BILL NUMBER: AB 626	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JUNE 8, 2016
	AMENDED IN ASSEMBLY  JUNE 1, 2015
	AMENDED IN ASSEMBLY  APRIL 13, 2015
	AMENDED IN ASSEMBLY  MARCH 26, 2015

INTRODUCED BY   Assembly  Member   Low
  Members   Chiu   and Low 
    (   Principal coauthor: 
 Assembly Member   Roger Hernández 
 ) 
   (Coauthor: Assembly Member  Dababneh  
Frazier  )
    (   Coauthors:   Senators  
Anderson,   Cannella,   and Gaines   )


                        FEBRUARY 24, 2015

    An act to amend Section 87482.6 of the Education Code,
relating to community colleges.   An act to add and
repeal Section 9204 of the Public Contract Code, relating to public
contracts. 



	LEGISLATIVE COUNSEL'S DIGEST


   AB 626, as amended,  Low   Chiu  .
 Community colleges: employees.   Public
contracts: claim resolution.  
   Existing law prescribes various requirements regarding the
formation, content, and enforcement of state and local public
contracts. Existing law applicable to state public contracts
generally requires that the resolution of claims related to those
contracts be subject to arbitration. Existing law applicable to local
agency contracts prescribes a process for the resolution of claims
related to those contracts of $375,000 or less.  
   This bill would establish, for contracts entered into on or after
January 1, 2017, a claim resolution process applicable to any claim
by a contractor in connection with a public works project. The bill
would define a claim as a separate demand by the contractor for one
or more of the following: a time extension for relief from damages or
penalties for delay, payment of money or damages arising from work
done pursuant to the contract for a public work, or payment of an
amount disputed by the public entity, as specified.  
   This bill would require a public entity, defined to exclude
certain state entities, upon receipt of a claim sent by registered or
certified mail, to review it and, within 45 days, provide a written
statement identifying the disputed and undisputed portions of the
claim. The bill would authorize the 45-day period to be extended by
mutual agreement. The bill would require any payment due on an
undisputed portion of the claim to be processed within 60 days, as
specified. The bill would require that the claim be deemed rejected
in its entirety if the public entity fails to issue the written
statement.  
   This bill would authorize, if the claimant disputes the public
entity's written response or if the public entity fails to respond to
a claim within the time prescribed, the claimant to demand to meet
and confer for settlement of the issues in dispute. The bill would
require any disputed portion of the claim that remains in dispute
after the meet and confer conference to be subject to nonbinding
mediation, as specified. The bill would provide that unpaid claim
amounts accrue interest at 7% per annum. The bill would prescribe a
procedure by which a subcontractor or lower tier contractor may make
a claim through the contractor.  
    This bill would require the text of these provisions, or a
summary, to be set forth in the plans or specifications for any
public work which may give rise to a claim. The bill would specify
that a waiver of these rights is void and contrary to public policy,
except as specified. The bill would also specify that it does not
impose liability on a public entity that makes loans or grants
available through a competitive application process, for the failure
of an awardee to meet its contractual obligations.  
    By increasing the duties of local agencies and officials, this
bill would impose a state-mandated local program.  
   This bill would, on January 1, 2020, repeal the provision
establishing the claim resolution process.  
   This bill would specify that these provisions constitute a matter
of statewide concern.  
    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.  
   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.  
   Existing law establishes the California Community Colleges under
the administration of the Board of Governors of the California
Community Colleges. Existing law establishes community college
districts, which provide instruction to students at campuses
throughout the state.  
   Existing law provides that, until specified statutory provisions
are implemented regarding program-based funding, community college
districts that have less than 75% of their hours of credit
instruction taught by full-time instructors shall apply a portion of
their program improvement allocations toward reaching that 75%
standard, as specified. Existing law requires the board of governors
to adopt regulations for the effective administration of the law
concerning the appropriate percentage of hours of credit instruction
taught by full-time instructors. Existing law requires the Chancellor
of the California Community Colleges to compute the number of
full-time faculty required to be secured using program improvement
allocations, as specified, to determine the extent to which each
community college district has hired that number of full-time
faculty, and, to the extent that the cumulative number of full-time
faculty have not been retained, to reduce the district's base budget
for 1991-92 and subsequent fiscal years in accordance with a certain
formula.  
   This bill would require the office of the Chancellor of the
California Community Colleges to convene a group of stakeholders on
or before July 1, 2016, and every 4 years thereafter, to develop
recommendations on funding strategies to enable the community
colleges to achieve the 75% standard and increase district
participation in the support of part-time faculty. The bill would
require the chancellor's office to report these recommendations to
the Legislature, as specified. 
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program:  no   yes  .


