BILL ANALYSIS �
SB 821
Page 1
Date of Hearing: June 22, 2011
ASSEMBLY COMMITTEE ON EDUCATION
Julia Brownley, Chair
SB 821 (Fuller) - As Amended: May 17, 2011
SENATE VOTE : 37-0
SUBJECT : School district reorganization: fiscal actions
affecting newly organized or reorganized school districts
SUMMARY : Clarifies and expands existing law with respect to
the fiscal oversight of newly formed or reorganized school
districts during the period between the date of approval and the
effective date of that organizational change. Specifically,
this bill :
1)Requires the existing or interim board and administrators of a
school district that is part of the new district formation or
reorganization to provide written notification to the county
superintendent of schools (county superintendent), and provide
relevant documents and information, no less than 10 schooldays
before taking any action that could have a material fiscal
impact, or impose a debt or liability, on the existing or new
school district.
2)Authorizes the county superintendent to review any action
taken by any interim or existing governing board or
administrators that could have a material fiscal impact, or
impose a debt or liability, on the existing or new school
district; also authorizes the county superintendent to stay or
rescind that action, if that action is unnecessary for the
immediate functioning of the existing or newly formed school
district.
3)Requires the county superintendent to notify the interim or
existing governing board or administrators of his or her
justification for denying the district's request.
4)Requires a school district to provide, in a timely manner, any
documents requested by the county superintendent as part of a
review performed by the county superintendent pursuant to 2)
above.
5)Provides that the proposed requirements apply irrespective of
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the district's fiscal status as reflected in its budget or
interim certification.
EXISTING LAW :
1)States the intent of the Legislature that local educational
needs and concerns serve as the basis for future
reorganizations of districts in each county.
2)Establishes a process whereby locally developed reorganization
petitions that:
a) Transfer territory between districts are reviewed by the
county committee on school district organization (county
committee) for approval or disapproval in a public hearing;
and, allows for the county committee decision on a petition
dealing with a transfer of territory to be appealed to the
SBE for review and consideration.
b) Create one or more new school districts, where the
governing boards of the affected school districts consent
to the petition, where the county superintendent with
jurisdiction over the affected school districts grants
approval to the county committee and the county committee
chooses to accept that authority, and where the county
committee enters into an agreement to share the costs of
complying with the requirements of the California
Environmental Quality Act (CEQA) on behalf of any or all
affected school districts, are reviewed by the county
committee for approval or disapproval in a public hearing.
c) Deal with all other district organizational issues are
reviewed by the county committee in public hearing and
submitted with a recommendation to the SBE; and, requires
the SBE to hear such petitions in public hearing, receive a
recommendation from California Department of Education
(CDE) staff, and formally approve or disapprove those
petitions.
3)Requires approved petitions to be returned to the local
jurisdiction, where the county superintendent is required to
call for an election at which the petition is put to a vote of
the affected electorate; also subjects these petitions to
review under CEQA.
4)Authorizes the county superintendent, effective upon the
certification of the school district reorganization election
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results, to intervene during the transition period before the
newly organized district becomes operational if there is
reason to believe that any actions of the outgoing school
districts may jeopardize the fiscal solvency of the new
district.
FISCAL EFFECT : This bill is keyed non-fiscal; however, due to
possible fiscal impacts, the Assembly Rules Committee has
determined that this bill, if passed by this committee, will be
re-referred to the Assembly Appropriations Committee.
COMMENTS : The process for consolidating or reorganizing school
districts is clearly defined state law. Each county has a
county committee that acts as the first level, local
decision-making body with respect to reorganization proposals
and is generally responsible for overseeing the organization of
local school districts. According to the CDE, 40 percent of the
counties have committees that are separate from the county board
of education. In most of the remainder of the counties, the
county board of education acts as the county committee; however,
where all of the territory of a county superintendent is
included in one unified school district, the governing board of
the unified school district serves as the county committee.
The county committee responds to official reorganization
proposals submitted for review, studies the organization of
local districts, and formulates plans and recommendations for
reorganization. Proposals for school district reorganization
come before the county committee in one of two ways, either by
citizen petition or public agency resolution; public agencies
could include cities or counties, as well as school districts.
Reorganization proposals before the county committee are heard
in public hearing.
Depending on the nature of the reorganization proposal, the
county committee is authorized to either approve or disapprove
the proposal, or to make a recommendation to the State Board of
Education (SBE). In the case of disapproved proposals that are
appealed to the SBE, or where the proposal goes to the SBE with
a county committee recommendation, the SBE holds a public
hearing before approving or disapproving the petition.
Proposals approved by the SBE, or where appropriate by the
county committee, are returned to the county of origin, where
the county superintendent is required to call for an election at
which the petition is put to a vote of the affected electorate
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(i.e., voters in all jurisdictions impacted by the change).
Reorganization can be a lengthy process, and can be
controversial; a successful reorganization proposal,
particularly one in which previous districts cease to exist and
a new district or districts come into being, often results in
numerous administrative changes, and can involve a change in
governance in the form of a newly elected school district
governing board that replaces the previous board or boards.
Existing law deals in a detailed manner with many of the various
administrative and fiscal effects of a school district
reorganization, including providing statutory guidance or
requirements relative to the treatment of school district
employees, to the allocation of property, funds and funding,
obligations, bonded indebtedness, and to the calculation of
school district revenue limits. All of the required changes,
however, become effective on the specific date on which
authority shifts from any previously existing school district
governing board or boards to the new governing board; during the
transitional period between certification of the election
results and the date upon which the reorganization becomes
effective, an outgoing governing board would still hold the
authority to take actions that would impact the newly forming
district.
