BILL NUMBER: SB 130 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Denham
FEBRUARY 9, 2009
An act relating to the King City Joint Union High School District,
making an appropriation therefor, and declaring the urgency thereof,
to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 130, as introduced, Denham. King City Joint Union High School
District.
(1) Existing law provides for emergency apportionments to school
districts subject to specified conditions including, in certain
circumstances, the repayment of an emergency loan over a period of no
more than 10 years and the appointment by the Superintendent of
Public Instruction of an administrator who would exercise the powers
and responsibilities of the governing board of the school district.
This bill would require the Superintendent of Public Instruction
to assume all the rights, duties, and powers of the governing board
of the King City Joint Union High School District and to appoint, in
consultation with the Monterey County Superintendent of Schools, an
administrator to act on behalf of the Superintendent of Public
Instruction in exercising the superintendent's authority over the
school district. The bill would require the administrator to be
deemed an employee of the school district for certain purposes.
The bill would require the governing board of the school district
to serve as an advisory body reporting to the administrator and
prohibit its members from receiving any compensation during the
period of the superintendent's authority over the district. The bill
would authorize the administrator to terminate the employment of
certain district personnel, as provided. The bill would authorize the
administrator, with the approval of the superintendent, to enter
into agreements on behalf of the district and to change any existing
district rules, regulations, policies, or practices, as provided.
The bill would continue the authority of the superintendent and
the administrator over the school district until certain enumerated
conditions are met, including the completion of assessment and
improvement plans for the school district.
The bill would require the administrator to consider, on a monthly
basis or more frequently if desired, information from one or more
specified groups. The bill would require the County Office Fiscal
Crisis and Management Assistance Team (FCMAT) to prepare, by November
1, 2009, an improvement plan for the school district. The bill would
require the FCMAT, commencing 30 days following the effective date
of this bill and in January 2010 and at least every 6 months
thereafter, to file a status report with specified persons on
progress made by the district in implementing the plan.
The bill would require the school district to bear 100% of all
costs associated with implementing its provisions, thereby imposing a
state-mandated local program.
The bill would appropriate $10,000,000 from the General Fund to
the Superintendent of Public Instruction for apportionment as an
emergency loan to the King City Joint Union High School District, and
specify procedures for repayment of the loan. The bill would
authorize the school district to sell property owned by the district
and use the proceeds from the sale to reduce or retire the emergency
loan, and would prohibit the district from being eligible for
financial hardship assistance under the Leroy F. Greene School
Facilities Act of 1998.
(2) This bill would make a legislative finding and declaration
that the unique circumstances of the King City Joint Union High
School District warrant the enactment of a special statute.
(3) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
(4) This bill would declare that it is to take effect immediately
as an urgency statute.
Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) Providing a quality education that meets the unique needs of
King City public school pupils is a fundamental goal that should not
be jeopardized.
(b) On December 4, 2007, the Monterey County Office of Education
declared the King City Joint Union High School District a "lack of
going concern" and appointed a fiscal advisor to monitor the
operations of the district.
(c) The budget analysis conducted by the county office indicates
that the district is deficit spending, is unable to maintain its
reserve for economic uncertainty, and will have a negative fund
balance for at least the current and two subsequent fiscal years.
(d) The district is facing a fiscal and cash insolvency as a
result of organizational decisionmaking and the loss of an appeal for
a recent Public Employee Relations Board (PERB) ruling that resulted
in increased employee compensation costs and continued deficit
spending.
(e) The district is declining in enrollment, which is further
exacerbating its fiscal circumstances.
(f) The King City Joint Union High School District is projected to
run out of cash to support its routine operations and expenditures
by March 2009, and it will require an emergency appropriation from
the state in order to continue the delivery of educational services
to pupils enrolled in the district.
SEC. 2. (a) It is the intent of the Legislature that the state
administrator appointed pursuant to this act work with the staff and
governing board of the King City Joint Union High School District to
identify the procedures and programs that the district will implement
during the 2008-09 school year and future school years that do all
of the following:
(1) Significantly raise pupil achievement.
(2) Improve pupil attendance.
(3) Lower pupil dropout rate.
(4) Increase parental involvement.
(5) Attract, retain, and train a quality teaching staff.
(6) Manage fiscal expenditures in a manner that is consistent with
the current and projected revenues of the district.
(b) It is the intent of the Legislature that these identified
procedures and programs be analyzed by the state administrator and,
where applicable and appropriate, be protected, maintained, and
expanded as the budget of the district allows. The state
administrator shall report any findings applicable to this section to
the Superintendent of Public Instruction and the education
committees of the Legislature.
