BILL ANALYSIS Ó
AB 1582
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Date of Hearing: March 30, 2016
ASSEMBLY COMMITTEE ON ELECTIONS AND REDISTRICTING
Shirley Weber, Chair
AB 1582
(Travis Allen & Harper) - As Amended February 18, 2016
SUBJECT: Political Reform Act of 1974: Conflict of Interest
Codes: public postsecondary educational institutions.
SUMMARY: Requires employees of public postsecondary educational
institutions to disclose items of value that they receive as a
result of adopting specific course materials. Specifically,
this bill requires the Conflict of Interest Code (COI Code) of
each public postsecondary educational institution to require an
employee of that institution to disclose all of the following
that the employee receives as a result of making or influencing
a decision to adopt specific course materials required for
coursework or instruction:
1)Any item of value, including the donation of equipment or
goods and any payment, loan, advance, or deposit of money,
actual or promised; and,
2)Any royalties or other compensation received from the sale of
the course materials.
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EXISTING LAW:
1)Creates the Fair Political Practices Commission (FPPC), and
makes it responsible for the impartial, effective
administration and implementation of the Political Reform Act
(PRA).
2)Requires every state and local governmental agency to adopt
and promulgate a COI Code. Requires each COI Code to include
a specific enumeration of the positions within the agency,
with the exception of certain high-ranking public officials
who are identified in statute, that involve the making or
participation in the making of decisions which may foreseeably
have a material effect on any financial interest. Requires
each person who holds such an enumerated position to file
periodic statements of economic interests (SEIs) disclosing
his or her financial interests in accordance with the
provisions of the COI Code.
3)Prohibits a public official at any level of state or local
government from making, participating in the making, or in any
way attempting to use his or her official position to
influence a governmental decision in which the official knows
or has reason to know that he or she has a financial interest,
as defined. Provides, pursuant to a regulation adopted by the
FPPC, that making, participating in, or influencing a
governmental decision for these purposes does not include
teaching decisions, including an instructor's selection of
books or other educational materials at his or her own school
or institution.
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4)Requires every employee of the California State University
(CSU) system who is designated in the system's COI Code to
complete an ethics training course every two years.
5)Prohibits, pursuant to the College Textbook Transparency Act,
a faculty member or other entity that chooses course materials
to be used at a public postsecondary educational institution
from demanding or receiving anything of value for adopting
specific course materials, except as specified. Provides that
this restriction does not prohibit an employee from receiving
royalties or other compensation from the sales of course
materials that include the instructor's writing or other work
or from receiving honoraria for academic peer review of course
materials. Provides that any royalties, honoraria, or other
compensation received is subject to the employer's policies
relating to employee conflicts of interest.
FISCAL EFFECT: Unknown. State-mandated local program; contains
a crimes and infractions disclaimer.
COMMENTS:
1)Purpose of the Bill: According to the author:
California is the only state in the nation that has a
blanket exemption from the state conflict of interest
laws for textbook adoption decisions at public
colleges. A custom textbook can be something as simple
as changing the name on the cover, or affixing the
university seal. AB 1582 would simply amend the
Conflict of Interest code section of the [PRA] to
require an employee of a post-secondary educational
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institution to disclose if they receive royalties or
compensation for required coursework to increase
transparency for our future generation.
2)Teaching Decisions and the PRA: In order to ensure that
public officials perform their duties in an impartial manner,
the PRA includes a comprehensive set of rules to prevent
conflicts of interest by public officials. As part of that
comprehensive scheme, public officials and employees are
required to file SEIs if the position they hold is designated
in an agency's COI Code. State law requires a position to be
designated in an agency's COI Code when the position entails
the making or participation in the making of governmental
decisions that may foreseeably have a material financial
effect on the decision maker's financial interests.
Furthermore, existing law generally prohibits a public official
from making, participating in, or influencing a governmental
decision in which the official has a financial interest. This
restriction is broadly applicable to all public officials-not
just to those who are required to file SEIs. Regulations
adopted by the FPPC identify certain actions that a public
official may take that are not considered to be making,
participating in, or influencing governmental decisions for
the purposes of the state's conflict of interest laws. One
such exception provides that teaching decisions, including an
instructor's selection of books or other educational materials
at his or her own school or institution, or other similar
decisions incidental to teaching, are not considered to be
making, participating in, or influencing governmental
decisions for the purposes of the state's conflict of interest
laws. According to FPPC staff, this exception has existed
since 1978.
Because these types of teaching decisions are not considered
governmental decisions for the purposes of the PRA, professors
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and teachers at public postsecondary educational institutions
generally are not required to file SEIs unless they are also
administrators with broader responsibilities. Relatedly,
professor and teacher positions typically are not designated
in the COI Codes that are adopted by the postsecondary
institutions. In fact, a review of the COI Codes for the
University of California (UC) and CSU systems found that
neither system designates professor and teacher positions in
their COI Codes. Similarly, a review of the COI Codes for each
of the ten largest community college districts in the state
(by enrollment) found that none of those community college
districts designates professor or teacher positions in their
COI Codes.
