BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 46 HEARING: 3/16/11
AUTHOR: Correa FISCAL: Yes
VERSION: 3/7/11 TAX LEVY: No
CONSULTANT: Detwiler
DISCLOSURE OF PUBLIC OFFICIALS' COMPENSATION
Requires state and local officials to annually disclose
their compensation.
Background
Newspaper articles report that the City of Bell's city
council members received salaries that total $1,800
annually for their council service. Most of Bell's city
council members also received annually:
$18,895 for serving on the Public Financing Authority.
$18,895 for serving on the Surplus Property Authority.
$18,895 for serving on the City Housing Authority.
$18,895 for serving on the Planning Commission.
$720 for serving on the Community Redevelopment
Agency.
Bell's contract with its former city manager paid him
$23,000 for each biweekly pay period. The contract
provided automatic 12% raises if the City had a "positive
cash position" in the previous fiscal year. Among other
benefits, the contract required the City to pay for the
employee's costs of PERS membership for retirement
benefits. The City agreed to fully reimburse any expenses
of the employee and his dependents that were not covered by
the City's medical, dental, and vision insurance policies.
The contract also allowed the employee to borrow up to
$80,000 from the City, repaid with the employee's vacation
leave time.
Existing Law
The California Constitution requires county boards of
supervisors to set their compensation by ordinance.
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The California Constitution allows charter cities to
determine the process for setting the compensation of their
municipal officers and employees.
General law cities may pay salaries to their council
members, using a statutory schedule based on population.
By ordinance, a city council can increase its salaries
beyond these statutory amounts, but a raise can't exceed 5%
a year since the last increase. State law prohibits
automatic salary increases. With majority-voter approval,
city council members can receive higher or lower salaries
than the statute prescribes. Unless specifically
authorized by state law, general law cities can't provide
higher compensation for their council members' service on
other commissions, committees, boards, or authorities.
Some state laws limit the compensation that city council
members can receive when they serve on other bodies.
However, if another statute allows compensation, but does
not set an amount, state law limits the maximum amount to
$150 a month. These statutory limits on general law cities
do not apply to what a city can provide its council members
for retirement, health and welfare, and federal social
security benefits, if the city pays the same benefits for
its employees. These statutory limits do not apply to the
reimbursement of council members' actual and necessary
expenses (AB 11, De La Torre, 2005).
Most special districts pay stipends to the members of their
governing boards; usually a statutorily set amount for each
meeting or each day of service. A few districts can pay
monthly salaries to their governing boards.
State law allows the governing boards of school districts
and community college districts to receive monthly
salaries, based on the districts' average daily attendance
and the counties' populations. The county boards of
education may receive monthly salaries based on their
counties' populations.
Counties, cities, and special districts (but not school
districts) must adopt written policies that control their
reimbursements for expenses. In addition, if a local
agency compensates its governing body or key staff, those
local officials must receive ethics training every two
years (AB 1234, Salinas, 2005).
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The governing bodies of all local agencies, including
school districts, must ratify their executive employees'
contracts of employment in open session and reflect those
decisions in their minutes. This requirement applies to
superintendents, deputy superintendents, assistant
superintendents, associate superintendents, community
college presidents, community college vice presidents,
community college deputy vice presidents, general managers,
city managers, county administrators, or similar chief
administrative or executive officers. Copies of these
employment contracts and settlement agreements must be
publicly available (SB 1996, Hart, 1992).
The Political Reform Act requires public officers and key
employees to file annual statements of economic interest
that disclose their investments, property interests, and
sources of income. Local officials and key employees file
their annual statements with their agencies' clerks.
Statements of economic interest are open for public
inspection and copies must be available within two business
days of receipt.
Proposed Law
Senate Bill 46 requires each public official to file an
annual compensation disclosure form. When filing the
annual form, a public official must follow the Political
Reform Act's procedures and deadlines. Alternatively, if a
public agency has a website, SB 46 allows the agency to
compile and post the required information for each of its
public officials.
If a public agency has a website, it must post the
information from its public officials' compensation
disclosure forms and, if applicable, the agency's written
policy for reimbursing expenses.