SEC. 3. The Legislature finds and declares that, because of the
fiscal emergency in which the King City Joint Union High School
District finds itself, it is necessary that the Superintendent of
Public Instruction assume control of the district in order to ensure
the return to the district of fiscal solvency. For this section,
fiscal solvency shall be defined, at a minimum, as follows:
(a) The county superintendent finds that the district, in any
given fiscal year after receipt of the state loan and for at least
two subsequent years, demonstrates that revenues exceed expenditures
in the district's general fund unrestricted budget.
(b) The county superintendent finds that district is able to
maintain the minimum reserve for economic uncertainty for three
consecutive years.
(c) The county superintendent determines that the district's
general fund unrestricted fund balance is positive and has the
potential to increase for three consecutive years.
(d) The county superintendent, after the application of a variety
of criteria, finds that the district certification is at least
qualified.
SEC. 4. (a) The Superintendent of Public Instruction shall
immediately assume all of the rights, duties, and powers of the
governing board of the King City Joint Union High School District.
(b) The Superintendent of Public Instruction, in consultation with
the Monterey County Superintendent of Schools, shall appoint an
administrator to act on behalf of the Superintendent of Public
Instruction in exercising the authority described in this act. The
Superintendent of Public Instruction or the state-appointed
administrator may, on a short-term basis, employ at district expense
any staff necessary to assist the administrator, including, but not
necessarily limited to, a certified public accountant. The
administrator shall have recognized expertise in management and
finance. The administrator shall serve under the direction and
supervision of the Superintendent of Public Instruction until
terminated by the Superintendent of Public Instruction at his or her
discretion. The Superintendent of Public Instruction shall consult
with the Monterey County Superintendent of Schools before terminating
or replacing the administrator. The Superintendent of Public
Instruction, operating through the administrator, may do all of the
following:
(1) Implement substantial changes in the fiscal policies and
practices of the King City Joint Union High School District,
including, if necessary, the filing of a petition under Chapter 9 of
the federal Bankruptcy Act (11 U.S.C. Sec. 901 et seq.) for the
adjustment of indebtedness of the district.
(2) Revise the educational program of the King City Joint Union
High School District to reflect realistic revenue projections, in
response to the dramatic effect of the changes in fiscal policies and
practices upon educational program quality and the potential for the
success of all pupils. To the extent allowed by district finances,
it is the intent of the Legislature that the revised program maintain
the core educational reforms that have led to districtwide
improvement of academic achievement, including, but not necessarily
limited to, educational reforms targeting underperforming and Program
Improvement schools and other reforms that have demonstrated
measurable success.
(3) Encourage all members of the school community to accept a fair
share of the burden of the fiscal recovery of the King City Joint
Union High School District.
(4) Consult, for the purposes described in this act, with the
governing board of the King City Joint Union High School District,
the exclusive representatives of the employees of the district,
parents, and the community.
(5) Consider for purposes of efficiency and cost containment an
analysis of the unification of the King City Joint Union High School
District with the King City Elementary School District, any other
school district located within the general high school attendance
area, or both.
SEC. 5. (a) (1) To facilitate the appointment of the
state-appointed administrator and the employment of any necessary
staff, for the purposes of this act, the Superintendent of Public
Instruction is exempt from the requirements of Article 6 (commencing
with Section 999) of Chapter 6 of Division 4 of the Military and
Veterans Code and Part 2 (commencing with Section 10100) of the
Public Contract Code.
(2) The Superintendent of Public Instruction shall establish
salary and benefits of the administrator, which shall be paid by the
King City Joint Union High School District.
(3) During the tenure of his or her appointment, the
administrator, if otherwise an employee of the state or of the county
superintendent, is an employee of the school district, but shall
remain in the same retirement system under the same plan that is
provided by his or her employment with the state or the office of the
county superintendent. Upon the expiration or termination of the
appointment, the administrator shall have the right to return to his
or her former position, or to a position at substantially the same
level as that position, if that former position was with the state or
the office of the county superintendent. The time served in the
appointment shall be counted for all purposes as if the administrator
had served that time in his or her former position with the state or
with the office of the county superintendent.
(b) For the period of time during which the Superintendent of
Public Instruction exercises the authority described in subdivision
(a) of Section 4, the governing board of the King City Joint Union
High School District shall serve as an advisory body reporting to the
administrator, but has no rights, duties, or powers, and is not
entitled to nor shall it receive any stipend, benefits, or other
compensation from the district.
(c) Upon appointment of the state administrator, the district
superintendent of schools is no longer an employee of the district.
(d) Notwithstanding any other provision of law, the administrator
may, after according the employee reasonable notice and opportunity
for hearing, terminate the employment of any deputy, associate, or
assistant superintendent of schools, or other person employed in an
equivalent capacity, whose duties include overseeing, managing, or
otherwise directing the fiscal and budgetary operations of the King
City Joint Union High School District, and who is employed by the
King City Joint Union High School District under a contract of
employment renewed after the effective date of this act if the
employee fails to document, to the satisfaction of the administrator,
that before the effective date of this act he or she either advised
the governing board of the district, or his or her superior, that
actions contemplated or taken by the governing board could result in
the fiscal insolvency of the district or took other appropriate
action to avert that fiscal insolvency.
(e) With the approval of the Superintendent of Public Instruction,
the administrator may enter into agreements on behalf of the school
district and, subject to any contractual and statutory obligation of
the school district, change any existing school district rules,
regulations, policies, or practices as necessary for the effective
implementation of the improvement plan specified in Section 7 of this
act.
(f) (1) For the fiscal year in which the apportionments are
disbursed and for each fiscal year thereafter, the County Office
Fiscal Crisis and Management Assistance Team (FCMAT) shall serve as
the independent fiscal advisor to the state administrator as defined
in paragraph (5) of subdivision (e) of Section 42127.6 of the
Education Code. The fiscal advisor shall do all of the following:
(A) Assist the state administrator in the development of the
multiyear financial recovery plan.
(B) Develop and consistently update an independent multiyear
financial projection of the district's budget.
(C) Consult with the state administrator regarding any draw
against the funds contained in the emergency appropriation.
(D) Independently report on the fiscal health of the district at
an interval that is consistent with the 1st and 2nd Interim Reporting
periods as established in the Education Code.
(2) The costs of the advisor shall be paid by the district to the
extent that the advisor's costs exceed the amount appropriated for
the FCMAT pursuant to schedule (9) of Item 6110-485 of Section 2.00
of the annual Budget Act. The fiscal advisor shall remain in place
until the fiscal solvency of the district has been achieved pursuant
to the criteria identified in subdivisions (a) to (d), inclusive, of
Section 3 of this act.
(g) The authority of the Superintendent of Public Instruction and
the administrator pursuant to this act shall continue until all of
the following conditions occur:
(1) Two complete fiscal years have elapsed following the
appointment of the administrator or, at any time after one complete
fiscal year has elapsed following that appointment, if the
administrator determines, and so notifies the Superintendent of
Public Instruction, that future compliance by the King City Joint
Union High School District with the improvement plan specified in
Section 7 of this act is probable.
(2) The FCMAT completes the improvement plan specified in Section
7 of this act.
(3) The FCMAT, after consultation with the administrator,
determines that for at least the immediately previous six months the
school district made substantial and sustained progress in
implementation of the plans in the major functional area.
(4) The administrator certifies that all necessary collective
bargaining agreements have been negotiated and ratified and that the
agreements are consistent with the terms of the improvement plan
specified in Section 7 of this act.
(5) The district completes all reports required by the
Superintendent of Public Instruction and the administrator.
(6) The administrator certifies that the members of the school
board and district personnel, as appropriate, have successfully
completed the training specified in subdivision (b) of Section 7 of
this act.
(7) The Superintendent of Public Instruction concurs with the
assessment of the administrator and the FCMAT that future compliance
by the King City Joint Union High School District with the
improvement plan described in Section 7 of this act and the multiyear
financial recovery plan described in paragraph (2) of subdivision
(a) of Section 41327 of the Education Code is probable.
(h) If all of the conditions specified in subdivision (e) occur,
the governing board of the King City Joint Union High School District
shall regain all of its rights, duties, and powers.
(i) Notwithstanding subdivision (f), if the King City Joint Union
High School District violates any provision of the improvement plan
specified in Section 7 of this act, after the governing board of the
school district regains all of its rights, duties, and powers
pursuant to subdivision (f), the Superintendent of Public Instruction
may reassume, in accordance with this section, all of the rights,
duties, and powers of the governing board of the school district. The
Superintendent of Public Instruction shall subsequently return to
the governing board of the school district all of its rights, duties,
and powers reassumed under this subdivision if he or she determines
that the conditions of subdivision (e) are satisfied.
(j) For the purposes of Article 2 (commencing with Section 41320)
and Article 2.5 (commencing with Section 41325) of Chapter 3 of Part
24 of the Education Code, the administrator is a public school
employer within the meaning of the Educational Employment Relations
Act (Chapter 10.7 (commencing with Section 3540) of Division 4 of
Title 1 of the Government Code).
