BILL NUMBER: AB 751 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 26, 2011
INTRODUCED BY Assembly Member Furutani
FEBRUARY 17, 2011
An act to amend Sections 1240 , 1630, 42127.6,
and 42131 of the Education Code, relating to education finance.
LEGISLATIVE COUNSEL'S DIGEST
AB 751, as amended, Furutani. Education finance.
(1) Existing law requires the county superintendent of schools to
report to the Superintendent of Public Instruction
submit 2 reports during the fiscal year to the county board of
education on the financial condition of a county office of
education or a school district if the county superintendent
determines , which certify if the county office
of education or a school district may be is
unable to meet its financial obligations for the current or 2
subsequent fiscal years or if a county office of education
or a school district has a positive, qualified
, or negative certification. Existing law
requires the Superintendent of Public Instruction to take at least
one of certain actions, and all actions that are necessary, to ensure
that a county office of education meets its financial obligations
for the current and 2 subsequent fiscal years. Existing law requires
the county superintentient to take similar actions with respect to
school districts.
This bill would instead require a county superintendent of schools
to report to the Superintendent of Public Instruction on the
financial condition of the county office of education or a school
district if the county superintendent determines the county office of
education or a school district may be unable to meet its financial
obligations for the current or the subsequent fiscal year, rather
than for the current fiscal year and 2 subsequent fiscal years.
This bill would require the Superintendent of Public Instruction
and the county superintendent to clearly distinguish between
specified county offices of education as part of each of those
reports, and any other report that indicated that a county office of
education is assigned a qualified certification.
(2) Existing law requires the superintendent of each school
district to submit 2 reports during the fiscal year to the governing
board of the school district on the financial condition of the
district. Pursuant to these reports, existing law requires the
governing board of each school district to clarify
certify , in writing, within 45 days after the close of
the period being reported, whether the school district is able to
meet its financial obligations for the remainder of the fiscal year
and, based on current forecasts, for the subsequent fiscal year.
Existing law requires the county superintendent of schools to
report to the Superintendent of Public Instruction whether the county
office of education is able to meet its financial obligations for
the current and 2 subsequent fiscal years. Pursuant to existing law,
a negative certification is assigned to a county office of education
or a school district that, based upon current projections, will be
unable to meet its financial obligations for the remainder of the
fiscal year or the subsequent fiscal year; a qualified certification
is assigned to an office or district that may not meet its financial
obligations for the current fiscal year or 2 subsequent fiscal years;
and a positive certification to an office or district that will meet
its financial obligations for the current fiscal year and 2
subsequent fiscal years.
This bill would change the standards for the certifications so
that a negative certification is assigned to an office or district
that, based upon current projections, will be unable to meet its
financial obligations for the remainder of the fiscal year; a
qualified certification would be assigned to an office or district
that may not meet its financial obligations for the current fiscal
year or the subsequent fiscal year; and a positive certification to
an office or district that will meet its financial obligations for
the current fiscal year and the subsequent fiscal year.
This bill would require the Superintendent, a county
superintendent, and the governing board of a school district to
clearly distinguish between specified school districts as part of
each of those reports, and any other report that indicates that a
school district is assigned a qualified certification.
The bill would also require the governing board of a school
district that chooses to propose reductions or cuts to expenditures
in the current fiscal year, after being assigned a qualified
certification for a specified reason, to present that proposal, as
specified, at an open public meeting. The bill would also authorize
the Superintendent to waive specified reporting, certification, and
intervention requirements for a county office of education and school
district if specified conditions are met.
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 1240 of the Education Code is amended to read:
1240. The county superintendent of schools shall do all of the
following:
(a) Superintend the schools of his or her county.
(b) Maintain responsibility for the fiscal oversight of each
school district in his or her county pursuant to the authority
granted by this code.
(c) (1) Visit and examine each school in his or her county at
reasonable intervals to observe its operation and to learn of its
problems. He or she annually may present a report of the state of the
schools in his or her county, and of his or her office, including,
but not limited to, his or her observations while visiting the
schools, to the board of education and the board of supervisors of
his or her county.
(2) (A) For fiscal years 2004-05 to 2006-07, inclusive, to the
extent that funds are appropriated for purposes of this paragraph,
the county superintendent, or his or her designee, annually shall
submit a report, at a regularly scheduled November board meeting, to
the governing board of each school district under his or her
jurisdiction, the county board of education of his or her county, and
the board of supervisors of his or her county describing the state
of the schools in the county or of his or her office that are ranked
in deciles 1 to 3, inclusive, of the 2003 base Academic Performance
Index (API), as defined in subdivision (b) of Section 17592.70, and
shall include, among other things, his or her observations while
visiting the schools and his or her determinations for each school
regarding the status of all of the circumstances listed in
subparagraph (J) and teacher misassignments and teacher vacancies. As
a condition for receipt of funds, the county superintendent, or his
or her designee, shall use a standardized template to report the
circumstances listed in subparagraph (J) and teacher misassignments
and teacher vacancies, unless the current annual report being used by
the county superintendent, or his or her designee, already includes
those details for each school.