Under existing law, the county superintendent does have the
authority to intervene during the transition period before the
newly organized district becomes operational, but only if there
is reason to believe that any actions of the outgoing school
districts may jeopardize the fiscal solvency of the new
district; this authority is granted as part of the county
superintendent's general responsibilities for fiscal oversight
of school districts. However, this authority may not be
sufficient to ensure that the interests of the pupils, the
community, and the state are protected during the transition
period; this authority may also not be sufficiently clear under
existing law to allow for smooth reorganizational transitions
without litigation.
An example of the lack of clarity that exists under current law:
In November of 2007, Sacramento voters approved the
reorganization/unification of the Grant Joint Union High School
District (GJUHSD) and three smaller elementary school districts
into one district to be known as the Twin Rivers Unified School
District; the reorganization was effective July 1, 2008.
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In early 2008, the outgoing governing board of GJUHSD, among
other actions, awarded severance buyout packages to 14
administrators. At that time, the county superintendent of
schools raised concerns about the legal propriety of the actions
and how the issues were presented to the outgoing board, and
refused to process the payroll warrants associated with the
severance buyout package. The GJUHSD filed suit in Superior
Court of Sacramento seeking to compel the county superintendent
and the county office of education (COE) to process the approved
payroll warrants - citing that the county superintendent of
schools and COE did not have the right to substitute their
judgment for that of the governing board of the GJUHSD and that
none of the concerns about legal propriety had merit. The
Superior Court, in June 2008, ruled in favor of GJUHSD
determining that the county superintendent abused his discretion
under the Education Code in refusing to process the payroll
warrants and that the county superintendent failed to produce
substantial evidence that the severance buyouts were improperly
adopted. The county superintendent and the Sacramento County
Office of Education (SCOE) appealed that lower court decision.
In December 2009, the Third Appellate Court, after examining the
respective roles of the GJUHSD and the county superintendent of
schools, concluded that the county superintendent was within his
authorities by refusing to process the severance payroll
warrants, that he did not abuse his discretion in taking that
action. The Appellate Court pointed out that statute vests to
county superintendents of schools general oversight powers and,
specifically, the authority to act as a watchdog for each school
district's fiscal affairs, and that current law, through review
of legislative history, gave the county superintendent of
schools a prompt, effective means of stopping wasteful or
unnecessary expenditures by the outgoing governing boards of
school districts within his/her jurisdiction. Accordingly, the
Appellate Court overturned the writ of mandate.
Seven additional lawsuits have been filed concerning issues
between the governing board of TRUSD, and former administrators
and governing board members of GJUHSD; these lawsuits are
related to the disposition of equipment or payment of funds that
did or did not occur during, or as a result of actions taken
during, the transitional period.
According to the author, the lack of clarity in existing law "is
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a known problem that can be easily remedied." The author goes
on to state that this bill "is a proactive step to avoid
districts having to spend money on litigation and help people
who are thinking about doing a unification because they aren't
worried about the risk."
Committee amendments: Committee staff recommends the following
technical amendments to this bill:
1)The bill requires that the county superintendent notify "the
existing or interim reorganized school district governing
board or the school district administrators in writing of his
or her justification for the exercise of authority under
�these provisions] to deny the request." However, there is
not necessarily a request made by the district; the clear
intent of this provision is to require the county
superintendent to provide a justification when the authority
to stay or rescind an action by the existing or interim
governing board or administrators is used. The language of
the bill should be amended to strike out the ambiguous phrase,
"deny the request" and instead clarify that the use of the
stay or rescind authority is to be justified.
2)The bill provides that its proposed requirements apply
irrespective of the district's fiscal status as reflected in
the district's budget or interim certification; however, the
bill proposes both requirements and authorities that are
integral to the intent of the bill. The bill should be
amended to clarify that all provisions of the bill, both
requirements and authorities, apply irrespective of the
district's fiscal status.
Previous and related legislation: AB 504 (Williams), pending in
the Senate Committee on Governance and Finance, authorizes any
newly unified school district in the County of Santa Barbara to
continue the collection of the parcel taxes originally imposed
and collected in former school districts. AB 174 (Carter),
Chapter 314, Statutes of 2009, streamlines the process for
specified school district reorganizations. AB 2243 (Carter),
vetoed in 2008, was substantially similar to AB 174. AB 1642
(Salinas), Chapter 344, Statutes of 2005, makes changes to the
school district reorganization process, including authorizing a
county committee on school district reorganization to abolish a
common governing board of an elementary district and a high
school district upon a vote of the electors of the respective
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districts. AB 780 (Cogdill), Chapter 652, Statutes of 2004,
authorized Fresno, Humboldt and Ventura counties to locally
approve school district unifications through January 1, 2009
without receiving the further approval of the SBE; it also
required the approval of the SBE in the event that the county
decision on a unification proposal was appealed. AB 2841
(Salinas), vetoed in 2004, proposed streamlining changes to the
process similar to AB 1642. SB 977 (Solis), Chapter 599,
Statutes of 2000, prohibits an action to reorganize the
boundaries of a school district without the consent of a
majority of the members of the governing board of the school
district if the school district has obtained an emergency loan
from the state, and the school district has a pupil population
from low income households.
REGISTERED SUPPORT / OPPOSITION :
Support
California County Superintendents Educational Services
Association
Kern County Superintendent of Schools
Los Angeles County Office of Education
Riverside County Superintendent of Schools
Twin Rivers Unified School District
Opposition
None on file
Analysis Prepared by : Gerald Shelton / ED. / (916) 319-2087