BILL NUMBER: AB 2585	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Daly

                        FEBRUARY 21, 2014

   An act to amend Section 42127 of the Education Code, relating to
school finance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2585, as introduced, Daly. School finance: school districts:
budgets.
   Existing law, on or before July 1 of each year requires a school
district to hold a hearing on, and adopt, a budget for the subsequent
fiscal year. Existing law requires the governing board of the school
district to file the adopted budget with the county superintendent
of schools, as specified. Existing law requires the county
superintendent of schools to examine the adopted budget, as
specified, to make certain determinations related to the adopted
budget, and, on or before August 15, to approve, conditionally
approve, or disapprove the adopted budget for each school district.
If the adopted budget is conditionally approved or disapproved,
existing law requires the county superintendent of schools, on or
before August 15, to transmit to the governing board of the school
district, in writing, his or her recommendations regarding revision
of the budget and the reasons for those recommendations.
   This bill would require the public hearing to be conducted in
accordance with a specified provision related to proposed budgets.
The bill, if the adopted budget of a school district is conditionally
approved or disapproved as described above, would require the
governing board of the school district, on or before September 8, and
in conjunction with the county superintendent of schools, to review
and respond to the superintendent's recommendations at a regular
meeting of the governing board of the school district. The bill would
require the response to include any revisions to the adopted budget
and other proposed action to be taken, if any, as a result of the
superintendent's recommendations. By requiring school districts to
undertake additional responsibilities related to the adoption of
budgets, the bill would impose a state-mandated local program.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 42127 of the Education Code is amended to read:

   42127.  (a) On or before July 1 of each year, the governing board
of each school district shall accomplish the following:
   (1) Hold a public hearing  conducted in accordance with
Section 42103  on the budget to be adopted for the subsequent
fiscal year. The budget to be adopted shall be prepared in accordance
with Section 42126. The agenda for that hearing shall be posted at
least 72 hours before the public hearing and shall include the
location where the budget will be available for public inspection.
   (A) For the 2011-12 fiscal year, notwithstanding any of the
standards and criteria adopted by the state board pursuant to Section
33127, each school district budget shall project the same level of
revenue per unit of average daily attendance as it received in the
2010-11 fiscal year and shall maintain staffing and program levels
commensurate with that level.
   (B) For the 2011-12 fiscal year, the school district shall not be
required to demonstrate that it is able to meet its financial
obligations for the two subsequent fiscal years.
   (2) Adopt a budget. Not later than five days after that adoption
or by July 1, whichever occurs first, the governing board of the
school district shall file that budget with the county superintendent
of schools. The budget and supporting data shall be maintained and
made available for public review. If the governing board of the
school district does not want all or a portion of the property tax
requirement levied for the purpose of making payments for the
interest and redemption charges on indebtedness as described in
paragraph (1) or (2) of subdivision (b) of Section 1 of Article XIII
A of the California Constitution, the budget shall include a
statement of the amount or portion for which a levy shall not be
made. For the 2014-15 fiscal year and each fiscal year thereafter,
the governing board of the school district shall not adopt a budget
before the governing board of the school district adopts a local
control and accountability plan, if an existing local control and
accountability plan or annual update to a local control and
accountability plan is not effective for the budget year. The
governing board of a school district shall not adopt a budget that
does not include the expenditures necessary to implement the local
control and accountability plan or the annual update to a local
control and accountability plan that is effective during the
subsequent fiscal year.
   (b) The county superintendent of schools may accept changes in any
statement included in the budget, pursuant to subdivision (a), of
the amount or portion for which a property tax levy shall not be
made. The county superintendent of schools or the county auditor
shall compute the actual amounts to be levied on the property tax
rolls of the school district for purposes that exceed apportionments
to the school district pursuant to Chapter 6 (commencing with Section
95) of Part 0.5 of Division 1 of the Revenue and Taxation Code. Each
school district shall provide all data needed by the county
superintendent of schools or the county auditor to compute the
amounts. On or before August 15, the county superintendent of schools
shall transmit the amounts computed to the county auditor who shall
compute the tax rates necessary to produce the amounts. On or before
September 1, the county auditor shall submit the rate computed to the
board of supervisors for adoption.
