BILL ANALYSIS �
SB 423
Page 1
Date of Hearing: June 22, 2011
ASSEMBLY COMMITTEE ON EDUCATION
Julia Brownley, Chair
SB 423 (Wyland) - As Amended: March 23, 2011
SENATE VOTE : 37-0
SUBJECT : School facilities: local bond measures
SUMMARY : Requires the financial and performance audits of local
bonds approved pursuant to Proposition 39 of 2000 to be
submitted to local citizens' oversight committees by March 31 of
each year.
EXISTING LAW :
1)Authorizes, under Section 1 of Article XIII A of the
California Constitution, school districts, community college
districts, or county offices of education to pass a general
obligation bond by a 55% vote, provided that the local
initiative includes the following accountability measures:
a) A requirement that the proceeds from the sale of the
bonds be used only for the construction, reconstruction,
rehabilitation, or replacement of school facilities,
including the furnishing and equipping of school
facilities, or the acquisition or lease of real property
for school facilities, and not for any other purpose.
b) Provide a list of the specific school facilities
projects to be funded and certification that the school
district board, community college board, or county office
of education has evaluated safety, class size reduction,
and information technology needs in developing that list.
c) A requirement that the school district board, community
college board, or county office of education conduct an
annual, independent performance audit, conducted in
accordance with the Government Auditing Standards issued by
the Comptroller General of the United States for
performance audits.
d) A requirement that the school district board, community
college board, or county office of education conduct an
SB 423
Page 2
annual, independent financial audit of the proceeds from
the sale of the bonds, conducted in accordance with the
Government Auditing Standards issued by the Comptroller
General of the United States for financial audits, until
all of those proceeds have been expended for the school
facilities projects.
2)Authorizes school districts, community college districts, and
county offices of education to levy a 55% vote ad valorem tax
pursuant to limits specified in the proposition.
3)Requires the governing board of a school district or a
community college district to establish and appoint members to
an independent citizens' oversight committee within 60 days of
the date that the governing board enters the election results
on its minutes. (Education Code (EC) Section 15278(a))
4)Specifies that the purpose of the citizens' oversight
committee shall be to inform the public concerning the
expenditure of bond revenues and compliance with Proposition
39 requirements, including ensuring that bond revenues are
expended only for the purposes authorized by Proposition 39,
including construction, reconstruction, rehabilitation or
replacement of school facilities, furnishing and equipping of
school facilities, or the acquisition or lease or real
property for school facilities and ensuring that no funds are
used for salaries or other school operating expenses. (EC
Section 15278(b))
5)Authorizes the citizens' oversight committee to engage in
activities in furtherance of its purpose, including receiving
and reviewing copies of the annual, independent financial and
performance audits. (EC Section 15278(c))
6)Requires the citizens' oversight committee to issue a report
at least once a year on the results of its activities. (EC
Section 15280(b))
FISCAL EFFECT : This bill is keyed non-fiscal.
COMMENTS : Background . Proposition 39 was passed by voters in
2000. Among others, the Proposition, a Constitutional
Amendment, reduced the voting threshold for the passage of local
general obligations bonds from two-thirds to 55% provided that
the local bond initiative meets the following accountability
SB 423
Page 3
measures:
1)The initiative identifies a list of the specific school
facilities projects that will be funded by bond proceeds.
2)A requirement that the school board, community college board,
or county office of education conduct an annual, independent
performance audit to ensure that the funds have been expended
only on the specific projects listed.
3)A requirement that the school board, community college board,
or county office of education conduct an annual, independent
financial audit of the proceeds from the sale of the bonds
until all of those proceeds have been expended for the school
facilities projects.
Both the financial audit and performance audit must be reviewed
by an independent citizens' oversight committee. AB 1908
(Lempert), Chapter 44, Statutes of 2000, a companion bill to
Proposition 39, requires each district, within 60 days of the
passage of a local bond with 55% to appoint a citizens'
oversight committee to monitor and review expenditures to ensure
compliance with Proposition 39 requirements, and to keep the
public informed about bond expenditures.
This bill requires the audits to be submitted to the citizens'
oversight committee by March 31 each year. The author states,
"This change would allow school districts to take corrective
action regarding any changes necessary to bond spending prior to
the summer construction season. Also, not completing audits by
March 31st could mean that current members of a local BOC �bond
oversight committee] may become termed out prior to being able
to act on the audit findings. This potentially creates a lack
of continuity in this important process. The March 31st
deadline would allow school districts to address any cost
concerns in a timely and efficient manner."
Under current law (EC 41020(h)), local educational agencies are
required to submit its financial audit for the preceding school
fiscal year to the county superintendent of schools by December
14.
Committee amendment . Staff recommends clarifying that the
audits required to be submitted by March 31 are for the
preceding fiscal year.
SB 423
Page 4
Related legislation . SB 911 (De Leon), pending in the Assembly
Local Government Committee, requires, after January 1, 2012,
that the annual report filed by the chief fiscal officer of a
bond-issuers local agency must be filed within 60 days of the
end of an agency's fiscal year. Failure to file the report by
the annual deadline results in a suspension in the expenditure
of bond proceeds until the report is submitted. The report
referenced in SB 911 is a report required by a school district's
chief fiscal officer and not the performance and financial
audits required by Proposition 39.
Prior related legislation . SB 1473 (Wyland), Chapter 294,
Statutes of 2010, required the Proposition 39 annual financial
and performance audits to be conducted in accordance with the
Government Auditing Standards issued by the Comptroller General
of the United States for financial and performance audits
REGISTERED SUPPORT / OPPOSITION :
Support
California League of Bond Oversight Committees (co-sponsor)
Howard Jarvis Taxpayers Association (co-sponsor)
Opposition
None on file
Analysis Prepared by : Sophia Kwong Kim / ED. / (916) 319-2087