BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Tom Torlakson, Chairman
45 (Swanson)
Hearing Date: 08/30/07 Amended: 07/18/07
Consultant: Dan Troy Policy Vote: ED 7-1
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BILL SUMMARY: AB 45 would require the County Office Fiscal
Crisis and Management Assistance Team (FCMAT) to annually report
on or before March 1, until all powers and duties of the have
been returned to the local governing board, on the progress made
toward recovery by the Oakland Unified School District (OUSD).
The bill would require the governing board and the state
administrator appointed by the Superintendent of Public
Instruction (SPI) to execute a memorandum of understanding (MOU)
regarding the return of any power or powers recommended for
return to the district in the progress report, and that the
power or powers be transferred to the district by July 1 of the
year in which the report is issued. If the district and state
administrator can not reach agreement on the MOU, the SPI may
issue statement governing the details of the restoration of
power. The district would have the option of presenting a case
to an administrative law judge of the Office of Administrative
Hearings (OAH) to modify the statement.
In the case of fiscal control, the SPI would retain authority to
prohibit the return of power to the district until he or she
determines that OUSD is a going concern and is unlikely to
revert to policies that would require an additional emergency
loan. The bill would also allow the members of the governing
board to receive full compensation once authority for one or
more powers has been returned.
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Fiscal Impact (in thousands)
Major Provisions 2007-08 2008-09 2009-10 Fund
FCMAT Report $0 $150 $150
General*
OAL contracting Unknown, likely
several thousand General
* Counts toward meeting the Proposition 98 minimum funding
guarantee
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STAFF COMMENTS: SUSPENSE FILE.
Chapter 14/2003 (SB 39, Perata) appropriated an emergency loan
of $100 million to OUSD, required the SPI to appoint a state
administrator for the district that would assume all powers and
duties of the district governing board, required FCMAT to create
a recovery plan for the district, and established a process by
which the governing board could regain control of the district's
powers and duties. Key powers and duties that are
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AB 45 (Swanson)
detailed in the recovery plan and assessed in periodic FCMAT
reports are community relations and governance, pupil
achievement, personnel management, facilities management, and
fiscal control.
A FCMAT progress report released in September of 2006 found that
the district had made significant and sustainable progress in
the area of community relations and governance and recommended
the return of power in that area to the district. The state
administrator formally returned that power to OUSD on July 9th,
2007.
Under current law, power can only restored to a district
governing board when the SPI concurs with a positive assessment
from FCMAT's progress report that the district has made
significant and sustainable progress in a given area as measured
against agreed upon benchmarks. This bill would effectively
remove the need for the SPI's concurrence except in the area of
fiscal control.
Costs of earlier FCMAT progress reports have been approximately
$150,000 or more, so this bill would create annual costs of at
least that much until the time that all powers have been
restored to the governing board of OUSD. The most recent
version of the proposed 2007-08 Budget includes $385,000 for
reports in Oakland, Vallejo, and West Fresno.
This bill would require OAH to hear petitions from OUSD
governing board if they cannot reach agreement with the SPI on a
MOU to restore powers. The bill does not make clear who is
fiscally responsible for the hearing process, nor is it clear
how often such a process would need to occur, but this provision
would likely lead to costs of several thousands each time the
process is triggered.
There would also be new costs to the OUSD as this bill requires
that members of the governing board receive full compensation to
the level members received prior to the state takeover in 2003.
This compensation, primarily health benefits, would range from
approximately $33,000 to $120,000 depending on choices made by
the members and their number of dependents. These costs would
be absorbed by the district.
Staff notes that FCMAT has traditionally maintained a role as a
neutral party evaluator that performs audits, reports, and
assessments. By making FCMAT, effectively, the entity
responsible for restoring powers to OUSD, will FCMAT's role as a
neutral entity be compromised? This bill may also serve to
create tension between FCMAT and the SPI should the SPI not
concur with FCMAT's recommendation.