BILL NUMBER: AB 2585 CHAPTERED
BILL TEXT
CHAPTER 309
FILED WITH SECRETARY OF STATE SEPTEMBER 9, 2014
APPROVED BY GOVERNOR SEPTEMBER 9, 2014
PASSED THE SENATE AUGUST 19, 2014
PASSED THE ASSEMBLY AUGUST 20, 2014
AMENDED IN SENATE AUGUST 13, 2014
AMENDED IN ASSEMBLY MARCH 25, 2014
INTRODUCED BY Assembly Member Daly
FEBRUARY 21, 2014
An act to amend Sections 1622 and 42127 of the Education Code,
relating to school finance.
LEGISLATIVE COUNSEL'S DIGEST
AB 2585, Daly. School finance: annual budgets.
(1) Existing law, on or before July 1 of each year, requires a
county board of education to hold a public hearing on the proposed
county school service fund budget for that fiscal year, requires the
county board of education to adopt an annual budget for the budget
year, and requires the county board of education to file the budget
with the Superintendent of Public Instruction, the county board of
supervisors, and the county auditor. Existing law requires the
Superintendent to examine the budget, as specified, and, on or before
August 15, approve or disapprove the budget. If the budget is
disapproved, existing law requires the Superintendent, on or before
August 15, to transmit to the county office of education, in writing,
his or her recommendations regarding revision of the budget and the
reasons for those recommendations. Existing law, on or before
September 8, and after a public hearing regarding the proposed
revisions to the budget, as specified, requires the county board of
education to revise the county office of education budget to reflect
certain fiscal changes, to include any response to the
recommendations of the Superintendent, to adopt the revised budget,
and to file the revised budget with the Superintendent, the county
board of supervisors, and the county auditor. Existing law authorizes
the county office of education to elect to use an alternative budget
review process by providing the Superintendent with written notice,
as specified.
This bill, if the budget of a county office of education is
disapproved, would instead require the county superintendent of
schools and the county board of education, on or before September 8,
to review the recommendations of the Superintendent at a regularly
scheduled meeting of the county board of education and to respond to
those recommendations. The bill would require that response to
include any revisions to the adopted budget and other proposed
actions to be taken, if any, as a result of those recommendations.
The bill would repeal the authority of a county office of education
to elect to use the alternative budget review process. The bill would
also make nonsubstantive changes to these provisions. By requiring a
county superintendent of schools to undertake additional
responsibilities related to reviewing the recommendations of the
Superintendent, the bill would impose a state-mandated local program.
(2) Existing law, on or before July 1 of each year, requires a
school district to hold a public 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. Existing
law, on or before September 8, and after a public hearing regarding
the proposed revisions to the budget, as specified, requires the
governing board of the school district to revise the adopted budget
to reflect certain fiscal changes, to include any response to the
recommendations of the county superintendent of schools, to adopt the
revised budget, and to file the revised budget with the county
superintendent of schools. Existing law, if the adopted budget is
disapproved, also requires the governing board of the school district
and the county superintendent of schools to review the disapproval
and the recommendations of the county superintendent of schools
regarding revision of the budget at the public hearing. Existing law
authorizes the governing board of a school district to elect to use
an alternative budget review process by providing the county
superintendent of schools with written notice, as specified.
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 instead 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 actions to be taken, if any, as a
result of the superintendent's recommendations. The bill would repeal
the authority of the governing board of a school district to elect
to use the alternative budget review process. The bill would also
make nonsubstantive changes to these provisions. By requiring school
districts to undertake additional responsibilities related to the
conditional approval of budgets, the bill would impose a
state-mandated local program.
(3) 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.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1622 of the Education Code is amended to read:
1622. (a) On or before July 1 of each fiscal year, the county
board of education shall adopt an annual budget for the budget year
and shall file the budget with the Superintendent, the county board
of supervisors, and the county auditor. The budget, and supporting
data, shall be maintained and made available for public review. The
budget shall indicate the date, time, and location at which the
county board of education held the public hearing required under
Section 1620. For the 2014-15 fiscal year and each fiscal year
thereafter, the county board of education shall not adopt a budget
before the county board of education adopts a local control and
accountability plan or approves an update to an existing local
control and accountability plan if an existing local control and
accountability plan or update to a local control and accountability
plan is not effective during the budget year. The county board of
education shall not adopt a budget that does not include the
expenditures identified in the local control and accountability plan
and any annual update to the local control and accountability plan
that will be effective for the budget year. 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 Superintendent before a local control and accountability plan
or update to an existing local control and accountability plan for
the budget year is approved.
(b) (1) The Superintendent shall examine the budget to determine
if it (A) complies with the standards and criteria adopted by the
state board pursuant to Section 33127 for application to final local
educational agency budgets, (B) allows the county office of education
to meet its financial obligations during the fiscal year, and (C) is
consistent with a financial plan that will enable the county office
of education to satisfy its multiyear financial commitments. In
addition, the Superintendent shall identify any technical corrections
to the budget that must be made. On or before August 15, the
Superintendent shall approve or disapprove the budget and, in the
event of a disapproval, transmit to the county office of education in
writing his or her recommendations regarding revision of the budget
and the reasons for those recommendations.