(B) Commencing with the 2007-08 fiscal year, to the extent that
funds are appropriated for purposes of this paragraph, the county
superintendent, or his or her designee, annually shall submit a
report, at a regularly scheduled November board meeting, to the
governing board of each school district under his or her
jurisdiction, the county board of education of his or her county, and
the board of supervisors of his or her county describing the state
of the schools in the county or of his or her office that are ranked
in deciles 1 to 3, inclusive, of the 2006 base API, pursuant to
Section 52056. As a condition for the receipt of funds, the annual
report shall include the determinations for each school made by the
county superintendent, or his or her designee, regarding the status
of all of the circumstances listed in subparagraph (J) and teacher
misassignments and teacher vacancies, and the county superintendent,
or his or her designee, shall use a standardized template to report
the circumstances listed in subparagraph (J) and teacher
misassignments and teacher vacancies, unless the current annual
report being used by the county superintendent, or his or her
designee, already includes those details with the same level of
specificity that is otherwise required by this subdivision. For
purposes of this section, schools ranked in deciles 1 to 3,
inclusive, on the 2006 base API shall include schools determined by
the department to meet either of the following:
(i) The school meets all of the following criteria:
(I) Does not have a valid base API score for 2006.
(II) Is operating in fiscal year 2007-08 and was operating in
fiscal year 2006-07 during the Standardized Testing and Reporting
(STAR) Program testing period.
(III) Has a valid base API score for 2005 that was ranked in
deciles 1 to 3, inclusive, in that year.
(ii) The school has an estimated base API score for 2006 that
would be in deciles 1 to 3, inclusive.
(C) The department shall estimate an API score for any school
meeting the criteria of subclauses (I) and (II) of clause (i) of
subparagraph (B) and not meeting the criteria of subclause (III) of
clause (i) of subparagraph (B), using available test scores and
weighting or corrective factors it deems appropriate. The department
shall post the API scores on its Internet Web site on or before May
1.
(D) For purposes of this section, references to schools ranked in
deciles 1 to 3, inclusive, on the 2006 base API shall exclude schools
operated by county offices of education pursuant to Section 56140,
as determined by the department.
(E) In addition to the requirements above, the county
superintendent, or his or her designee, annually shall verify both of
the following:
(i) That pupils who have not passed the high school exit
examination by the end of grade 12 are informed that they are
entitled to receive intensive instruction and services for up to two
consecutive academic years after completion of grade 12 or until the
pupil has passed both parts of the high school exit examination,
whichever comes first, pursuant to paragraphs (4) and (5) of
subdivision (d) of Section 37254.
(ii) That pupils who have elected to receive intensive instruction
and services, pursuant to paragraphs (4) and (5) of subdivision (d)
of Section 37254, are being served.
(F) (i) Commencing with the 2010-11 fiscal year and every third
year thereafter, the Superintendent shall identify a list of schools
ranked in deciles 1 to 3, inclusive, of the API for which the county
superintendent, or his or her designee, annually shall submit a
report, at a regularly scheduled November board meeting, to the
governing board of each school district under his or her
jurisdiction, the county board of education of his or her county, and
the board of supervisors of his or her county that describes the
state of the schools in the county or of his or her office that are
ranked in deciles 1 to 3, inclusive, of the base API as defined in
clause (ii).
(ii) For the 2010-11 fiscal year, the list of schools ranked in
deciles 1 to 3, inclusive, of the base API shall be updated using the
criteria set forth in clauses (i) and (ii) of subparagraph (B),
subparagraph (C), and subparagraph (D), as applied to the 2009 base
API and thereafter, shall be updated every third year using the
criteria set forth in clauses (i) and (ii) of subparagraph (B),
subparagraph (C), and subparagraph (D), as applied to the base API of
the year preceding the third year consistent with clause (i).
(iii) As a condition for the receipt of funds, the annual report
shall include the determinations for each school made by the county
superintendent, or his or her designee, regarding the status of all
of the circumstances listed in subparagraph (J) and teacher
misassignments and teacher vacancies, and the county superintendent,
or his or her designee, shall use a standardized template to report
the circumstances listed in subparagraph (J) and teacher
misassignments and teacher vacancies, unless the current annual
report being used by the county superintendent, or his or her
designee, already includes those details with the same level of
specificity that is otherwise required by this subdivision.
(G) The county superintendent of the Counties of Alpine, Amador,
Del Norte, Mariposa, Plumas, and Sierra, and the City and County of
San Francisco shall contract with another county office of education
or an independent auditor to conduct the required visits and make all
reports required by this paragraph.
(H) On a quarterly basis, the county superintendent, or his or her
designee, shall report the results of the visits and reviews
conducted that quarter to the governing board of the school district
at a regularly scheduled meeting held in accordance with public
notification requirements. The results of the visits and reviews
shall include the determinations of the county superintendent, or his
or her designee, for each school regarding the status of all of the
circumstances listed in subparagraph (J) and teacher misassignments
and teacher vacancies. If the county superintendent, or his or her
designee, conducts no visits or reviews in a quarter, the quarterly
report shall report that fact.
(I) The visits made pursuant to this paragraph shall be conducted
at least annually and shall meet the following criteria:
(i) Minimize disruption to the operation of the school.
(ii) Be performed by individuals who meet the requirements of
Section 45125.1.
