BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 46|
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THIRD READING
Bill No: SB 46
Author: Correa (D)
Amended: 6/2/11
Vote: 27 - Urgency
SENATE GOVERNANCE & FINANCE COMMITTEE : 7-0, 4/27/11
AYES: Wolk, Huff, DeSaulnier, Hancock, Hernandez, Kehoe,
Liu
NO VOTE RECORDED: Fuller, La Malfa
SENATE APPROPRIATIONS COMMITTEE : 9-0, 5/26/11
AYES: Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley,
Price, Runner, Steinberg
SUBJECT : Public officials: compensation disclosure
SOURCE : Author
DIGEST : This bill requires, beginning January 1, 2013,
until January 1, 21019 every person who is required to file
a statement of economic interests and designated employees
who file statements under a conflict of interest code to
also file a compensation disclosure form, and require each
agency to post compensation information on its website.
This bill also requires the State Controller's Office (SCO)
to adopt emergency regulations for the implementation of
these requirements by March 1, 2013, including format of
the compensation disclosure form, as specified.
Furthermore, the SCO would recommend methods for compiling
the compensation information on publicly accessible
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databases to the Governor and Legislature by July 1, 2013.
Senate Floor Amendments of 6/2/11 add an urgency clause.
ANALYSIS : The California Constitution requires county
boards of supervisors to set their compensation by
ordinance. The California Constitution allows charter
cities to determine the process for set-ting 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 the statutory amounts, but a raise can't exceed five
percent 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 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 limits do not apply to the reimbursement
of council members' actual and necessary expenses (AB 11
�De La Torre], Chapter 178, Statutes of 2005).
This bill requires public officials to file annual
compensation disclosure forms. This bill applies to state,
county, and city elected officials and key state, county,
and city appointed officials who must file statements of
economic interest under the Political Reform Act. The bill
also applies to state and local officials who are
designated employees under their agencies' conflict of
interest codes.
Compensation disclosure form . By March 1, 2013, the State
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Controller must adopt emergency regulations to implement
the bill's requirements. This bill 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 received
from another entity if the other governing board shares
membership with the public agency.
Filing methods . When filing the annual compensation
disclosure forms, state and local officials must follow the
Political Reform Act's procedures and dead-lines.
Alternatively, if a public agency has a Web site, this bill
allows the agency to compile and post the required
information for each of its public officials. If a public
agency has a Web site, it must post the information from
its public officials' compensation disclosure forms and, if
applicable, the agency's written policy for reimbursing
expenses.
Enforcement . A district attorney or any interested person
can file a lawsuit to compel a public official or agency to
comply with these requirements. Before filing the suit,
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
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.
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The bill deems inaction within this 30-day period as a
decision not to correct the alleged violation. Within 15
days, the demanding party must either file the lawsuit or
"thereafter be barred" from filing the suit. This bill
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, 2013, the State
Controller must recommend to the Governor and Legislature
methods for compiling the information from the compensation
disclosure forms in publicly accessible databases.
This bill 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 may report
to the Governor and Legislature regarding the bill's
implementation and effectiveness, including the
compensation disclosure forms' accuracy, completeness, ease
of use, and timeliness.
The requirements created by this bill automatically
terminate on January 1, 2019, unless the Legislature
extends that date or makes the requirements permanent.
This bill 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.
Background
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
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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.
Local Executives' Contracts . The governing bodies of all
local agencies, including school districts, must ratify
their executive employees' contracts 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], Chapter 962,
Statutes of 1992).
Local Officials' Expenses and Ethics Training . 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], Chapter 700, Statutes of 2005).
Statements of Economic Interest . When the voters passed
Proposition 9 (1974), a statutory initiative, they enacted
the Political Reform Act of 1974. The Act requires state,
county, and city elected officials and key appointed
officials to file annual statements of economic interest
that disclose their investments, property interests, and
sources of income.
The Act also requires state agencies and local government
agencies (counties, cities, special districts, school
districts) to adopt conflict of interest codes. Each
agency's conflict of interest code must list its
"designated employees" who make decisions that may
materially affect their financial interests. These
designated employees must also file annual statements of
economic interest.
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Often called the "Form 700," these statements of economic
interest are open for public inspection and copies must be
available within two business days of receipt. Conditions
cannot be imposed on persons who want to inspect or
repro-duce these forms. Information or identification
cannot be required from the requester. Copying charges
can't exceed ten-cent a page, but a maximum retrieval fee
of five dollars is allowed for copies of statements that
are more than five years old.
Bell's Controversy . Starting last summer, newspapers
reported compensation controversies in the City of Bell
that involving city council members and executive staff.
While Bell's city council members received $1,800 in annual
salaries for their council service, most also received
salaries for service on the City's Public Financing
Authority, Surplus Property Authority, Housing Authority,
Planning Commission, and Community Redevelopment Agency.
As a result, most of Bell's city council members received
nearly $100,000 a year in compensation.
Bell's contract with its former city manager paid him
$23,000 for each biweekly pay period, with automatic 12
percent 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 Public Employees' Retirement
System 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.
State Controller's Reports . The State Controller must
annually collect and publish information about the
financial transactions of counties, cities, special
districts, school districts, and re-development agencies.
Local officials must provide their information in the time,
manner, and format that the Controller requests.
Responding to the Bell controversy, State Controller John
Chiang asked for information about local officials'
compensation and reported the results on his website. The
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Controller posts results from counties, cities, and special
districts and intends to report state employees'
information in May 2011. The Controller presents each
agency's information by job classification, not by the
official's name, including:
Employee's salary range (minimum and maximum
annual salary).
Employee's total wages that are subject to
Medicare reporting (the so-called "Box 5" amount:
wages, overtime, cash and bonus payments).
Employee's defined benefit pension formula.
Employer contribution to the employee's share
of pension benefits.
Employer contribution to the employee's
deferred compensation plan.
Employer contribution to the employee's health,
dental, or vision benefits.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
SCO: form development $43
General
SCO: IT & recommendations $335
General
FPPC staff review/processing $100-$150
$200-$250 $150-$200 General
State agency impact unknown multi-million dollar costs
toGeneral/
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state agencies to compile
compensation Various
information for affected employees
and
post it on agency Web sites
BSA report cost pressures in the range of
$200-$250 General
to report on effectiveness of the
bill in a
future year
SUPPORT : (Verified 6/6/11)
American Federation of State, County and Municipal
Employees
California Newspaper Publishers Association
Secretary of State Debra Bowen
OPPOSITION : (Verified 6/6/11)
Association of California Healthcare Districts
Association of California School Administrators
Association of California Water Agencies
California Association of Clerks and Election Officials
California Special Districts Association
California State Association of Counties
County of Stanislaus
Regional Council of Rural Counties
AGB:do 6/6/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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