report to the Superintendent of Public Instruction whether the county
office of education is able to meet its financial obligations for
the current and 2 subsequent fiscal years. Pursuant to existing law,
a negative certification is assigned to a county office of education
or a school district that, based upon current projections, will be
unable to meet its financial obligations for the remainder of the
fiscal year or the subsequent fiscal year; a qualified certification
is assigned to an office or district that may not meet its financial
obligations for the current fiscal year or 2 subsequent fiscal years;
and a positive certification to an office or district that will meet
its financial obligations for the current fiscal year and 2
subsequent fiscal years.
This bill would change the standards for the certifications so
that a negative certification is assigned to an office or district
that, based upon current projections, will be unable to meet its
financial obligations for the remainder of the fiscal year; a
qualified certification would be assigned to an office or district
that may not meet its financial obligations for the current fiscal
year or the subsequent fiscal year; and a positive certification to
an office or district that will meet its financial obligations for
the current fiscal year and the subsequent fiscal year.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1240 of the Education Code is amended to read:
1240. The county superintendent of schools shall do all of the
following:
(a) Superintend the schools of his or her county.
(b) Maintain responsibility for the fiscal oversight of each
school district in his or her county pursuant to the authority
granted by this code.
(c) (1) Visit and examine each school in his or her county at
reasonable intervals to observe its operation and to learn of its
problems. He or she annually may present a report of the state of the
schools in his or her county, and of his or her office, including,
but not limited to, his or her observations while visiting the
schools, to the board of education and the board of supervisors of
his or her county.
(2) (A) For fiscal years 2004-05 to 2006-07, inclusive, to the
extent that funds are appropriated for purposes of this paragraph,
the county superintendent, or his or her designee, annually shall
submit a report, at a regularly scheduled November board meeting, to
the governing board of each school district under his or her
jurisdiction, the county board of education of his or her county, and
the board of supervisors of his or her county describing the state
of the schools in the county or of his or her office that are ranked
in deciles 1 to 3, inclusive, of the 2003 base Academic Performance
Index (API), as defined in subdivision (b) of Section 17592.70, and
shall include, among other things, his or her observations while
visiting the schools and his or her determinations for each school
regarding the status of all of the circumstances listed in
subparagraph (J) and teacher misassignments and teacher vacancies. As
a condition for receipt of funds, the county superintendent, or his
or her designee, shall use a standardized template to report the
circumstances listed in subparagraph (J) and teacher misassignments
and teacher vacancies, unless the current annual report being used by
the county superintendent, or his or her designee, already includes
those details for each school.
(B) Commencing with the 2007-08 fiscal year, to the extent that
funds are appropriated for purposes of this paragraph, the county
superintendent, or his or her designee, annually shall submit a
report, at a regularly scheduled November board meeting, to the
governing board of each school district under his or her
jurisdiction, the county board of education of his or her county, and
the board of supervisors of his or her county describing the state
of the schools in the county or of his or her office that are ranked
in deciles 1 to 3, inclusive, of the 2006 base API, pursuant to
Section 52056. As a condition for the receipt of funds, the annual
report shall include the determinations for each school made by the
county superintendent, or his or her designee, regarding the status
of all of the circumstances listed in subparagraph (J) and teacher
misassignments and teacher vacancies, and the county superintendent,
or his or her designee, shall use a standardized template to report
the circumstances listed in subparagraph (J) and teacher
misassignments and teacher vacancies, unless the current annual
report being used by the county superintendent, or his or her
designee, already includes those details with the same level of
specificity that is otherwise required by this subdivision. For
purposes of this section, schools ranked in deciles 1 to 3,
inclusive, on the 2006 base API shall include schools determined by
the department to meet either of the following:
(i) The school meets all of the following criteria:
(I) Does not have a valid base API score for 2006.
(II) Is operating in fiscal year 2007-08 and was operating in
fiscal year 2006-07 during the Standardized Testing and Reporting
(STAR) Program testing period.
(III) Has a valid base API score for 2005 that was ranked in
deciles 1 to 3, inclusive, in that year.
(ii) The school has an estimated base API score for 2006 that
would be in deciles 1 to 3, inclusive.
(C) The department shall estimate an API score for any school
meeting the criteria of subclauses (I) and (II) of clause (i) of
subparagraph (B) and not meeting the criteria of subclause (III) of
clause (i) of subparagraph (B), using available test scores and
weighting or corrective factors it deems appropriate. The department
shall post the API scores on its Internet Web site on or before May
1.
(D) For purposes of this section, references to schools ranked in
deciles 1 to 3, inclusive, on the 2006 base API shall exclude schools
operated by county offices of education pursuant to Section 56140,
as determined by the department.