(iii) Consist of not less than 25 percent unannounced visits in
each county. During unannounced visits in each county, the county
superintendent shall not demand access to documents or specific
school personnel. Unannounced visits shall only be used to observe
the condition of school repair and maintenance, and the sufficiency
of instructional materials, as defined by Section 60119.
(J) The priority objective of the visits made pursuant to this
paragraph shall be to determine the status of all of the following
circumstances:
(i) Sufficient textbooks as defined in Section 60119 and as
specified in subdivision (i).
(ii) The condition of a facility that poses an emergency or urgent
threat to the health or safety of pupils or staff as defined in
district policy or paragraph (1) of subdivision (c) of Section
17592.72.
(iii) The accuracy of data reported on the school accountability
report card with respect to the availability of sufficient textbooks
and instructional materials, as defined by Section 60119, and the
safety, cleanliness, and adequacy of school facilities, including
good repair as required by Sections 17014, 17032.5, 17070.75, and
17089.
(iv) The extent to which pupils who have not passed the high
school exit examination by the end of grade 12 are informed that they
are entitled to receive intensive instruction and services for up to
two consecutive academic years after completion of grade 12 or until
the pupil has passed both parts of the high school exit examination,
whichever comes first, pursuant to paragraphs (4) and (5) of
subdivision (d) of Section 37254.
(v) The extent to which pupils who have elected to receive
intensive instruction and services, pursuant to paragraphs (4) and
(5) of subdivision (d) of Section 37254, are being served.
(K) The county superintendent may make the status determinations
described in subparagraph (J) during a single visit or multiple
visits. In determining whether to make a single visit or multiple
visits for this purpose, the county superintendent shall take into
consideration factors such as cost-effectiveness, disruption to the
schoolsite, deadlines, and the availability of qualified reviewers.
(L) If the county superintendent determines that the condition of
a facility poses an emergency or urgent threat to the health or
safety of pupils or staff as defined in district policy or paragraph
(1) of subdivision (c) of Section 17592.72, or is not in good repair,
as specified in subdivision (d) of Section 17002 and required by
Sections 17014, 17032.5, 17070.75, and 17089, the county
superintendent, among other things, may do any of the following:
(i) Return to the school to verify repairs.
(ii) Prepare a report that specifically identifies and documents
the areas or instances of noncompliance if the district has not
provided evidence of successful repairs within 30 days of the visit
of the county superintendent or, for major projects, has not provided
evidence that the repairs will be conducted in a timely manner. The
report may be provided to the governing board of the school district.
If the report is provided to the school district, it shall be
presented at a regularly scheduled meeting held in accordance with
public notification requirements. The county superintendent shall
post the report on his or her Internet Web site. The report shall be
removed from the Internet Web site when the county superintendent
verifies the repairs have been completed.
(d) Distribute all laws, reports, circulars, instructions, and
blanks that he or she may receive for the use of the school officers.
(e) Annually, on or before August 15, present a report to the
governing board of the school district and the Superintendent
regarding the fiscal solvency of a school district with a disapproved
budget, qualified interim certification, or a negative interim
certification, or that is determined to be in a position of fiscal
uncertainty pursuant to Section 42127.6.
(f) Keep in his or her office the reports of the Superintendent.
(g) Keep a record of his or her official acts, and of all the
proceedings of the county board of education, including a record of
the standing, in each study, of all applicants for certificates who
have been examined, which shall be open to the inspection of an
applicant or his or her authorized agent.
(h) Enforce the course of study.
(i) (1) Enforce the use of state textbooks and instructional
materials and of high school textbooks and instructional materials
regularly adopted by the proper authority in accordance with Section
51050.
(2) For purposes of this subdivision, sufficient textbooks or
instructional materials has the same meaning as in subdivision (c) of
Section 60119.
(3) (A) Commencing with the 2005-06 school year, if a school is
ranked in any of deciles 1 to 3, inclusive, of the base API, as
specified in paragraph (2) of subdivision (c), and not currently
under review pursuant to a state or federal intervention program, the
county superintendent specifically shall review that school at least
annually as a priority school. A review conducted for purposes of
this paragraph shall be completed by the fourth week of the school
year. For the 2004-05 fiscal year only, the county superintendent
shall make a diligent effort to conduct a visit to each school
pursuant to this paragraph within 120 days of receipt of funds for
this purpose.
(B) In order to facilitate the review of instructional materials
before the fourth week of the school year, the county superintendent
in a county with 200 or more schools that are ranked in any of
deciles 1 to 3, inclusive, of the base API, as specified in paragraph
(2) of subdivision (c), may utilize a combination of visits and
written surveys of teachers for the purpose of determining
sufficiency of textbooks and instructional materials in accordance
with subparagraph (A) of paragraph (1) of subdivision (a) of Section
60119 and as defined in subdivision (c) of Section 60119. If a county
superintendent elects to conduct written surveys of teachers, the
county superintendent shall visit the schools surveyed within the
same academic year to verify the accuracy of the information reported
on the surveys. If a county superintendent surveys teachers at a
school in which the county superintendent has found sufficient
textbooks and instructional materials for the previous two
consecutive years and determines that the school does not have
sufficient textbooks or instructional materials, the county
superintendent shall within 10 business days provide a copy of the
insufficiency report to the school district as set forth in paragraph
(4).
