BILL ANALYSIS                                                                                                                                                                                                    Ó






                         SENATE COMMITTEE ON EDUCATION
                                Carol Liu, Chair
                           2013-2014 Regular Session
                                        

          BILL NO:       AB 1825
          AUTHOR:        Nazarian
          INTRODUCED:    February 18, 2014
          FISCAL COMM:   Yes            HEARING DATE:  June 4, 2014
          URGENCY:       No             CONSULTANT:Lenin Del Castillo

           SUBJECT  :  Office of the Inspector General.
          
           SUMMARY  

          This bill proposes to extend the sunset date of the Los  
          Angeles Unified School District's Office of the Inspector  
          General by ten years from January 1, 2015, to January 1,  
          2025. 

           BACKGROUND  

          Current law authorizes the Los Angeles Unified School  
          District's Office of Inspector General until January 1,  
          2015, to conduct audits and investigations, as specified,  
          including the ability to subpoena witnesses, administer  
          oaths or affirmations, take testimony, and compel the  
          production of all information and documentary evidence  
          deemed material and relevant and that reasonably relate to  
          the inquiry or investigation undertaken by the Inspector  
          General when there is reasonable suspicion that a law,  
          regulation, rule, or district policy has been violated or  
          is being violated. 

          Current law provides that "reasonable suspicion" means that  
          the circumstances known or apparent to the Inspector  
          General include specific and articulable facts causing him  
          or her to suspect that a material violation of law,  
          regulation, or school district policy has occurred or is  
          occurring, and that the facts would cause a reasonable  
          officer in a similar position to suspect that a material  
          violation of a law, regulation, rule, or school district  
          policy has occurred or is occurring.  

          Current law provides that any person who, after the  
          administration of an oath or affirmation, states or affirms  






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          as true any material matter that he or she knows to be  
          false, is a misdemeanor publishable by imprisonment in a  
          county jail not to exceed six months or by a fine of up to  
          $5,000 or both for the first offense, and that each  
          subsequent violation shall be punishable by imprisonment  
          not to exceed one year or by a fine of up to $10,000 or  
          both.

          Additionally, the Inspector General is required to submit  
          annual reports to the Legislature and a final cumulative  
          report by December 1, 2014, on all of the following:

             1)   The use and effectiveness of the subpoena power in  
               the successful completion of the Inspector General's  
               duties;

             2)   Any use of the subpoena power in which it was  
               quashed, including the basis for the court's order;  
               and

             3)   Any referral to the local district attorney or  
               Attorney General where the district attorney or  
               Attorney General declined to investigate the matter  
               further or declined to prosecute.

           ANALYSIS
           
           This bill  extends the sunset date of January 1, 2015, for  
          the Office of the Inspector General by ten years to January  
          1, 2025.  Additionally, this bill changes the deadline for  
          the Inspector General to submit a final cumulative report,  
          as specified, from December 1, 2014, to December 1, 2024

           STAFF COMMENTS  

              1)   Office of the Inspector General  .  The Los Angeles  
               Unified School District's Office of the Inspector  
               General was originally established by Chapter 295,  
               Statutes of 1999, SB 1260 (Hayden), at the request of  
               the school district with the primary mission of  
               detecting and preventing waste, fraud, and abuse.  It  
               was also established in response to criticism over the  
               district's attempt to build a new downtown school on  
               expensive property that later turned out to be  







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               contaminated.  At that time, the district's Internal  
               Audits and Special Investigation Unit had been in  
               existence for one year, but it was difficult or  
               impossible to conduct investigations, especially those  
               that involve an outside party such as a contractor,  
               and that the unit had no authority to compel to  
               provide documents or other types of information.  The  
               Office of Inspector General originally had a sunset  
               date of January 1, 2001, but subsequent legislation  
               extended the sunset date-Chapter, 750, Statutes of  
               2000, SB 1360 (Hayden), and Chapter 462, Statutes of  
               2002, AB 2425 (Richman).  

               The Office of the Inspector General consists of 52  
               employees and operates within a $7.2 million budget  
               that is fully funded at the local level.  The Los  
               Angeles Unified School District has indicated that  
               since its inception, the Inspector General has saved  
               the district a total of approximately $585 million as  
               a result of greater efficiencies, from the  
               identification of disallowed or unsupported costs  
               related to contracts and grants, and from restitution  
               recovered via the courts.

              2)   Need for the bill  .  According to the Los Angeles  
               Unified School District, the Inspector General's  
               subpoena power may compel the production of  
               information deemed material and relevant in situations  
               that the Inspector General has reasonable suspicion  
               that a law, regulation, rule, or policy has been  
               violated.  The bill would ensure the Inspector General  
               maintains its subpoena power to compel private  
               individuals and entities to collaborate and ensure  
               that audits and investigations are conducted in a  
               timely manner.  The Los Angeles Unified School  
               District has indicated that absent the subpoena  
               authority, the Inspector General could not effectively  
               perform its mission and would be limited in its  
               efforts to provide law enforcement with sufficient  
               information to determine if a prosecution should be  
               pursued.  

              3)   Senate Office of Oversight and Outcomes report  .   
               The Senate Office of Oversight and Outcomes report,  







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               "Food Fight:  Small team of state examiners no match  
               for schools that divert student meal funds" discussed  
               weaknesses and gaps in the oversight system for  
               student meal funds.  According to the report, school  
               districts have been illegally dipping into student  
               meal funds and misappropriating them when they are  
               intended to feed low income students.  The  
               misappropriations are in most cases attempts by school  
               districts to use cafeteria funds to pay for a greater  
               share of personnel, utility, and other costs.  The  
               Inspector General documented the district's  
               misappropriation of cafeteria funds.  As part of the  
               report, the Senate Office of Oversight and Outcomes  
               recommended that the Legislature should consider  
               eliminating or extending the sunset date for the Los  
               Angeles Unified School District's Office of Inspector  
               General.  

              4)   Committee amendments  .  Staff recommends that the  
               bill be amended to retain the deadline for the Office  
               of the Inspector General to submit a cumulative report  
               on December 1, 2014, and require that a final  
               cumulative report be submitted on December 1, 2024.  

           SUPPORT  

          Los Angeles Unified School District (sponsor)

           OPPOSITION
           
          None on file.