(E) In addition to the requirements above, the county
superintendent, or his or her designee, annually shall verify both of
the following:
(i) That pupils who have not passed the high school exit
examination by the end of grade 12 are informed that they 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.
(ii) That pupils who have elected to receive intensive instruction
and services, pursuant to paragraphs (4) and (5) of subdivision (d)
of Section 37254, are being served.
(F) (i) Commencing with the 2010-11 fiscal year and every third
year thereafter, the Superintendent shall identify a list of schools
ranked in deciles 1 to 3, inclusive, of the API for which the county
superintendent, or his or her designee, annually shall submit a
report, at a regularly scheduled November board meeting, to the
governing board of each school district under his or her
jurisdiction, the county board of education of his or her county, and
the board of supervisors of his or her county that describes the
state of the schools in the county or of his or her office that are
ranked in deciles 1 to 3, inclusive, of the base API as defined in
clause (ii).
(ii) For the 2010-11 fiscal year, the list of schools ranked in
deciles 1 to 3, inclusive, of the base API shall be updated using the
criteria set forth in clauses (i) and (ii) of subparagraph (B),
subparagraph (C), and subparagraph (D), as applied to the 2009 base
API and thereafter , shall be updated every third year
using the criteria set forth in clauses (i) and (ii) of subparagraph
(B), subparagraph (C), and subparagraph (D), as applied to the base
API of the year preceding the third year consistent with clause (i).
(iii) As a condition for the receipt of funds, the annual report
shall include the determinations for each school made by the county
superintendent, or his or her designee, regarding the status of all
of the circumstances listed in subparagraph (J) and teacher
misassignments and teacher vacancies, and the county superintendent,
or his or her designee, shall use a standardized template to report
the circumstances listed in subparagraph (J) and teacher
misassignments and teacher vacancies, unless the current annual
report being used by the county superintendent, or his or her
designee, already includes those details with the same level of
specificity that is otherwise required by this subdivision.
(G) The county superintendent of the Counties of Alpine, Amador,
Del Norte, Mariposa, Plumas, and Sierra, and the City and County of
San Francisco shall contract with another county office of education
or an independent auditor to conduct the required visits and make all
reports required by this paragraph.
(H) On a quarterly basis, the county superintendent, or his or her
designee, shall report the results of the visits and reviews
conducted that quarter to the governing board of the school district
at a regularly scheduled meeting held in accordance with public
notification requirements. The results of the visits and reviews
shall include the determinations of the county superintendent, or his
or her designee, for each school regarding the status of all of the
circumstances listed in subparagraph (J) and teacher misassignments
and teacher vacancies. If the county superintendent, or his or her
designee, conducts no visits or reviews in a quarter, the quarterly
report shall report that fact.
(I) The visits made pursuant to this paragraph shall be conducted
at least annually and shall meet the following criteria:
(i) Minimize disruption to the operation of the school.
(ii) Be performed by individuals who meet the requirements of
Section 45125.1.
(iii) Consist of not less than 25 percent unannounced visits in
each county. During unannounced visits in each county, the county
superintendent shall not demand access to documents or specific
school personnel. Unannounced visits shall only be used to observe
the condition of school repair and maintenance, and the sufficiency
of instructional materials, as defined by Section 60119.
(J) The priority objective of the visits made pursuant to this
paragraph shall be to determine the status of all of the following
circumstances:
(i) Sufficient textbooks as defined in Section 60119 and as
specified in subdivision (i).
(ii) The condition of a facility that poses an emergency or urgent
threat to the health or safety of pupils or staff as defined in
district policy or paragraph (1) of subdivision (c) of Section
17592.72.
(iii) The accuracy of data reported on the school accountability
report card with respect to the availability of sufficient textbooks
and instructional materials, as defined by Section 60119, and the
safety, cleanliness, and adequacy of school facilities, including
good repair as required by Sections 17014, 17032.5, 17070.75, and
17089.
(iv) The extent to which pupils who have not passed the high
school exit examination by the end of grade 12 are informed that they
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.
(v) The extent to which pupils who have elected to receive
intensive instruction and services, pursuant to paragraphs (4) and
(5) of subdivision (d) of Section 37254, are being served.
(K) The county superintendent may make the status determinations
described in subparagraph (J) during a single visit or multiple
visits. In determining whether to make a single visit or multiple
visits for this purpose, the county superintendent shall take into
consideration factors such as cost-effectiveness, disruption to the
schoolsite, deadlines, and the availability of qualified reviewers.