(C) For purposes of this paragraph, "written surveys" may include
paper and electronic or online surveys.
(4) If the county superintendent determines that a school does not
have sufficient textbooks or instructional materials in accordance
with subparagraph (A) of paragraph (1) of subdivision (a) of Section
60119 and as defined by subdivision (c) of Section 60119, the county
superintendent shall do all of the following:
(A) Prepare a report that specifically identifies and documents
the areas or instances of noncompliance.
(B) Provide within five business days of the review, a copy of the
report to the school district, as provided in subdivision (c), or,
if applicable, provide a copy of the report to the school district
within 10 business days pursuant to subparagraph (B) of paragraph
(3).
(C) Provide the school district with the opportunity to remedy the
deficiency. The county superintendent shall ensure remediation of
the deficiency no later than the second month of the school term.
(D) If the deficiency is not remedied as required pursuant to
subparagraph (C), the county superintendent shall request the
department to purchase the textbooks or instructional materials
necessary to comply with the sufficiency requirement of this
subdivision. If the department purchases textbooks or instructional
materials for the school district, the department shall issue a
public statement at the first regularly scheduled meeting of the
state board occurring immediately after the department receives the
request of the county superintendent and that meets the applicable
public notice requirements, indicating that the district
superintendent and the governing board of the school district failed
to provide pupils with sufficient textbooks or instructional
materials as required by this subdivision. Before purchasing the
textbooks or instructional materials, the department shall consult
with the district to determine which textbooks or instructional
materials to purchase. All purchases of textbooks or instructional
materials shall comply with Chapter 3.25 (commencing with Section
60420) of Part 33 of Division 4 of Title 2. The amount of funds
necessary for the purchase of the textbooks and materials is a loan
to the school district receiving the textbooks or instructional
materials. Unless the school district repays the amount owed based
upon an agreed-upon repayment schedule with the Superintendent, the
Superintendent shall notify the Controller and the Controller shall
deduct an amount equal to the total amount used to purchase the
textbooks and materials from the next principal apportionment of the
district or from another apportionment of state funds.
(j) Preserve carefully all reports of school officers and
teachers.
(k) Deliver to his or her successor, at the close of his or her
official term, all records, books, documents, and papers belonging to
the office, taking a receipt for them, which shall be filed with the
department.
(l) (1) Submit two reports during the fiscal year to the county
board of education in accordance with the following:
(A) The first report shall cover the financial and budgetary
status of the county office of education for the period ending
October 31. The second report shall cover the period ending January
31. Both reports shall be reviewed by the county board of education
and approved by the county superintendent no later than 45 days after
the close of the period being reported.
(B) As part of each report, the county superintendent shall
certify in writing whether or not the county office of education is
able to meet its financial obligations for the remainder of the
fiscal year and, based on current forecasts, for the
subsequent fiscal year two subsequent fiscal years
. The certifications shall be classified as positive,
qualified, or negative, pursuant to standards prescribed by the
Superintendent, for the purposes of determining subsequent state
agency actions pursuant to Section 1240.1. For purposes of this
subdivision, a negative certification shall be assigned to a county
office of education that, based upon current projections, will not
meet its financial obligations for the remainder of the fiscal year
or for the subsequent fiscal year . A qualified
certification shall be assigned to a county office of education that
may not meet its financial obligations for the current fiscal year
or the subsequent fiscal year two subsequent
fiscal years . A positive certification shall be assigned to a
county office of education that will meet its financial obligations
for the current fiscal year and the subsequent fiscal year
two subsequent fiscal years . In accordance with
those standards, the Superintendent may reclassify a certification.
If a county office of education receives a negative certification,
the Superintendent, or his or her designee, may exercise the
authority set forth in subdivision (c) of Section 1630. Copies of
each certification, and of the report containing that certification,
shall be sent to the Superintendent at the time the certification is
submitted to the county board of education. Copies of each qualified
or negative certification and the report containing that
certification shall be sent to the Controller at the time the
certification is submitted to the county board of education.
(C) As part of each report submitted pursuant to this paragraph,
and any other report that indicates that a county office of education
is assigned a qualified certification as defined in this
subdivision, the Superintendent and the county superintendent shall
clearly distinguish between a county office of education that is
assigned a qualified certification because, based on current
projections, it may not meet its financial obligations only for the
second subsequent fiscal year following the current fiscal year, and
a county office of education that is otherwise assigned a qualified
certification.
(2) All reports and certifications required under this subdivision
shall be in a format or on forms prescribed by the Superintendent,
and shall be based on standards and criteria for fiscal stability
adopted by the state board pursuant to Section 33127. The reports and
supporting data shall be made available by the county superintendent
to an interested party upon request.
(3) This subdivision does not preclude the submission of
additional budgetary or financial reports by the county
superintendent to the county board of education or to the
Superintendent.
(4) The county superintendent is not responsible for the fiscal
oversight of the community colleges in the county, however
but , he or she may perform financial services
on behalf of those community colleges.
(m) If requested, act as agent for the purchase of supplies for
the city and high school districts of his or her county.