(2) For the 2014-15 fiscal year and each fiscal year thereafter,
the Superintendent shall disapprove a budget if any of the following
occur:
(A) The Superintendent has not approved a local control and
accountability plan or an annual update to the local control and
accountability plan filed by a county board of education pursuant to
Section 52070.5 that is effective for the budget year.
(B) The Superintendent determines that the budget does not include
the expenditures necessary to implement the local control and
accountability plan or an annual update to the local control and
accountability plan that is effective for that budget year.
(c) In the event of the disapproval of the budget of a county
office of education pursuant to subdivision (b), on or before
September 8, the county superintendent of schools and the county
board of education shall review the recommendations of the
Superintendent at a regularly scheduled meeting of the county board
of education and respond to those recommendations. That response
shall include any revisions to the adopted budget and other proposed
actions to be taken, if any, as a result of those recommendations.
(d) (1) The Superintendent shall examine the revised budget as
provided in subdivision (c) to determine if it complies with the
standards and criteria adopted by the state board pursuant to Section
33127 for application to final local educational agency budgets and,
no later than October 8, shall approve or disapprove the revised
budget. For the 2014-15 fiscal year and each fiscal year thereafter,
the Superintendent shall disapprove a revised budget if the
Superintendent determines that the revised budget does not include
the expenditures necessary to implement the local control and
accountability plan or an annual update to the local control and
accountability plan approved by the Superintendent pursuant to
Section 52070.5 that is effective for the budget year. If the
Superintendent disapproves the budget, he or she shall call for the
formation of a budget review committee pursuant to Section 1623.
(2) Notwithstanding any other law, for the 2014-15 fiscal year and
each fiscal year thereafter, if the Superintendent disapproves the
budget for the sole reason that the Superintendent has not approved a
local control and accountability plan or an annual update to the
local control and accountability plan filed by the county board of
education pursuant to Section 52070.5, the Superintendent shall not
call for the formation of a budget review committee pursuant to
Section 1623.
(e) Not later than 45 days after the Governor signs the annual
Budget Act, the county office of education 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.
SEC. 2. 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.
(2) (A) 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 for the budget
year.
(B) Commencing with budgets adopted for the 2015-16 fiscal year,
the governing board of a school district that proposes to adopt a
budget, or revise a budget pursuant to subdivision (e), that includes
a combined assigned and unassigned ending fund balance in excess of
the minimum recommended reserve for economic uncertainties adopted by
the state board pursuant to subdivision (a) of Section 33128, shall,
at the public hearing held pursuant to paragraph (1), provide all of
the following for public review and discussion:
(i) The minimum recommended reserve for economic uncertainties for
each fiscal year identified in the budget.
(ii) The combined assigned and unassigned ending fund balances
that are in excess of the minimum recommended reserve for economic
uncertainties for each fiscal year identified in the budget.
(iii) A statement of reasons that substantiates the need for an
assigned and unassigned ending fund balance that is in excess of the
minimum recommended reserve for economic uncertainties for each
fiscal year that the school district identifies an assigned and
unassigned ending fund balance that is in excess of the minimum
recommended reserve for economic uncertainties, as identified
pursuant to clause (ii).
(C) The governing board of a school district shall include the
information required pursuant to subparagraph (B) in its budgetary
submission each time it files an adopted or revised budget with the
county superintendent of schools. The information required pursuant
to subparagraph (B) shall be maintained and made available for public
review.
(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.
(4) Determine whether the adopted budget includes a combined
assigned and unassigned ending fund balance that exceeds the minimum
recommended reserve for economic uncertainties. If the adopted budget
includes a combined assigned and unassigned ending fund balance that
exceeds the minimum recommended reserve for economic uncertainties,
the county superintendent of schools shall verify that the school
district complied with the requirements of subparagraphs (B) and (C)
of paragraph (2) of subdivision (a).
(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 the governing board of 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 budget prepared by the county superintendent of
schools shall also comply with the requirements of subparagraph (B)
of paragraph (2) of subdivision (a). 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),
(3), or (4) 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.
(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) 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.
(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.
(f) (1) The county superintendent of schools shall examine the
revised budget as provided in paragraph (3) of subdivision (d) to
determine whether it (A) complies with the standards and criteria
adopted by the state board pursuant to Section 33127 for application
to final local educational agency budgets, (B) allows the school
district to meet its financial obligations during the fiscal year,
(C) satisfies all conditions established by the county superintendent
of schools in the case of a conditionally approved budget, (D) 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, and (E)
whether the revised budget complies with the requirements of
subparagraph (B) of paragraph (2) of subdivision (a). 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.
(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 governing board of the school
district pursuant to Section 52070, the county superintendent of
schools shall not call for the formation of a budget review committee
pursuant to Section 42127.1.
(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).
(h) 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.
(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), inclusive, but is governed instead by the
budget procedures set forth in Section 1622.
SEC. 3. 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.