BILL ANALYSIS Ó SENATE COMMITTEE ON GOVERNANCE AND FINANCE Senator Robert M. Hertzberg, Chair 2015 - 2016 Regular ------------------------------------------------------------------ |Bill No: |AB 779 |Hearing |6/29/16 | | | |Date: | | |----------+---------------------------------+-----------+---------| |Author: |Cristina Garcia |Tax Levy: |No | |----------+---------------------------------+-----------+---------| |Version: |6/2/16 |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant|Favorini-Csorba | |: | | ----------------------------------------------------------------- Local government: financial disclosures Requires local agencies to post the names and total compensation of elected officials and the ten highest-paid employees on their websites. Background The State Controller must compile and publish reports of the financial transactions of local governments, including counties, cities, special districts, and joint powers authorities. These annual reports must also state the annual compensation of a local agency's elected officials, officers, and employees in accordance with reporting instructions developed by the Controller. The Controller must make these reports, including compensation data, available on its website in a form that can be printed and downloaded. Local agencies that maintain a website must post the report and the compensation information, or a link to the report on the Controller's website, in a conspicuous location (AB 2040, Garcia, 2014 and AB 341, Achadjian, 2015). The Controller's instructions define compensation to include salaries, overtime pay, lump sum pay, pension contributions, health/vision/dental benefits, deferred compensation contributions, and any other compensation (such as automobile allowances). Local agencies must compile this information for AB 779 (Cristina Garcia) 6/2/16 Page 2 of ? each employee, who is identified by their classification, including whether the employee held multiple positions. In 2015, the Legislature required local agencies to submit this information for the previous calendar year no later than April 30th (AB 341, Achadjian, 2015). In recent years, several small cities in Los Angeles County have come under scrutiny for their compensation practices. In particular, beginning in July 2010, a series of news reports revealed that City of Bell officials received some of the highest salaries in the nation, topping $700,000 annually. These revelations led to further inquiries into financial irregularities that culminated with convictions for the former mayor, four former city councilmembers, the city administrator, and the assistant city administrator. More recently, City of Maywood officials drew criticism in May 2016 for receiving automobile stipends of $250/month, even though the city is the second smallest in the county and covers approximately one square mile. Troubled by these abuses, some advocates for open government want local agencies to post additional information about employee compensation on their website. Proposed Law Assembly Bill 779 requires a city, county, city and county, or special district to post a link on its homepage that contains the names, positions, and total compensation of each elected official within that entity for the previous fiscal year and the 10 employees with the greatest total compensation. AB 779 defines total compensation to include the aggregate of payments for salaries, overtime, unused vacation, stipends, pension contributions, retirement contributions, health premium contributions, automobile allowances, phone allowances, technology allowances, and any other type of compensation provided. Reimbursements or payments for work-related travel expenses do not count as compensation under the bill. The city, county, or special district must aggregate the compensation of each employee that holds more than one position. AB 779 requires this information to be posted within six months of the close of the fiscal year. A city or special district that AB 779 (Cristina Garcia) 6/2/16 Page 3 of ? does not have a website must work with the relevant county to post the information on the county's website. State Revenue Impact No estimate. Comments 1. Purpose of the bill . Exorbitant employee compensation undermines the public's faith that taxpayer dollars are being put to the best use. But without adequate information on compensation, it is difficult to identify and hold accountable those who are being overpaid. The average citizen is unlikely to think of the State Controller's Office website when looking for local government compensation information; logic leads them to look on the local government's website. And even if a taxpayer can find the right website, it can be difficult to tie compensation to specific individuals. AB 779 helps Californians to easily find information about their local elected officials and the highest earners to hold them accountable. Matching the level of compensation with names, instead of only employee classifications, and breaking out parts of compensation (such as car allowances) makes it easier to identify egregious compensation practices. The California Legislature already posts names and salaries for all its employees; AB 779 ensures that local governments take small steps in a similar direction. 2. Redundant . State law already requires local governments to provide exhaustive information on the compensation of its employees to the State Controller's Office, which then posts the information in an accessible format. Local agencies must also include a prominent link to that information on their website, either by posting the information themselves or pointing the user to the Controller's website. AB 779 requires local governments to post nearly identical and redundant information on their websites. In addition, one of the few new pieces of information required by the bill-names of employees-poses a privacy and safety risk by potentially subjecting employees to harassment. If there are concerns with the transparency afforded by the Controller's compensation reports, it makes sense to address those deficiencies instead of creating costly AB 779 (Cristina Garcia) 6/2/16 Page 4 of ? and duplicative requirements. The Committee may wish to consider amending AB 779 to modify the components and presentation of those reports instead of imposing new requirements. 3. Homepage . Even in today's digital age, not all cities and special districts have websites. Typically, current law only requires online posting of materials (such as agendas) if local agencies have a website. AB 779 requires cities and special districts that lack websites to work with the relevant county to post compensation information. Counties with large numbers of small special districts may find themselves expending significant effort to collect and host this information. This burden may fall especially hard on rural counties that have smaller population bases. The Committee may wish to consider amending AB 779 to instead require local agencies to only post the compensation information on their website if they have one. 4. Timing is everything . Just last year, the Legislature amended the deadline by which cities, counties, and special districts must provide annual compensation information to the State Controller's Office: April 30th for the information provided in the preceding calendar year. But AB 779 requires these agencies to post the information within six months of the close of the fiscal year. The Committee may wish to consider amending AB 779 to specify the same deadline as in current law. 5. New bill, prior votes not relevant . As passed by the Assembly, AB 779 contained provisions relating to transportation and congestion management. The Senate Governance & Finance Committee never heard that version of the bill. The June 2 amendments deleted AB 779's contents and inserted the current language relating to local government compensation. 6. Mandate . The California Constitution generally requires the state to reimburse local agencies for their costs when the state imposes new programs or additional duties on them. According to the Legislative Counsel's Office, AB 2801 creates a new state-mandated local program because it increases the duties of local officials. AB 2801 says that if the Commission on State Mandates determines that it creates a state-mandated local program, the state must reimburse local agencies by following the existing statutory process for mandate claims. AB 779 (Cristina Garcia) 6/2/16 Page 5 of ? 7. Prior and related legislation . AB 2040 (Garcia, 2014) requires local agencies to prominently post a link on their websites to the Controller's compensation reports. Previous versions of the legislation also required local agencies to post the names and monthly compensation of every employee and elected official employed by the agency. AB 2257 (Maienschein), which the Committee will hear on June 29th along with AB 779, directs local agencies that have websites to include on their homepage a link to the most recent agenda of their governing bodies. Assembly Actions Not relevant to the June 2nd version of the bill. Support and Opposition (6/23/16) Support : California League of Conservation Voters; Sierra Club California. Opposition : California Professional Firefighters; California Special Districts Association; California State Association of Counties; County of Sacramento; League of California Cities; Rural County Representatives of California; Urban Counties of California. -- END --