   (c) The county superintendent of schools shall do all of the
following:
   (1) Examine the adopted budget to determine whether it complies
with the standards and criteria adopted by the state board pursuant
to Section 33127 for application to final local educational agency
budgets. The county superintendent of schools shall identify, if
necessary, technical corrections that are required to be made to
bring the budget into compliance with those standards and criteria.
   (2) Determine whether the adopted budget will allow the school
district to meet its financial obligations during the fiscal year and
is consistent with a financial plan that will enable the school
district to satisfy its multiyear financial commitments. In addition
to his or her own analysis of the budget of each school district, the
county superintendent of schools shall review and consider studies,
reports, evaluations, or audits of the school district that were
commissioned by the school district, the county superintendent of
schools, the Superintendent, and state control agencies and that
contain evidence that the school district is showing fiscal distress
under the standards and criteria adopted in Section 33127 or that
contain a finding by an external reviewer that more than 3 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. The county superintendent of schools
shall either conditionally approve or disapprove a budget that does
not provide adequate assurance that the school district will meet its
current and future obligations and resolve any problems identified
in studies, reports, evaluations, or audits described in this
paragraph.
   (3) Determine whether the adopted budget includes the expenditures
necessary to implement the local control and accountability plan or
annual update to the local control and accountability plan approved
by the county superintendent of schools.
   (d) (1) On or before August 15, the county superintendent of
schools shall approve, conditionally approve, or disapprove the
adopted budget for each school district. For the 2014-15 fiscal year
and each fiscal year thereafter, the county superintendent of schools
shall disapprove a budget if the county superintendent of schools
determines that the budget does not include the expenditures
necessary to implement a local control and accountability plan or an
annual update to the local control and accountability plan approved
by the county superintendent of schools. If a school district does
not submit a budget to the county superintendent of schools, the
county superintendent of schools shall develop, at school district
expense, a budget for that school district by September 15 and
transmit that budget to the governing board of the school district.
The budget prepared by the county superintendent of schools shall be
deemed adopted, unless the county superintendent of schools approves
any modifications made by the governing board of the school district.
The approved budget shall be used as a guide for the school district'
s priorities. The Superintendent shall review and certify the budget
approved by the county. If, pursuant to the review conducted pursuant
to subdivision (c), the county superintendent of schools determines
that the adopted budget for a school district does not satisfy
paragraph (1), (2), or (3) of that subdivision, he or she shall
conditionally approve or disapprove the budget and, not later than
August 15, transmit to the governing board of the school district, in
writing, his or her recommendations regarding revision of the budget
and the reasons for those recommendations, including, but not
limited to, the amounts of any budget adjustments needed before he or
she can approve that budget. The county superintendent of schools
may assign a fiscal adviser to assist the school district to develop
a budget in compliance with those revisions. In addition, the county
superintendent of schools may appoint a committee to examine and
comment on the superintendent's review and recommendations, subject
to the requirement that the committee report its findings to the
county superintendent of schools no later than August 20. For the
2011-12 fiscal year, notwithstanding any of the standards and
criteria adopted by the state board pursuant to Section 33127, the
county superintendent of schools, as a condition on approval of a
school district budget, shall not require a school district to
project a lower level of revenue per unit of average daily attendance
than it received in the 2010-11 fiscal year nor require the school
district to demonstrate that it is able to meet its financial
obligations for the two subsequent fiscal years.
   (2)  Notwithstanding any other provision of this article, for the
2014-15 fiscal year and each fiscal year thereafter, the budget shall
not be adopted or approved by the county superintendent of schools
before a local control and accountability plan or update to an
existing local control and accountability plan for the budget year is
approved. 