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

   SECTION 1.    Section 9204 is added to the  
Public Contract Code  , to read:  
   9204.  (a) The Legislature finds and declares that it is in the
best interests of the state and its citizens to ensure that all
construction business performed on a public works project in the
state that is complete and not in dispute is paid in full and in a
timely manner.
   (b) Notwithstanding any other law, including, but not limited to,
Article 7.1 (commencing with Section 10240) of Chapter 1 of Part 2,
Chapter 10 (commencing with Section 19100) of Part 2, and Article 1.5
(commencing with Section 20104) of Chapter 1 of Part 3, this section
shall apply to any claim by a contractor in connection with a public
works project.
   (c) For purposes of this section:
   (1) "Claim" means a separate demand by a contractor sent by
registered mail or certified mail with return receipt requested, for
one or more of the following:
   (A) A time extension, including, without limitation, for relief
from damages or penalties for delay assessed by a public entity under
a contract for a public works project.
   (B) Payment by the public entity of money or damages arising from
work done by, or on behalf of, the contractor pursuant to the
contract for a public works project and payment for which is not
otherwise expressly provided or to which the claimant is not
otherwise entitled.
   (C) Payment of an amount that is disputed by the public entity.
   (2) "Contractor" means any type of contractor within the meaning
of Chapter 9 (commencing with Section 7000) of Division 3 of the
Business and Professions Code who has entered into a direct contract
with a public entity for a public works project.
   (3) (A) "Public entity" means, without limitation, except as
provided in subparagraph (B), a state agency, department, office,
division, bureau, board, or commission, the California State
University, the University of California, a city, including a charter
city, county, including a charter county, city and county, including
a charter city and county, district, special district, public
authority, political subdivision, public corporation, or nonprofit
transit corporation wholly owned by a public agency and formed to
carry out the purposes of the public agency.
   (B) "Public entity" shall not include the following:
   (i) The Department of Water Resources as to any project under the
jurisdiction of that department.
   (ii) The Department of Transportation as to any project under the
jurisdiction of that department.
   (iii) The Department of Parks and Recreation as to any project
under the jurisdiction of that department.
   (iv) The Department of Corrections and Rehabilitation with respect
to any project under its jurisdiction pursuant to Chapter 11
(commencing with Section 7000) of Title 7 of Part 3 of the Penal
Code.
   (v) The Military Department as to any project under the
jurisdiction of that department.
   (vi) The Department of General Services as to all other projects.
   (vii) The High-Speed Rail Authority.
   (4) "Public works project" means the erection, construction,
alteration, repair, or improvement of any public structure, building,
road, or other public improvement of any kind.
   (5) "Subcontractor" means any type of contractor within the
meaning of Chapter 9 (commencing with Section 7000) of Division 3 of
the Business and Professions Code who either is in direct contract
with a contractor or is a lower tier subcontractor.
   (d) (1) (A) Upon receipt of a claim pursuant to this section, the
public entity to which the claim applies shall conduct a reasonable
review of the claim and, within a period not to exceed 45 days, shall
provide the claimant a written statement identifying what portion of
the claim is disputed and what portion is undisputed. Upon receipt
of a claim, a public entity and a contractor may, by mutual
agreement, extend the time period provided in this subdivision.
   (B) The claimant shall furnish reasonable documentation to support
the claim.
   (C) If the public entity needs approval from its governing body to
provide the claimant a written statement identifying the disputed
portion and the undisputed portion of the claim, and the governing
body does not meet within the 45 days or within the mutually agreed
to extension of time following receipt of a claim sent by registered
mail or certified mail, return receipt requested, the public entity
shall have up to three days following the next duly publicly noticed
meeting of the governing body after the 45-day period, or extension,
expires to provide the claimant a written statement identifying the
disputed portion and the undisputed portion.
   (D) Any payment due on an undisputed portion of the claim shall be
processed and made within 60 days after the public entity issues its
written statement. If the public entity fails to issue a written
statement, paragraph (3) shall apply.
   (2) (A) If the claimant disputes the public entity's written
response, or if the public entity fails to respond to a claim issued
pursuant to this section within the time prescribed, the claimant may
demand in writing an informal conference to meet and confer for
settlement of the issues in dispute. Upon receipt of a demand in
writing sent by registered mail or certified mail, return receipt
requested, the public entity shall schedule a meet and confer
conference within 30 days for settlement of the dispute.
   (B) Within 10 business days following the conclusion of the meet
and confer conference, if the claim or any portion of the claim
remains in dispute, the public entity shall provide the claimant a
written statement identifying the portion of the claim that remains
in dispute and the portion that is undisputed. Any payment due on an
undisputed portion of the claim shall be processed and made within 60
days after the public entity issues its written statement. Any
disputed portion of the claim, as identified by the contractor in
writing, shall be submitted to nonbinding mediation, with the public
entity and the claimant sharing the associated costs equally. The
public entity and claimant shall mutually agree to a mediator within
10 business days after the disputed portion of the claim has been
identified in writing. If the parties cannot agree upon a mediator,
each party shall select a mediator and those mediators shall select a
