BILL ANALYSIS Ó
AB 1344
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Date of Hearing: April 27, 2011
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 1344 (Feuer and Alejo) - As Amended: April 25, 2011
SUBJECT : Local governance.
SUMMARY : Prohibits, on or after January 2, 2012, any contract
executed or renewed between a local agency and an excluded
employee from including an automatic renewal of contract, an
automatic increase in compensation that exceeds a cost-of-living
adjustment, an automatic increase in compensation that is linked
to another contract, and a maximum cash settlement that exceeds
the amounts provided for in statutory provisions governing
employment contracts. Specifically, this bill :
1)Prohibits, on or after January 2, 2012, any contract executed
or renewed between a city; county; charter city; charter
county; town; school district; municipal corporation;
district; political subdivision; any board, commission or
agency thereof; or other local public agency (local agency)
and an excluded employee from including an automatic renewal
of contract, an automatic increase in compensation that
exceeds a cost-of-living adjustment, an automatic increase in
compensation that is linked to another contract, and a maximum
cash settlement that exceeds the amounts provided for in
statutory provisions governing employment contracts.
2)Requires a local agency, before increasing the compensation of
an excluded employee, to complete a performance review of the
excluded employee.
3)Requires a local agency to conform to the requirements of law,
including, but not limited to, the Ralph M. Brown Act (Brown
Act) and the Public Records Act.
4)Defines compensation to mean any of the following:
a) Annual salary or stipend;
b) A local agency's payments to the filer's deferred
compensation or defined benefit plans;
c) Automobile and equipment allowances;
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d) Supplemental incentive and bonus payments; and,
e) A local agency's payments to the filer that are in
excess of the standard benefits the local agency offers for
all other employees.
5)Defines excluded employee to mean any person who is or will be
employed by, and report directly to, the legislative body of a
local agency and who is not subject to the Meyers-Milias-Brown
Act, and includes any person who performs governmental duties
for a local agency pursuant to a contract with that local
agency and any person who is considered an
at-will employee.
6)Requires a city charter or amendments to a city charter
proposed by a charter commission to be submitted to the voters
at an established statewide general election date.
7)Authorizes the governing body of a city to submit a charter
proposal, amendments to a charter, repeal of a charter, or
recodification of a charter, whether proposed by the governing
body or by petition, to the voters for adoption at the next
established statewide general election date provided there are
at least 88 days before the election.
8)Requires a proposal to adopt or amend a city charter to
include in the ballot description an enumeration of new city
powers that would result with the adoption of the charter,
including, but not limited to, whether the city council will
have the power to raise its own compensation and the
compensation of other city officials without voter approval
under the charter.
9)Requires an employee or officer of a local agency who is
convicted of a crime involving an abuse of his or her office
or position to pay restitution to the local agency that
expended public funds for the legal defense of that officer or
employee.
10)Requires the legislative body of a local agency to post at
least 72 hours in advance the agenda for a regular meeting on
the local agency's Internet Web site if the local agency has
one.
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11)Requires the legislative body of a local agency to post at
least 24 hours in advance the notice and agenda for a special
meeting on the local agency's Internet Web site if the local
agency has one.
12)Requires the legislative body of a local agency to post at
least one hour in advance the notice for an emergency meeting
on the local agency's Internet Web site if the local agency
has one. If Internet services are not functioning, the notice
requirements for an emergency meeting are required to be
deemed waived.
13)Requires the legislative body of a local agency to post at or
near the time the presiding officer or designee notifies the
members of the legislative body of the emergency meeting the
notice for a dire emergency meeting on the local agency's
Internet Web site if the local agency has one. If Internet
services are not functioning, the notice requirements for a
dire emergency meeting are required to be deemed waived.
14)Declares these provisions are a statewide concern and apply
to all counties and cities, including charter counties,
charter cities, and charter cities and counties.
EXISTING LAW :
1)Provides, under the Meyers-Milias-Brown Act, that collective
bargaining and representation procedures generally do not
apply to executive employees, such as county administrators,
city managers, special district managers, school
superintendents, community college presidents that are
employed by, and report directly to, local elected governing
boards.
2)Requires all contracts of employment between an employee and a
local agency employer to include a provision that provides,
regardless of the term of the contract, if the contract is
terminated, the maximum cash settlement an employee may
receive is required to be an amount equal to the monthly
salary of the employee multiplied by the number of months left
on the unexpired term of the contract. However, if the
unexpired term of the contract is greater than 18 months, the
maximum cash settlement is required to be an amount equal to
the monthly salary of the employee multiplied by 18.