3)Implementation Issues: This bill seeks to require the COI
Codes of public postsecondary educational institutions to
require employees to disclose compensation or items of value
that they receive as a result of making or influencing a
decision to adopt specific course materials. The manner in
which this disclosure would occur is unclear. While this bill
does not explicitly require professors, teachers, and
instructors at postsecondary educational institutions to file
SEIs, the author's staff has indicated that it is his intent
for this disclosure to occur on SEIs. To the extent that this
bill is interpreted and implemented in a manner that requires
professors, teachers, and instructors to file SEIs, however,
this bill would significantly increase the number of employees
at postsecondary educational institutions who are required to
file SEIs. Currently, the CSU system estimates that
approximately 4,000 employees are required to file SEIs
system-wide; if this bill requires CSU to designate all
faculty members under its COI Code, the system estimates that
an additional 25,000 employees-for a total of 29,000
employees-would be required to file SEIs. All such employees
additionally would be required to take ethics training classes
every two years. The UC system estimates that a minimum of
12,000 employees would be required to comply with this bill,
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while information maintained by the Community College
Chancellor's Office suggests that more than 55,000 community
college employees would be subject to the provisions of this
bill.
4)Are SEIs the Right Mechanism for the Disclosure Sought? As
noted above, SEIs are required to be filed by certain public
officials and employees as part of the state's comprehensive
set of rules designed to prevent conflicts of interest. The
primary purpose of having public officials and employees
publicly identify their economic interests on SEIs is to
identify those situations where employees or officials may
have conflicts of interests while discharging their official
duties.
According to the author, the intent of this bill is to require
disclosure of royalties and other compensation that employees
of post-secondary educational institutions receive as a result
of a decision to adopt course materials; it is not intended to
prohibit employees from adopting course materials for which
they will receive royalties, nor is it intended to override
the FPPC's regulation that provides that teaching decisions do
not create a conflict of interest. This bill requires the
disclosure to occur, however, through a mechanism that exists
primarily to prevent conflicts of interest. Requiring public
employees to disclose financial interests that cannot create a
conflict of interest through that mechanism could cause
confusion, and could create inconsistencies within the state's
conflict of interest laws that could complicate compliance
with those laws. Given that this bill does not seek to make
the selection of course materials subject to the state's
conflict of interest laws generally, it is unclear whether
using the COI Codes of public agencies is the most appropriate
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mechanism for obtaining the author's desired disclosure. As
noted below (see "Related Legislation"), at least one other
bill that is currently pending in this legislative session
would provide for disclosure of royalties received by
postsecondary educational employees without modifying the
state's conflict of interest laws.
5)Related Legislation: AB 2214 (Harper), which is pending in
the Assembly Higher Education Committee, requires CSU Trustees
and the governing board of each community college district,
and requests the UC Regents, to require faculty members to
annually disclose income they received from a publisher,
periodical, or provider of online content for royalties,
advances, consulting services, or for any other purpose.
6)Arguments in Support: In support of this bill, the California
State Student Association writes:
In compliance with state conflict of interest laws,
designated employees of public postsecondary
institutions are required to fill out FPPC Form 700.
This form requires some employees to provide
information about personal financial interests in
order to ensure that the decisions being made are in
the best interest of the public. Currently, California
is one of the few states that has a blanket exemption
in the conflict of interest laws for textbook adoption
decisions at public postsecondary institutions. This
exemption could lead to a faculty member making a
decision that is not in the best interest of students.
AB 1582 will add a conflict of interest clause to the
FPPC report for the individuals who make, or have
decision making authority, to adopt course materials.
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By making these small changes, faculty members would
be required to be more transparent about the royalties
they receive from course materials they had decision
making authority to adopt.
7)Arguments in Opposition: In opposition to this bill, the Fair
Political Practices Commission writes:
[We] question whether an instructor's choice of what
book to use in their classroom is considered a
"governmental decision" for purposes of regulation and
enforcement under the [PRA]. The bill undoubtedly
would require a significant increase in the number of
professors and faculty members who would have to file
[an SEI] for the sole purpose of reporting their
selection of text books or other educational
materials.
[Under] this bill, although an employee would be
required to file [an SEI] and disclose the financial
interest, the disclosure would not result in
disqualification. This proposed carve-out from the
[PRA] - where these filers would be allowed to
participate in decisions despite having an identified
conflict on their [SEI] - is inconsistent with the
express exception for royalties in the Education Code,
and potentially confusing to both the reporting
officials and the public. The [FPPC] has significant
concerns with requiring such disclosure, but
nonetheless stating it is not a conflict of interest
under the [PRA].
8)Previous Legislation: AB 1548 (Solorio), Chapter 574,
Statutes of 2007, the College Textbook Transparency Act,
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requires faculty and other textbook adopters to follow
specified practices in the adoption and purchase of textbooks.
SB 386 (Runner) of 2009, would have required faculty members at
community colleges and at CSU to prepare a justification for
any adoption of a new edition of a textbook within three years
after the adoption of a previous edition of that textbook.
The justification would have been required to include a
disclosure of any financial interest of the faculty member
related to requiring students to purchase the new edition of
the textbook. The UC system was requested to comply with the
bill. SB 386 was held on the Senate Appropriations
Committee's suspense file.
9)Double-Referral: This bill has been double-referred to the
Assembly Higher Education Committee.
10)Political Reform Act of 1974: California voters passed an
initiative, Proposition 9, in 1974 that created the FPPC and
codified significant restrictions and prohibitions on
candidates, officeholders and lobbyists. That initiative is
commonly known as the PRA. Amendments to the PRA that are not
submitted to the voters, such as those contained in this bill,
must further the purposes of the initiative and require a
two-thirds vote of both houses of the Legislature.
REGISTERED SUPPORT / OPPOSITION:
Support
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California State Student Association
Opposition
Fair Political Practices Commission
Analysis Prepared by:Ethan Jones / E. & R. / (916) 319-2094