Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 625

Introduced by Assembly Member Bonta

February 24, 2015

An act begin insert to amend Section 42127.3 of the Education Code, end insert relating to schools.

LEGISLATIVE COUNSEL’S DIGEST

AB 625, as amended, Bonta. begin delete School districts: audits and findings. end delete begin insert School finance: school district budgets. end insert

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(1) Existing law requires a school district to adopt a budget for the subsequent fiscal year, as specified. Existing law requires the county superintendent of schools to examine the adopted budget, make certain determinations related to the adopted budget, and approve, conditionally approve, or disapprove the adopted budget for each school district, as specified.

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If the adopted budget is conditionally approved or disapproved, existing law specifies a process for revising the budget. If the county superintendent of schools disapproves the revised budget, existing law requires him or her to call for the formation of a budget review committee, as specified. Existing law requires the budget review committee to review the proposed budget of the school district and the underlying fiscal policies of the school district and to transmit to the Superintendent of Public Instruction, the county superintendent of schools, and the governing board of the school district either a recommendation that the school district budget be approved or a report disapproving the school district budget and setting forth recommendations for revisions to the school district budget, as specified.

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If the budget review committee disapproves the school district budget, existing law authorizes the governing board of the school district to submit a response to the Superintendent, as specified, and, based upon the recommendations of the budget review committee and any response to those recommendations provided by the governing board of the school district, requires the Superintendent to either approve or disapprove the budget. If the Superintendent disapproves the budget, existing law requires the Superintendent to notify the governing board of the school district in writing of the reasons for that disapproval and requires the county superintendent of schools to take certain actions as necessary, including, among others, determining whether there are any financial problem areas and employing, subject to approval by the Superintendent, a certified public accounting firm to investigate financial problem areas.

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This bill would add appointing a fiscal adviser to perform specified duties of the county superintendent of schools to the list of actions a county superintendent of schools is required to take as necessary. To the extent this bill would impose additional duties on a county superintendent of schools, the bill would impose a state-mandated local program. The bill would also make various nonsubstantive changes.

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(2)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

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This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

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Existing law requires the county superintendent of schools to report to the Superintendent of Public Instruction on the financial condition of a school district if the county superintendent determines a school district may be unable to meet its financial obligations for the current or 2 subsequent fiscal years or if a school district has a qualified or negative certification. Existing law requires the county superintendent to take at least one of certain actions and all actions that are necessary to ensure that the district meets its financial obligations.

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This bill would state the intent of the Legislature to enact legislation that reforms the audit procedures and findings for a school district that has been taken over by the State of California.

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Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program:  begin delete no end delete begin insert yes end insert .

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

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begin insert SECTION 1. end insert   

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begin insert Section 42127.3 of the end insert begin insert Education Code end insert begin insert is amended
to read: end insert

42127.3.  

(a) If the budget review committee established
pursuant to Sections 42127.1 and 42127.2 recommends approval
of the school district budget, the county superintendent of schools
shall accept the recommendation of the budget review committee
and approve the budget.

(b) If the budget review committee established pursuant to
Sections 42127.1 and 42127.2 disapproves the school district
budget, the begin delete school district end delete governing board begin insert of the school district end insert ,
not later than five working days after receipt of the report described
in paragraph (2) of subdivision (b) of Section 42127.2, may submit
a response to the Superintendent, including any revisions to the
adopted final budget and any other proposed actions to be taken
as a result of the recommendations of the budget review committee.
Based upon the recommendations of the budget review committee
and any response to those recommendations provided by the
governing board of the school district, the Superintendent shall
either approve or disapprove the budget. If the Superintendent
disapproves the budget, he or she shall notify the governing board
of the school district in writing of the reasons for that disapproval
and, until the county superintendent begin insert of schools end insert certifies the begin insert school end insert
district’s first interim report pursuant to Section 42131, the county
superintendent of schools shall do the following as necessary:

(1) Not later than November 30, develop and adopt, in
consultation with the Superintendent and the governing board of
the school district, a fiscal plan and budget that will govern the
begin insert school end insert district and will allow the begin insert school end insert district to meet its financial
obligations, both in the current fiscal year and with regard to the
begin insert school end insert district’s multiyear financial commitments. The
Superintendent may extend the date by which the county
superintendent of schools is required to develop and adopt a fiscal
plan and budget. The governing board of the school district shall
govern the operation of the begin insert school end insert district for the current fiscal
year in accordance with that adopted budget.

(2) Cancel purchase orders, prohibit the issuance of nonsalary
warrants, and otherwise stay or rescind any action that is
inconsistent with the budget adopted pursuant to paragraph (1).
The county superintendent of schools shall inform the governing
board of the school district in writing of his or her justification for
any exercise of authority under this paragraph.

(3) Monitor and review the operation of the school district.

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(4) Appoint a fiscal adviser to perform any or all of the duties
of the county superintendent of schools prescribed by this section.

end insert begin delete

(4)

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begin insert (5) end insert  Determine the need for additional staff and may employ,
subject to approval by the Superintendent, short-term analytical
assistance or expertise to validate financial information if the
begin insert school end insert district staff does not have the expertise or staff.

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(5)

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begin insert (6) end insert  Require the school district to encumber all contracts and
other obligations, to prepare appropriate cashflow analyses and
monthly or quarterly budget revisions, and to appropriately record
all receivables and payables.

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(6)

end delete

begin insert (7) end insert  Determine whether there are any financial problem areas
and may employ, subject to approval by the Superintendent, a
certified public accounting firm to investigate financial problem
areas.

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(7)

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begin insert (8) end insert  Withhold compensation of the members of the governing
board begin insert of the school district end insert and the begin insert superintendent of the school end insert
district begin delete superintendent end delete for failure to provide requested financial
information. A forfeiture may be appealed to the Superintendent
pursuant to subdivision (b) of Section 42127.6.

(c) If, during the selection of the budget review committee or
during the committee’s review of the budget, an agreement is
reached between the governing board of the school district and the
county superintendent of schools, and the school district revises
its budget to comply with this agreement, the county superintendent
of schools shall approve the begin insert school end insert district budget and the budget
review committee selection, or its review of the budget, shall be
canceled.

(d) The school district shall pay 75 percent and the county office
of education shall pay 25 percent of the actual administrative
expenses incurred pursuant to subdivision (b), or costs associated
with improving the begin insert school end insert district’s financial management
practices. The Superintendent shall develop, and distribute to
affected school districts and county offices of education, advisory
guidelines regarding the appropriate amount of any fees charged
pursuant to this subdivision.

(e) This section shall not be construed to authorize the county
superintendent of schools to abrogate any provision of a collective
bargaining agreement that was entered into by a school district
begin delete prior to end delete begin insert before end insert the date upon which the county superintendent of
schools disapproved the budget of the school district pursuant to
subdivision (b).

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begin insert SEC. 2. end insert   

end insert begin insert

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 Part 7 (commencing with Section 17500) of Division
4 of Title 2 of the Government Code.

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SECTION 1.  

It is the intent of the Legislature to enact
legislation that reforms the audit procedures and findings for a
school district that has been taken over by the State of California.

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