(n) For purposes of Section 44421.5, report to the Commission on
Teacher Credentialing the identity of a certificated person who
knowingly and willingly reports false fiscal expenditure data
relative to the conduct of an educational program. This requirement
applies only if, in the course of his or her normal duties, the
county superintendent discovers information that gives him or her
reasonable cause to believe that false fiscal expenditure data
relative to the conduct of an educational program has been reported.
SEC. 2. Section 1630 of the Education Code is
amended to read:
1630. (a) The Superintendent shall review and consider studies,
reports, evaluations, or audits of the county office of education
that contain evidence that the county office of education is
demonstrating fiscal distress according to the standards and criteria
developed pursuant to Section 33127 or that contain a finding by an
external reviewer that more than 3 of the 15 most common predictors
of school agencies needing intervention, as determined by the County
Office Fiscal Crisis and Management Assistance Team, are present. If
those findings are made, the Superintendent shall investigate the
financial condition of the county office of education and determine
if the county office of education may be unable to meet its financial
obligations for the current or the subsequent fiscal year, or should
receive a qualified or negative interim financial certification
pursuant to Section 1240.
(b) If at any time during the fiscal year the Superintendent
determines that the county office of education may be unable to meet
its financial obligations for the current or the subsequent fiscal
year or if the county office has a qualified certification pursuant
to Section 1240, he or she shall notify the county board of education
and the county superintendent in writing of that determination and
the basis for the determination. The notification shall include the
assumptions used in making the determination and shall be available
to the public. The Superintendent shall do the following, as
necessary, to ensure that the county office meets its financial
obligations:
(1) Assign a fiscal expert, paid for by the Superintendent, to
advise the county office on its financial problems.
(2) Conduct a study of the financial and budgetary conditions of
the county office. If, in the course of this review, the
Superintendent determines that his or her office requires analytical
assistance or expertise that is not available through the county
office, he or she may employ, at county office expense, on a
short-term basis, staff, including certified public accountants, to
provide the assistance and expertise.
(3) Direct the county office to submit a financial projection of
all fund and cash balances of the county office as of June 30 of the
current year and the subsequent fiscal year as he or she requires.
(4) Require the county office to encumber all contracts and other
obligations, to prepare appropriate cashflow analyses and monthly or
quarterly budget revisions, and to appropriately record all
receivables and payables.
(5) Direct the county office to submit a proposal for addressing
the fiscal conditions that resulted in the determination that the
county office may not be able to meet its financial obligations.
(6) Withhold compensation of the county board of education and the
county superintendent for failure to provide requested financial
information.
(c) If, after taking the actions identified in subdivision (a),
the Superintendent determines that a county office will be unable to
meet its financial obligations for the current or subsequent fiscal
year, he or she shall notify the county board of education and the
county superintendent in writing of that determination and the basis
for that determination. The notification shall include the
assumptions used in making the determination and shall be available
to the public.
(d) If the Superintendent makes that determination, or if
the county office has a negative certification pursuant to Section
1240, the Superintendent, shall, as necessary to enable the county
office to meet its financial obligations, do one or more of the
following:
(1) Develop and impose, in consultation with the county board of
education and the county superintendent, a budget that will enable
the county to meet its financial obligations.
(2) Stay or rescind any action that is determined to be
inconsistent with the ability of the county office to meet its
obligations for the current or subsequent fiscal year and may, as
necessary, appoint a fiscal adviser to perform any or all of the
duties prescribed by this paragraph on his or her behalf. This
includes any actions up to the point that the subsequent year's
budget is approved by the Superintendent. The Superintendent shall
inform the county board of education in writing of his or her
justification for any exercise of authority under this paragraph.
(3) Assist in developing, in consultation with the county board of
education and the county superintendent, a financial plan that will
enable the county office to meet its future obligations.
(4) Assist in developing, in consultation with the county board of
education and the county superintendent, a budget for the subsequent
fiscal year. If necessary, the Superintendent shall continue to work
with the county board of education and the county superintendent
until the budget for the subsequent year is adopted.
(e) Any actions taken by the Superintendent pursuant to paragraph
(1) or (2) of subdivision (d) shall be accompanied by a notification
that includes the actions to be taken, the reasons for the actions,
and the assumptions used to support the necessity for those actions.
That notification shall be available to the public.
(f) This section does not authorize the Superintendent to abrogate
any provision of a collective bargaining agreement that was entered
into by a county office prior to the date upon which the
Superintendent assumed authority pursuant to subdivision (d).
(g) The county office shall pay reasonable fees charged by the
Superintendent for any administrative expenses incurred pursuant to
subdivision (d) or costs associated with improving the office's
financial management practices.
(h) Notwithstanding any other provision of law, a county treasurer
shall not honor any warrant when the Superintendent, as appropriate,
has disapproved that warrant, or has disapproved the order on county
office funds for which a warrant was prepared.
(i) For all purposes of errors and liability insurance policies, a
fiscal expert appointed pursuant to this section shall be deemed to
be an employee of the county office of education. The Superintendent
may require that the fiscal adviser be placed on the county office of
education payroll for the purposes of remuneration, benefits, and
payroll deductions.
(j) If staff persons are hired pursuant to paragraph (2) of
subdivision (a), the Superintendent may certify to the Controller an
amount to be transferred to the State Department of Education, from
the funds that otherwise would be apportioned to the county office of
education pursuant to Section 2558, for the purpose of paying all
costs incurred by that staff in performing their respective services.
