BILL ANALYSIS Ó
AB 2279
Page 1
Date of Hearing: April 18, 2012
ASSEMBLY COMMITTEE ON EDUCATION
Julia Brownley, Chair
AB 2279 (Swanson) - As Introduced: February 24, 2012
SUBJECT : School districts: emergency apportionments:
trustees
SUMMARY : Provides that a trustee assigned to a school district
that has received an emergency loan shall serve until any one of
the following conditions has been met:
1)The district has repaid the loan,
2)The school district has adequate fiscal systems and controls
in place, or
3)The Superintendent of Public Instruction (SPI) has determined
that the school district's future compliance with its approved
fiscal plan is probable.
EXISTING LAW provides that a trustee assigned to a school
district that has received an emergency loan shall serve until
all three of the above conditions have been met. Existing law
further provides that the SPI may retain the trustee if an
independent audit of the district's fiscal systems finds them to
be inadequate.
FISCAL EFFECT : Unknown
COMMENTS : Existing law provides for emergency loans to school
districts that are unable to meet their current operating
expenses. Such loans are provided by legislation enacted at the
request of the district. Existing law requires districts that
request and agree to receive an emergency loan to agree to
statutory terms and conditions regarding repayment of the loan
and the steps to be taken to return the district to financial
solvency.
If a district receives an emergency loan of up to 200% of its
recommended budget reserve, then the Superintendent of Public
Instruction (SPI) is required to appoint a trustee to monitor
and review the operation of the district and who has the
authority to stay and rescind any action of the district
governing board. Existing law requires the trustee to serve
until the loan is repaid, the district has adequate fiscal
AB 2279
Page 2
systems and controls in place, and the SPI determines that the
district's future compliance with its approved fiscal plan is
probable. In addition, existing law provides that-before the
district repays the loan-it shall select an auditor from a list
established by the SPI and State Controller to conduct an audit
of its fiscal systems. If the fiscal systems are deemed to be
inadequate, then the SPI may retain the trustee until the
deficiencies are corrected.
This bill changes the conditions that govern how long a trustee
shall serve. Instead of requiring the trustee to serve until
all three of the currently-required conditions have been met-the
loan has been repaid, the district has adequate fiscal systems
and controls in place, and the SPI has determined that future
compliance with the approved fiscal plan is probable-this bill
provides that the trustee shall serve until any one of those
conditions has been met.
The term of an emergency loan is typically 20 years. Having a
trustee in place for this length of time undermines the
community's engagement with its schools, because the powers and
authority of the locally-elected governing board is constrained.
Over time, this can discourage qualified members of the
community from choosing to serve on the board, leading to
further disengagement, and making self-government more difficult
when full authority returns to the board. A goal of this bill,
therefore, is to be able to remove the trustee and return full
authority to the local governing board sooner than 20 years.
Existing law also requires that adequate fiscal systems and
controls are in place and that the SPI determines the district
is likely to be in compliance with the recovery plan in the
future. In practice, adequate fiscal systems and controls are
in place within weeks or months of a state takeover, because
they are imposed by the trustee or administrator. Accordingly,
this bill could result in the removal of a trustee only a few
months after he or she has been put in place, and before the
loan is repaid and before the SPI has determined that future
compliance with the recovery plan is probable. Staff recommends
that the bill be amended to require removal of the trustee after
adequate fiscal systems and controls are in place and the SPI
has determined that future compliance with the approved fiscal
plan is probably, but not before three years after the trustee
was appointed.
AB 2279
Page 3
Existing law authorizes the SPI to reappoint a trustee within
five years of his or her removal if the district violates any of
the approved recovery plans. Under existing law, reappointment
of the trustee could occur up to five years after the loan is
repaid. Under this bill, this could occur before the loan is
repaid. To be consistent with existing law, staff recommends
that the bill be amended to provide that the trustee can be
reappointed either five years after the trustee is removed or
five years after the loan is repaid, whichever comes later.
REGISTERED SUPPORT / OPPOSITION :
Support
None received
Opposition
None received
Analysis Prepared by : Rick Pratt / ED. / (916) 319-2087