BILL NUMBER: SB 130 CHAPTERED
BILL TEXT
CHAPTER 20
FILED WITH SECRETARY OF STATE JULY 22, 2009
APPROVED BY GOVERNOR JULY 22, 2009
PASSED THE SENATE JUNE 1, 2009
PASSED THE ASSEMBLY JULY 9, 2009
AMENDED IN SENATE MAY 6, 2009
AMENDED IN SENATE APRIL 13, 2009
INTRODUCED BY Senator Denham
(Coauthor: Assembly Member Caballero)
FEBRUARY 9, 2009
An act relating to the King City Joint Union High School District,
making an appropriation therefor, and declaring the urgency thereof,
to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 130, Denham. King City Joint Union High School District.
(1) Existing law provides for emergency apportionments to school
districts subject to specified conditions including, in certain
circumstances, the repayment of an emergency loan over a period of no
more than 10 years and the appointment by the Superintendent of
Public Instruction of an administrator who would exercise the powers
and responsibilities of the governing board of the school district.
This bill would express the intent of the Legislature to provide
emergency apportionment assistance to the King City Joint Union High
School District, and require the Superintendent to assume all the
rights, duties, and powers of the governing board of the King City
Joint Union High School District and to appoint, in consultation with
the Monterey County Superintendent of Schools, a state administrator
to act on behalf of the Superintendent in exercising the
Superintendent's authority over the school district.
The bill would continue the authority of the Superintendent and
the state administrator over the school district until certain
enumerated conditions are met, including the completion of assessment
and improvement plans for the school district.
The bill would require the County Office Fiscal Crisis and
Management Assistance Team (FCMAT) to provide specified assistance
relating to the development of a multiyear financial recovery plan,
the preparation of budget reports, and the recommendation of
activities that could enhance revenue or achieve cost savings.
The bill would require the school district to bear 100% of costs
associated with implementing the provisions of the bill relating to
the administration of the emergency apportionment assistance and the
activities of the FCMAT, thereby imposing a state-mandated local
program.
The bill would appropriate $5,000,000 from the General Fund to the
Superintendent for apportionment as an emergency loan to the King
City Joint Union High School District, and specify procedures for
repayment of the loan. In addition, the bill would authorize the
district to augment the emergency loan with an additional $8,000,000
of lease financing in order to increase the emergency loan to a total
of no more than $13,000,000. The bill would authorize the school
district to sell property owned by the district and use the proceeds
from the sale to reduce or retire the emergency loan, and would
prohibit the district from being eligible for financial hardship
assistance under the Leroy F. Greene School Facilities Act of 1998.
(2) This bill would make a legislative finding and declaration
that the unique circumstances of the King City Joint Union High
School District warrant the enactment of a special statute.
(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 no reimbursement is required by this
act for a specified reason.
(4) This bill would declare that it is to take effect immediately
as an urgency statute.
Appropriation: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) Providing a quality education that meets the unique needs of
King City public school pupils is a fundamental goal that should not
be jeopardized.
(b) On December 4, 2007, the Monterey County Office of Education
declared the King City Joint Union High School District a "lack of
going concern" and appointed a fiscal advisor to monitor the
operations of the district.
(c) The budget analysis conducted by the county office indicates
that the district is deficit spending, is unable to maintain its
reserve for economic uncertainty, and will have a negative fund
balance for at least the current and two subsequent fiscal years.
(d) The district is facing a fiscal and cash insolvency as a
result of organizational decisionmaking and the loss of an appeal for
a recent Public Employee Relations Board (PERB) ruling that resulted
in increased employee compensation costs and continued deficit
spending.
(e) The district is declining in enrollment, which is further
exacerbating its fiscal circumstances.
(f) The King City Joint Union High School District is projected to
run out of cash to support its routine operations and expenditures
by March 2009, and it will require an emergency appropriation from
the state in order to continue the delivery of educational services
to pupils enrolled in the district.
SEC. 2. It is the intent of the Legislature to provide emergency
appropriation assistance to the King City Joint Union High School
District, and invoke the provisions of Article 2 (commencing with
Section 41320) of, and Article 2.5 (commencing with Section 41325)
of, Chapter 3 of Part 24 of Division 3 of Title 2 of the Education
Code, except as otherwise provided in this act, in order to restore
the district to fiscal solvency.