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3)Requires, under the Brown Act, that all meetings of a
legislative body of a local agency be open and public and all
persons be permitted to attend unless a closed session is
authorized.
4)Requires, at least 72 hours before a regular meeting, the
legislative body of the local agency, or its designee, to post
an agenda containing a brief general description of each item
of business to be transacted or discussed at the meeting,
including items to be discussed in closed session.
5)Requires, at least 24 hours before a special meeting, the
legislative body of the local agency deliver written notice
and an agenda to each member of the legislative body and to
each local newspaper of general circulation and radio or
television state requesting notice in writing.
6)Requires, at least one hour before an emergency meeting, the
presiding officer of the legislative body or designee to
notify each local newspaper of general circulation and radio
or television station that has requested notice of special
meetings. If telephone services are not functioning, the
notice requirements for an emergency meeting are required to
be deemed waived and the legislative body or designee is
required to notify those newspapers, radio stations, or
television stations of the fact an emergency meeting was held,
the purpose of the meeting, and any action taken.
7)Requires, at or near the time the presiding officer or
designee notifies the members of the legislative body of the
dire emergency meeting, the presiding officer or designee to
notify each local newspaper of general circulation and radio
or television station that has requested notice of special
meetings. If telephone services are not functioning, the
notice requirements for a dire emergency meeting are required
to be deemed waived and the legislative body or designee is
required to notify those newspapers, radio stations, or
television stations of the fact a dire emergency meeting was
held, the purpose of the meeting, and any action taken.
8)Authorizes a legislative body of a local agency to hold closed
sessions with the local agency's designated representatives
regarding the salaries, salary schedules, or compensation paid
in the form of fringe benefits of its represented and
unrepresented employees, and, for represented employees, any
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other matter within the statutorily provided scope of
representation.
9)Prohibits closed sessions from including final action on the
proposed compensation of one or more unrepresented employees.
10)Finds and declares that in enacting the Public Records Act,
the Legislature, mindful of the right of individuals to
privacy, that access to information concerning the conduct of
the people's business is a fundamental and necessary right of
every person in this state.
11)Declares that every employment contract between a state or
local agency and any public official or public employee is a
public record.
12)Requires city and county charter proposals to be submitted to
the voters at either a special election called for that
purpose, at any established municipal election date, or at any
established election date provided pursuant to statute,
provided there are at least 88 days before the election.
13)Requires a city charter proposal prepared by the charter
commission, after it has been filed in the office of the clerk
of the governing body of the city, to be submitted to the
voters of the city at either a special election called within
14 days by the governing body for that purpose to be conducted
at least 95 days after the date the special election is called
or at the next established municipal election date or at the
next established statewide election date, provided there are
at least 95 days before the election.
14)Authorizes, as an alternative, the governing body of any
city, on its own motion, to propose or cause to be proposed,
amend or cause to be amended, or repeal or cause to be
repealed a charter and to submit the proposal for adoption, or
the amendments or repeal thereof, to the voters at either a
special election called for that purpose or at any established
municipal election date or at any established election date,
provided there are at least 88 days before the election.
15)Establishes penalties for misuse of public resources for
falsifying expense reporting, including, but not limited to,
loss of reimbursement privileges, restitution, civil penalties
for misuse of public resources, and prosecution for misuse of
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public resources.
FISCAL EFFECT : Unknown
COMMENTS :
1)According to the author, the scandal surrounding the City of
Bell in 2010 exposed deficiencies in existing law that must be
addressed to ensure greater transparency and so voters have
confidence that taxpayer dollars are being used wisely. AB
1344, the author says, targets practices exploited by some
local governments that inappropriately even extravagantly
rewarded elected officials and top executive officers outside
of public view. Requiring basic good governance measures as
they relate to compensation practices, the author says,
provides, to the maximum extent possible, the public with the
opportunity to be informed and comment on local
compensation-setting practices.
2)The Meyers-Milias-Brown Act governs local governments'
relations with their employees and portions of the Education
Code govern school districts and community college districts'
employee relations. These collective bargaining and
representation procedures generally do not apply to executive
employees - county administrators, city managers, special
district managers, school superintendents, community college
presidents - who are employed by, and report directly to,
local elected governing boards.
Under the Brown Act, 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.
The governing bodies of local agencies are required to ratify
their executive employees' contracts of employment in open
session and reflect those decisions in their minutes. Copies
of these employment contracts and settlement agreements must
be publicly available. When a contract with an executive
employee is terminated, the maximum cash settlement a local
agency can pay is an amount equal to 18 months' salary. These
provisions apply to general law counties, general law cities,
special districts, school districts, and community college
districts.
