BILL ANALYSIS �
AB 1235
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Date of Hearing: May 1, 2013
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 1235 (Gordon) - As Introduced: February 22, 2013
SUBJECT : Local agencies: financial management training.
SUMMARY : Requires specified local agency officials to complete
financial management training once per term of office.
Specifically, this bill :
1)Provides that, if a local agency provides any type of
compensation, salary, or stipend to a member of a legislative
body, or provides reimbursement for actual and necessary
expenses incurred by a member of a legislative body in the
performance of official duties, then all local agency
officials shall receive training in financial management.
2)Requires each local agency official to receive at least four
hours of training in general financial management principles
and financial management laws relevant to his or her public
service once per term of office.
3)Requires any entity that develops curricula to satisfy the
requirements of this bill to consult with the Treasurer's
office and the Controller's office regarding the sufficiency
and accuracy of any proposed course content. When reviewing
any proposed course content the Treasurer's office and the
Controller's office shall not preclude an entity from also
including local financial management policies in the
curricula.
4)Allows a local agency or an association of local agencies to
offer one or more training courses, or sets of self-study
materials with tests, to meet the requirements of this bill.
These courses may be taken at home, in-person, or online.
5)Requires all providers of training courses to meet the
training requirements of this bill to provide participants
with proof of participation to meet the record-keeping
requirements imposed by this bill.
6)Requires a local agency to provide information on training
available to meet the requirements of this bill to its local
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officials at least once annually.
7)Requires each local agency official in local agency service as
of January 1, 2014, except for officials whose term of office
ends before January 1, 2015, to receive the training required
by this bill before January 1, 2015. Thereafter, each local
agency official shall receive the required training required
at least once per term of office.
8)Requires each local agency official who commences service with
a local agency on or after January 1, 2014, to receive the
training required by this bill no later than one year from the
first day of service with the local agency. Thereafter, each
local agency official shall receive the required training at
least once per term of office.
9)Requires a local agency official who serves more than one
local agency to satisfy the requirements of this bill once per
term of office of one of the agencies without regard to the
number of local agencies with which he or she serves.
10)Requires a local agency that requires its local agency
officials to complete the financial management training
prescribed by this bill to maintain records indicating the
dates that local officials satisfied the training
requirements, and the entity that provided the training.
These records must be maintained for at least five years after
local officials receive the training. These records are
public records subject to disclosure under the California
Public Records Act.
11)Provides the following definitions:
a) "Legislative body" means:
i) The governing body of a local agency or any other
local body created by state or federal statute;
ii) A commission, committee, board, or other body of a
local agency, whether permanent or temporary,
decisionmaking or advisory, created by charter,
ordinance, resolution, or formal action of a legislative
body. However, advisory committees, composed solely of
the members of the legislative body that are less than a
quorum of the legislative body are not legislative
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bodies, except that standing committees of a legislative
body, irrespective of their composition, which have a
continuing subject matter jurisdiction, or a meeting
schedule fixed by charter, ordinance, resolution, or
formal action of a legislative body are legislative
bodies for purposes of this chapter;
iii) A board, commission, committee, or other multimember
body that governs a private corporation, limited
liability company, or other entity that either:
(1) Is created by the elected legislative body in
order to exercise authority that may lawfully be
delegated by the elected governing body to a private
corporation, limited liability company, or other
entity; or,
(2) Receives funds from a local agency and the
membership of whose governing body includes a member
of the legislative body of the local agency appointed
to that governing body as a full voting member by the
legislative body of the local agency, as specified;
and,
iv) The lessee of any hospital, pursuant to specified
lease agreements, where the lessee exercises any material
authority of a legislative body of a local agency
delegated to it by that legislative body, as specified.
b) "Local agency" means a city, county, city and county,
charter city, charter county, charter city and county, or
special district;
c) "Local agency official" means either of the following:
i) Any member of a local agency legislative body or any
elected local agency official who receives any type of
compensation, salary, or stipend or reimbursement for
actual and necessary expenses incurred in the performance
of official duties; or,
ii) Any employee designated by a local agency
legislative body to receive the training specified under
this article.
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d) "Financial management training" includes, but is not
limited to, the following:
i) Laws and commonly accepted best practices relating
to local budgeting, including, but not limited to,
revenue sources, debt instruments, budget monitoring, and
financial policies;
ii) Laws relating to financial reporting requirements
for local agencies at the local, state, and federal
levels, including auditing requirements;
iii) Laws and commonly accepted best practices relating
to long-term financial planning, cash management, and
investments, for local agencies;
iv) Laws and commonly accepted best practices relating
to capital financing and debt management; and,
v) Laws relating to purchasing and contracting
practices.
12)Provides that, if the Commission on State Mandates determines
that this act contains costs mandated by the state,
reimbursement to local agencies and school districts for those
costs shall be made pursuant to current law governing state
mandated local costs.
EXISTING LAW requires local government officials and designated
employees to receive two hours of ethics training every two
years, as specified.
