Bill Text: CA SB533 | 2011-2012 | Regular Session | Chaptered
Bill Title: Inglewood Unified School District: emergency loan.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Passed) 2012-09-14 - Chaptered by Secretary of State. Chapter 325, Statutes of 2012. [SB533 Detail]
Download: California-2011-SB533-Chaptered.html
BILL NUMBER: SB 533 CHAPTERED
BILL TEXT
CHAPTER 325
FILED WITH SECRETARY OF STATE SEPTEMBER 14, 2012
APPROVED BY GOVERNOR SEPTEMBER 14, 2012
PASSED THE SENATE AUGUST 31, 2012
PASSED THE ASSEMBLY AUGUST 28, 2012
AMENDED IN ASSEMBLY AUGUST 24, 2012
AMENDED IN ASSEMBLY AUGUST 20, 2012
AMENDED IN ASSEMBLY AUGUST 15, 2012
AMENDED IN SENATE APRIL 25, 2011
INTRODUCED BY Senator Wright
(Principal coauthor: Assembly Member Bradford)
FEBRUARY 17, 2011
An act relating to the Inglewood Unified School District, making
an appropriation therefor, and declaring the urgency thereof, to take
effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 533, Wright. Inglewood Unified School District: emergency loan.
(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 20 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 Inglewood Unified School
District, and require the Superintendent to assume all the rights,
duties, and powers of the governing board of the Inglewood Unified
School District and to appoint, in consultation with the Los Angeles
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 Inglewood Unified 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 Inglewood Unified School District to
bear 100% of the 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 up to $29,000,000 from the General Fund
to the Superintendent for apportionment as an emergency loan to the
Inglewood Unified School District, and would specify procedures for
repayment of the loan unless the loan has been refinanced, as
specified. The bill would authorize the school district to augment
the emergency apportionment or loan with an additional $26,000,000 of
bank financing, as provided. The bill would authorize the school
district to sell property owned by the school district from September
1, 2012, to June 30, 2015, inclusive, and use the proceeds from the
sale to reduce or retire the emergency loan, and would prohibit the
school district from being eligible for financial hardship assistance
under the Leroy F. Greene School Facilities Act of 1998 from June 1,
2012, to June 30, 2015, inclusive.
(2) This bill would make legislative findings and declarations
that the unique circumstances of the Inglewood Unified 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
the pupils of the Inglewood Unified School District is a fundamental
goal that should not be jeopardized.
(b) On April 12, 2012, the Los Angeles County Office of Education
notified the Inglewood Unified School District of its budget negative
certification. Negative certification is assigned when a school
district will be unable to meet its financial obligations for the
remainder of the fiscal year or the subsequent fiscal year. In
December 2010, the Los Angeles County Office of Education assigned a
fiscal advisor to monitor the operations of the Inglewood Unified
School District.
(c) The budget analysis conducted by the Los Angeles County Office
of Education indicates that the Inglewood Unified School District is
deficit spending, unable to maintain a prudent reserve for economic
uncertainty, will have a negative General Fund balance for the
2012-13 fiscal year, and insufficient reserves for the two subsequent
fiscal years to meet all of its financial obligations.
(d) The Inglewood Unified School District is facing fiscal and
cash insolvency as a result of organizational decisionmaking,
overstating average daily attendance, understating California State
Teachers' Retirement System payments, understating certificated
salary expenses, and continued deficit spending.
(e) The enrollment of the Inglewood Unified School District is
declining which further exacerbates its fiscal circumstances.
(f) The Inglewood Unified School District is projected to run out
of cash to support its routine operations and expenditures at the end
of March 2013, and it will require an emergency appropriation from
the state in order to continue the delivery of educational services
to pupils enrolled in the school district.
SEC. 2. It is the intent of the Legislature to provide emergency
appropriation assistance to the Inglewood Unified 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
school 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 governing board of the
Inglewood Unified School District, and shall appoint a state
administrator, in consultation with the county superintendent of
schools, 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 school 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 subdivision (b) is probable.
(2) The Superintendent of Public Instruction may return power to
the governing board of the school district 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 school 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 Inglewood
Unified School District to identify the procedures and programs that
the school district will implement during the 2012-13 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 school district.