" Public official ." SB 46 defines a "public official" as
anyone who must file a statement of economic interests
under the Political Reform Act, except candidates for
office. The bill affects state agencies, including state
offices, departments, bureaus, boards, commissions, and the
Legislature. SB 46 also affects local agencies, including
counties, cities, special districts, school districts,
community college districts, county boards of education,
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county superintendents of schools, joint powers agencies,
and other political subdivisions of the state.
Compensation disclosure form . By October 1, 2011, the
State Controller must adopt regulations to implement the
bill's requirements. SB 46 requires the State Controller's
regulations to include the format of the compensation
disclosure form, including:
The public agency's cost of the public official's
annual salary or stipend.
The public agency's cost to provide benefits to the
public official.
The public agency's reimbursements for the public
official's expenses.
The public agency's cost of the public official's
perquisites.
When the public official completed ethics training,
if applicable.
A public official must also disclose any amounts that the
official received from another public agency if the other
agency's governing board includes a quorum or majority of
the first public agency.
The compensation disclosure forms must be open for public
inspection and for reproduction within two days of their
receipt. Conditions cannot be imposed on persons who want
to inspect or reproduce these forms. Information or
identification cannot be required from the requester.
Copying charges can't exceed 10� a page, but a maximum
retrieval fee of $5 is allowed for copies of statements
that are more than five years old. A request for more than
one compensation disclosure form at the same time must be
treated as a single request.
Enforcement . A district attorney or any interested person
can file a lawsuit that asks a court to compel a public
official or public agency to comply with these
requirements. Before filing the suit, however, the
district attorney or interested person must make a written
demand that clearly describes the nature of the alleged
violation. Within 30 days, the public official or public
agency must either correct the alleged violation and notify
the demanding party, or inform the demanding party of its
decision not to correct the alleged violation. The bill
deems inaction within this 30-day period as a decision not
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to correct the alleged violation. Within 15 days, the
demanding party must either file the lawsuit or "thereafter
be barred" from filing the suit. SB 46 requires the court
to dismiss a lawsuit with prejudice if the court determines
that the alleged violation has been corrected.
Oversight and sunset . By July 1, 2012, the State
Controller must recommend to the Governor and Legislature
methods for compiling the information from the compensation
disclosure forms in publicly accessible databases. SB 46
requires the State Controller's recommendations to include
proposals for the establishment, operation, oversight, and
funding for these databases.
By January 1, 2018, the Bureau of State Audits must report
to the Governor and Legislature regarding the bill's
implementation and effectiveness.
The requirements created by SB 46 automatically terminate
on January 1, 2019, unless the Legislature extends that
date or makes the requirements permanent.
Legislative declarations . SB 46 contains legislative
findings and declarations relating to the constitutional
rights of access to information. The bill also contains
findings and declarations that the disclosure of
compensation is a statewide issue and not a municipal
affair; these requirements apply to charter cities. SB 46
is an urgency bill that takes effect when signed and
chaptered.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . The California Constitution
declares that The people have the right of access to
information concerning the conduct of the people's
business, and therefore, the meetings of public bodies and
the writings of public officials and agencies shall be open
to public scrutiny. Exposing government decisions and
documents to public review is an important ingredient of an
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informed democracy because scrutiny can prevent mischief
and even corruption. As the late U.S. Supreme Court
Justice Brandeis wrote in 1913, Sunlight is said to be the
best of disinfectants. SB 46 advances public participation
by opening to scrutiny state and local decisions about
public officials' compensation.
2. Five months later . "Transparency and Accountability:
Pursuing the Public's Right to Know" was the topic of the
October 20, 2010 hearing held in Santa Ana by the former
Senate Local Government Committee. Legislators learned
from more than 20 speakers. After the hearing, the
Committee's staff found:
Unanimous support for statutory changes that will
require more public disclosure of public officials'
compensation.
General support that public officials should
disclose all forms of their compensation. However,
there was no consensus on whether public officials
should disclose their reimbursement payments, and
there were cautionary notes about privacy concerns
regarding medical benefits and worksites.
