BILL NUMBER: AB 609 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 25, 2011
AMENDED IN ASSEMBLY MARCH 30, 2011
INTRODUCED BY Assembly Member Swanson
FEBRUARY 16, 2011
An act to amend Section 41320.1 of, and to add Section
41344.45 to , the Education Code, and to amend
Section 9 of Chapter 14 of the Statutes of 2003, relating
to the Oakland Unified School District
education finance .
LEGISLATIVE COUNSEL'S DIGEST
AB 609, as amended, Swanson. Education Finance: Oakland
Unified School District: audits: emergency loan deductions.
(1) Existing law provides for emergency apportionments to
school districts subject to specified conditions, including, in
certain circumstances, the repayment of an emergency loan 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. As a condition of
receiving an emergency apportionment, existing law requires the
Controller, or his or her designee , to cause an audit to
be conducted on the books and accounts of the school district.
Pursuant to these provisions, existing law appropriates
$100,000,000 from the General Fund to the Superintendent of Public
Instruction for apportionment to purposes of
providing the Oakland Unified School District as
with an emergency loan , and requires the
Controller to conduct an audit for the fiscal year in which the loan
moneys are disbursed and each fiscal year thereafter .
Existing law requires the Controller, or his or her designee, to
cause an audit to be conducted of the books and accounts of the
Oakland Unified School District for the fiscal years in which
emergency loan moneys are disbursed to the school district. Existing
law provides that, at the discretion of the Controller, the audit may
be conducted by the Controller, his or her designee, or an auditor
selected by the county superintendent of schools and approved by the
Controller. Existing law also requires that the cost of the audit be
paid by the school district.
This bill would delete the requirement that the Oakland Unified
School District be subject to, and be responsible for paying for,
these audits, and would instead require the school district to comply
with certain other provisions of existing law relating to annual
audits. The bill would require the Controller to deduct specified
amounts related to the cost to the school district of these audits
from the amount owed by the school district for the emergency loan.
The bill would additionally require the Controller to deduct
$16,630,000 from the amount owed for that emergency loan.
This bill would require an audit conducted as a condition of
receiving an emergency apportionment to only be conducted to assist
the administrator in ensuring that the school district returns to
financial solvency, and would prohibit the audit from being conducted
in a manner that would impose an additional financial burden on the
school district. The bill would require the Oakland Unified School
District to be released from any requirement to be subject to, or to
pay for, fines or penalties imposed as a result of emergency loan
audits for a specified period. The bill would also require the
Controller to calculate the total amount of emergency loan audit
fines or penalties accrued or paid by the Oakland Unified School
District during a specified period and deduct that amount from the
amount owed by the school district for the emergency loan. The bill
would also require the Controller to deduct $18,500,000 dollars from
the amount owed by the Oakland Unified School District on the
outstanding principal balance of the emergency loan.
(2) This bill would make legislative findings and declarations as
to the necessity of a special statute for the Oakland Unified School
District.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 41320.1 of the
Education Code is amended to read:
41320.1. Acceptance by the district of the apportionments made
pursuant to Section 41320 constitutes the agreement by the district
to all of the following conditions:
(a) The Superintendent of Public Instruction shall appoint a
trustee who has recognized expertise in management and finance and
may employ, on a short-term basis, any staff necessary to assist the
trustee, including, but not limited to, certified public accountants,
as follows:
(1) The expenses incurred by the trustee and any necessary staff
shall be borne by the district.
(2) The Superintendent shall establish the terms and conditions of
the employment, including the remuneration of the trustee. The
trustee shall serve at the pleasure of, and report directly to, the
Superintendent.
(3) The trustee, and any necessary staff, shall serve until the
loan authorized by this section is repaid, the district has adequate
fiscal systems and controls in place, and the Superintendent has
determined that the district's future compliance with the fiscal plan
approved for the district under Section 41320 is probable. The
Superintendent shall notify the county superintendent of schools, the
Legislature, the Department of Finance, and the Controller no less
than 60 days prior to the time that the Superintendent expects these
conditions to be met.
