BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 130|
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THIRD READING
Bill No: SB 130
Author: Denham (R), et al
Amended: 5/6/09
Vote: 27 - Urgency
SENATE EDUCATION COMMITTEE : 9-0, 4/29/09
AYES: Romero, Huff, Alquist, Hancock, Liu, Maldonado,
Padilla, Simitian, Wyland
SENATE APPROPRIATIONS COMMITTEE : 10-0, 5/28/09
AYES: Kehoe, Cox, Corbett, Denham, DeSaulnier, Hancock,
Leno, Oropeza, Wyland, Yee
NO VOTE RECORDED: Runner, Walters, Wolk
SUBJECT : King City Joint High School District:
emergency loans
SOURCE : Monterey County Office of Education
DIGEST : This bill, appropriates $5 million from the
State General Fund to the Superintendent of Public
Instruction for apportionment as an emergency loan to the
King City Joint Union High School District, and transfers
authority over the district from its board of trustees to
the Superintendent of Public Instruction who is required to
appoint an administrator for the district.
ANALYSIS : Existing law requires that emergency loans be
provided by legislative appropriation and that acceptance
of a loan that exceeds 200 percent of a district's
CONTINUED
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recommended reserve requires that the State Superintendent
of Public Instruction (SPI) to assume all the legal rights,
duties and powers of the district governing board. The SPI
may appoint an administrator to act on behalf of the SPI
and the district governing board becomes advisory to the
administrator.
The King City Joint Union High School District (District)
has about 2,000 pupils attending three high schools and one
continuation school. The District had 2007-08 revenues of
$19 million and expenditures of $20.7 million. A beginning
balance of $1.7 million allowed the District to end the
year with a $10 thousand balance. The District's reserve
requirement (three percent) should be close to $500,000.
The Monterey County Office of Education declared the
District to not be a "going concern" in December of 2007,
and the District was projected to run out of cash in March
2009.
In order to provide an emergency loan that exceeds 200
percent of the District's reserve, current law requires the
SPI to assume all the legal rights, duties, and powers of
the governing board. The SPI then appoints a state
administrator to act for SPI and the local board becomes
advisory to the state administrator. The authority of the
SPI and state administrator continues until specified
benchmarks are achieved, allowing the SPI to appoint a
trustee to replace the administrator. Under a trustee the
district board regains its authority, but the trustee has
the authority to stay and rescind any action of the board.
The authority of the SPI and the state-appointed trustee
continues until the loan has been repaid, the District has
adequate fiscal controls in place and the SPI determines
that the district's future compliance with the fiscal plan
approved for the district is probable.
This bill appropriates $5 million from the State General
Fund to the SPI for apportionment to the District for the
purpose of an emergency loan. This bill further authorizes
the District to augment the emergency loan with an
additional $8 million of lease financing in order to
increase the loan to $13 million:
1.Provides that in order to qualify for the loan, the
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District shall comply with current law except as
otherwise specified in the bill.
2.Requires that the SPI assume all rights, duties, and
powers of the District's governing board and appoint a
state administrator, in consultation with the county
superintendent, and provides for the authority of the
SPI and the state administrator to continue until all of
the following occur:
A. After one year, the state administrator and the
SPI determine that future compliance by the
District with recovery plans is probable.
B. The SPI has approved all of the recovery plans
legally required.
C. The County Office Fiscal Crisis and Management
Assistance Team (FCMAT) completes the improvement
plans required under current law, and has completed
at least two reports on district progress in
implementing the improvement plans.
D. The state administrator certifies that
collective bargaining agreements have been
ratified, consistent with the recovery plans.
E. The District has completed all reports required
by the SPI and the state administrator.
F. The state administrator certifies that the
members of the school board and specified district
personnel have successfully completed the training
specified by this bill (see #6 below).
3.The SPI may return power to the governing board for any
of the following five areas if performance under the
recovery plan for that area has been demonstrated to the
satisfaction of the SPI.
A. Financial management.
B. Pupil achievement.
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C. Personnel management.
D. Facilities management.
E. Community relations.
4.Declares intent that the SPI and state administrator
work with the District to do all of the following:
A. Improve achievement, attendance, dropout rates,
and parent involvement.
B. Attract and retain quality teachers, and manage
fiscal resources.
C. Maintain core educational reforms that will lead
to improvement of academic achievement.
D. Consider the unification of the District with
the King City Elementary School District, or any
other school district within the general attendance
area.
5.Specifies the duties of the FCMAT and provides that the
District shall bear 100 percent of the costs associated
with the activities of the FCMAT.
6.Provides that the improvement plan for personnel
management should include training for:
A. Members of the governing board including
training in their fiduciary responsibilities as
board member and in financial management practices
provided by the California School Boards
Association.
B. All personnel with management, policymaking, and
advisory responsibilities who report directly to
the state administrator, to ensure they have the
knowledge and skills to effectively administer
their areas of responsibility.
7.Provides that the emergency loan may be disbursed only
if the state administrator and FCMAT jointly determine
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that it is necessary to support the immediate cash flow
needs of the district.
8.Authorizes the District to augment the emergency loan
with an additional $8 million of lease financing in
order to increase the emergency loan to a total of no
more than $13 million.
9.Requires the District to repay the emergency loan
amortized over a 20-year term, including the usual
interest calculated at a rate equal to the rate earned
by the Pooled Money Investment Account in the State
Treasury.
10.Requires the District to enter into lease financing with
the California Infrastructure and Economic Development
Bank for the purpose of financing the emergency loan.
11.Provides that the Director of the Department of Finance
may amend the payment schedule if the director concludes
that the amendment is warranted and is in the best
interests of both the state and the District, provided
that the Director of Finance gives 90-day notice to the
Joint Legislative Budget Committee.
12.From June 1, 2009, to June 30, 2012, authorizes the
District to sell property owned by the district and use
the proceeds from the sale to reduce or retire the
emergency loan.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2008-09 2009-10
2010-11 Fund
Emergency Loan $5,000 General
I-Bank Lease financing
($5,000)General
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SUPPORT : (Verified 5/28/09)
Monterey County Office of Education (source)
California State Controller, John Chiang
California Teachers Association
California Teachers Association
Department of Education
Fiscal Crisis Management and Assistance Team
King City Joint Unified High School District
DLW:do 5/29/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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