Amended in Senate April 15, 2013

Senate BillNo. 584


Introduced by Senator Wyland

February 22, 2013


An act to amend Section 14502.1 ofbegin delete, and to add Section 17076.12 to,end delete the Education Code, relating to school facilities.

LEGISLATIVE COUNSEL’S DIGEST

SB 584, as amended, Wyland. School facilities: financial and performance audits.

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(1) Existing

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begin insert Existingend insert law requires the Controller, in consultation with the Department of Finance, the State Department of Education, and representatives of certain nongovernmental organizations, to recommend the statements and other information to be included in the audit reports filed with the state, and to propose the content of an audit guide that is required to be submitted by the Controller to the Education Audits Appeal Panel for review and possible amendment.

This bill would require the Controller, on or before January 1, 2015, and in consultation with the State Allocation Board, the Department of Finance, and the State Department of Education, to submit content to the Education Audits Appeal Panel to be included in the audit guide, Standards and Procedures for Audits of California K-12 Local Educational Agenciesbegin delete 2015-16end deletebegin insert beginningend insertbegin insert in theend insertbegin insert 2015-16 fiscal yearend insert, that is related tobegin delete specifiedend delete financial and performance audits required forbegin insert specifiedend insert school facility projects.

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(2) The California Constitution limits the maximum amount of any ad valorem tax on real property to 1% of the full cash value of the property except for ad valorem taxes or assessments that pay the interest and redemption charges on bonded indebtedness incurred by a school district, community college district, or county office of education for the construction, rehabilitation, or replacement of school facilities approved by 55% of the voters if the proposition includes specified accountability requirements, including, but not limited to, a requirement that the governing board of either the school district or community college district or county office of education conduct annual independent performance and financial audits. Existing law requires, by March 31 of each year, the annual, independent financial and performance audits for the preceding fiscal year to be submitted to a citizens’ oversight committee that is required to be established if a proposition is approved by the voters, as described above.

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Existing law also requires a school district that has received any funds pursuant to the Leroy F. Greene School Facilities Act of 1998 (the act) to submit an annual summary report of the expenditure of state funds and of district matching funds until all state funds and district matching funds are expended, and then the school district is required to submit a final report to the State Allocation Board.

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This bill would also require a school district that has received any funds or apportionments pursuant to the act to submit annual independent financial and performance audits to the State Allocation Board for the preceding fiscal year to ensure that the funds have been expended only in accordance with the act. The bill would prohibit a school district that does not annually submit these audits from receiving funds or apportionments pursuant to the act.

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Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 14502.1 of the Education Code is
2amended to read:

3

14502.1.  

(a) The Controller, in consultation with the
4Department of Finance and the State Department of Education,
5shall develop a plan to review and report on financial and
6compliance audits. The plan shall commence with the 2003-04
7fiscal year for audits of school districts, other localbegin delete educationend delete
8begin insert educational end insert agencies, and the offices of county superintendents
9of schools. The Controller, in consultation with the Department
10of Finance, the State Department of Education, and representatives
P3    1of the California School Boards Association, the California
2 Association of School Business Officials, the California County
3Superintendents Educational Service Association, the California
4Teachers Association, the California Society of Certified Public
5Accountants, shall recommend the statements and other information
6to be included in the audit reports filed with the state, and shall
7propose the content of an audit guide to carry out the purposes of
8this chapter. A supplement to the audit guide may be suggested in
9the audit year, following the above process, to address issues
10resulting from new legislation in that year that changes the
11conditions of apportionment. The proposed content of the audit
12guide and any supplement to the audit guide shall be submitted by
13the Controller to the Education Audits Appeal Panel for review
14and possible amendment.

