BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 423| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: SB 423 Author: Wyland (R) Amended: 3/23/11 Vote: 21 SENATE EDUCATION COMMITTEE : 9-0, 5/11/11 AYES: Lowenthal, Runner, Alquist, Blakeslee, Hancock, Huff, Liu, Price, Vargas NO VOTE RECORDED: Simitian, Vacancy SUBJECT : School facilities: local bond measures SOURCE : California League of Bond Oversight Committees Howard Jarvis Taxpayers Association DIGEST : This bill requires that the constitutionally required annual independent financial and performance audits of the use of school facility construction bonds, as required by initiative measure (Proposition 39, November 2000), be submitted to the citizens' oversight committee, also established by Proposition 39, by March 31 of each year. ANALYSIS : Article XI, section 18 of the California Constitution, as amended by voter initiative measure (Proposition 39, November 2000) authorizes a school district, community college district, or county office of education to incur bond indebtedness for the construction, reconstruction, rehabilitation, or replacement of school facilities, with the approval of 55 percent of the voters CONTINUED SB 423 Page 2 of the district or county. Article XIII A provides that this vote threshold only applies if, among other things, the local bond measure includes a specific list of school projects to be funded and requires the authorizing board to conduct annual, independent financial and performance audits until all bond funds have been spent to ensure they are used exclusively for the projects listed in the measure. Current law provides that a Citizen's Oversight Committee be established to, among other things, receive and review copies of the constitutionally required annual independent financial and performance audits. Current law, established by SB 1473 (Wyland), Chapter 294, Statutes of 2010, requires that the independent financial and performance audits required by Proposition 39 be conducted in accordance with the Government Auditing Standards issued by the Comptroller General of the United States. This bill requires that the annual independent financial and performance audits required as a result of the passage of Proposition 39 be submitted to the citizen's oversight committee by March 31 of each year. Comments Need for the Bill . While Proposition 39 and the Education Code currently require annual financial and performance audits for funds connected to bonds issued under the provisions of Proposition 39, the statute currently only requires that these audits be done at some point during the calendar year. Prior/Related Legislation SB 1473 (Wyland), Chapter 294, Statutes of 2010, required that the constitutionally required performance audit established by initiative measure (Proposition 39, November 2000) be conducted in accordance with Government Auditing Standards issued by the Comptroller General of the United States. SB 911 (de Leon) was recently amended to provide, among other things, that if a citizen's oversight committee CONTINUED SB 423 Page 3 appointed in accordance with Proposition 39 fails to issue a report on expenditures to taxpayers at least once a year (as required by law), no bond proceeds may be expended until a report is issues. (On Senate Third Reading File) FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 5/12/11)) California League of bond Oversight Committees (co-source) Howard Jarvis Taxpayers Association (co-source) ARGUMENTS IN SUPPORT : According to the author's office, the establishment of an annual due date of March 31 would allow districts to take corrective action regarding any necessary changes to bond spending prior to the summer construction season. In addition, the author's office contends that the timing of this audit would logically follow completion of other audits required of the community colleges and school districts (generally due December 15) and would be flexible enough to meet both the districts and the citizens oversight committee. CPM:cm 5/12/11 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED