BILL ANALYSIS
AB 164
Page 1
Date of Hearing: April 15, 2009
ASSEMBLY COMMITTEE ON EDUCATION
Julia Brownley, Chair
AB 164 (Mendoza) - As Introduced: January 27, 2009
SUBJECT : School districts: compensation of district
superintendents.
SUMMARY : Beginning January 1, 2010, prohibits school governing
boards from entering into a contract with a district
superintendent that would obligate the district to compensate
the superintendent for work he or she has not performed; and,
requires school governing boards to include a provision in
superintendent contracts that specifies they shall not receive
retirement, medical, dental or other benefits that would exceed
the benefits of a civil service employee at the district with a
substantially similar salary. Specifically, this bill :
1)Prohibits, commencing January 1, 2010, school district
governing boards from entering into an employment contract
with a district superintendent that contains provisions that
obligate the district or school to compensate the district
superintendent for work that he or she has not performed.
2)Requires, commencing January 1, 2010, school district
governing boards to include in any contract for the services
of a district superintendent a provision that the district
superintendent shall not receive retirement, medical, dental,
or other benefits that would exceed the benefits that a civil
service employee of that district with a substantially similar
salary would earn during an equivalent period of service.
EXISTING LAW requires that all contracts of employment between
an employee and a local agency include a provision that states
if the contract is terminated, the maximum cash settlement that
an employee may receive shall be equal to the monthly salary of
the employee multiplied by the number of months left on the
unexpired term of the contract, but not more than 18 months.
(Government Code Section 53260)
FISCAL EFFECT : This bill is keyed non-fiscal.
COMMENTS : This bill would ban school district superintendent
contract settlements or buy-outs. Existing law authorizes local
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agencies (which include school districts and community college
districts) to pay contract settlements up to the amount of the
employee's monthly salary multiplied by 18. This means that
school district governing boards and superintendents may enter
into a contract which allows for a settlement of up to 18 months
of salary payment or the number of months left in the contract,
whichever is less. AB 164 would eliminate the authority of a
school district governing board to enter into a contract with a
superintendent that would obligate the district to pay the
superintendent for work he or she did not perform.
This bill also requires school district boards to include in any
district superintendent contract a provision that the district
superintendent shall not receive retirement, medical, dental, or
other benefits that would exceed the benefits that a civil
service employee of that district with a substantially similar
salary would earn during an equivalent period of service. Do
districts have civil service employees? Do any school district
employees receive a substantially similar salary to the district
superintendent? It is unclear how this provision would be
implemented. It is also unclear what the author's intent is by
requiring this contract provision.
How are Superintendent Contracts Usually Drafted ? Independently
elected school boards are authorized to enter into a contact
with district superintendents, including assistant
superintendents in some cases. It is unclear if this bill would
also ban buy-outs for assistant superintendents as well.
Superintendent contracts typically include the following terms:
a contract term of between 1 and 4 years; salary; a stipend for
doctorate degrees; a process for evaluation; a contract
termination clause; an automobile and cell phone allowance;
vacation and sick time; and, possibly moving expenses. If
districts were no longer allowed to offer a termination clause,
this would essentially eliminate the term of employment in the
contract and would question the need for a contract at all.
Superintendents would be at-will employees who could be
terminated at any time without severance. The committee should
consider the implications of eliminating superintendent buy-outs
and how that would affect the contracting ability of local
school boards; and, their ability to attract top quality
superintendents.
Evaluation of Superintendents . Superintendents are at-will
employees without due process rights, and the termination clause
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in a contract with a school board provides a level of protection
for superintendents should the contract be terminated. If the
committee chooses to pass this bill in its current form, the
committee may wish to provide some other form of protection for
superintendents, such as an annual formal evaluation process.
While most superintendent contracts include an evaluation, there
is not a statutory requirement for such a review to take place.
A formal evaluation process would provide superintendents the
legally discoverable documentation to bring forward litigation
should their contract be terminated without cause.
Local Control Issues . If elected school boards have the
authority to determine the length of time a superintendent shall
be paid if the contract is terminated early, up to the
equivalent of 18 months of salary, aren't these local school
board members held accountable by the voters who elected them?
If constituents of school board members are unhappy with the
actions of the school board, they have the right to work to get
the members unelected. Should the Legislature intervene to
limit the flexibility afforded to school boards, when elected
school board members are held accountable by the voters that
elected them?
Other State Policies . The California School Boards Association
(CSBA) surveyed other states and received 19 responses. Florida
limits buyouts to one year, Kentucky and Mississippi prohibit
buy-outs, and Texas reduces state funding to a district if a
district buys out a superintendent contract and the amount of
the buy-out exceeds one year of salary and benefits. All other
states indicated no restrictions.
The author sites the following examples of recent superintendent
buy-outs: Alum Rock Union School District negotiated a $300,000
severance package for a superintendent in 2008 even though the
terms of the contract only obligated the school district to pay
$200,000. Alum Rock Union School District also negotiated
superintendent buyouts in 2001 and again in 2004. In December
2008, Los Angeles Unified School District negotiated a severance
package with its superintendent worth over $500,000. The
severance package included payment for salary, housing expenses,
and an annual expense account.
According to the author, AB 164 is needed in order to stop the
wasteful spending associated with superintendent buy-outs. It
is unacceptable for school districts to divert funds away from
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the needs of students in order to provide a golden parachute for
an administrator. Buy-outs amounting to hundreds of thousands
of dollars represent lost opportunities for our children. This
is money that could have been used to pay for teachers,
textbooks, tutoring, or a large variety of other vital needs.
Superintendent buy-outs represent an irresponsible use of
taxpayer funds. It has been argued that buy-outs are needed to
provide stability for superintendents and that these buy-outs
help attract talent to these positions. AB 164 does nothing to
impede this candidate recruitment process. AB 164 simply states
that School Boards should no longer have the ability to pay a
Superintendent for work that is not performed.
The California Taxpayers' Association supports the bill and
argues, "It is important to limit pay for work performed, to
avoid waste of scarce taxpayer dollars. In addition to ensuring
that compensation levels are appropriate, this bill would
eliminate other fringe benefits that exceed what a comparable
job in civil service would provide. AB 164 furthers the goal of
government efficiency and merits strong support."
Arguments in Opposition . According to the California School
Boards Association, "Existing law already limits buy-outs. This
limits the use of public monies for buy-out purposes, and
affords school districts the flexibility to compete in the
market for superintendent and recruit the best person to fit
local circumstances. AB 164 would put California school
districts at a disadvantage in the recruitment of top
superintendents. AB 164 could force California school districts
to pay higher salaries and offer more in benefits to compensate
for a lack of job security. Also, top superintendents may be
reluctant to work in California."
According to the Association of California School
Administrators, "Unlike teachers, a superintendent can be
released without cause. School superintendents are at-will
employees without any due process rights. Under AB 164, a
school board could unilaterally, and without cause, terminate a
multi-year superintendent contract without compensation to the
superintendent. Current law allows for up to 18 months of a
superintendent's contract to be paid upon dismissal by the
board. Early termination clauses in a superintendent's contract
are often negotiated far below the 18 months. It is all too
common for a superintendent to be dismissed after a school board
election for the simple excuse that they just don't seem to fit
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any longer. Early termination clauses are not considered extra
pay nor are they a gift of public funds. They are damages paid
to an employee who is released at will with a breach of
contract. Without an early termination clause, the dismissed
superintendent would be forced to go to court and file a
wrongful discharge resulting in much higher costs to a school
district. In the past two years, ACSA's Professional Standards
Department has assisted 34 superintendents whose boards have
unilaterally and without cause terminated their contracts. We
can't expect superintendents to take positions of leadership
under the direction of an elected school board without a
contract that ensures an individual some protection. AB 164
eliminates that protection. ACSA believes [the] bill will have
a detrimental impact to attracting and retaining dynamic school
leaders whose role is a key factor in improving student
achievement."
Committee Amendments . If the committee chooses to pass this
bill, staff recommends a number of amendments. However, these
amendments do not address all the concerns raised in this
analysis. Staff recommends the bill be amended to require
school governing boards to perform a formal evaluation of
superintendents on an annual basis. Staff recommends the bill
be amended to clarify that this measure will not prevent school
governing boards from compensating superintendents, upon
termination of the contract, for vacation or sick leave that has
been earned. Staff recommends the bill also be amended to
delete the term "civil service" from the bill, as these types of
employees do not exist in school districts.
REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees
(AFSCME)
California Taxpayers' Association
United Teachers Los Angeles
Opposition
Association of California School Administrators
California Association of School Business Officials
California School Boards Association
El Dorado Union High School District
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Los Angeles Unified School District
Riverside County Schools Advocacy Association
San Francisco Unified School District
Small School Districts' Association
Analysis Prepared by : Chelsea Kelley / ED. / (916) 319-2087