SEC. 3. As provided in subdivision (b) of Section 41326 of the
Education Code, the Superintendent of Public Instruction shall assume
all legal rights, duties, and powers of the King City governing
board and shall appoint a state administrator, in consultation with
the county superintendent, to act on his or her behalf in carrying
out the requirements of Article 2 (commencing with Section 41320) of,
and Article 2.5 (commencing with Section 41325) of, Chapter 3 of
Part 24 of Division 3 of Title 2 of the Education Code.
Notwithstanding subdivision (e) of Section 41326 of the Education
Code, the authority of the Superintendent of Public Instruction and
the state administrator shall continue until all of the following
occur:
(a) (1) At any time after one complete fiscal year has elapsed
following the district's acceptance of a loan as described in
subdivision (a) of Section 41326 of the Education Code, the state
administrator determines, and so notifies the Superintendent of
Public Instruction and the county superintendent of schools, that
future compliance by the school district with the recovery plans
approved pursuant to paragraph (2) is probable.
(2) The Superintendent of Public Instruction may return power to
the governing board for any area listed in subdivision (a) of Section
41327.1 of the Education Code, if performance under the recovery
plan for that area has been demonstrated to the satisfaction of the
Superintendent of Public Instruction.
(b) The Superintendent of Public Instruction has approved all of
the recovery plans referred to in subdivision (a) of Section 41327 of
the Education Code, and the County Office Fiscal Crisis and
Management Assistance Team completes the improvement plans specified
in Section 41327.1 of the Education Code and has completed a minimum
of two reports identifying the school district's progress in
implementing the improvement plans.
(c) The state administrator certifies that all necessary
collective bargaining agreements have been negotiated and ratified,
and that the agreements are consistent with the terms of the recovery
plans.
(d) The school district has completed all reports required by the
Superintendent of Public Instruction and the state administrator.
(e) The state administrator certifies that the members of the
school board and district personnel, as appropriate, have
successfully completed the training specified in subdivision (b) of
Section 7 of this act.
(f) The Superintendent of Public Instruction determines that
future compliance by the school district with the recovery plans
approved pursuant to subdivision (b) is probable.
SEC. 4. In addition to the implementation of subdivision (b) of
Section 41325 of the Education Code, it is the intent of the
Legislature that the Superintendent of Public Instruction, operating
through the appointed state administrator, do all of the following:
(a) Work with the staff and governing board of the King City Joint
Union High School District to identify the procedures and programs
that the district will implement during the 2008-09 school year and
future school years that do all of the following:
(1) Significantly raise pupil achievement.
(2) Improve pupil attendance.
(3) Lower pupil dropout rate.
(4) Increase parental involvement.
(5) Attract, retain, and train a quality teaching staff.
(6) Manage fiscal expenditures in a manner that is consistent with
the current and projected revenues of the district.
(b) Analyze the identified procedures and programs and, where
applicable and appropriate, protect, maintain, and expand them as the
budget of the district allows. The state administrator shall report
any findings applicable to this section to the Superintendent of
Public Instruction and the education committees of the Legislature.
(c) To the extent allowed by district finances, maintain, under
the revised program, core educational reforms that will lead to
districtwide improvement of academic achievement, including, but not
necessarily limited to, educational reforms targeting underperforming
and Program Improvement schools and other reforms that have
demonstrated measurable success.
(d) Consider for purposes of efficiency and cost containment an
analysis of the unification of the King City Joint Union High School
District with the King City Elementary School District, any other
school district located within the general high school attendance
area, or both.
SEC. 5. (a) The County Office Fiscal Crisis and Management
Assistance Team (FCMAT) shall, with concurrence from the
Superintendent of Public Instruction, do all of the following:
(1) Provide assistance to the state administrator in the
development of the first annual multiyear financial recovery plan
required under paragraph (2) of subdivision (a) of Section 41327 of
the Education Code.
(2) Provide assistance to the state administrator in the
development of the adopted budget and interim reports.
(3) Recommend to the Superintendent of Public Instruction any
studies or activities that should be undertaken by the state
administrator to enhance revenue or achieve cost savings.
