BILL ANALYSIS                                                                                                                                                                                                    �




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de Le�n, Chair


          SB 407 (Hill) - Local government employment contracts.
          
          Amended: April 1, 2013          Policy Vote: G&F 6-0
          Urgency: No                     Mandate: Yes
          Hearing Date: April 15, 2013                            
          Consultant: Mark McKenzie       
          
          This bill meets the criteria for referral to the Suspense File. 

          
          Bill Summary: SB 407 would extend specified limitations and  
          requirements that currently apply to local agency executive  
          employment contracts to contracts between a local agency and  
          certain deputy and assistant executive officers and other  
          persons whose positions are held by an employment contract.

          Fiscal Impact: Unknown state-reimbursable local costs.  Costs  
          incurred by many local agencies are likely to be minimal, but if  
          only 5% of over 6,000 local entities to which this bill would  
          apply incur one-time costs of $1,000 and a successful  
          reimbursement claim is filed, total statewide General Fund costs  
          would be over $300,000. (see staff comments)

          Background: Existing law generally provides, under the  
          Meyers-Milias-Brown Act and certain provisions of the Education  
          Code, that collective bargaining and representation procedures  
          do not apply to executive employees, such as county  
          administrators, city managers, special district managers, school  
          superintendents, and community college presidents that report to  
          local elected governing boards pursuant to an employment  
          contract.  

          In response to the scandal involving local officials in the City  
          of Bell in 2010, the Legislature approved AB 1344 (Feuer), Chap  
          692/2011, which placed new restrictions and requirements on  
          employment contracts that apply to local agency chief executive  
          officers and persons employed as the head of a local agency  
          department who are not subject to collective bargaining and  
          representation procedures in existing law.  Among other things,  
          AB 1344: 
                 Prohibits employment contracts from providing for  
               automatic renewal of the contract if it includes automatic  








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               compensation increases that exceed a cost-of-living  
               adjustment, or a maximum cash settlement that exceeds 18  
               months of salary plus benefits, or remaining contracted  
               salary, whichever is less.
                 Requires employment contracts to provide for  
               reimbursement of salary provided as paid leave pending an  
               investigation, funds provided for legal defense, and cash  
               settlements related to termination if that person is  
               convicted of a crime involving abuse of position. 
                 Prohibits local agency legislative bodies from calling a  
               special meeting to discuss or make compensation decisions  
               for local agency executive employees.

          Existing law does not explicitly apply these requirements to  
          local agency employment contracts with deputy or assistant chief  
          executive employees or other persons whose position is held by  
          an employment contract.

          Proposed Law: This bill would explicitly apply existing law's  
          requirements on employment contracts between a local agency and  
          specified local agency executive employees to employment  
          contracts between a local agency and any person who is a deputy  
          or assistant chief executive officer, and other persons whose  
          positions are held by an employment contract.

          Staff Comments: SB 407 would impose a reimbursable  
          state-mandated local program by placing new requirements on  
          local officials with respect to certain employment contracts  
          that are executed or renewed by local agencies.  Specifically,  
          the bill would prohibit local agency employment contracts with  
          additional classes of employees from containing provisions  
          authorizing specified automatic compensation increases or cash  
          settlements exceeding certain statutory requirements.  The bill  
          would apply to all local public agencies, including general law  
          cities, charter cities, counties, school districts, and special  
          districts, and would require changes to employment contracts and  
          human resources procedures involving legal staff time.  Total  
          reimbursable mandate costs are unknown, and would depend upon  
          whether affected agencies submit a successful claim for  
          reimbursement with the Commission on State Mandates.  These  
          costs would likely be relatively minor for most agencies, and  
          many would forego reimbursement.  If five percent of the over  
          6000 affected agencies incur costs of over $1,000 and file a  
          successful claim, however, total statewide costs would exceed  








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          $300,000.  Most of these costs would be one-time, with minor  
          ongoing costs.