FISCAL EFFECT : Unknown
COMMENTS :
1)This bill establishes financial management training
requirements for local agency officials, which would apply to
any member of a local agency legislative body, any elected
local agency official who receives any type of compensation,
salary, or stipend or reimbursement for actual and necessary
expenses incurred in the performance of official duties, and
any employee designated by a local agency legislative body to
receive the training. The bill applies to cities, counties,
charter cities, charter counties, and special districts.
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As defined in the bill, local agency "legislative body"
includes, among others, the governing body of a local agency
or any other local body created by state or federal statute;
and, a commission, committee, board, or other body of a local
agency created by charter, ordinance, resolution, or formal
action of a legislative body. The bill requires four hours of
training per term of office.
Provisions of the bill require entities that offer training to
consult with the Treasurer's office and the Controller's
office regarding the sufficiency and accuracy of any proposed
course content, and to provide proof of participation that
meets record-keeping requirements imposed by the bill. Local
agencies would be required to keep specified records of the
training for at least five years. This bill is sponsored by
the author.
2)According to the author's office, "One of the primary
responsibilities of any local official is the responsible
management of public agency finances. But, in order to
properly manage public funds, an official must understand the
complex and often unstable world of local agency financing.
"From the reliability and restricted use of various revenue
streams, to the appropriations (Gann) limit, to bond
restrictions - there are hundreds of rules and regulations
designed to protect the taxpayer, but which the average
citizen may not be familiar with or fully understand. Indeed,
even a new local official may be more familiar with the
service needs in their community than the financial
constraints of the local agency in meeting those needs."
3)Current law requires two hours of ethics training for local
government officials and designated employees every two years.
This bill establishes similar requirements for training in
financial management. The author's office notes that
financial training courses are offered by the Institute for
Local Government (ILG) and the California State Association of
Counties (CSAC) Institute.
The ILG is the research and education affiliate of CSAC and
the League of California Cities. It offers a "Local
Government 101" course, including materials on financial
management for elected officials. The CSAC Institute provides
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professional development specifically created for county
supervisors, other county elected officials and senior
executives in county service. It offers a broad range of
courses including several that pertain to county finance.
4)The California Special Districts Association, in support,
writes, "Fiscal responsibility in public agencies is
paramount. As the task of governing these agencies has become
even more complex, regulated and costly, it has become
increasingly important to demonstrate to the public that local
agencies are appropriately managed."
5)The League of California Cities, in opposition, states, "The
policy assumption behind the bill appears to be that local
officials (in our case city officials) are not receiving
sufficient training on financial matters. We cannot agree
with this assumption?Just this past January, 440 newly elected
council members gathered in Sacramento for an annual three-day
training that included a 2.5 hour workshop titled: 'Financial
Responsibilities, City Revenues Workshop.' The League also
hosts many conferences and educational seminars each year
(that include financial topics.) The League also has long
supported the development and maintenance of a website that is
widely recognized as the best source of information on city
finance: Californiacityfinance.com. Other organizations also
exist that focus on professional development and training of
city officials such as the California Society of Municipal
Finance Officers, and the California Municipal Treasurers
Association.
"In short, we do not believe that it is necessary or
appropriate for the state to impose uniform, state-supervised
financial training requirements on cities. A review of the
bill also raises additional issues:
Under the measure the curricula must be reviewed for
sufficiency by the Treasurer and the Controller. We think
this is an inappropriate incursion of state authority. The
League is a well-respected source of accurate information,
we understand the unique issues facing cities, and always
reach out to the top experts for our conferences and
seminars.
All five of the paragraphs listing the information to be
provided begin with the word "Laws." There are clearly
many laws affecting financial issues, but a four-hour
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workshop listing various laws - many of which are highly
technical and complicated - may not be the most informative
educational exercise for elected officials.
City officials that have reviewed this bill have asked
why state elected officials would not also be subject to
the same training requirement. These city officials
believe that - on the whole - cities have a better track
record than the state for managing their budgets in a
disciplined manner, adopting annual balanced budgets, and
maintaining sufficient reserves for economic downturns.
City officials are also concerned that the training
required by this measure could lead to a slippery slope of
other state training requirements, imposing further burdens
and eroding local flexibility. "
1)The Association of California Water Agencies, in opposition,
"suggests the following two amendments to the bill: (1) a
local agency should only be subject to compulsory financial
management training if it violates existing financially
related laws or regulations; and (2) all other local agencies
should be permitted to elect to provide financial management
training to their officials if the local agency so desires."
2)This bill is keyed a state mandate, which means the state
could be required to reimburse local agencies and school
districts for implementing the bill's provisions if the
Commission on State Mandates determines that the bill contains
costs mandated by the state.
3)Support arguments : Supporters argue that this bill provides
for greater training of local officials to help ensure they
have necessary information to make responsible fiscal
decisions for their agencies and for California taxpayers.
Opposition arguments : Opponents contend that this bill is an
unnecessary state incursion into local government affairs, and
that local agencies already provide adequate financial
training to local officials and employees.
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REGISTERED SUPPORT / OPPOSITION :
Support
California Special Districts Association
Opposition
Association of California Water Agencies
League of California Cities
Analysis Prepared by : Angela Mapp / L. GOV. / (916) 319-3958