(4) Before the district repays the loan, including interest, the
recipient of the loan shall select an auditor from a list established
by the Superintendent and the Controller to conduct an audit of its
fiscal systems. If the fiscal systems are deemed to be inadequate,
the Superintendent may retain the trustee until the deficiencies are
corrected. The cost of this audit and any additional cost of the
trustee shall be borne by the district.
(5) Notwithstanding any other law, all reports submitted to the
trustee are public records.
(6) To facilitate the appointment of the trustee and the
employment of any necessary staff, for the purposes of this section,
the Superintendent 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 Division 2 of the Public Contracts
Contract Code.
(7) Notwithstanding any other law, the Superintendent may appoint
an employee of the department to act as trustee for up to the
duration of the trusteeship. The salary and benefits of that employee
shall be established by the Superintendent and paid by the school
district. During the time of appointment, the employee is an employee
of the school district, but shall remain in the same retirement
system under the same plan as if the employee had remained in the
department. Upon the expiration or termination of the appointment,
the employee shall have the right to return to his or her former
position, or to a position at substantially the same level as that
position, with the department. The time served in the appointment
shall be counted for all purposes as if the employee had served that
time in his or her former position with the department.
(b) The trustee appointed by the Superintendent shall monitor and
review the operation of the district. During the period of his or her
service, the trustee may stay or rescind any action of the local
district governing board that, in the judgment of the trustee, may
affect the financial condition of the district. The Superintendent
may establish timelines and prescribe formats for reports and other
materials to be used by the trustee to monitor and review the
operations of the district. The trustee shall approve or reject all
reports and other materials required from the district as a condition
of receiving the apportionment. The Superintendent, upon the
recommendation of the trustee, may reduce any apportionment to the
district in an amount up to two hundred dollars ($200) per day for
each late or unacceptable report or other material required under
Part 24 (commencing with Section 41000), and shall report to the
Legislature any failure of the district to comply with the
requirements of this section. If the Superintendent determines, at
any time, that the fiscal plan approved for the district under
Section 41320 is unsatisfactory, he or she may modify the plan as
necessary, and the district shall comply with the plan as modified.
(c) At the request of the Superintendent, the Controller shall
transfer to the department, from any apportionment to which the
district would otherwise have been entitled pursuant to Section
42238, the amount necessary to pay the expenses incurred by the
trustee and any associated costs incurred by the county
superintendent of schools.
(d) (1) For the fiscal year in which the
apportionments are disbursed and each year thereafter, the
Controller, or his or her designee, shall cause an audit to be
conducted of the books and accounts of the district, in lieu of the
audit required by Section 41020. At the Controller's discretion, the
audit may be conducted by the Controller, his or her designee, or an
auditor selected by the district and approved by the Controller. The
costs of these audits shall be borne by the district. These audits
shall be required until the Controller determines, in consultation
with the Superintendent, that the district is financially solvent,
but in no event earlier than one year following the implementation of
the plan or later than the time the apportionment made is repaid,
including interest. In addition, the Controller shall conduct quality
control reviews pursuant to subdivision (c) of Section 14504.2.
(2) The audit required pursuant to this subdivision shall only be
conducted to assist the administrator in ensuring that the district
returns to financial solvency. The audit shall not be conducted in a
manner that would impose an additional financial burden on the
district.
(e) For all purposes of errors and omissions liability insurance
policies, the trustee appointed pursuant to this section is an
employee of the local education agency to which he or she is
assigned. For the purpose of workers' compensation benefits, the
trustee is an employee of the local education agency to which he or
she is assigned, except that a trustee appointed pursuant to
paragraph (7) of subdivision (a) is an employee of the department for
that purpose.