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The California Public Records Act requires public records to be
open to inspection during office hours and gives every person
a right to inspect public records, with specific exceptions.
The Public Records Act also provides the procedures for
requesting copies of public records. Among the specific
exemptions are employment contracts between public agencies
and public officials or employees.
The California Constitution gives cities the power to become
charter cities. The benefit of becoming a charter city is
charter cities have supreme authority over "municipal
affairs." In other words, a charter city's law concerning a
municipal affair will trump a state law governing the same
topic. Personnel matters for the most part are deemed a
"municipal affair" and are under the authority of the charter
entity.
However, employee compensation procedures set forth in the
Meyers-Milias-Brown Act apply to charter cities and counties.
In Voters for Responsible Retirement v. Board of Supervisors
(1994) 8 Cal.4th 765, the California Supreme Court ruled: "It
is indisputable that the procedures set forth in the
ÝMeyers-Milias-Brown Act] are a matter of statewide concern,
and are preemptive of contradictory local labor-management
procedures. (International Brotherhood of Electrical Workers
v. City of Gridley (1983) 34 Cal.3d 191, 202)" (Id. At 781).
In addition, in People ex rel. Seal Beach Police Officers
Assn. v. City of Seal Beach (1984) 36 Cal.3d 591, the
California Supreme Court stated: "We emphasize there is a
clear distinction between the substance of a public employee
labor issue and the procedure by which it is resolved. Thus
there is no question that 'salaries of local employees of a
charter city constitute municipal affairs and are not subject
to general laws.' ÝSonoma County Organization of Public
Employees v. County of Sonoma (1979) 23 Cal.3d 296, 317.]
Nevertheless, the process by which salaries are fixed is
obviously a matter of statewide concern ?" (Id. at 600-601, fn
11).
AB 1344's requirement that local governing bodies conduct
performance reviews before raising the compensation of their
key executive staff appears to be a procedural statute that is
within the Legislature's power to require. However, the
Committee may wish to consider whether the four contracting
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practices banned by AB 1344 are procedural or substantive.
Prohibiting automatic contract renewals, automatic
compensation increases, and automatic compensation increases
linked to other contracts are probably procedural
requirements. Putting a limit on the amount of settlement
payments might be substantive and, thus, not allowed to be
governed by state statute for purposes of charter cities and
counties.
3)City charter and city charter amendment proposals can
originate in one of three fashions: a charter commission, the
governing body of the city, or by a petition of the voters.
For a charter commission, the proposed charter is required to
be submitted to the voters of the city at either a special
election called within 14 days by the governing body for that
purpose to be conducted at least 95 days after the date the
special election is called, or at the next established
municipal election date or at the next established election
date, provided there are at least 95 days before the election.
A governing body, on its own motion, is authorized to propose
or cause to be proposed, amend or cause to be amended, or
repeal or cause to be repealed, a charter and to submit the
proposal to the voters at either a special election called for
that purpose or at any established municipal election date or
at any established election date, provided there are at least
88 days before the election. Petitions from voters for a
charter proposal are submitted to the city council for
placement on the ballot at an election on a date to be
determined by the city council. These provisions apply to
general law cities.
In an apparent response to a newly enacted state law limiting
city council members' compensation, the City of Bell hurriedly
wrote a city charter and placed the proposal on the ballot at
a special municipal election on November 29, 2005. It was the
only item on the ballot, with the move being billed as one
that would give the city more local control. The ballot
language included no mention of the effect the change would
have on council members' salaries. Fewer than 400 voters
turned out in the city of over 36,000 residents.
The author says the decision to convert a general law city to a
charter city is important, but its importance may not be
apparent to voters.
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AB 1344's requirement that a charter and charter amendment
proposal be placed at a statewide general election coupled
with a ballot description enumerating new city powers as a
result of adopting the charter, including the new city
council's new power to raise its own compensation and the
compensation of other city officials without voter approval,
would ensure voters have an idea of what becoming a charter
city can mean. However, the ultimate decision on whether a
city is to adopt a charter lies in the hands of the voters. A
ballot pamphlet accompanies every election, and city measures
include an impartial analysis from the city attorney and any
submitted arguments in favor or against the measure. The
Committee may wish to consider whether it necessary to require
the ballot description to include an enumeration of new city
powers that would result with the adoption of a charter when a
ballot pamphlet already would contain an impartial analysis.