15(b) The audit guide and any supplement shall be adopted by the
16Education Audits Appeal Panel pursuant to the rulemaking
17procedures of the Administrative Procedure Act as set forth in
18Chapter 3.5 (commencing with Section 11340) of Part 1 of Division
193 of Title 2 of the Government Code. It is the intent of the
20Legislature that, for the 2003-04 fiscal year, the audit guide be
21adopted by July 1 of the fiscal year to be audited. A supplemental
22audit guide may be adopted to address legislative changes to the
23conditions of apportionment. It is the intent of the Legislature that
24supplements be adopted before March 1 of the audit year.
25Commencing with the 2004-05 fiscal year, and each fiscal year
26thereafter, the audit guide shall be adopted by July 1 of the fiscal
27year to be audited. A supplemental audit guide may be adopted to
28address legislative changes to the conditions of apportionment.
29The supplements shall be adopted before March 1 of the audit
30year. To meet these goals and to ensure the accuracy of the audit
31guide, the process for adopting emergency regulations set forth in
32Section 11346.1 of the Government Code may be followed to
33adopt thebegin insert auditend insert guide and supplemental audit guide. It is the intent
34of the Legislature that once the audit guide has been adopted for
35a fiscal year, as well as any supplement for that year, thereafter
36only suggested changes to the audit guide and any additional
37supplements need be adopted pursuant to the rulemaking
38procedures of the Administrative Procedure Act. The audit guide
39and any supplement shall be issued in booklet form and may be
40made available by any means deemed appropriate. The Controller
P4    1and consultants in the development of the suggested audit guide
2and any supplement shall work cooperatively on a timeline that
3will allow thebegin delete education audits appeal panelend deletebegin insert Education Audits
4Appeal Panelend insert
to meet the July 1 and March 1 issuance dates.
5Consistent with current practices for development of the audit
6guide before the 2003-04 fiscal year, the Controller shall provide
7for the adoption of procedures and timetables for the development
8of the suggested audit guide, any supplement, and the format for
9additions, deletions, and revisions.

10(c) For the audit of school districts or county offices of education
11electing to take formal action pursuant to Sections 22714 and
1244929, the audit guide content proposed by the Controller shall
13include, but not be limited to, the following:

14(1) The number and type of positions vacated.

15(2) The age and service credit of the retirees receiving the
16additional service credit provided by Sections 22714 and 44929.

17(3) A comparison of the salary and benefits of each retiree
18receiving the additional service credit with the salary and benefits
19of the replacement employee, if any.

20(4) The resulting retirement cost, including interest, if any, and
21postretirement health care benefits costs, incurred by the employer.

22(d) The Controller shall annually prepare a cost analysis, based
23on the information included in the audit reports for the prior fiscal
24year, to determine the net savings or costs resulting from formal
25actions taken by school districts and county offices of education
26pursuant to Sections 22714 and 44929, and shall report the results
27of the cost analysis to the Governor and the Legislature by April
281 of each year.

29(e) All costs incurred by the Controller to implement subdivision
30(c) shall be absorbed by the Controller.

31 (f) On or before January 1, 2015, the Controller, in consultation
32with the State Allocation Board, the Department of Finance, and
33the State Department of Education, shall submit content to the
34Education Audits Appeal Panel to be included in the audit guide,
35Standards and Procedures for Audits of California K-12 Local
36Educational Agenciesbegin delete 2015-16end deletebegin insert beginning in theend insertbegin insert 2015-16 fiscal
37yearend insert
, that is related to the financial and performance audits required
38for school facility projects, as described inbegin delete Sectionsend deletebegin insert Sectionend insert 15286
39begin delete and 17076.12end delete.

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SEC. 2.  

Section 17076.12 is added to the Education Code, to
2read:

3

17076.12.  

(a) A school district that has received any funds or
4apportionments pursuant to this chapter shall submit annual,
5independent financial and performance audits for the preceding
6fiscal year to the board to ensure that the funds have been expended
7only in accordance with this chapter.

8(b) If a school district fails to annually submit the audits required
9by subdivision (a), the school district shall be prohibited from
10receiving funds or apportionments pursuant to this chapter.

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