BILL ANALYSIS Ó
AB 2279
Page 1
Date of Hearing: May 16, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2279 (Swanson) - As Amended: May 2, 2012
Policy Committee: Education
Vote:6-4
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill removes the requirement that a trustee appointed by
the Superintendent of Public Instruction (SPI) who works in a
school district that received an emergency loan serve until the
loan is repaid. Specifically, this bill:
1)Requires the trustee to serve for at least three years and
until the school district has adequate fiscal systems/controls
in place and the SPI determines the district's future
compliance with the fiscal plan is probable, as specified.
2)Authorizes the county superintendent of schools (CSS) to stay
or rescind an action of the governing board of the school
district that may affect the financial condition of the
district after the trustee's period of service and until the
emergency loan is repaid.
FISCAL EFFECT
For a school district with an emergency loan, this bill will
result in local school district GF savings, likely in excess of
$150,000, per year by repealing the requirement for a trustee to
serve in the district until its loan is repaid.
COMMENTS
1)Background . Due to school districts becoming financially
insolvent, the state developed a process (AB 1200, Chapter
1213, Statutes of 1991) that outlined the duties and
responsibilities of both the state and school districts when
emergency loans need to be granted to districts. The process
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provides that if the state makes a loan to a school district
the SPI shall assume all legal rights, duties, and powers of
the governing board of the school district. The SPI is
required to appoint a trustee to act on his or her behalf in
exercising specified authority over the district and may, on a
short-term basis, assign any staff necessary to assist the
trustee.
Current law requires the school district to incur all expenses
related to the trustee and necessary staff, including
salaries. The trustee is required to serve until the school
district's loan is repaid; the district has adequate fiscal
systems/controls in place; and the SPI has determined the
district's future compliance with the fiscal plan is probable.
Statute requires the trustee to monitor and review the
operation of the school district and is authorized to stay or
rescind any action of the district governing board that in his
or her judgment may affect the financial condition of the
district.
Once a school board regains its authority to make employment
decisions, it often times hires a superintendent to oversee
the district, including its instructional plan. If this
occurs, the newly hired superintendent works with the trustee,
who still remains an authority in the district until the
emergency loan is repaid.
2)Purpose . Under current law, the trustee appointed by the SPI
is required to serve under the school district pays off its
emergency loan. Of the eight emergency loans the state has
issued, four have been paid off. Of the four districts that
paid off their loan, it took three of them more than 10 years
to pay the loan in full. As a result, the trustee appointed
by the SPI served in the school district, alongside the
district's superintendent, for a number of years. During this
time, the district was paying the salary of both the trustee
and its superintendent.
According to the California School Boards Association, sponsor
of this bill, "Once the board and district have demonstrated
that they have gotten their fiscal house in order and they can
make the necessary loan repayments, full authority should be
restored. This measure is designed to fully restore full
authority back to a local governing board after having
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demonstrated their ability to meet the conditions of
repayment, meet the needs of their students and be fully
accountable to their community. Further, the removal of the
trustee would also result in local savings, as the district
would no longer be paying the salary and benefits of both the
superintendent and the trustee."
3)School districts with who have received an emergency loan . The
following chart details current and past emergency loans made
to school districts. This bill would apply to all school
districts with an emergency loan.
Emergency Loans to School Districts Since 1991
(Dollars in Millions)
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| | | | | |
|School District | Year of | Total | Interest | Pay-Off |
| |Legislatio| Loan | Rate on | Date of |
| | n | Amount | Loana | Loan |
| | | | | |
|----------------+----------+----------+------------+------------|
| King City | 2009 | $13.0 | 5.44% | October |
| Joint Union | | | | 2028 |
| Highb | | | | |
|----------------+----------+----------+------------+------------|
| Vallejo City | 2004 | 60.0 | 1.50 | January |
| Unified | | | |2024 |
|----------------+----------+----------+------------+------------|
| Oakland | 2003 | 100.0 | 1.78 | January |
| Unified | | | | 2023 |
|----------------+----------+----------+------------+------------|
| West Fresno | 2003 | 1.3 | 1.93 | December |
| Elementary | | | | 2010 |
|----------------+----------+----------+------------+------------|
| Emery Unified | 2001 | 1.3 | 4.19 | June 2011 |
|----------------+----------+----------+------------+------------|
| Compton | 1993 | 20.0 | 4.39 | June 2001 |
| Unified | | | | |
|----------------+----------+----------+------------+------------|
| Coachella | 1992 | 7.3 | 5.34 | December |
| Valley | | | | 2001 |
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| Unified | | | | |
|----------------+----------+----------+------------+------------|
| West Contra | 1991 | 29.0 | 1.53 | January |
| Costa Unified | | | | 2018 |
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| |
| a For districts with multiple loans and multiple interest |
| rates, reflects interest rate on largest loan. |
| |
| |
| b Has since changed its name to South Monterey County Joint |
| Union High. |
| |
| |
| Source: LAO |
| |
| |
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Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081