qualified neutral third party to mediate with regard to the disputed
portion of the claim. Each party shall bear the fees and costs
charged by its respective mediator in connection with the selection
of the neutral mediator. If mediation is unsuccessful, the parts of
the claim remaining in dispute shall be subject to applicable
procedures outside this section.
   (C) For purposes of this section, mediation includes any
nonbinding process, including, but not limited to, neutral evaluation
or a dispute review board, in which an independent third party or
board assists the parties in dispute resolution through negotiation
or by issuance of an evaluation. Any mediation utilized shall conform
to the timeframes in this section.
   (D) Unless otherwise agreed to by the public entity and the
contractor in writing, the mediation conducted pursuant to this
section shall excuse any further obligation under Section 20104.4 to
mediate after litigation has been commenced.
   (E) This section does not preclude a public entity from requiring
arbitration of disputes under private arbitration or the Public Works
Contract Arbitration Program, if mediation under this section does
not resolve the parties' dispute.
   (3) Failure by the public entity to respond to a claim from a
contractor within the time periods described in this subdivision or
to otherwise meet the time requirements of this section shall result
in the claim being deemed rejected in its entirety. A claim that is
denied by reason of the public entity's failure to have responded to
a claim, or its failure to otherwise meet the time requirements of
this section, shall not constitute an adverse finding with regard to
the merits of the claim or the responsibility or qualifications of
the claimant.
   (4) Amounts not paid in a timely manner as required by this
section shall bear interest at 7 percent per annum.
   (5) If a subcontractor or a lower tier subcontractor lacks legal
standing to assert a claim against a public entity because privity of
contract does not exist, the contractor may present to the public
entity a claim on behalf of a subcontractor or lower tier
subcontractor. A subcontractor may request in writing, either on his
or her own behalf or on behalf of a lower tier subcontractor, that
the contractor present a claim for work which was performed by the
subcontractor or by a lower tier subcontractor on behalf of the
subcontractor. The subcontractor requesting that the claim be
presented to the public entity shall furnish reasonable documentation
to support the claim. Within 45 days of receipt of this written
request, the contractor shall notify the subcontractor in writing as
to whether the contractor presented the claim to the public entity
and, if the original contractor did not present the claim, provide
the subcontractor with a statement of the reasons for not having done
so.
   (e) The text of this section or a summary of it shall be set forth
in the plans or specifications for any public works project that may
give rise to a claim under this section.
   (f) A waiver of the rights granted by this section is void and
contrary to public policy, provided, however, that (1) upon receipt
of a claim, the parties may mutually agree to waive, in writing,
mediation and proceed directly to the commencement of a civil action
or binding arbitration, as applicable; and (2) a public entity in its
public works contracts may include dispute resolution provisions
that comply with this section, including the timeframes set forth
herein, and that prescribe additional reasonable and equitable terms
regarding actions or procedures to be taken by the parties.
   (g) This section applies to contracts entered into on or after
January 1, 2017.
   (h) Nothing in this section shall impose liability upon a public
entity that makes loans or grants available through a competitive
application process, for the failure of an awardee to meet its
contractual obligations.
   (i) This section shall remain in effect only until January 1,
2020, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2020, deletes or extends
that date. 
   SEC. 2.    The Legislature finds and declares that it
is of statewide concern to require a charter city, charter county,
or charter city and county to follow a prescribed claims resolution
process to ensure there are uniform and equitable procurement
practices. 
   SEC. 3.    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.  
  SECTION 1.    The Legislature finds and declares
all of the following:
   (a) In 1988, the Education Code was amended to read that "the
Legislature wishes to recognize and make efforts to address
longstanding policy of the board of governors that at least 75
percent of the hours of credit instruction in the California
Community Colleges, as a system, should be taught by full-time
instructors."
   (b) The expectations for full-time faculty go beyond classroom
instruction to include, among other full-service activities, all of
the following: developing and evaluating academic programs; holding
office hours and participating in meetings after classes; student
advising; participation in institutional governance; and
accreditation-related responsibilities such as the assessment of
departmental and student learning outcomes, curriculum development,
and preparing institutional self-studies.
   (c) In 2014, the percentage of credit courses taught by full-time
faculty in the system was only 56.14 percent.
   (d) The Legislature acknowledged the commitment of the Board of
Governors of the California Community Colleges, through its regular
budget process, to evaluate resource needs and seek funding for
essential educational priorities that contribute to student success.
These priorities include, but are not necessarily limited to, the
hiring of more full-time faculty and increasing support for part-time
faculty.
   (e) In the Seymour-Campbell Student Success Act of 2012, the
Legislature acknowledged the importance of counselors, who, along
with librarians, are considered to be faculty for purposes of the
75-percent goal.
   (f) Students enrolled in noncredit education are most often
deprived of the benefit of working with full-time faculty, as
statewide goals relating to the ratio of full-time to part-time
faculty have yet to be developed with respect to noncredit courses.
 