The Controller, upon receipt of that certification, shall transfer
that amount.
(k) To facilitate the appointment of a county office fiscal
officer and the employment of additional staff pursuant to paragraphs
(1) and (2), respectively, of subdivision (a), for the purposes of
those paragraphs, 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 Division 2 of the Public Contracts
Code.
SEC. 3. Section 42127.6 of the Education Code
is amended to read:
42127.6. (a) (1) A school district shall provide the county
superintendent of schools with a copy of a study, report, evaluation,
or audit that was commissioned by the district, the county
superintendent, the Superintendent of Public Instruction, and state
control agencies and that contains evidence that the school district
is showing fiscal distress under the standards and criteria adopted
in Section 33127, or a report on the school district by the County
Office Fiscal Crisis and Management Assistance Team or any regional
team created pursuant to subdivision (i) of Section 42127.8. The
county superintendent shall review and consider studies, reports,
evaluations, or audits of the school district that contain evidence
that the school district is demonstrating fiscal distress under the
standards and criteria adopted in Section 33127 or that contain a
finding by an external reviewer that more than three of the 15 most
common predictors of a school district needing intervention, as
determined by the County Office Fiscal Crisis and Management
Assistance Team, are present. If these findings are made, the county
superintendent shall investigate the financial condition of the
school district and determine if the school district may be unable to
meet its financial obligations for the current or one subsequent
fiscal year, or should receive a qualified or negative interim
financial certification pursuant to Section 42131.
(2) If, at any time during the fiscal year, the county
superintendent of schools determines that a school district may be
unable to meet its financial obligations for the current or one
subsequent fiscal year, or if a school district has a qualified or
negative certification pursuant to Section 42131, he or she shall
notify the governing board of the school district and the
Superintendent of Public Instruction in writing of that determination
and the basis for the determination. The notification shall include
the assumptions used in making the determination and shall be
available to the public. The county superintendent of schools shall
report to the Superintendent of Public Instruction on the financial
condition of the school district and his or her proposed remedial
actions, and shall do at least one of the following and all actions
that are necessary to ensure that the district meets its financial
obligations:
(A) Assign a fiscal expert, paid for by the county superintendent,
to advise the district on its financial problems.
(B) Conduct a study of the financial and budgetary conditions of
the district that includes, but is not limited to, a review of
internal controls. If, in the course of this review, the county
superintendent determines that his or her office requires analytical
assistance or expertise that is not available through the district,
he or she may employ, on a short-term basis, with the approval of the
Superintendent of Public Instruction, staff, including certified
public accountants, to provide the assistance and expertise. The
school district shall pay 75 percent and the county office of
education shall pay 25 percent of these staff costs.
(C) Direct the school district to submit a financial projection of
all fund and cash balances of the district as of June 30 of the
current year and subsequent fiscal years as he or she requires.
(D) Require the district to encumber all contracts and other
obligations, to prepare appropriate cashflow analyses and monthly or
quarterly budget revisions, and to appropriately record all
receivables and payables.
(E) Direct the district to submit a proposal for addressing the
fiscal conditions that resulted in the determination that the
district may not be able to meet its financial obligations.
(F) Withhold compensation of the members of the governing board
and the district superintendent for failure to provide requested
financial information. This action may be appealed to the
Superintendent of Public Instruction pursuant to subdivision (b).
(G) Assign the Fiscal Crisis and Management Assistance Team to
review teacher hiring practices, teacher retention rate, percentage
of provision of highly qualified teachers, and the extent of teacher
misassignment in the school district and provide the district with
recommendations to streamline and improve the teacher hiring process,
teacher retention rate, extent of teacher misassignment, and
provision of highly qualified teachers. If a review team is assigned
to a school district, the district shall follow the recommendations
of the team, unless the district shows good cause for failure to do
so. The Fiscal Crisis and Management Assistance Team may not
recommend an action that would abrogate a contract that governs
employment.
(3) Any contract entered into by a county superintendent of
schools for the purposes of this subdivision is subject to the
approval of the Superintendent of Public Instruction.
(4) An employee of a school district who provides information
regarding improper governmental activity, as defined in Section
44112, is entitled to the protection provided pursuant to Article 5
(commencing with Section 44110) of Chapter 1 of Part 25.
(b) Within five days of the county superintendent making the
determination specified in subdivision (a), a school district may
appeal the basis of the determination and any of the proposed actions
that the county superintendent has indicated that he or she will
take to further examine the financial condition of the district. The
Superintendent of Public Instruction shall sustain or deny any or all
parts of the appeal within 10 days.
(c) If, after taking the actions identified in subdivision (a),
the county superintendent determines that a district will be unable
to meet its financial obligations for the current or subsequent
fiscal year, he or she shall notify the school district governing
board and the Superintendent of Public Instruction in writing of that
determination and the basis for that determination. The notification
shall include the assumptions used in making the determination and
shall be provided to the superintendent of the school district and
parent and teacher organization of the district.
(d) Within five days of the county superintendent making the
determination specified in subdivision (c), a school district may
appeal that determination to the Superintendent. The Superintendent
shall sustain or deny the appeal within 10 days. If the governing
board of the school district appeals the determination, the county
superintendent of schools may stay any action of the governing board
that he or she determines is inconsistent with the ability of the
district to meet its financial obligations for the current or
subsequent fiscal year until resolution of the appeal by the
Superintendent.