   (3) (A) If the adopted budget of a school district is
conditionally approved or disapproved pursuant to paragraph (1), on
or before September 8, the governing board of the school district, in
conjunction with the county superintendent of schools, shall review
and respond to the recommendations of the county superintendent of
schools at a regular meeting of the governing board of the school
district. The response shall include any revisions to the adopted
budget and other proposed actions to be taken, if any, as a result of
those recommendations.  
   (B) On or before September 8, the governing board of the school
district shall adopt the revised budget and file it with the county
superintendent of schools.  
   (e) On or before September 8, the governing board of the school
district shall revise the adopted budget to reflect changes in
projected income or expenditures subsequent to July 1, and to include
any response to the recommendations of the county superintendent of
schools, shall adopt the revised budget, and shall file the revised
budget with the county superintendent of schools. Before revising the
budget, the governing board of the school district shall hold a
public hearing regarding the proposed revisions, to be conducted in
accordance with Section 42103. In addition, if the adopted budget is
disapproved pursuant to subdivision (d), the governing board of the
school district and the county superintendent of schools shall review
the disapproval and the recommendations of the county superintendent
of schools regarding revision of the budget at the public hearing.
The revised budget and supporting data shall be maintained and made
available for public review.  
   (1) For the 2011-12 fiscal year, notwithstanding any of the
standards and criteria adopted by the state board pursuant to Section
33127, each school district budget shall project the same level of
revenue per unit of average daily attendance as it received in the
2010-11 fiscal year and shall maintain staffing and program levels
commensurate with that level.  
   (2) For the 2011-12 fiscal year, the school district shall not be
required to demonstrate that it is able to meet its financial
obligations for the two subsequent fiscal years.  
   (f) 
   (e)  On or before September 22, the county superintendent
of schools shall provide a list to the Superintendent identifying
all school districts for which budgets may be disapproved. 
   (g) 
    (f)  (1) The county superintendent of schools shall
examine the revised budget to determine whether it (1) complies with
the standards and criteria adopted by the state board pursuant to
Section 33127 for application to final local educational agency
budgets, (2) allows the school district to meet its financial
obligations during the fiscal year, (3) satisfies all conditions
established by the county superintendent of schools in the case of a
conditionally approved budget, and (4) is consistent with a financial
plan that will enable the school district to satisfy its multiyear
financial commitments, and, not later than October 8, shall approve
or disapprove the revised budget. If the county superintendent of
schools disapproves the budget, he or she shall call for the
formation of a budget review committee pursuant to Section 42127.1,
unless the governing board of the school district and the county
superintendent of schools agree to waive the requirement that a
budget review committee be formed and the department approves the
waiver after determining that a budget review committee is not
necessary. Upon the grant of a waiver, the county superintendent of
schools immediately has the authority and responsibility provided in
Section 42127.3. Upon approving a waiver of the budget review
committee, the department shall ensure that a balanced budget is
adopted for the school district by November 30. If no budget is
adopted by November 30, the Superintendent may adopt a budget for the
school district. The Superintendent shall report to the Legislature
and the Director of Finance by December 10 if any school district,
including a school district that has received a waiver of the budget
review committee process, does not have an adopted budget by November
30. This report shall include the reasons why a budget has not been
adopted by the deadline, the steps being taken to finalize budget
adoption, the date the adopted budget is anticipated, and whether the
Superintendent has or will exercise his or her authority to adopt a
budget for the school district. For the 2011-12 fiscal year,
notwithstanding any of the standards and criteria adopted by the
state board pursuant to Section 33127, the county superintendent of
schools, as a condition on approval of a school district budget,
shall not require a school district to project a lower level of
revenue per unit of average daily attendance than it received in the
2010-11 fiscal year nor require the school district to demonstrate
that it is able to meet its financial obligations for the two
subsequent fiscal years.
