BILL NUMBER: AB 625	ENROLLED
	BILL TEXT

	PASSED THE SENATE  JULY 9, 2015
	PASSED THE ASSEMBLY  AUGUST 31, 2015
	AMENDED IN SENATE  JULY 1, 2015
	AMENDED IN SENATE  JUNE 17, 2015
	AMENDED IN ASSEMBLY  MAY 6, 2015
	AMENDED IN ASSEMBLY  APRIL 16, 2015
	AMENDED IN ASSEMBLY  MARCH 26, 2015

INTRODUCED BY   Assembly Member Bonta

                        FEBRUARY 24, 2015

   An act to amend Section 41320.1 of the Education Code, relating to
school finance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 625, Bonta. School finance: emergency apportionments:
compliance audits.
   Existing law authorizes the governing board of a school district
to request an emergency apportionment through the Superintendent of
Public Instruction if the governing board of the school district
determines during a fiscal year that its revenues are less than the
amount necessary to meet its current year expenditure obligations.
Under existing law, if a school district accepts an emergency
apportionment, that acceptance constitutes agreement by the school
district to numerous conditions, among which is an agreement that the
Controller, or his or her designee, or an auditor selected by the
school district and approved by the Controller shall conduct an
annual audit of the books and accounts of the school district, as
specified. This provision requires these audits to continue until the
Controller determines, in consultation with the Superintendent, that
the school district is financially solvent, but in no event earlier
than one year following the implementation of the school district's
fiscal plan or later than the time the apportionment is repaid,
including interest.
   This bill, for an audit conducted by the Controller, or his or her
designee, would require the Controller, the Superintendent, and the
school district superintendent, or their respective designees, to
meet before the audit to discuss the terms of the audit and the
timeline under which it will proceed.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 41320.1 of the Education Code, as amended by
Section 34 of Chapter 19 of the Statutes of 2015, is amended to read:

