BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON GOVERNANCE AND FINANCE
                         Senator Robert M. Hertzberg, Chair
                                2015 - 2016  Regular 

                              
          
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          |Bill No:  |AB 779                           |Hearing    |6/29/16  |
          |          |                                 |Date:      |         |
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          |Author:   |Cristina Garcia                  |Tax Levy:  |No       |
          |----------+---------------------------------+-----------+---------|
          |Version:  |6/2/16                           |Fiscal:    |Yes      |
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          |Consultant|Favorini-Csorba                                       |
          |:         |                                                      |
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                       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  







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          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  








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          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  








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          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.









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          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.


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