   (2) Notwithstanding any other law, for the 2014-15 fiscal year and
each fiscal year thereafter, if the county superintendent of schools
disapproves the budget for the sole reason that the county
superintendent of schools has not approved a local control and
accountability plan or an annual update to the local control and
accountability plan filed by the school district pursuant to Section
52061, the county superintendent of schools shall not call for the
formation of a budget review committee pursuant to Section 42127.1.

   (h) 
    (g)  Not later than October 8, the county superintendent
of schools shall submit a report to the Superintendent identifying
all school districts for which budgets have been disapproved or
budget review committees waived. The report shall include a copy of
the written response transmitted to each of those school districts
pursuant to paragraph (1) of subdivision (d). 
   (i) 
    (h)  Notwithstanding any other provision of this
section, the budget review for a school district shall be governed by
paragraphs (1), (2), and (3), rather than by  subdivisions
(e) and (g),  paragraph (3) of subdivision (d) and
subdivision (f),  if the governing board of the school district
so elects and notifies the county superintendent of schools in
writing of that decision, not later than October 31 of the
immediately preceding calendar year. On or before July 1, the
governing board of a school district for which the budget review is
governed by this subdivision, rather than by  subdivisions
(e) and (g),   paragraph (3) of subdivision (d) and
subdivision (f),  shall conduct a public hearing regarding its
proposed budget in accordance with Section 42103.
   (1) If the adopted budget of a school district is disapproved
pursuant to subdivision (d), on or before September 8, the governing
board of the school district, in conjunction with the county
superintendent of schools, shall review the superintendent's
recommendations at a regular meeting of the governing board of the
school district and respond to those recommendations. The response
shall include any revisions to the adopted budget and other proposed
actions to be taken, if any, as a result of those recommendations.
   (2) On or before September 22, the county superintendent of
schools shall provide a list to the Superintendent identifying all
school districts for which a budget may be tentatively disapproved.
   (3) Not later than October 8, after receiving the response
required under paragraph (1), the county superintendent of schools
shall review that response and either approve or disapprove the
budget. Except as provided in paragraph (2) of subdivision 
(g),   (f),  if the county superintendent of
schools disapproves the budget, he or she shall call for the
formation of a budget review committee pursuant to Section 42127.1,
unless the governing board of the school district and the county
superintendent of schools agree to waive the requirement that a
budget review committee be formed and the department approves the
waiver after determining that a budget review committee is not
necessary. Upon the grant of a waiver, the county superintendent has
the authority and responsibility provided to a budget review
committee in Section 42127.3. Upon approving a waiver of the budget
review committee, the department shall ensure that a balanced budget
is adopted for the school district by November 30. The Superintendent
shall report to the Legislature and the Director of Finance by
December 10 if any school district, including a school district that
has received a waiver of the budget review committee process, does
not have an adopted budget by November 30. This report shall include
the reasons why a budget has not been adopted by the deadline, the
steps being taken to finalize budget adoption, and the date the
adopted budget is anticipated. For the 2011-12 fiscal year,
notwithstanding any of the standards and criteria adopted by the
state board pursuant to Section 33127, the county superintendent of
schools, as a condition on approval of a school district budget,
shall not require a school district to project a lower level of
revenue per unit of average daily attendance than it received in the
2010-11 fiscal year nor require the school district to demonstrate
that it is able to meet its financial obligations for the two
subsequent fiscal years.
   (4) Not later than 45 days after the Governor signs the annual
Budget Act, the school district shall make available for public
review any revisions in revenues and expenditures that it has made to
its budget to reflect the funding made available by that Budget Act.

   (j) 
    (i)  Any school district for which the county board of
education serves as the governing board of the school district is not
subject to subdivisions (c) to  (h),   (g),
 inclusive, but is governed instead by the budget procedures set
forth in Section 1622.
  SEC. 2.  If the Commission on State Mandates determines that this
act contains costs mandated by the state, reimbursement to local
agencies and school districts for those costs shall be made pursuant
to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of
the Government Code.