(4) Provide any other assistance as described in Section 42127.8
of the Education Code.
(b) The district shall bear 100 percent of all costs associated
with implementing Article 2.5 (commencing with Section 41325) of
Chapter 3 of Part 24 of Title 2 of the Education Code, including the
activities of the FCMAT. The FCMAT's assistance under this section
shall continue until the district is certified as positive pursuant
to the definition in paragraph (1) of subdivision (a) of Section
42131 of the Education Code, or until all legal rights, duties, and
powers are returned to the board, whichever comes first.
SEC. 6. For the purposes of Article 2 (commencing with Section
41320) of, and Article 2.5 (commencing with Section 41325) of,
Chapter 3 of Part 24 of Division 3 of Title 2 of the Education Code,
the administrator is a public school employer within the meaning of
the Educational Employment Relations Act (Chapter 10.7 (commencing
with Section 3540) of Division 4 of Title 1 of the Government Code).
SEC. 7. (a) The Superintendent of Public Instruction may consider
the comprehensive assessment conducted by the County Office Fiscal
Crisis and Management Assistance Team (FCMAT) pursuant to Section
41327.1 of the Education Code to meet the requirements for the
management review and recovery plan identified in paragraph (1) of
subdivision (a) of Section 41327.1 of the Education Code.
(b) The improvement plan for personnel management specified in
paragraph (3) of subdivision (a) of Section 41327.1 of the Education
Code shall include, but not necessarily be limited to, the following
training:
(1) Training for members of the governing board of the school
district in the subjects about which members of the governing board
need to have knowledge to effectively discharge their duties as board
members, with specific training in the fiduciary responsibilities of
a governing board member and in the financial management practices
necessary for governing board members to effectively discharge their
duty to oversee and monitor the budget, accounting practices,
revenues, and expenditures of the school district. At a minimum, each
board member shall participate in the Masters In Governance training
provided by the California School Boards Association. The cost for
this training shall be borne by the district.
(2) Training for all personnel with management, policymaking, and
advisory responsibilities who report or would report directly to the
state administrator, to ensure they have the knowledge and skills to
effectively administer their areas of responsibility consistent with
sound fiscal practices and the budgetary requirements of the school
district.
(c) Notwithstanding the timelines in subdivision (d) of Section
41327.1 of the Education Code, after the first written status report,
FCMAT shall file subsequent reports annually thereafter as
determined by the Superintendent of Public Instruction.
SEC. 8. (a) The sum of five million dollars ($5,000,000) is hereby
appropriated from the General Fund to the Superintendent of Public
Instruction for apportionment to the King City Joint Union High
School District for the purpose of an emergency loan. In order to
qualify for the loan, the district shall comply with Article 2
(commencing with Section 41320) and Article 2.5 (commencing with
Section 41325) of Chapter 3 of Part 24 of Division 3 of Title 2 of
the Education Code to the extent those provisions are consistent with
the conditions specified in this act.
(b) Funds may be disbursed from the proceeds of the loan only if
the administrator and the County Office Fiscal Crisis and Management
Assistance Team jointly determine that the disbursement is necessary
to support the immediate cashflow needs of the district.
(c) Based on the needs of the district to meet its obligations,
the Superintendent of Public Instruction may direct the Controller to
disburse, on a monthly basis, specific amounts of the emergency loan
before the approval of all of the conditions established by this
act.
(d) For the fiscal year in which the apportionments are disbursed
and each year thereafter, the Controller, or his or her designee,
shall cause an audit to be conducted of the books and accounts of the
district, in lieu of the audit required by Section 41020 of the
Education Code. At the discretion of the Controller, the audit may be
conducted by the Controller, his or her designee, or an auditor
selected by the district and approved by the Controller. The costs of
these audits shall be borne by the district. These audits shall be
required until the Controller determines, in consultation with the
Superintendent, that the district is financially solvent, but in no
event earlier than one year following the implementation of the plan
or later than the time the apportionment made is repaid, including
interest.
SEC. 9. (a) The King City Joint Union High School District shall
repay the emergency loan incurred pursuant to Section 8 of this act
as a straight line loan amortized over a 20-year term. This amount
shall be repaid by the district, plus interest calculated at a rate
equal to the rate earned by the Pooled Money Investment Account on
the date this act becomes effective, for a period not to exceed 20
years.