SEC. 6. (a) The administrator shall consider, on a monthly basis,
or more frequently if so desired by the administrator, information
from one or more groups from each of the following categories:
(1) The governing board of the school district.
(2) Any advisory council of the school district.
(3) Any parent-teacher organization of the school district.
(4) Representatives from the community in which the school
district is located.
(5) The County Office Fiscal Crisis and Management Assistance
Team.
(b) The state appointed administrator shall prepare or obtain the
following reports and plans:
(1) A management review and recovery plan.
(2) A multiyear financial recovery plan. The multiyear financial
recovery plan shall include the development of an initial plan not
later than six months after the district's receipt of any proceeds
from the emergency appropriation. The multiyear financial recovery
plan shall include a plan, updated and submitted thereafter annually
on or before July 1, to repay to the state any and all loans owed by
the district.
SEC. 7. (a) On or before November 1, 2009, the County Office
Fiscal Crisis and Management Assistance Team (FCMAT) shall conduct a
comprehensive assessment and prepare an improvement plan for the King
City Joint Union High School District incorporating the following
five operational areas:
(1) Financial management.
(2) Pupil achievement.
(3) Personnel management.
(4) Facilities management.
(5) Community relations.
(b) The Superintendent of Public Instruction may consider the
comprehensive assessment conducted by the FCMAT to meet the
requirement for the management review and recovery plan identified in
paragraph (1) of subdivision (b) of Section 6 of this act.
(c) The improvement plan for personnel management specified in
paragraph (3) of subdivision (a) shall include, but not be limited
to, the following training:
(1) Training for members of the governing board of the school
district in the subjects about which members of the governing board
need to have knowledge to effectively discharge their duties as board
members, with specific training in the fiduciary responsibilities of
a governing board member and in the financial management practices
necessary for governing board members to effectively discharge their
duty to oversee and monitor the budget, accounting practices,
revenues, and expenditures of the school district. At a minimum, each
board member shall participate in the Masters In Governance training
provided by the California School Boards Association. The cost for
this training shall be borne by the district.
(2) Training for the superintendent of the school district and all
personnel with management, policymaking, and advisory
responsibilities who report or would report directly to the
superintendent, to ensure they have the knowledge and skills to
effectively administer their areas of responsibility consistent with
sound fiscal practices and the budgetary requirements of the school
district.
(d) Based upon progress reports prepared pursuant to subdivision
(c), the FCMAT shall recommend to the Superintendent of Public
Instruction those designated functional areas of school district
operation that it determines are appropriate for the governing board
of the school district to assume.
(e) Commencing 30 days following the effective date of this act
and in January 2010, and each six months thereafter until January
2011, the FCMAT shall file a written status report with the
appropriate fiscal and policy committees of the Legislature,
including any special committees created for the purpose of reviewing
the reports, and with the Members of the Legislature who represent
the King City Joint Union High School District, the advisory board of
the school district, the Superintendent of Public Instruction, the
Director of Finance, and the Secretary for Education. The reports
shall include an updated multiyear financial projection and analysis
of the progress that the King City Joint Union High School District
is making in meeting the recommendations of the improvement plan
developed pursuant to this section.
SEC. 8. (a) The King City Joint Union High School District shall
bear 100 percent of all costs associated with implementing this act.
(b) The King City Joint Union High School District shall add the
administrator as a covered employee of the school district for all
purposes of errors and omissions liability insurance policies.
SEC. 9. (a) The sum of ten million dollars ($10,000,000) is hereby
appropriated from the General Fund to the Superintendent of Public
Instruction for apportionment to the King City Joint Union High
School District for the purpose of an emergency loan. In order to
qualify for the loan, the district shall comply with Article 2
(commencing with Section 41320) and Article 2.5 (commencing with
Section 41325) of Chapter 3 of Part 24 of the Education Code to the
extent those provisions are consistent with the conditions specified
in this act.
(b) Funds may be disbursed from the proceeds of the loan only if
the administrator and the County Office Fiscal Crisis and Management
Assistance Team jointly determine that the disbursement is necessary
to support the immediate cash flow needs of the district.
(c) Based on the needs of the district to meet its obligations,
the Superintendent of Public Instruction may direct the Controller to
disburse, on a monthly basis, specific amounts of the emergency loan
before the approval of all of the conditions established by this
act.
(d) For the fiscal year in which the loan moneys are disbursed and
each fiscal year thereafter, the county superintendent of schools
shall cause an audit to be conducted of the books and accounts of the
district, that is consistent with the audit required by Section
41020 of the Education Code. At the discretion of the county
superintendent, the audit may be conducted by the Controller, or an
auditor selected by the county superintendent and approved by the
Controller. The costs of the audit shall be paid by the district. The
audits shall be performed until the Superintendent of Public
Instruction, in consultation with the county superintendent,
determines that the district is financially solvent, but may not
cease being performed earlier than one year following the
implementation of the plan required by Section 7 nor later than the
time the emergency loan, including interest, is repaid.