(L) If the county superintendent determines that the condition of
a facility poses an emergency or urgent threat to the health or
safety of pupils or staff as defined in district policy or paragraph
(1) of subdivision (c) of Section 17592.72, or is not in good repair,
as specified in subdivision (d) of Section 17002 and required by
Sections 17014, 17032.5, 17070.75, and 17089, the county
superintendent, among other things, may do any of the following:
(i) Return to the school to verify repairs.
(ii) Prepare a report that specifically identifies and documents
the areas or instances of noncompliance if the district has not
provided evidence of successful repairs within 30 days of the visit
of the county superintendent or, for major projects, has not provided
evidence that the repairs will be conducted in a timely manner. The
report may be provided to the governing board of the school district.
If the report is provided to the school district, it shall be
presented at a regularly scheduled meeting held in accordance with
public notification requirements. The county superintendent shall
post the report on his or her Internet Web site. The report shall be
removed from the Internet Web site when the county superintendent
verifies the repairs have been completed.
(d) Distribute all laws, reports, circulars, instructions, and
blanks that he or she may receive for the use of the school officers.
(e) Annually, on or before August 15, present a report to the
governing board of the school district and the Superintendent
regarding the fiscal solvency of a school district with a disapproved
budget, qualified interim certification, or a negative interim
certification, or that is determined to be in a position of fiscal
uncertainty pursuant to Section 42127.6.
(f) Keep in his or her office the reports of the Superintendent.
(g) Keep a record of his or her official acts, and of all the
proceedings of the county board of education, including a record of
the standing, in each study, of all applicants for certificates who
have been examined, which shall be open to the inspection of an
applicant or his or her authorized agent.
(h) Enforce the course of study.
(i) (1) Enforce the use of state textbooks and instructional
materials and of high school textbooks and instructional materials
regularly adopted by the proper authority in accordance with Section
51050.
(2) For purposes of this subdivision, sufficient textbooks or
instructional materials has the same meaning as in subdivision (c) of
Section 60119.
(3) (A) Commencing with the 2005-06 school year, if a school is
ranked in any of deciles 1 to 3, inclusive, of the base API, as
specified in paragraph (2) of subdivision (c), and not currently
under review pursuant to a state or federal intervention program, the
county superintendent specifically shall review that school at least
annually as a priority school. A review conducted for purposes of
this paragraph shall be completed by the fourth week of the school
year. For the 2004-05 fiscal year only, the county superintendent
shall make a diligent effort to conduct a visit to each school
pursuant to this paragraph within 120 days of receipt of funds for
this purpose.
(B) In order to facilitate the review of instructional materials
before the fourth week of the school year, the county superintendent
in a county with 200 or more schools that are ranked in any of
deciles 1 to 3, inclusive, of the base API, as specified in paragraph
(2) of subdivision (c), may utilize a combination of visits and
written surveys of teachers for the purpose of determining
sufficiency of textbooks and instructional materials in accordance
with subparagraph (A) of paragraph (1) of subdivision (a) of Section
60119 and as defined in subdivision (c) of Section 60119. If a county
superintendent elects to conduct written surveys of teachers, the
county superintendent shall visit the schools surveyed within the
same academic year to verify the accuracy of the information reported
on the surveys. If a county superintendent surveys teachers at a
school in which the county superintendent has found sufficient
textbooks and instructional materials for the previous two
consecutive years and determines that the school does not have
sufficient textbooks or instructional materials, the county
superintendent shall within 10 business days provide a copy of the
insufficiency report to the school district as set forth in paragraph
(4).
(C) For purposes of this paragraph, "written surveys" may include
paper and electronic or online surveys.
(4) If the county superintendent determines that a school does not
have sufficient textbooks or instructional materials in accordance
with subparagraph (A) of paragraph (1) of subdivision (a) of Section
60119 and as defined by subdivision (c) of Section 60119, the county
superintendent shall do all of the following:
(A) Prepare a report that specifically identifies and documents
the areas or instances of noncompliance.
(B) Provide within five business days of the review, a copy of the
report to the school district, as provided in subdivision (c), or,
if applicable, provide a copy of the report to the school district
within 10 business days pursuant to subparagraph (B) of paragraph
(3).
(C) Provide the school district with the opportunity to remedy the
deficiency. The county superintendent shall ensure remediation of
the deficiency no later than the second month of the school term.
