BILL ANALYSIS �
AB 1235
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CONCURRENCE IN SENATE AMENDMENTS
AB 1235 (Gordon)
As Amended September 6, 2013
Majority vote
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|ASSEMBLY: |56-19|(May 30, 2013) |SENATE: |24-10|(September 10, |
| | | | | |2013) |
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Original Committee Reference: L. GOV.
SUMMARY : Requires specified local agency officials to complete
financial management training once per term of office.
The Senate amendments :
1)Clarify that the Treasurer's office and the Controller's
office, in consultation with other state agencies,
associations, and outside experts, shall work together to
develop standardized criteria that sufficiently meet the
requirements of this bill.
2)Require financial management training curricula developed by
any entity to meet criteria put forth by the Treasurer's
office and the Controller's office.
3)Make additional technical and clarifying changes.
EXISTING LAW requires local government officials and designated
employees to receive two hours of ethics training every two
years, as specified.
AS PASSED BY THE ASSEMBLY , this bill:
1)Provided 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)Required each official subject to the requirements of 1)
above, to receive training in general financial management
principles and financial management laws relevant to his or
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her public service once per term of office.
3)Required 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)Allowed 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)Required 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)Required a local agency to provide information on training
available to meet the requirements of this bill to its local
officials at least once annually.
7)Required 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)Required 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)Required 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)Required a local agency that requires its local agency
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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)Found and declared that the edification of local government
officials in financial management is a matter of statewide
concern and not merely a municipal affair, as that term is
used in the California Constitution, and that, therefore, this
bill shall apply to charter cities, charter counties, and
charter cities and counties.
12)Provided the following definitions:
a) "Legislative body" means the governing body of a local
agency or any other local body created by state or federal
statute;
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.
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;
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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.
13)Provided 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.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)Unknown reimbursable state-mandated costs, potentially
exceeding $50,000, related to certain administrative
requirements specified in the bill (General Fund). The
mandate is not expected to apply to the provision of financial
management training, but certain other eligible expenses
incurred by local entities would be subject to
state-reimbursement. Reimbursement would be available for 44
general law counties and 610 special districts that are
subject to the tax and spend provisions of the California
Constitution and are required by state law to provide
compensation.
2)Minor costs to the offices of the Treasurer and the Controller
to review financial management training curricula developed by
local agencies (General Fund). Since courses are currently
available, it is unlikely that many local agencies would
develop their own curricula.
COMMENTS : This bill establishes financial management training
requirements for local agency officials, which would apply to
any member of a local agency governing body or any other local
body created by state or federal statute who receives any type
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of compensation, salary, or stipend or reimbursement for actual
and necessary expenses incurred in the performance of official
duties. The bill applies to cities, counties, charter cities,
charter counties, and special districts.
Provisions of the bill require the Treasurer's office and the
Controller's office to develop standardized criteria for the
training, and require curricula developed by any entity that
offers training to meet these criteria. Training course
providers also must 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.
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."
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, without specifying a particular number of
required training hours. 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 (The League). It offers a "Local
Government 101" course, including materials on financial
management for elected officials. The CSAC Institute provides
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.
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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."
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:
1)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.
2)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 workshop
listing various laws - many of which are highly technical and
complicated - may not be the most informative educational
exercise for elected officials.
3)City officials that have reviewed this bill have asked why
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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.
4)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. "
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."
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.
Analysis Prepared by : Angela Mapp / L. GOV. / (916) 319-3958
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