SEC. 10. (a) Notwithstanding subparagraph (A) of paragraph (2) of
subdivision (a) of Section 41327 of the Education Code, the King City
Joint Union High School District shall repay the emergency loan
incurred pursuant to Section 9 of this act as a straight line loan
amortized over a 20-year term. This amount shall be repaid by the
district, plus interest calculated at a rate equal to the rate earned
by the Pooled Money Investment Account on the date this act becomes
effective, for a period not to exceed 20 years.
(b) If a required payment is not made within 60 days after a
scheduled date, the Controller shall pay the defaulted loan payment
of principal and interest by withholding that amount from the next
available payment that would otherwise be made to the county
treasurer on behalf of the district pursuant to Section 14041 of the
Education Code. However, subject to the approval of the Department of
Finance, the amount withheld may be in monthly amounts as determined
by an agreement between the King City Joint Union High School
District and the Controller during the period beginning with the next
available apportionment through the month preceding the next
scheduled payment.
(c) The school district shall enter into a lease financing with
the California Infrastructure and Economic Development Bank for the
purpose of financing the emergency apportionment, including a
repayment to the General Fund of the amount advanced pursuant to
Section 9. In addition to the emergency apportionment, the lease
financing may include funds necessary for reserves, capatalized
interest, credit enhancements and costs of issuance. The bank shall
issue bonds for that purpose pursuant to the powers granted pursuant
to the Bergeson-Peace Infrastructure and Economic Development Bank
Act as set forth in Division 1 (commencing with Section 63000) of
Part 6.7 of the Government Code. The term of the lease shall not
exceed 20 years, except that if at the end of the lease term any rent
payable is not fully paid, or if the rent payable has been abated,
the term of the lease shall be extended for a period not to exceed 10
years.
(d) The Director of Finance may amend the payment schedule set
forth in subdivision (a) if the director concludes that the amendment
is warranted and is in the best interests of both the state and the
King City Joint Union High School District education program. Upon
that determination, the director shall notify the Joint Legislative
Budget Committee that the payment scheduled will be changed on the
date that is 90 days from the date of notification if the Legislature
is in session. If the 90-day period ends during a recess of the
Legislature or while the Legislature is not in session, the 90-day
period shall be extended until the Legislature reconvenes. Amendments
to the payment schedule shall defer the unpaid portion of a
repayment of the earliest fiscal year in which no other repayment is
scheduled. Interest shall accrue on the unpaid portion of a repayment
from the scheduled due date until the time the payment is actually
made. The interest charge shall be the rate equal to the daily
investment rate of the Pooled Money Investment Account on the date
the pay schedule is changed.
(e) The school district may repay its loan obligation without
incurring any prepayment penalties.
SEC. 11. (a) Notwithstanding Sections 17456, 17457, 17462, and
17463 of the Education Code, or any other law, from June 1, 2009, to
June 30, 2012, inclusive, the King City Joint Union High School
District may sell property owned by the district and use the proceeds
from the sale to reduce or retire the emergency loan provided in
Section 9 of this act. The sale only of property pursuant to this
subdivision is not subject to Section 17459 or 17464 of the Education
Code.
(b) Notwithstanding any other provision of law, from June 1, 2009,
to June 30, 2011, inclusive, the King City Joint Union High School
District is not eligible for financial hardship assistance pursuant
to Article 8 (commencing with Section 17075.10) of Chapter 12.5 of
Part 10 of Division 1 of Title 1 of the Education Code.
SEC. 12. The Monterey County Superintendent of Schools maintains
the responsibility to superintend school districts under its
jurisdiction. This act does not remove any statutory or regulatory
rights, duties, or obligations from the county superintendent of
schools.
SEC. 13. The Legislature finds and declares that due to unique
circumstances relating to the fiscal emergency in the King City Joint
Union High School District a general statute cannot be made
applicable within the meaning of Section 16 of Article IV of the
California Constitution.
SEC. 14. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district are the result of a program for which legislative authority
was requested by that local agency or school district, within the
meaning of Section 17556 of the Government Code and Section 6 of
Article XIII B of the California Constitution.
SEC. 15. This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:
In order to address the fiscal emergency in which the King City
Joint Union High School District finds itself, and to ensure that it
meets its cash obligations for this fiscal year, it is necessary that
this act take effect immediately.