(D) If the deficiency is not remedied as required pursuant to
subparagraph (C), the county superintendent shall request the
department to purchase the textbooks or instructional materials
necessary to comply with the sufficiency requirement of this
subdivision. If the department purchases textbooks or instructional
materials for the school district, the department shall issue a
public statement at the first regularly scheduled meeting of the
state board occurring immediately after the department receives the
request of the county superintendent and that meets the applicable
public notice requirements, indicating that the district
superintendent and the governing board of the school district failed
to provide pupils with sufficient textbooks or instructional
materials as required by this subdivision. Before purchasing the
textbooks or instructional materials, the department shall consult
with the district to determine which textbooks or instructional
materials to purchase. All purchases of textbooks or instructional
materials shall comply with Chapter 3.25 (commencing with Section
60420) of Part 33 of Division 4 of Title 2 . The amount of
funds necessary for the purchase of the textbooks and materials is a
loan to the school district receiving the textbooks or instructional
materials. Unless the school district repays the amount owed based
upon an agreed-upon repayment schedule with the Superintendent, the
Superintendent shall notify the Controller and the Controller shall
deduct an amount equal to the total amount used to purchase the
textbooks and materials from the next principal apportionment of the
district or from another apportionment of state funds.
(j) Preserve carefully all reports of school officers and
teachers.
(k) Deliver to his or her successor, at the close of his or her
official term, all records, books, documents, and papers belonging to
the office, taking a receipt for them, which shall be filed with the
department.
(l) (1) Submit two reports during the fiscal year to the county
board of education in accordance with the following:
(A) The first report shall cover the financial and budgetary
status of the county office of education for the period ending
October 31. The second report shall cover the period ending January
31. Both reports shall be reviewed by the county board of education
and approved by the county superintendent no later than 45 days after
the close of the period being reported.
(B) As part of each report, the county superintendent shall
certify in writing whether or not the county office of education is
able to meet its financial obligations for the remainder of the
fiscal year and, based on current forecasts, for two
the subsequent fiscal years
year . The certifications shall be classified as positive,
qualified, or negative, pursuant to standards prescribed by the
Superintendent, for the purposes of determining subsequent state
agency actions pursuant to Section 1240.1. For purposes of this
subdivision, a negative certification shall be assigned to a county
office of education that, based upon current projections, will not
meet its financial obligations for the remainder of the fiscal year
or for the subsequent fiscal year . A qualified
certification shall be assigned to a county office of education that
may not meet its financial obligations for the current fiscal year or
two the subsequent fiscal
years year . A positive certification shall be
assigned to a county office of education that will meet its financial
obligations for the current fiscal year and the
subsequent two fiscal years
year . In accordance with those standards, the
Superintendent may reclassify a certification. If a county office of
education receives a negative certification, the Superintendent, or
his or her designee, may exercise the authority set forth in
subdivision (c) of Section 1630. Copies of each certification, and of
the report containing that certification, shall be sent to the
Superintendent at the time the certification is submitted to the
county board of education. Copies of each qualified or negative
certification and the report containing that certification shall be
sent to the Controller at the time the certification is submitted to
the county board of education.
(2) All reports and certifications required under this subdivision
shall be in a format or on forms prescribed by the Superintendent,
and shall be based on standards and criteria for fiscal stability
adopted by the state board pursuant to Section 33127. The reports and
supporting data shall be made available by the county superintendent
to an interested party upon request.
(3) This subdivision does not preclude the submission of
additional budgetary or financial reports by the county
superintendent to the county board of education or to the
Superintendent.
(4) The county superintendent is not responsible for the fiscal
oversight of the community colleges in the county, however, he or she
may perform financial services on behalf of those community
colleges.
(m) If requested, act as agent for the purchase of supplies for
the city and high school districts of his or her county.
(n) For purposes of Section 44421.5, report to the Commission on
Teacher Credentialing the identity of a certificated person who
knowingly and willingly reports false fiscal expenditure data
relative to the conduct of an educational program. This requirement
applies only if, in the course of his or her normal duties, the
county superintendent discovers information that gives him or her
reasonable cause to believe that false fiscal expenditure data
relative to the conduct of an educational program has been reported.
SEC. 2. Section 1630 of the Education Code is amended to read:
1630. (a) The Superintendent shall review and consider studies,
reports, evaluations, or audits of the county office of education
that contain evidence that the county office of education is
demonstrating fiscal distress according to the standards and criteria
developed pursuant to Section 33127 or that contain a finding by an
external reviewer that more than 3 of the 15 most common predictors
of school agencies needing intervention, as determined by the County
Office Fiscal Crisis and Management Assistance Team, are present. If
those findings are made, the Superintendent shall investigate the
financial condition of the county office of education and determine
if the county office of education may be unable to meet its financial
obligations for the current or two the
subsequent fiscal years year , or
should receive a qualified or negative interim financial
certification pursuant to Section 1240.
(b) If at any time during the fiscal year the Superintendent
determines that the county office of education may be unable to meet
its financial obligations for the current or two
the subsequent fiscal years year
or if the county office has a qualified certification pursuant
to Section 1240, he or she shall notify the county board of education
and the county superintendent in writing of that determination and
the basis for the determination. The notification shall include the
assumptions used in making the determination and shall be available
to the public. The Superintendent shall do the following, as
necessary, to ensure that the county office meets its financial
obligations:
(1) Assign a fiscal expert, paid for by the Superintendent, to
advise the county office on its financial problems.