  SEC. 2.    Section 87482.6 of the Education Code
is amended to read:
   87482.6.  (a) Until the provisions of Section 84750.5 regarding
program-based funding are implemented by a standard adopted by the
board of governors that establishes the appropriate percentage of
hours of credit instruction that should be taught by full-time
instructors, the Legislature wishes to recognize and make efforts to
address longstanding policy of the board of governors that at least
75 percent of the hours of credit instruction in the California
Community Colleges, as a system, should be taught by full-time
instructors. To this end, community college districts that have less
than 75 percent of their hours of credit instruction taught by
full-time instructors shall apply a portion of the program
improvement allocation received pursuant to Section 84755 as follows:

   (1) Districts that, in the prior fiscal year, had between 67
percent and 75 percent of their hours of credit instruction taught by
full-time instructors shall apply up to 33 percent of this
allocation as necessary to reach the 75-percent standard. If a
district in this category chooses instead not to improve its
percentage, the board of governors shall withhold 33 percent of this
allocation.
   (2) Districts that, in the prior fiscal year, had less than 67
percent of their hours of credit instruction taught by full-time
instructors shall apply up to 40 percent of this allocation as
necessary to reach the 75-percent standard. If a district in this
category chooses instead not to improve its percentage, the board of
governors shall withhold 40 percent of this allocation.
   (3) Districts that maintain 75 percent or more of their hours of
credit instruction taught by full-time instructors shall otherwise be
free to use their program improvement allocation for any of the
purposes specified in Section 84755.
   (b) The board of governors shall adopt regulations for the
effective administration of this section. Unless and until amended by
the board of governors, the regulations shall provide as follows:
   (1) In computing the percentage of hours of credit instruction
taught by full-time instructors, the hours of overload teaching by
full-time instructors shall be excluded from both the total hours of
credit instruction taught by full-time and part-time instructors and
the total hours of instruction taught by full-time instructors.
   (2) A full-time instructor shall be defined as any regular and
contract faculty member teaching credit instruction.
   (3) (A) The chancellor shall compute and report to each community
college district the number of full-time faculty (FTF) which are to
be secured through the use of the prescribed portion of program
improvement revenue allocated to each district. This computation
shall be made by dividing the applicable portion of program
improvement revenue (0 percent, 33 percent, or 40 percent of the
program improvement allocation), by the statewide average
"replacement cost" (a figure which represents the statewide average
faculty salary plus benefits, minus the statewide average hourly rate
of compensation for part-time instructors times the statewide
average full-time teaching load). If the quotient is not a whole
number, then the quotient shall be rounded down to the nearest whole
number. If this quotient, once applied, will result in the district
exceeding the 75-percent standard, the chancellor shall further
reduce the quotient to a whole number that will leave the district as
close as possible to, but in excess of, the 75-percent standard.
   (B) By March 15 of each year, the chancellor shall report to each
district an estimate of the number of FTF to be secured based upon
the appropriation of revenues contained in the annual Budget Bill.
   (4) On or before December 31, 1991, the chancellor shall determine
the extent to which each district, by September 30, 1991, has hired
the number of FTF determined pursuant to paragraph (3) for the
1989-90 and 1990-91 fiscal years. To the extent that the cumulative
number of FTF have not been retained, the chancellor shall reduce the
district's base budget for 1991-92 and subsequent fiscal years by an
amount equivalent to the average replacement cost times the
deficiency in the number of FTF.
   (c) The office of the Chancellor of the California Community
Colleges shall convene a group of stakeholders, which shall include
faculty and students, on or before July 1, 2016, and every four years
thereafter, to develop recommendations on funding strategies to
enable the community colleges to achieve the 75-percent standard and
increase the participation of districts in the support of part-time
faculty, including, but not limited to, support of part-time faculty
office hours. The office of the chancellor shall report the
recommendations developed by the stakeholder group to the
Legislature, as provided in Section 9795 of the Government Code, on
or before March 1, 2017, and every four years thereafter. 

  SEC. 3.    It is the intent of the Legislature
that the office of the Chancellor of the California Community
Colleges work together with the Academic Senate for California
Community Colleges and other relevant entities to develop goals for
the full-time to part-time faculty ratio in noncredit education.