BILL ANALYSIS Ó AB 1344 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1344 (Feuer and Alejo) As Amended August 30, 3011 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |78-0 |(June 2, 2011) |SENATE: |24-14|(September 7, | | | | | | |2011) | ----------------------------------------------------------------- Original Committee Reference: L. GOV. 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 the contract if the contract provides for an automatic increase in compensation that exceeds a cost-of-living adjustment and a maximum cash settlement that exceeds the amounts provided for in statutory provisions governing employment contracts; and, provides more public review when a city is considering placing the adoption of a charter before the voters. The Senate amendments : 1)Delete the definition of "compensation" used in the Assembly version and re-define "compensation" as annual salary, stipend, or bonus, paid by a local agency employer to a local agency executive. 2)Delete the term "excluded employee" and replaces it with "local agency executive": a) Define "local agency executive" as any person employed by a local agency who not subject to the Meyers-Milias-Brown Act or similar provisions, and who meets either of the following requirements: i) The person is the chief executive officer of the local agency; or, ii) The person is the head of a department of a local agency. 3)Require, on or after January 1, 2012, any contract executed or renewed between a local agency and an officer or employee of a AB 1344 Page 2 local agency that provides for paid leave of an officer or employee pending an investigation to include that any salary provided for that purpose must be reimbursed if the officer or employee is convicted of a crime involving and abuse of his or her position. 4)Provide, that on or after January 1, 2012, any contract of employment executed or renewed between a local agency and an officer or employee that provides for legal criminal defense must require that any funds provided for that that purpose must be reimbursed if the officer or employee is convicted of a crime involving and abuse of his or her position. 5)Provide, that on or after January 1, 2012, if a local agency, absent a contractual obligation, for the payment legal criminal defense must require that any funds provided for that that purpose must be reimbursed if the officer or employee is convicted of a crime involving and abuse of his or her position. 6)Define "abuse of office or position" as either of the following: i) An abuse of public authority, including, but not limited to, waste, fraud, and violation of the law under color of authority; or, ii) A crime against public justice, including but not limited to, bribery and corruption. 7)Require, prior to submitting the adoption of a charter to the voters, a city to hold at least two public hearings on the proposal and contents of the charter, and specify that the hearings shall be at least 30 -days apart. 8)Prohibit the governing body of a city from conducting a vote to approve submission to the voters of a proposal to adopt a charter until 21 days after the second public hearing. 9)Prohibit a legislative body from calling a special meeting regarding the salaries, salary schedules or compensation paid in the form of fringe benefits, of a local agency executive. 10)Specify that a legislative body is not prohibited from AB 1344 Page 3 calling a special meeting to discuss the budget of the local agency. 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. 3)Requires, under the Ralph M. Brown Act (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 to 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 AB 1344 Page 4 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 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. AB 1344 Page 5 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 public resources. AS PASSED BY THE ASSEMBLY , this bill: 1)Prohibited, 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 the if the contract provides for 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)Defined "compensation" to mean any of the following: a) Annual salary or stipend; AB 1344 Page 6 b) A local agency's payments to the filer's deferred compensation or defined benefit plans; c) Automobile and equipment allowances; 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. 3)Defined "cost-of-living" to mean the California Consumer Price Index for urban Wage Earners and Clerical Workers as calculated by the Department of Industrial Relations. 4)Defined "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. 5)Required 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, statewide primary, or regularly scheduled municipal election date provided there are at least 95 days before the election. 6)Authorized 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, statewide primary, or regularly scheduled municipal election date provided there are at least 88 days before the election. 7)Required 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. AB 1344 Page 7 8)Required 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 criminal defense of that officer or employee. 9)Required 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 and if the legislative body is one of the following: a) The governing body of a local agency or any other local body created by state or federal statute; or, b) A commission, committee, board, or other body of a local agency, whether permanent or temporary, decision-making or advisory, created by charter, ordinance, resolution, or formal action of a legislative body if the members are compensated for their appearance and if one or more of the members also are members of a legislative body of a local agency or any other local body created by state or federal statute. However, advisory committees, composed solely of the members of the legislative body that are less than a quorum of the legislative body are not legislative bodies for purposes of these provisions, except that standing committees of a legislative body, irrespective of their composition, which have a continuing subject matter jurisdiction, or a meeting schedule fixed by charter, ordinance, resolution, or formal action of a legislative body are legislative bodies for purposes of these provisions. 10)Required 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 and if the legislative body is one of the following: a) The governing body of a local agency or any other local body created by state or federal statute; or, b) A commission, committee, board, or other body of a local agency, whether permanent or temporary, decision-making or advisory, created by charter, ordinance, resolution, or formal action of a legislative body if the members are AB 1344 Page 8 compensated for their appearance and if one or more of the members also are members of a legislative body of a local agency or any other local body created by state or federal statute. However, advisory committees, composed solely of the members of the legislative body that are less than a quorum of the legislative body are not legislative bodies for purposes of these provisions, except that standing committees of a legislative body, irrespective of their composition, which have a continuing subject matter jurisdiction, or a meeting schedule fixed by charter, ordinance, resolution, or formal action of a legislative body are legislative bodies for purposes of these provisions. 11)Declared these provisions are a statewide concern and apply to all counties and cities, including charter counties, charter cities, and charter cities and counties. 12)Declared these provisions are severable. FISCAL EFFECT : According to the Senate Appropriations Committee: AB 1344 would impose a reimbursable state-mandated local program by placing new requirements on employment contracts that are executed or renewed by local agencies as of January 1, 2012. Total reimbursable mandate costs are unknown, and would depend upon whether affected agencies submit a successful claim for reimbursement. These costs would likely be relatively minor for most agencies, and many would forego reimbursement. If five percent of the over 6000 affected agencies incur costs of over $1,000 and file a successful claim, however, total statewide costs would exceed $300,000. Most of these costs would be one-time, with minor ongoing costs. COMMENTS : 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 (Feuer), 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. AB 1344 Page 9 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. The California Public Records Act (PRA) 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 PRA 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 AB 1344 Page 10 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). The Legislature may wish to consider whether the three contracting practices banned by AB 1344 (Feuer) are procedural or substantive. Prohibiting automatic contract renewals that provide for an automatic increase in compensation that exceeds a cost-of-living adjustment is 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. 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 AB 1344 Page 11 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. This bill's requirement that a charter and charter amendment proposal be placed at a statewide general, statewide primary, or regularly scheduled municipal 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 Legislature 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. 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. AB 1344 Page 12 Current law does allow a local agency employer to reimburse an employee for his or 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 this bill 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 criminal defense fees. 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. 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. 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 this bill 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 Legislature 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. AB 1344 Page 13 AB 827 De La Torre of (2010) contained identical provisions to this bill with regard to executive officer employment contracts. AB 827 passed out of the Local Government 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." Support arguments: The 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 this bill is an overreaction to one incident and that, from information gathered by informal surveys and discussions, the practices observed by City of Bell are not very common. Analysis Prepared by : Katie Kolitsos / L. GOV. / (916) 319-3958 FN: 0002468