(e) If the appeal described in subdivision (d) is denied or not
filed, or if the district has a negative certification pursuant to
Section 42131, the county superintendent, in consultation with the
Superintendent, shall take at least one of the actions described in
paragraphs (1) to (5), inclusive, and all actions that are necessary
to ensure that the district meets its financial obligations and shall
make a report to the Superintendent about the financial condition of
the district and remedial actions proposed by the county
superintendent.
(1) Develop and impose, in consultation with the Superintendent
and the school district governing board, a budget revision that will
enable the district to meet its financial obligations in the current
fiscal year.
(2) Stay or rescind any action that is determined to be
inconsistent with the ability of the school district to meet its
obligations for the current or subsequent fiscal year. This includes
any actions up to the point that the subsequent year's budget is
approved by the county superintendent of schools. The county
superintendent of schools shall inform the school district governing
board in writing of his or her justification for any exercise of
authority under this paragraph.
(3) Assist in developing, in consultation with the governing board
of the school district, a financial plan that will enable the
district to meet its future obligations.
(4) Assist in developing, in consultation with the governing board
of the school district, a budget for the subsequent fiscal year. If
necessary, the county superintendent of schools shall continue to
work with the governing board of the school district until the budget
for the subsequent year is adopted.
(5) As necessary, appoint a fiscal adviser to perform any or all
of the duties prescribed by this section on his or her behalf.
(f) Any action taken by the county superintendent of schools
pursuant to paragraph (1) or (2) of subdivision (e) shall be
accompanied by a notification that shall include the actions to be
taken, the reasons for the actions, and the assumptions used to
support the necessity for these actions.
(g) This section does not authorize the county superintendent to
abrogate any provision of a collective bargaining agreement that was
entered into by a school district prior to the date upon which the
county superintendent of schools assumed authority pursuant to
subdivision (e).
(h) The school district shall pay 75 percent and the county office
of education shall pay 25 percent of the administrative expenses
incurred pursuant to subdivision (e) or costs associated with
improving the district's financial management practices. The
Superintendent shall develop and distribute to affected school
districts and county offices of education advisory guidelines
regarding the appropriate amount of administrative expenses charged
pursuant to this subdivision.
(i) Notwithstanding Section 42647 or 42650 or any other law, a
county treasurer shall not honor any warrant if, pursuant to Sections
42127 to 42127.5, inclusive, or pursuant to this section, the county
superintendent or the Superintendent, as appropriate, has
disapproved that warrant or the order on school district funds for
which a warrant was prepared.
(j) Effective upon the certification of the election results for a
newly organized school district pursuant to Section 35763, the
county superintendent of schools may exercise any of the powers and
duties of this section regarding the reorganized school district and
the other affected school districts until the reorganized school
district becomes effective for all purposes in accordance with
Article 4 (commencing with Section 35530) of Chapter 3 of Part 21.
(k) The Superintendent shall monitor the efforts of a county
office of education in exercising its authority under this section
and may exercise any of that authority if he or she finds that the
actions of the county superintendent of schools are not effective in
resolving the financial problems of the school district. Upon a
decision to exercise the powers of the county superintendent of
schools, the county superintendent of schools is relieved of those
powers assumed by the Superintendent. In addition to the actions
taken by the county superintendent, the Superintendent shall take
further actions to ensure the long-term fiscal stability of the
district. The county office of education shall reimburse the
Superintendent for all of his or her costs in exercising his or her
authority under this subdivision. The Superintendent shall promptly
notify the county superintendent of schools, the county board of
education, the superintendent of the school district, the governing
board of the school district, the appropriate policy and fiscal
committees of each house of the Legislature, and the Department of
Finance of his or her decision to exercise the authority of the
county superintendent of schools.
SEC. 4. SEC. 2. Section 42131 of the
Education Code is amended to read:
42131. (a) (1) Pursuant to the reports required by Section 42130,
the governing board of each school district shall certify, in
writing, within 45 days after the close of the period being reported,
whether the school district is able to meet its financial
obligations for the remainder of the fiscal year and, based on
current forecasts, for the subsequent fiscal year. These
certifications shall be based upon the board's assessment, on the
basis of standards and criteria for fiscal stability adopted by the
State Board of Education pursuant to Section 33127, of the district
budget, as revised to reflect current information regarding the
adopted State Budget, district property tax revenues pursuant to
Chapter 6 (commencing with Section 95) of Part 0.5 of Division 1 of
the Revenue and Taxation Code, and ending balances for the preceding
fiscal year as reported pursuant to Section 42100. The certifications
shall be classified as positive, qualified, or negative, as
prescribed by the Superintendent of Public Instruction for the
purposes of determining subsequent actions by the Superintendent of
Public Instruction, the Controller, or the county superintendent of
schools, pursuant to subdivisions (b) and (c). These certifications
shall be based upon the financial and budgetary reports required by
Section 42130 but may include additional financial information known
by the governing board to exist at the time of each certification.