   41320.1.  Acceptance by the school district of the apportionments
made pursuant to Section 41320 constitutes the agreement by the
school district to all of the following conditions:
   (a) The Superintendent shall appoint a trustee who has recognized
expertise in management and finance and may employ, on a short-term
basis, staff necessary to assist the trustee, including, but not
limited to, certified public accountants, as follows:
   (1) The expenses incurred by the trustee and necessary staff shall
be borne by the school district.
   (2) The Superintendent shall establish the terms and conditions of
the employment, including the remuneration of the trustee. The
trustee shall serve at the pleasure of, and report directly to, the
Superintendent.
   (3) The trustee, and necessary staff, shall serve until the school
district has adequate fiscal systems and controls in place, the
Superintendent has determined that the school district's future
compliance with the fiscal plan approved for the school district
under Section 41320 is probable, and the Superintendent decides to
terminate the trustee's appointment, but in no event for less than
three years. The Superintendent shall notify the county
superintendent of schools, the Legislature, the Department of
Finance, and the Controller no less than 60 days before the time that
the Superintendent expects these conditions to be met.
   (4) Before the school district repays the loan, including
interest, the recipient of the loan shall select an auditor from a
list established by the Superintendent and the Controller to conduct
an audit of its fiscal systems. If the fiscal systems are deemed to
be inadequate, the Superintendent may retain the trustee until the
deficiencies are corrected. The cost of this audit and any additional
cost of the trustee shall be borne by the school district.
   (5) Notwithstanding any other law, all reports submitted to the
trustee are public records.
   (6) To facilitate the appointment of the trustee and the
employment of necessary staff, for purposes of this section, the
Superintendent is exempt from the requirements of Article 6
(commencing with Section 999) of Chapter 6 of Division 4 of the
Military and Veterans Code and Part 2 (commencing with Section 10100)
of Division 2 of the Public Contract Code.
   (7) Notwithstanding any other law, the Superintendent may appoint
an employee of the department to act as trustee for up to the
duration of the trusteeship. The salary and benefits of that employee
shall be established by the Superintendent and paid by the school
district. During the time of appointment, the employee is an employee
of the school district, but shall remain in the same retirement
system under the same plan as if the employee had remained in the
department. Upon the expiration or termination of the appointment,
the employee shall have the right to return to his or her former
position, or to a position at substantially the same level as that
position, with the department. The time served in the appointment
shall be counted for all purposes as if the employee had served that
time in his or her former position with the department.
   (b) (1) The trustee appointed by the Superintendent shall monitor
and review the operation of the school district. During the period of
his or her service, the trustee may stay or rescind an action of the
governing board of the school district that, in the judgment of the
trustee, may affect the financial condition of the school district.
   (2) After the trustee's period of service, and until the loan is
repaid, the county superintendent of schools that has jurisdiction
over the school district may stay or rescind an action of the
governing board of the school district that, in his or her judgment,
may affect the financial condition of the school district. The county
superintendent of schools shall notify the Superintendent, within
five business days, if he or she stays or rescinds an action of the
governing board of the school district. The notice shall include, but
not be limited to, both of the following:
   (A) A description of the governing board of the school district's
intended action and its financial implications.
   (B) The rationale and findings that support the county
superintendent of school's decision to stay or rescind the action of
the governing board of the school district.
   (3) If the Superintendent is notified by the county superintendent
of schools pursuant to paragraph (2), the Superintendent shall
report to the Legislature, on or before December 30 of every year,
whether the school district is complying with the fiscal plan
approved for the school district.
   (4) The Superintendent may establish timelines and prescribe
formats for reports and other materials to be used by the trustee to
monitor and review the operations of the school district. The trustee
shall approve or reject all reports and other materials required
from the school district as a condition of receiving the
apportionment. The Superintendent, upon the recommendation of the
trustee, may reduce an apportionment to the school district in an
amount up to two hundred dollars ($200) per day for each late or
unacceptable report or other material required under this part, and
shall report to the Legislature a failure of the school district to
comply with the requirements of this section. If the Superintendent
determines, at any time, that the fiscal plan approved for the school
district under Section 41320 is unsatisfactory, he or she may modify
the plan as necessary, and the school district shall comply with the
plan as modified.
   (c) At the request of the Superintendent, the Controller shall
transfer to the department, from an apportionment to which the school
district would otherwise have been entitled pursuant to Section
42238.02, as implemented by Section 42238.03, the amount necessary to
pay the expenses incurred by the trustee and associated costs
incurred by the county superintendent of schools.
   (d) For the fiscal year in which the apportionments are disbursed
and every year thereafter, the Controller, or his or her designee,
shall cause an audit to be conducted of the books and accounts of the
school district, in lieu of the audit required by Section 41020. At
the Controller's discretion, the audit may be conducted by the
Controller, his or her designee, or an auditor selected by the school
district and approved by the Controller. The costs of these audits
shall be borne by the school district. These audits shall be required
until the Controller determines, in consultation with the
Superintendent, that the school district is financially solvent, but
in no event earlier than one year following the implementation of the
plan or later than the time the apportionment made is repaid,
including interest. For an audit conducted by the Controller, or his
or her designee, the Controller, the Superintendent, and the school
district superintendent, or their respective designees, shall meet
before the audit to discuss the terms of the audit and the timeline
under which it will proceed. In addition, the Controller shall
conduct quality control reviews pursuant to subdivision (c) of
Section 14504.2.
   (e) For purposes of errors and omissions liability insurance
policies, the trustee appointed pursuant to this section is an
employee of the local educational agency to which he or she is
assigned. For purposes of workers' compensation benefits, the trustee
is an employee of the local educational agency to which he or she is
assigned, except that a trustee appointed pursuant to paragraph (7)
of subdivision (a) is an employee of the department for those
purposes.
   (f) Except for an individual appointed by the Superintendent as
trustee pursuant to paragraph (7) of subdivision (a), the
state-appointed trustee is a member of the State Teachers' Retirement
System, if qualified, for the period of service as trustee, unless
the trustee elects in writing not to become a member. A person who is
a member or retirant of the State Teachers' Retirement System at the
time of appointment shall continue to be a member or retirant of the
system for the duration of the appointment. If the trustee chooses
to become a member or is already a member, the trustee shall be
placed on the payroll of the school district for the purpose of
providing appropriate contributions to the system. The Superintendent
may also require that an individual appointed as trustee pursuant to
paragraph (7) of subdivision (a) be placed on the payroll of the
school district for purposes of remuneration, other benefits, and
payroll deductions. For purposes of workers' compensation benefits,
the state-appointed trustee is deemed an employee of the local
educational agency to which he or she is assigned, except that a
trustee who is appointed pursuant to paragraph (7) of subdivision (a)
is an employee of the department for those purposes.