4)In January 2011, three of the six City of Bell city council
members charged with multiple counts of misappropriating
public funds asked the court to force the city to pay their
legal bills because the three insisted they had not broken any
law and were acting in their official capacities at the time.
Former City Manager Robert Rizzo also filed a complaint in
court to have the city pick up his legal bills while he is
defending himself in two civil cases and a felony complaint
that includes more than 50 counts. Rizzo's 1996 employment
contract provided for legal defense fees reimbursement, but
city officials are refusing to abide by those contract terms.
Current law does allow a local agency employer to reimburse an
employee for his her legal defense fees if the local agency
determines the employee cooperates in his or her defense in
good faith and acted within the scope of his or her
employment, among other things. The author says AB 1344 would
rectify this deficiency by prohibiting a local agency employee
who is convicted of a crime involving the abuse of office from
being reimbursed for his or her legal defense fees. The
author may wish to consider whether it would be better to
include these provisions under Division 3.6 (commencing with
Section 810) of Title 1 of the Government Code rather than
creating a new article of law.
5)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
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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.
There also are modified requirements for posting meeting
notices and agendas depending on whether the meeting is a
special meeting, an emergency meeting, or a dire emergency
meeting.
The author says current law does not maximize the opportunities
for the public to be informed of a public meeting, including
hearings on compensation practices. By requiring local
agencies with Internet Web sites to post agendas online with
the same existing disclosure guidelines used for physically
posted meeting notices and agendas, the public would have
increased access to a local agency's decision-making process.
However, AB 1344 does not provide any safe harbor provision for
when a local agency's Internet Web site is not functioning.
It is not unusual for server problems to arise with increased
Internet traffic and usage. There also are situations when
the local government might not be aware its Internet Web site
is not working. Under current law, the requirement of
physically posting an agenda does not encounter these types of
issues, making it foolproof. The Committee may wish to
consider whether it would be prudent to enact a mandate
involving technology that is frequently fallible.
Also, larger local agencies, such as counties and cities, tend
to have sophisticated Internet Web sites and dedicated
information technology staff. Many smaller special districts
and cities, however, either do not have an Internet Web site
or have a very simple site that contains only their name,
mailing address, phone number, and basic information. Those
local government agencies that have minimal sites might not be
able to comply with the provisions of AB 1344 because they
simply do not have the staff or money to post their agendas.
Instead of applying for reimbursement from the Commission on
State Mandates, whose backlog can be as long as several years,
those smaller local government agencies might instead choose
to pull their Internet Web sites completely. The Committee
may wish to consider whether the risk of eliminating public
access to small cities and special districts outweighs the
benefit of placing meeting notices and agendas online.
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6)AB 827 (De La Torre, 2010) contained identical provisions to
AB 1344 with regard to executive officer employment contracts.
AB 827 passed out of this committee on a 6-1 vote and was
vetoed by the Governor with the following message:
"The scandal with the City of Bell was a disgraceful use of
public funds. I share the public outrage expressed over the
abuses attributed to the City of Bell's management of employee
contracts. Assembly Bill 827 presents good public policy in
that it provides transparency with regards to some municipal
personnel contracts, but it should be applied to all public
employees, including labor union members and state employees.
I encourage the Legislature to enact thoughtful and meaningful
solutions rather than a rushed proposal that is severely
limited in its application."
7)Similar legislation:
AB 392 (Alejo, 2011) requires a local agency to post at least 72
hours before a regular meeting of a legislative body the
agenda and applicable staff-generated reports on the local
agency's Internet Web site, if any, and, for a local agency
without an Internet Web site, requires a local agency to
disclose on the physically posted agenda the public location
where the local agency makes available any applicable
staff-generated reports for public inspection and copying at
least 72 hours in advance of the regular meeting.
AB 582 (Pan, 2011) requires the legislative body of a local
agency to publicly notice twice a proposed compensation
increase of more than five percent for a city manager, deputy
city manager, county chief administrative officer, deputy
chief administrative officer, or similar employee.
8)Support arguments: Support, California Common Cause, says
requiring a local agency to post meeting notices online is a
failsafe reform to ensure the growing numbers of people who
communicate with government online are being served.
Opposition arguments: Opposition might argue AB 1344 is an
overreaction to one incident and that, from information
gathered by informal surveys and discussions, the outrageous
compensation provided to the City of Bell's city manager is a
rarity.
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9)This bill is double-referred to the Committee on Elections and
Redistricting.
REGISTERED SUPPORT / OPPOSITION :
Support
CA Common Cause
Opposition
None on file
Analysis Prepared by : Jennifer Klein Baldwin / L. GOV. /
(916) 319-3958