BILL ANALYSIS Ó
AB 280
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Date of Hearing: May 8, 2013
ASSEMBLY COMMITTEE ON EDUCATION
Joan Buchanan, Chair
AB 280 (Alejo) - As Amended: April 11, 2013
SUBJECT : Local agency employment contracts: maximum cash
settlement
SUMMARY : Reduces the maximum cash settlement that can be
provided to a school district superintendent and other
high-level district officials who are terminated before their
contracts expire and limits the amount that can be paid for a
leave of absence, as specified. Specifically, this bill :
1)Provides that in the case of a voluntary termination of the
employment contract of a district superintendent, deputy
superintendent, assistant superintendent, or associate
superintendent of schools the maximum cash settlement shall be
three times the monthly salary, regardless of the number of
months left in the contract.
2)Provides that in the case of an involuntary termination of the
employment contract of a district superintendent, deputy
superintendent, assistant superintendent, or associate
superintendent of schools the maximum cash settlement shall be
six times the monthly salary, regardless of the number of
months left in the contract.
3)Provides that the maximum cash settlement shall be one month's
salary in the case of a district superintendent, deputy
superintendent, assistant superintendent, or associate
superintendent of schools who the district believes, and
subsequently confirms, pursuant to an independent audit, has
engaged in fraud, misappropriation of funds, or other illegal
fiscal practices.
4)Provides that if a school district places a district
superintendent, deputy superintendent, assistant
superintendent, or associate superintendent of schools on a
paid leave of absence, the maximum pay during the leave shall
be the employee's monthly salary multiplied by an unspecified
number.
5)States that the formula for determining the maximum pay during
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a leave of absence is a maximum and not a target amount to be
paid.
6)Requires the employee on leave to exhaust all of his or her
accrued sick leave and vacation time before receiving pay
under the formula.
7)Applies these provisions to contracts negotiated on or after
January 1, 2014.
EXISTING LAW authorizes the cash settlement of a terminated
school district superintendent to be equal to the monthly salary
of the superintendent multiplied by the number of months left on
the unexpired term of the contract, not to exceed 18, and limits
the cash settlement in the case of termination for fraud or
other illegal fiscal practices to three month's salary.
FISCAL EFFECT : This bill is keyed non-fiscal.
COMMENTS : According to the author's office, there is an
ongoing problem with school district superintendent turnover,
and it is becoming extremely costly to school districts due to
the size of cash settlements of terminated superintendents. The
author's office states that "By placing limits on cash
settlements for superintendents, we can save money for students,
begin to improve our schools [sic] administrative processes, and
demonstrate fiscal discipline in the administration of taxpayer
dollars."
Arguments in support . Supporters of the bill argue point to a
2012 report in the Sacramento Bee showing that the annual pay
for the highest paid school district superintendents ranged from
$265,773 to $322,159, which would translate into an 18-month
severance pay of $398,599 to $483,238. Supporters also state
that, between 2006 and 2009, 45% of all superintendents and 71%
of superintendents in the largest districts left their jobs.
They do not indicate, however, how many left their job because
of retirement or transfer out (without a buyout) vs. how many
received a settlement for unexpired months in their contracts.
Arguments in opposition . Opponents of the bill address three
issues: voluntary termination, involuntary termination, and
paid leaves of absence. Regarding involuntary terminations,
opponents argue that if the unexpired term of the contract is
more than six months, then termination amounts to a breach of
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contract, and the district should be required to pay up to the
current statutory maximum of 18 months. According to the Small
School Districts' Association (SSDA), this bill's "contract
provision would penalize school superintendents who are hired by
a school board, relocate to the school district and then, for
reasons that are not related to fraud, misappropriation of funds
or other illegal practices, are fired by the school board
without notice and prior to the end of their mutually bargained
and agreed upon contract. SSDA believes contracts should be
honored and, if unilaterally broken, then there should be a
significant penalty for breaking the contract." Opponents also
argue that the cost of unilaterally terminating a contract
serves as a disincentive for terminating a superintendent for
political, and not job performance-related, purposes. Although
the author's office argues that this bill is in response to "an
ongoing problem with school district superintendent turnover,"
this bill could actually increase turnover by reducing the
penalty to districts for terminating contracts before their
terms expire.
Regarding voluntary terminations, The Association of California
School Administrators (ACSA) argues that voluntary terminations
are sometimes negotiated in order to avoid an involuntary
termination. This can save the district money. For example, a
negotiated voluntary termination with six month's pay would be
less expensive than an involuntary termination with 12 month's
pay. This bill would eliminate this cost-saving tool.
Regarding paid leaves of absence, opponents argue that paid
leaves of absence are sometimes provided for legal or employment
reasons and sometimes must remain confidential, and should not
be subject to arbitrary limitations. If a superintendent is
falsely accused of wrong-doing, for example, he or she may be
put on a leave of absence pending an investigation. Even if
exonerated, the superintendent would not be entitled to pay if
the investigation and leave exceed the limit imposed by this
bill. Rather than imposing a statewide, arbitrary cap, the
committee may wish to consider requiring school districts to
adopt policies regarding leaves of absence and to include in the
policy the requirement that paid leaves must be approved by the
governing board in a public hearing.
In general, this bill could have four major unintended
consequences. First, it could increase superintendent turnover
by reducing the penalty districts pay for terminations prior to
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the fulfillment of a contract. Second, it could cost districts
money by limiting the ability to negotiate lower-cost voluntary
terminations in lieu of involuntary terminations. Third, it
could result in limitations on paid leaves of absence that could
unfairly punish superintendents. Fourth, it could have a
chilling effect on the willingness of highly-qualified
individuals to seek top-level district positions by increasing
the financial uncertainty of assuming such positions.
Accordingly, staff recommends that the bill be amended to strike
its current provisions and insert a provision requiring school
district governing boards to adopt a policy governing paid
leaves of absence and requiring the policy to include the
requirement that paid leaves must be approved by the governing
board in a public hearing.
Related legislation . AB 2155 (Hueso) in 2011, among other
things, limited the cash settlement for terminated school
superintendents to 12 month's salary. That bill died in
Assembly Appropriations.
REGISTERED SUPPORT / OPPOSITION :
Support
California Federation of Teachers
Opposition
Association of California School Administrators
California Association of School Business Officials
California School Boards Association
Small School Districts' Association
Analysis Prepared by : Rick Pratt / ED. / (916) 319-2087