For purposes of this subdivision, a negative certification shall be
assigned to any school district that, based upon current projections,
will be unable to meet its financial obligations for the remainder
of the fiscal year or the subsequent fiscal year
. A qualified certification shall be assigned to any school
district that, based upon current projections, may not meet its
financial obligations for the current fiscal year or the
subsequent fiscal year two subsequent fiscal years
. A positive certification shall be assigned to any school
district that, based upon current projections, will meet its
financial obligations for the current fiscal year and the
subsequent fiscal year two subsequent fiscal years
.
(2) (A) A copy of each certification and a copy of the report
submitted to the governing board pursuant to Section 42130 shall be
filed with the county superintendent of schools. If a county office
of education receives a positive certification when it determines a
negative or qualified certification should have been filed, the
county superintendent of schools shall change the certification to
negative or qualified, as appropriate, and, no later than 75 days
after the close of the period being reported, shall provide notice of
that action to the governing board of the school district and to the
Superintendent. No later than five days after a school district
receives notice from the county superintendent of schools of a change
in the district's certification to negative or qualified, the
governing board of the district may submit an appeal to the
Superintendent regarding the validity of that change, in accordance
with the criteria applied to those designations pursuant to this
subdivision. No later than 10 days after receiving that appeal, the
Superintendent shall determine the certification to be assigned to
the district, and shall notify the school district governing board
and the county superintendent of schools of that determination.
(B) Copies of any certification in which the governing board is
unable to certify unqualifiedly that these financial obligations will
be met and a copy of the report submitted to the governing board
pursuant to Section 42130 shall be sent by the county office of
education to the Controller and the Superintendent at the time of the
certification, together with a completed transmittal form provided
by the Superintendent. Within 75 days after the close of the
reporting period on all school district certifications that are
classified as qualified or negative pursuant to this section, the
appropriate county superintendent of schools shall submit to the
Superintendent and the Controller his or her comments on those
certifications and report any action proposed or taken pursuant to
subdivision (b).
(3) All reports and certifications required under this subdivision
shall be in a format or on forms prescribed by the Superintendent,
and shall be based on standards and criteria for fiscal stability
adopted by the State Board of Education pursuant to Section 33127.
(4) This subdivision does not preclude the submission of
additional budgetary or financial reports by the county
superintendent of schools to the district governing board, or to the
Superintendent.
(5) As part of each report submitted pursuant to Section 42130,
and any other report that indicates that a school district is
assigned a qualified certification as defined in this subdivision,
the Superintendent, a county superintendent, and the governing board
of a school district shall clearly distinguish between a school
district that is assigned a qualified certification because, based on
current projections, it may not meet its financial obligations only
for the second subsequent fiscal year following the current fiscal
year, and a school district that is otherwise assigned a qualified
certification.
(b) As to any school district having a negative or qualified
certification, the county superintendent of schools shall exercise
his or her authority, as necessary, pursuant to Section 42127.6.
(c) Within 75 days after the close of each reporting period, each
county superintendent of schools shall report to the Controller and
the Superintendent as to whether the governing board of each of the
school districts under his or her jurisdiction has submitted the
certification required by subdivision (a). That report shall account
for all districts under the jurisdiction of the county office of
education , and indicate the type of certification filed
by each district.
(d) The Controller's office may conduct an audit or review of the
fiscal condition of any district having a negative or qualified
certification.
(e) The governing board of each school district filing a qualified
or negative certification for the second report required under
Section 42130, or classified as qualified or negative by the county
superintendent of schools, shall provide to the county superintendent
of schools, the Controller, and the Superintendent no later than
June 1, financial statement projections of the district's fund and
cash balances through June 30 for the period ending April 30. The
governing boards of all other school districts are encouraged to
develop a similar financial statement for use in developing the
beginning fund balances of the district for the ensuing fiscal year.
(f) Any school district for which the county board of education
serves as the governing board is not subject to subdivisions (a) to
(e), inclusive, but is governed instead by the interim report,
monitoring, and review procedures set forth in subdivision ( l
) of Section 1240 and in Article 2 (commencing with Section
1620) of Chapter 5 of Part 2 of Division 1 of Title 1.
(g) The governing board of a school district that chooses to
propose reductions or cuts to expenditures in the current year, after
being assigned a qualified certification because it may not meet its
financial obligations only for the second subsequent fiscal year
following the current fiscal year, shall present that proposal and
provide for public comment at an open meeting held prior to the open
meeting at which the governing board of the school district takes
action on that proposal.
(h) The Superintendent may waive any reporting, certification, and
intervention requirements based on the second subsequent fiscal year
following the current fiscal year for a county office of education
pursuant to Sections 1240 and 1630, and for a school district
pursuant to Sections 42127.6, 42130, and 42131, if all of the
following conditions are met:
(1) The county superintendent acting for the county office of
education or the governing board of the school district requests that
the waiver be approved, and provides any information, upon request,
that is needed by the department to analyze the waiver
request.
(2) In the case of a school district requesting a waiver pursuant
to this subdivision, the county superintendent of the county where
that school district is located provides a letter supporting the
waiver.
(3) The Superintendent determines with reasonable certainty, based
on the requestor's fiscal history, current financial status and
budget projections, and the Superintendent's expectations concerning
future funding levels, that the county office of education or school
district will meet its financial obligations for the second
subsequent fiscal year following the current fiscal year.