General support for requiring all public officials
to disclose their compensation. However, K-12
schools, community colleges, and the University of
California contended that the current laws are
adequate.
General support for public disclosure methods that
produce public disclosure reports which are precise,
reliable, accessible, and inexpensive.
Mixed advice on how to collect, store, and
distribute reports. Should the Legislature use the
"Form 700" approach in SB 501 (Correa, 2010) or build
on the State Controller's recent work?
After the hearing, State Controller John Chiang
posted an online database of the salaries, pensions,
and other compensation for nearly 600,000 county and
city employees.
SB 46 builds on those findings and last year's SB 501 by
requiring disclosure by state as well as local officials,
expanding the types of compensation that officials must
disclose, avoiding disclosure of information that
compromise medical privacy and personal safety, and
producing disclosure documents that voters and public
officials can compare.
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3. Home rule and local control . The California
Constitution requires county supervisors to set their own
compensation by adopting referendable ordinances. Cities
that adopt charters have the constitutional authority to
control their own "municipal affairs." State law already
regulates the amounts of compensation that general law
cities, special districts, and school districts can pay
their governing bodies. Some say that Sacramento is in no
position to tell communities how to run their local
governments. Because local governments are closer to the
people than the Legislature and the Governor, compensation
and personnel decisions belong at the local level. Instead
of poking into local politics, legislators should let a
community's voters control their elected officials. That's
why the constitutional home rule provision exists.
4. A clear distinction . While the California Constitution
appears to give counties and charter cities control over
their employment practices, a series of court opinions
explains "that there is a clear distinction between the
substance of a public employee labor issue and the
procedure by which it is resolved." The 2009 Sonoma County
decision repeated the rule that "procedural statutes do not
conflict with the constitutional powers of local
governments." SB 46's requirement for local officials and
employees to file annual compensation disclosure statements
appears to be a procedural statute that's within the
Legislature's power. The bill doesn't affect what local
governments can pay their governing bodies or their key
executive staff.
5. Too much or too little ? Most of the information that
SB 46 requires in a compensation disclosure form is already
in the public domain. The Ralph M. Brown Act, the Public
Records Act, and the Political Reform Act already give
access to information about how much money local elected
officials and key executive staff make. Some say that
requiring the compilation of these facts into a new
government form may be an expensive, but not very
revealing, bureaucratic exercise. Conversely, others say
that the bill doesn't go far enough. Local governing
boards and executive staff ought to report their
compensation to a state-run, searchable data base. It
appears that the bill may satisfy neither those who claim
that it is redundant nor those who claim that it fails to
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achieve full disclosure.
6. Be careful what you ask for . To avoid creating a
permanent program that might not work, SB 46 sunsets its
new requirements on January 1, 2019. To give future
legislators the basis for reviewing these requirements, SB
46 requires the Bureau of State Audits to evaluate their
"implementation and effectiveness." Unless the Legislature
asks specific questions, it will abdicate responsibility
for picking the evaluation criteria to the State Auditor.
Vague standards may result in vague recommendations. The
Committee may wish to consider amending SB 46 to spell out
the criteria that the State Auditor should use when
evaluating the bill's requirements.
7. Looks familiar . Several of SB 46's features are
similar to existing laws. The bill's reference to written
policies for reimbursement payments relies on the 2005
Salinas bill. The timing and procedures for filing the new
compensation disclosure forms rely on the existing
provisions of the Political Reform Act, as do the
requirements for inspecting and copying those forms. The
enforcement provisions track the Ralph M. Brown Act's civil
enforcement procedures. By putting these new requirements
within the context of existing statutes instead of creating
new procedures, SB 46 makes compliance easier for public
officials and public agencies. Many of SB 46's features
appeared in SB 501 (Correa, 2010) which died on the Senate
Floor when the Senate failed to take up the bill for
concurrence in the Assembly amendments.
Support and Opposition (3/10/11)
Support : American Federation of State, County and
Municipal Employees, California Newspaper Publishers
Association.
Opposition : Unknown.