(b) If a required payment is not made within 60 days after a
scheduled date, the Controller shall pay the defaulted loan payment
of principal and interest by withholding that amount from the next
available payment that would otherwise be made to the county
treasurer on behalf of the district pursuant to Section 14041 of the
Education Code. However, subject to the approval of the Department of
Finance, the amount withheld may be in monthly amounts as determined
by an agreement between the King City Joint Union High School
District and the Controller during the period beginning with the next
available apportionment through the month preceding the next
scheduled payment.
(c) The school district shall enter into a lease financing with
the California Infrastructure and Economic Development Bank for the
purpose of financing the emergency apportionment, including a
repayment to the General Fund of the amount advanced pursuant to
Section 8. In addition to the amount advanced pursuant to Section 8,
the school district may augment the emergency loan with an additional
eight million dollars ($8,000,000) of lease financing in order to
increase the emergency loan to a total of no more than thirteen
million dollars ($13,000,000). In addition to the emergency
apportionment, the lease financing may include funds necessary for
reserves, capitalized interest, credit enhancements, and costs of
issuance. The bank shall issue bonds for that purpose pursuant to the
powers granted pursuant to the Bergeson-Peace Infrastructure and
Economic Development Bank Act as set forth in Division 1 (commencing
with Section 63000) of Title 6.7 of the Government Code. The term of
the lease shall not exceed 20 years, except that if at the end of the
lease term any rent payable is not fully paid, or if the rent
payable has been abated, the term of the lease shall be extended for
a period not to exceed 10 years.
(d) The Director of Finance may amend the payment schedule set
forth in subdivision (a) if the director concludes that the amendment
is warranted and is in the best interests of both the state and the
King City Joint Union High School District education program. Upon
that determination, the director shall notify the Joint Legislative
Budget Committee that the payment scheduled will be changed on the
date that is 90 days from the date of notification if the Legislature
is in session. If the 90-day period ends during a recess of the
Legislature or while the Legislature is not in session, the 90-day
period shall be extended until the Legislature reconvenes. Amendments
to the payment schedule shall defer the unpaid portion of a
repayment of the earliest fiscal year in which no other repayment is
scheduled. Interest shall accrue on the unpaid portion of a repayment
from the scheduled due date until the time the payment is actually
made. The interest charge shall be the rate equal to the daily
investment rate of the Pooled Money Investment Account on the date
the pay schedule is changed.
(e) The school district may repay its loan obligation without
incurring any prepayment penalties.
SEC. 10. (a) Notwithstanding Sections 17456, 17457, 17462, and
17463 of the Education Code, or any other law, from June 1, 2009, to
June 30, 2012, inclusive, the King City Joint Union High School
District may sell property owned by the district and use the proceeds
from the sale to reduce or retire the emergency loan provided in
Section 8 of this act. The sale only of property pursuant to this
subdivision is not subject to Section 17459 or 17464 of the Education
Code.
(b) Notwithstanding any other provision of law, from June 1, 2009,
to June 30, 2014, inclusive, the King City Joint Union High School
District is not eligible for financial hardship assistance pursuant
to Article 8 (commencing with Section 17075.10) of Chapter 12.5 of
Part 10 of Division 1 of Title 1 of the Education Code.
SEC. 11. The Monterey County Superintendent of Schools maintains
the responsibility to superintend school districts under its
jurisdiction. This act does not remove any statutory or regulatory
rights, duties, or obligations from the county superintendent of
schools.
SEC. 12. The Legislature finds and declares that, due to unique
circumstances relating to the fiscal emergency in the King City Joint
Union High School District, a general statute cannot be made
applicable within the meaning of Section 16 of Article IV of the
California Constitution.
SEC. 13. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district are the result of a program for which legislative authority
was requested by that local agency or school district, within the
meaning of Section 17556 of the Government Code and Section 6 of
Article XIII B of the California Constitution.
SEC. 14. This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:
In order to address the fiscal emergency in which the King City
Joint Union High School District finds itself, and to ensure that it
meets its cash obligations for this fiscal year, it is necessary that
this act take effect immediately.