(2) Conduct a study of the financial and budgetary conditions of
the county office. If, in the course of this review, the
Superintendent determines that his or her office requires analytical
assistance or expertise that is not available through the county
office, he or she may employ, at county office expense, on a
short-term basis, staff, including certified public accountants, to
provide the assistance and expertise.
(3) Direct the county office to submit a financial projection of
all fund and cash balances of the county office as of June 30 of the
current year and the subsequent fiscal years
year as he or she requires.
(4) Require the county office to encumber all contracts and other
obligations, to prepare appropriate cashflow analyses and monthly or
quarterly budget revisions, and to appropriately record all
receivables and payables.
(5) Direct the county office to submit a proposal for addressing
the fiscal conditions that resulted in the determination that the
county office may not be able to meet its financial obligations.
(6) Withhold compensation of the county board of education and the
county superintendent for failure to provide requested financial
information.
(c) If, after taking the actions identified in subdivision (a),
the Superintendent determines that a county office will be unable to
meet its financial obligations for the current or subsequent fiscal
year, he or she shall notify the county board of education and the
county superintendent in writing of that determination and the basis
for that determination. The notification shall include the
assumptions used in making the determination and shall be available
to the public.
(d) If the Superintendent of Public Instruction
makes that determination, or if the county office has a negative
certification pursuant to Section 1240, the Superintendent, shall, as
necessary to enable the county office to meet its financial
obligations, do one or more of the following:
(1) Develop and impose, in consultation with the county board of
education and the county superintendent, a budget that
will enable the county to meet its financial obligations.
(2) Stay or rescind any action that is determined to be
inconsistent with the ability of the county office to meet its
obligations for the current or subsequent fiscal year and may, as
necessary, appoint a fiscal adviser to perform any or all of the
duties prescribed by this paragraph on his or her behalf. This
includes any actions up to the point that the subsequent year's
budget is approved by the Superintendent. The Superintendent shall
inform the county board of education in writing of his or her
justification for any exercise of authority under this paragraph.
(3) Assist in developing, in consultation with the county board of
education and the county superintendent, a financial plan that will
enable the county office to meet its future obligations.
(4)
Assist in developing, in consultation with the county board of
education and the county superintendent, a budget for the subsequent
fiscal year. If necessary, the Superintendent shall continue to work
with the county board of education and the county superintendent
until the budget for the subsequent year is adopted.
(e) Any actions taken by the Superintendent pursuant to paragraph
(1) or (2) of subdivision (d) shall be accompanied by a notification
that includes the actions to be taken, the reasons for the actions,
and the assumptions used to support the necessity for those actions.
That notification shall be available to the public.
(f) This section does not authorize the Superintendent to abrogate
any provision of a collective bargaining agreement that was entered
into by a county office prior to the date upon which the
Superintendent assumed authority pursuant to subdivision (d).
(g) The county office shall pay reasonable fees charged by the
Superintendent for any administrative expenses incurred pursuant to
subdivision (d) or costs associated with improving the office's
financial management practices.
(h) Notwithstanding any other provision of law, a county treasurer
shall not honor any warrant when the Superintendent, as appropriate,
has disapproved that warrant, or has disapproved the order on county
office funds for which a warrant was prepared.
(i) For all purposes of errors and liability insurance policies, a
fiscal expert appointed pursuant to this section shall be deemed to
be an employee of the county office of education. The Superintendent
may require that the fiscal adviser be placed on the county office of
education payroll for the purposes of remuneration, benefits, and
payroll deductions.
(j) If staff persons are hired pursuant to paragraph (2) of
subdivision (a), the Superintendent may certify to the Controller an
amount to be transferred to the State Department of Education, from
the funds that otherwise would be apportioned to the county office of
education pursuant to Section 2558, for the purpose of paying all
costs incurred by that staff in performing their respective services.
The Controller, upon receipt of that certification, shall transfer
that amount.
(k) To facilitate the appointment of a county office fiscal
officer and the employment of additional staff pursuant to paragraphs
(1) and (2), respectively, of subdivision (a), for the purposes of
those paragraphs, the Superintendent of Public Instruction is exempt
from the requirements of Article 6 (commencing with Section 999) of
Chapter 6 of Division 4 of the Military and Veterans Code and Part 2
(commencing with Section 10100) of Division 2 of the
Public Contracts Code.