(f) Except for an individual appointed by the Superintendent as
trustee pursuant to paragraph (7) of subdivision (a), the
state-appointed trustee is a member of the State Teachers' Retirement
System, if qualified, for the period of service as trustee, unless
the trustee elects in writing not to become a member. A person who is
a member or retirant of the State Teachers' Retirement System at the
time of appointment shall continue to be a member or retirant of the
system for the duration of the appointment. If the trustee chooses
to become a member or is already a member, the trustee shall be
placed on the payroll of the school district for the purposes of
providing appropriate contributions to the system. The Superintendent
may also require that any individual appointed as trustee pursuant
to paragraph (7) of subdivision (a) be placed on the payroll of the
school district for purposes of remuneration, other benefits, and
payroll deductions. For the purpose of workers' compensation
benefits, the state-appointed trustee is deemed an employee of the
local education agency to which he or she is assigned, except that a
trustee who is appointed pursuant to paragraph (7) of subdivision (a)
is an employee of the department for that purpose.
SECTION 1. SEC. 2. Section 41344.45
is added to the Education Code, immediately following Section
41344.4, to read:
41344.45. (a) On and after January 1, 2012, the
The Oakland Unified School District shall be
released from any requirement to be subject to, or to pay for,
audits pursuant to former fines or penalties
imposed as a result of audits performed pursuant to subdivision
(d) of Section 9 of Chapter 14 of the Statutes of 2003, and
shall instead comply with Section 41020 for any
fiscal year that falls between June 16, 2003, and June 28, 2009,
inclusive .
(b) No later than April 1, 2012, the Controller shall determine
both of the following with respect to audits performed pursuant to
former subdivision (d) of Section 9 of Chapter 14 of the Statutes of
2003:
(1) The cost to the Oakland Unified School District of each of the
audits required by former subdivision (d) of Section 9 of Chapter 14
of the Statutes of 2003 for the 2003-04 fiscal year to the 2010-11
fiscal year, inclusive.
(2) The amounts paid by the Oakland Unified School District for
audits required by former subdivision (d) of Section 9 of Chapter 14
of the Statutes of 2003 for audits that were issued by the Controller
six or more months late.
(c)
(b) Notwithstanding any other law, no later
than July 1, 2012, the Controller shall do all of the
following:
(1) Subtract one-half of the amount calculated under paragraph (2)
of subdivision (b) from the amount owed by the Oakland Unified
School District for the loan that it received pursuant to subdivision
(a) of Section 9 of Chapter 14 of the Statutes of 2003.
(2)
(1) Calculate the total amount of any audit fines or
penalties charged to accrued or paid by
the Oakland Unified School District as a result of the audits
performed pursuant to former subdivision (d) of
Section 9 of Chapter 14 of the Statutes of 2003 between the
2003-04 fiscal year and the 2010-11 fiscal year during
the period of June 16, 2003, to June 28, 2009 , inclusive, and
deduct that amount from the amount owed by the Oakland Unified
School District for the loan that it received pursuant to subdivision
(a) of Section 9 of Chapter 14 of the Statutes of 2003.
(3)
(2) Deduct sixteen million six hundred thirty
thousand dollars ($16,630,000) eighteen million five
hundred thousand dollars ($18,500,000) from the amount owed by
the Oakland Unified School District for on
the outstanding principal balance of the loan that it received
pursuant to subdivision (a) of Section 9 of Chapter 14 of the
Statutes of 2003.
SEC. 2. Section 9 of Chapter 14 of the Statutes
of 2003 is amended to read:
Sec. 9. (a) The sum of one hundred million dollars ($100,000,000)
is hereby appropriated from the General Fund to the Superintendent of
Public Instruction for apportionment to the Oakland Unified 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) of, and Article 2.5 (commencing with Section
41325) of, Chapter 3 of Part 24 of Division 3 of Title 2 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.
(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.
SEC. 3. The Legislature finds and declares that, due to the unique
circumstances relating to the fiscal emergency in the Oakland
Unified School District, a general statute cannot be made applicable
within the meaning of Section 16 of Article IV of the California
Constitution, and the enactment of this
Section 41344.45 of the Education Code by Section 2 of this act as a
special statute is therefore necessary.