(b) Analyze the identified procedures and programs and, where
applicable and appropriate, protect, maintain, and expand them as the
budget of the school 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 school 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.
SEC. 5. (a) The County Office Fiscal Crisis and Management
Assistance Team (FCMAT), with concurrence from the Superintendent of
Public Instruction, shall, with respect to the Inglewood Unified
School District, 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 Inglewood Unified School 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 Division 3 of Title 2
of the Education Code, including the activities of the FCMAT. The
FCMAT's assistance under this section shall continue until the school
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 governing board of the school district, whichever comes first.
SEC. 6. For 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 state
administrator of the Inglewood Unified School District 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, with respect
to the Inglewood Unified School District, 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 financial
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 Inglewood
Unified School District in the subjects about which members of the
governing board of the school district need to have knowledge to
effectively discharge their duties as school 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 school 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 school 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 up to twenty-nine million dollars
($29,000,000) is hereby appropriated from the General Fund to the
Superintendent of Public Instruction for apportionment to the
Inglewood Unified School District for the purpose of an emergency
loan. In order to qualify for the loan, the school district shall
comply with 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 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 state 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 school
district.
(c) Based on the needs of the school 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 in lieu of the audit required by Section 41020
of the Education Code to be conducted of the books and accounts of
the school district. At the discretion of the Controller, the audit
may be conducted by the Controller, his or her designee, or an
auditor selected by the school district and approved by the
Controller. The costs of these audits shall be borne by the school
district. The audits shall be required until the Controller
determines, in consultation with the Superintendent of Public
Instruction, that the school 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) Unless the emergency loan has been refinanced pursuant
to Section 10 of this act, the Inglewood Unified 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 school 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) Unless the emergency loan has been refinanced pursuant to
Section 10 of this act, 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 school 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 Inglewood Unified School
District and the Controller during the period beginning with the next
available apportionment through the month preceding the next
scheduled payment.
(c) Unless the emergency loan has been refinanced pursuant to
Section 10 of this act, 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 Inglewood Unified School District education program.
Upon that determination, the director shall notify the Joint
Legislative Budget Committee that the payment schedule 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.
(d) Unless the emergency loan has been refinanced pursuant to
Section 10 of this act, the school district may repay its loan
obligation without incurring any prepayment penalties.
SEC. 10. The Inglewood Unified School District shall enter into
bank financing with the California Infrastructure and Economic
Development Bank pursuant to the bank's powers under 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 and Sections 41329.52 and 41329.55 of the
Education Code, upon terms the bank, in its discretion, deems
necessary or appropriate for purposes of financing or refinancing the
emergency apportionment, including a repayment to the General Fund
of the amount advanced pursuant to Section 8 of this act. In addition
to the financing or refinancing of the emergency apportionment, the
bank financing made pursuant to this section may include funds
necessary for reserves, capitalized interest, credit enhancements,
and costs of issuance. In addition to the amount advanced pursuant to
Section 8 of this act, the school district may augment the emergency
apportionment or loan with an additional twenty-six million dollars
($26,000,000) of bank financing in order to increase the emergency
apportionment or loan to a total of no more than fifty-five million
dollars ($55,000,000) as the principal financing amount plus the
amount of funds necessary for reserves, capitalized interests, credit
enhancements, and costs of issuance associated with each bank
financing and, as a result, increase the amount of the bank
financing. If a bank financing has been made, the Inglewood Unified
School District may prepay its bank financing obligations in
accordance with the terms of the bank financing documents.
SEC. 11. (a) Notwithstanding Sections 17456, 17457, 17462, and
17463 of the Education Code, or any other law, from September 1,
2012, to June 30, 2015, inclusive, the Inglewood Unified School
District may sell property owned by the school 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 law, from June 1, 2012, to June 30,
2015, inclusive, the Inglewood Unified 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. 12. The Los Angeles County Superintendent of Schools
maintains the responsibility to superintend school districts under
his or her jurisdiction. This act does not remove any statutory or
regulatory rights, duties, or obligations from the county
superintendent of schools.
SEC. 13. The Legislature finds and declares that, due to unique
circumstances relating to the fiscal emergency in the Inglewood
Unified School District, a general statute cannot be made applicable
within the meaning of Section 16 of Article IV of the California
Constitution.
SEC. 14. 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. 15. 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 Inglewood
Unified 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.