SEC. 3. Section 42127.6 of the Education Code is amended to read:
42127.6. (a) (1) A school district shall provide the county
superintendent of schools with a copy of a study, report, evaluation,
or audit that was commissioned by the district, the county
superintendent, the Superintendent of Public Instruction, and state
control agencies and that contains evidence that the school district
is showing fiscal distress under the standards and criteria adopted
in Section 33127, or a report on the school district by the County
Office Fiscal Crisis and Management Assistance Team or any regional
team created pursuant to subdivision (i) of Section 42127.8. The
county superintendent shall review and consider studies, reports,
evaluations, or audits of the school district that contain evidence
that the school district is demonstrating fiscal distress under the
standards and criteria adopted in Section 33127 or that contain a
finding by an external reviewer that more than three of the 15 most
common predictors of a school district needing intervention, as
determined by the County Office Fiscal Crisis and Management
Assistance Team, are present. If these findings are made, the county
superintendent shall investigate the financial condition of the
school district and determine if the school district may be unable to
meet its financial obligations for the current or two
one subsequent fiscal years
year , or should receive a qualified or negative interim
financial certification pursuant to Section 42131. If
(2) If, at any time during the
fiscal year , the county superintendent of schools
determines that a school district may be unable to meet its financial
obligations for the current or two one
subsequent fiscal years year, or if a
school district has a qualified or negative certification pursuant to
Section 42131, he or she shall notify the governing board of the
school district and the Superintendent of Public Instruction in
writing of that determination and the basis for the determination.
The notification shall include the assumptions used in making the
determination and shall be available to the public. The county
superintendent of schools shall report to the Superintendent of
Public Instruction on the financial condition of the school district
and his or her proposed remedial actions , and shall do at
least one of the following and all actions that are necessary to
ensure that the district meets its financial obligations:
(A) Assign a fiscal expert, paid for by the county superintendent,
to advise the district on its financial problems.
(B) Conduct a study of the financial and budgetary conditions of
the district that includes, but is not limited to, a review of
internal controls. If, in the course of this review, the county
superintendent determines that his or her office requires analytical
assistance or expertise that is not available through the district,
he or she may employ, on a short-term basis, with the approval of the
Superintendent of Public Instruction, staff, including certified
public accountants, to provide the assistance and expertise. The
school district shall pay 75 percent and the county office of
education shall pay 25 percent of these staff costs.
(C) Direct the school district to submit a financial projection of
all fund and cash balances of the district as of June 30 of the
current year and subsequent fiscal years as he or she requires.
(D) Require the district to encumber all contracts and other
obligations, to prepare appropriate cashflow analyses and monthly or
quarterly budget revisions, and to appropriately record all
receivables and payables.
(E) Direct the district to submit a proposal for addressing the
fiscal conditions that resulted in the determination that the
district may not be able to meet its financial obligations.
(F) Withhold compensation of the members of the governing board
and the district superintendent for failure to provide requested
financial information. This action may be appealed to the
Superintendent of Public Instruction pursuant to subdivision (b).
(G) Assign the Fiscal Crisis and Management Assistance Team to
review teacher hiring practices, teacher retention rate, percentage
of provision of highly qualified teachers, and the extent of teacher
misassignment in the school district and provide the district with
recommendations to streamline and improve the teacher hiring process,
teacher retention rate, extent of teacher misassignment, and
provision of highly qualified teachers. If a review team is assigned
to a school district, the district shall follow the recommendations
of the team, unless the district shows good cause for failure to do
so. The Fiscal Crisis and Management Assistance Team may not
recommend an action that would abrogate a contract that governs
employment.
(2)
( 3) Any contract entered into by a county
superintendent of schools for the purposes of this subdivision is
subject to the approval of the Superintendent of Public Instruction.
(3)
( 4) An employee of a school district who
provides information regarding improper governmental activity, as
defined in Section 44112, is entitled to the protection provided
pursuant to Article 5 (commencing with Section 44110) of Chapter 1 of
Part 25.
(b) Within five days of the county superintendent making the
determination specified in subdivision (a), a school district may
appeal the basis of the determination and any of the proposed actions
that the county superintendent has indicated that he or she will
take to further examine the financial condition of the district. The
Superintendent of Public Instruction shall sustain or deny any or all
parts of the appeal within 10 days.
(c) If, after taking the actions identified in subdivision (a),
the county superintendent determines that a district will be unable
to meet its financial obligations for the current or subsequent
fiscal year, he or she shall notify the school district governing
board and the Superintendent of Public Instruction in writing of that
determination and the basis for that determination. The notification
shall include the assumptions used in making the determination and
shall be provided to the superintendent of the school district and
parent and teacher organization of the district.
