BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   SB 423|
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                                 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 
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          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 

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          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

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