BILL ANALYSIS Ó
AB 215
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Date of Hearing: May 13, 2015
ASSEMBLY COMMITTEE ON EDUCATION
Patrick O'Donnell, Chair
AB 215
(Alejo) - As Amended May 4, 2015
SUBJECT: Local agency employment contracts: maximum cash
settlement.
SUMMARY: Reduces the maximum cash settlement that may be paid
to a school district superintendent in the case of terminations
of employment. Specifically, for contracts of employment
negotiated on or after January 1, 2016. Specifically, this
bill:
1)Reduces the maximum cash settlement that may be paid to a
school district superintendent from 18 times the monthly
salary to 12 times the monthly salary, unless the
superintendent was dismissed for cause, in which case the
maximum cash settlement is 6 times the monthly salary.
2)Reduces the maximum cash settlement that may be paid to a
school district superintendent in the case of a termination in
which the school district believes and subsequently confirms
that the superintendent has engaged in fraud, misappropriation
of funds, or other illegal fiscal practices from 6 times the
monthly salary to 3 times the monthly salary.
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EXISTING LAW: Provides that, in the event of a termination of
employment of a school district superintendent, the maximum cash
settlement shall be the employee's monthly salary multiplied by
the number of months left on the unexpired term of the contract,
but no more than 18 months. In the case of a termination in
which the school district believes and subsequently confirms
that the superintendent has engaged in fraud, misappropriation
of funds, or other illegal fiscal practices, the maximum cash
settlement is 6 times the monthly salary.
FISCAL EFFECT: This bill is keyed non-fiscal by the Legislative
Counsel
COMMENTS: This bill reduces from 18 times the monthly salary to
12 times the monthly salary the maximum cash settlement that may
be paid to a school district superintendent whose employment has
been terminated. In the case of a termination in which the
school district believes and subsequently confirms that the
superintendent has engaged in fraud, misappropriation of funds,
or other illegal fiscal practices, this bill reduces the maximum
cash settlement from 6 times the monthly salary to 3 times the
monthly salary. In no case can the amount of the cash
settlement exceed the number of unexpired months on the
contract.
According to the California Department of Education (CDE) the
average annual salaries for unified school district
superintendents, by district size, in 2012-13 as follows:
$116,606 for districts with less than 1,500 average
daily attendance (ADA);
$151,912 for district with 1,500 to 4,999 ADA;
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$183,557 for districts with 5,000 to 9,999 ADA;
$206,292 for districts with 10,000 to 19,999 ADA; and
$227,183 for districts with more than 20,000 ADA
There is considerable variance around these averages.
Information provided by the author's office shows that the
highest salaries range from $265,773 to $322,159. With salaries
in this range, the maximum cash settlement could range from
$398,660 to $483,239 under existing law.
It has been argued that these salaries and the related cash
settlements reflect the market cost of recruiting high-quality
candidates to a position with inherent instability. A 2014
survey by the Brown Center on Education Policy at the Brookings
Institution ("Urban School Superintendents: Characteristics,
Tenure, and Salary") found that the average tenure of an urban
school district superintendent is 3.18 years in 2014-up from 2.8
years in 2003.
On the other hand, some buyouts have generated negative
publicity. For example, a state-appointed administrator in the
Inglewood Unified School District received a six-month buyout
worth $100,000 after serving only two months on the job. In
another case, the Hesperia Unified School District put its
superintendent on a paid leave of absence for six months and
then provided an 18-month cash settlement-effectively providing
a 24-month buy-out at a cost of about $325,000, plus benefits,
for a district with 23,000 ADA.
The premise of the bill. The author's office argues that, "by
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placing a cap on district superintendent's severance pay, we can
save money for students, begin to improve our school
administrative processes, and demonstrate fiscal discipline in
the administration of taxpayer dollars." While this bill would
reduce the cost of cash settlements in individual cases where
there is more than 12 months left on a contract, this does not
necessarily mean that it will reduce the cost of cash
settlements overall. What is unknown is the relationship
between the cost of a settlement and the decision to terminate.
Currently, the relatively high cost of a settlement may reduce
the number of terminations. Conversely, reducing the cost of a
settlement could increase terminations, reducing the
already-short tenure of district superintendents and increasing
the statewide costs of settlements.
Arguments in opposition. Opponents argue that superintendents
are at-will employees, who have no due process rights and can be
terminated any time without cause. This action can end the
career of a superintendent. Rather than being extra pay or a
gift of public funds, cash settlements are damages paid to a
superintendent "who is released by breach of contact."
REGISTERED SUPPORT / OPPOSITION:
Support
None received
Opposition
AB 215
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Association of California School Administrators/
Analysis Prepared by:Rick Pratt / ED. / (916) 319-2087