(d) Within five days of the county superintendent making the
determination specified in subdivision (c), a school district may
appeal that determination to the Superintendent of Public
Instruction . The Superintendent shall sustain or deny the
appeal within 10 days. If the governing board of the school district
appeals the determination, the county superintendent of schools may
stay any action of the governing board that he or she determines is
inconsistent with the ability of the district to meet its financial
obligations for the current or subsequent fiscal year until
resolution of the appeal by the Superintendent of Public
Instruction .
(e) If the appeal described in subdivision (d) is denied or not
filed, or if the district has a negative certification pursuant to
Section 42131, the county superintendent, in consultation with the
Superintendent of Public Instruction , shall take
at least one of the actions described in paragraphs (1) to (5),
inclusive, and all actions that are necessary to ensure that the
district meets its financial obligations and shall make a report to
the Superintendent about the financial condition of the district and
remedial actions proposed by the county superintendent.
(1) Develop and impose, in consultation with the Superintendent
of Public Instruction and the school district
governing board, a budget revision that will enable the district to
meet its financial obligations in the current fiscal year.
(2) Stay or rescind any action that is determined to be
inconsistent with the ability of the school district to meet its
obligations for the current or subsequent fiscal year. This includes
any actions up to the point that the subsequent year's budget is
approved by the county superintendent of schools. The county
superintendent of schools shall inform the school district governing
board in writing of his or her justification for any exercise of
authority under this paragraph.
(3) Assist in developing, in consultation with the governing board
of the school district, a financial plan that will enable the
district to meet its future obligations.
(4) Assist in developing, in consultation with the governing board
of the school district, a budget for the subsequent fiscal year. If
necessary, the county superintendent of schools shall continue to
work with the governing board of the school district until the budget
for the subsequent year is adopted.
(5) As necessary, appoint a fiscal adviser to perform any or all
of the duties prescribed by this section on his or her behalf.
(f) Any action taken by the county superintendent of schools
pursuant to paragraph (1) or (2) of subdivision (e) shall be
accompanied by a notification that shall include the actions to be
taken, the reasons for the actions, and the assumptions used to
support the necessity for these actions.
(g) This section does not authorize the county superintendent to
abrogate any provision of a collective bargaining agreement that was
entered into by a school district prior to the date upon which the
county superintendent of schools assumed authority pursuant to
subdivision (e).
(h) The school district shall pay 75 percent and the county office
of education shall pay 25 percent of the administrative expenses
incurred pursuant to subdivision (e) or costs associated with
improving the district's financial management practices. The
Superintendent of Public Instruction shall develop
and distribute to affected school districts and county offices of
education advisory guidelines regarding the appropriate amount of
administrative expenses charged pursuant to this subdivision.
(i) Notwithstanding Section 42647 or 42650 or any other law, a
county treasurer shall not honor any warrant if, pursuant to Sections
42127 to 42127.5, inclusive, or pursuant to this section, the county
superintendent or the Superintendent of Public Instruction
, as appropriate, has disapproved that warrant or the order
on school district funds for which a warrant was prepared.
(j) Effective upon the certification of the election results for a
newly organized school district pursuant to Section 35763, the
county superintendent of schools may exercise any of the powers and
duties of this section regarding the reorganized school district and
the other affected school districts until the reorganized school
district becomes effective for all purposes in accordance with
Article 4 (commencing with Section 35530) of Chapter 3 of Part 21.
(k) The Superintendent of Public Instruction
shall monitor the efforts of a county office of education in
exercising its authority under this section and may exercise any of
that authority if he or she finds that the actions of the county
superintendent of schools are not effective in resolving the
financial problems of the school district. Upon a decision to
exercise the powers of the county superintendent of schools, the
county superintendent of schools is relieved of those powers assumed
by the Superintendent. In addition to the actions taken by the county
superintendent, the Superintendent of Public Instruction
shall take further actions to ensure the long-term fiscal
stability of the district. The county office of education shall
reimburse the Superintendent of Public Instruction
for all of his or her costs in exercising his or her authority under
this subdivision. The Superintendent of Public Instruction
shall promptly notify the county superintendent of schools,
the county board of education, the superintendent of the school
district, the governing board of the school district, the appropriate
policy and fiscal committees of each house of the Legislature, and
the Department of Finance of his or her decision to exercise the
authority of the county superintendent of schools.
