BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1344
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          CONCURRENCE IN SENATE AMENDMENTS
          AB 1344 (Feuer and Alejo)
          As Amended  August 30, 3011
          Majority vote
           
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          |ASSEMBLY:  |78-0 |(June 2, 2011)  |SENATE: |24-14|(September 7,  |
          |           |     |                |        |     |2011)          |
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           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 








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            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 








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            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 








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            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.








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          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;









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             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.









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          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 








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               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.









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          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 








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          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 








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          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.








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          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.








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          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 


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