BILL NUMBER: AB 609 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 11, 2011
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, relating
to education finance the Oakland Unified
School District .
LEGISLATIVE COUNSEL'S DIGEST
AB 609, as amended, Swanson. Education Finance:
Oakland Unified School District: audits: emergency loan
deductions. audit fines and penalties.
(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 purposes of providing the Oakland Unified
School District 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.
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 those emergency loan audits for a
specified period the 2003-04 to 2008-09 fiscal years,
inclusive . 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 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.
SEC. 2. SECTION 1. Section 41344.45
is added to the Education Code, immediately following Section
41344.4, to read:
41344.45. (a) The Oakland
Unified School District shall be released from any requirement to be
subject to, or to pay for, 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, for any fiscal year that falls
between June 16, 2003, and June 28, 2009 the 2003-04
to 2008-09 fiscal years , inclusive.
(b) Notwithstanding any other law, the Controller shall do all of
the following:
(1) Calculate the total amount of any audit fines or penalties
accrued or paid by the Oakland Unified School District as a result of
the audits performed pursuant to subdivision (d) of Section 9 of
Chapter 14 of the Statutes of 2003 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.
(2) Deduct eighteen million five hundred thousand dollars
($18,500,000) from the amount owed by the Oakland Unified School
District 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. 3. SEC. 2. 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 Section 41344.45 of the Education Code by
Section 2 of this act as a this special statute
is therefore necessary.