SEC. 4. Section 42131 of the Education Code is amended to read:
42131. (a) (1) Pursuant to the reports required by Section 42130,
the governing board of each school district shall certify, in
writing, within 45 days after the close of the period being reported,
whether the school district is able to meet its financial
obligations for the remainder of the fiscal year and, based on
current forecasts, for the subsequent fiscal year. These
certifications shall be based upon the board's assessment, on the
basis of standards and criteria for fiscal stability adopted by the
State Board of Education pursuant to Section 33127, of the district
budget, as revised to reflect current information regarding the
adopted State Budget, district property tax revenues pursuant to
Sections 95 to 100, inclusive, Chapter 6
(commencing with Section 95) of Pa rt 0.5 of Division 1
of the Revenue and Taxation Code, and ending balances for the
preceding fiscal year as reported pursuant to Section 42100. The
certifications shall be classified as positive, qualified, or
negative, as prescribed by the Superintendent of Public Instruction
for the purposes of determining subsequent actions by the
Superintendent of Public Instruction, the Controller, or the county
superintendent of schools, pursuant to subdivisions (b) and (c).
These certifications shall be based upon the financial and budgetary
reports required by Section 42130 but may include additional
financial information known by the governing board to exist at the
time of each certification. For purposes of this subdivision, a
negative certification shall be assigned to any school district that,
based upon current projections, will be unable to meet its financial
obligations for the remainder of the fiscal year or the
subsequent fiscal year . A qualified certification shall be
assigned to any school district that, based upon current
projections, may not meet its financial obligations for the current
fiscal year or two the subsequent
fiscal years year . A positive
certification shall be assigned to any school district that, based
upon current projections, will meet its financial obligations for the
current fiscal year and the subsequent two
fiscal years year .
(2) (A) A copy of each certification and a
copy of the report submitted to the governing board pursuant to
Section 42130 shall be filed with the county superintendent of
schools. If a county office of education receives a positive
certification when it determines a negative or qualified
certification should have been filed, the county superintendent of
schools shall change the certification to negative or qualified, as
appropriate, and, no later than 75 days after the close of the period
being reported, shall provide notice of that action to the governing
board of the school district and to the Superintendent of
Public Instruction . No later than five days after a school
district receives notice from the county superintendent of schools
of a change in the district's certification to negative or qualified,
the governing board of the district may submit an appeal to the
Superintendent of Public Instruction regarding the
validity of that change, in accordance with the criteria applied to
those designations pursuant to this subdivision. No later than 10
days after receiving that appeal, the Superintendent of
Public Instruction shall determine the certification to be
assigned to the district, and shall notify the school district
governing board and the county superintendent of schools of that
determination.
Copies
(B) Copies of any certification
in which the governing board is unable to certify unqualifiedly that
these financial obligations will be met and a copy of the report
submitted to the governing board pursuant to Section 42130 shall be
sent by the county office of education to the Controller and the
Superintendent of Public Instruction at the time
of the certification, together with a completed transmittal form
provided by the Superintendent of Public Instruction
. Within 75 days after the close of the reporting period on
all school district certifications that are classified as qualified
or negative pursuant to this section, the appropriate county
superintendent of schools shall submit to the Superintendent
of Public Instruction and the Controller his or her
comments on those certifications and report any action proposed or
taken pursuant to subdivision (b).
(3) All reports and certifications required under this subdivision
shall be in a format or on forms prescribed by the Superintendent
of Public Instruction , and shall be based on
standards and criteria for fiscal stability adopted by the State
Board of Education pursuant to Section 33127.
(4) This subdivision does not preclude the submission of
additional budgetary or financial reports by the county
superintendent of schools to the district governing board, or to the
Superintendent of Public Instruction .
(b) As to any school district having a negative or qualified
certification, the county superintendent of schools shall exercise
his or her authority, as necessary, pursuant to Section 42127.6.
(c) Within 75 days after the close of each reporting period, each
county superintendent of schools shall report to the Controller and
the Superintendent of Public Instruction as to
whether the governing board of each of the school districts under his
or her jurisdiction has submitted the certification required by
subdivision (a). That report shall account for all districts under
the jurisdiction of the county office of education and indicate the
type of certification filed by each district.
(d) The Controller's office may conduct an audit or review of the
fiscal condition of any district having a negative or qualified
certification.
(e) The governing board of each school district filing a qualified
or negative certification for the second report required under
Section 42130, or classified as qualified or negative by the county
superintendent of schools, shall provide to the county superintendent
of schools, the Controller, and the Superintendent of
Public Instruction no later than June 1, financial
statement projections of the district's fund and cash balances
through June 30 for the period ending April 30. The governing boards
of all other school districts are encouraged to develop a similar
financial statement for use in developing the beginning fund balances
of the district for the ensuing fiscal year.
(f) Any school district for which the county board of education
serves as the governing board is not subject to subdivisions (a) to
(f) (e) , inclusive, but is governed
instead by the interim report, monitoring, and review procedures set
forth in subdivision ( l ) of Section 1240 and in Article
2 (commencing with Section 1620) of Chapter 5 of Part 2 of
Division 1 of Title 1 .