Bill Text: CA SB799 | 2015-2016 | Regular Session | Amended
Bill Title: School finance: school districts: annual budgets: reserve balance.
Spectrum: Strong Partisan Bill (Democrat 16-1)
Status: (Failed) 2016-11-30 - From Assembly without further action. [SB799 Detail]
Download: California-2015-SB799-Amended.html
BILL NUMBER: SB 799 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY AUGUST 30, 2016
AMENDED IN ASSEMBLY AUGUST 20, 2015
AMENDED IN ASSEMBLY JUNE 25, 2015
AMENDED IN SENATE APRIL 20, 2015
INTRODUCED BY Senators Hill and Glazer
(Coauthors: Senators Allen, Block, Galgiani, Pavley, Roth, and
Wolk)
(Coauthors: Assembly Members Bonilla, Brown, Calderon, Cooper,
Gray, Irwin, Olsen, Salas, and Ting)
MARCH 18, 2015
An act to amend Sections 42127 and 42127.01 of the Education Code,
relating to school finance.
LEGISLATIVE COUNSEL'S DIGEST
SB 799, as amended, Hill. School finance: school districts: annual
budgets: reserve balance.
Existing law requires the governing board of a school district, on
or before July 1 of each year, to hold a hearing on, and adopt a
budget for, the subsequent fiscal year. Existing law requires the
governing board of a school district that proposes to adopt a budget
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 of Education to provide
specified information for public review and discussion.
This bill would instead require the governing board of a school
district that proposes to adopt a budget that includes unassigned
ending balances in the school district's general fund and special
reserve fund for other than capital outlay projects in excess of the
minimum recommended reserve for economic uncertainties to provide
specified information for public review and discussion. The bill
would also require the governing board of a school district to adopt
a policy establishing procedures for reporting the fund balances as
reflected in the school district's governmental fund financial
statements, as specified. By imposing additional duties on school
districts, the bill would impose a state-mandated local program.
Existing law limits the amount of the combined assigned or
unassigned ending fund balance contained in a school district's
annual budget in any fiscal year immediately after a fiscal year in
which a transfer is made into the Public School System Stabilization
Account. Existing law establishes formulas for calculating the
maximum amount allowable for school districts with less than 400,000
units of average daily attendance and for school districts with more
than 400,000 units of average daily attendance, as specified.
Existing law authorizes the county superintendent of schools to grant
an exemption from those requirements if the school district provides
documentation indicating extraordinary fiscal circumstances
substantiate the need for a combined assigned or unassigned ending
fund balance that is in excess of the minimum recommended reserve for
economic uncertainties, as specified.
This bill would instead provide that the school district's budget
shall not contain unassigned ending balances in the school district's
general fund and special reserve fund for other than capital outlay
projects in excess of 17% 15% of those
funds, and would require a county superintendent of schools to grant
a school district an exemption if the school district provides
documentation indicating extraordinary fiscal circumstances
substantiate the need for those fund balances, as specified. The bill
would also require each county
superintendent of schools to adopt a policy establishing the
procedures for submitting exemption requests and the criteria to be
used to determine whether extraordinary fiscal circumstances exist.
the governing board of a school district to report in
a public meeting its assigned and unassigned fund balances in the
school district's general fund and special reserve fund for other
than capital outlay projects, as specified.
Because the bill would impose additional duties on school
districts and county superintendents of schools, 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.
(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) (i) Commencing with budgets adopted for the 2016-17 fiscal
year, the governing board of a school district that proposes to adopt
a budget that includes unassigned ending balances in the school
district's general fund and special reserve fund for other than
capital outlay projects that are 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 unassigned ending balances in the school district's
general fund and special reserve fund for other than capital outlay
projects 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 explaining the unassigned ending
balances in the school district's general fund and special reserve
fund for other than capital outlay projects that are in excess of the
minimum recommended reserve for economic uncertainties for each
fiscal year that the school district identifies any unassigned ending
fund balances that are in excess of the minimum recommended reserve
for economic uncertainties, as identified pursuant to subclause (II).
(ii) Commencing with the 2016-17 fiscal year, the governing board
of a school district shall adopt a policy establishing procedures for
reporting the fund balances as reflected in the school district's
governmental fund financial statements. The policy shall outline how
the school district's fund balances are intended to ensure that
adequate financial resources are available to address revenue
shortfalls, unanticipated expenditures, planned future one-time
expenses, and any other financial or educational needs of the
district. The policy shall include a requirement for an annual report
to the governing board of the school district in a public meeting at
the same meeting as budget adoption.
(C) The governing board of a school district shall include the
information required pursuant to subparagraph (B) in its budgetary
submission at the 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) 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 September 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 superintendent of schools. 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 September 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 county
superintendent of schools' review and recommendations, subject to the
requirement that the committee report its findings to the county
superintendent of schools no later than September 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
October 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 October 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
November 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 December 31. If
no budget is adopted by December 31, the Superintendent may adopt a
budget for the school district. The Superintendent shall report to
the Legislature and the Director of Finance by January 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 December 31. 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 November 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. 2. Section 42127.01 of the Education Code is amended to read:
42127.01. (a) In a fiscal year immediately after a fiscal year in
which a transfer is made into the Public School System Stabilization
Account, a school district budget that is adopted or revised
pursuant to Section 42127 shall not contain unassigned ending
balances in the school district's general fund and special reserve
fund for other than capital outlay projects in excess of 17
15 percent of those funds.
(b) A county superintendent of schools shall grant a school
district under its jurisdiction an exemption from the requirements of
subdivision (a) for up to two consecutive fiscal years within a
three-year period if the school district provides documentation
indicating that extraordinary fiscal circumstances, including, but
not limited to, multiyear infrastructure or technology projects,
substantiate the need for unassigned ending balances in the school
district's general fund and special reserve fund for other than
capital outlay projects in excess of the amount described in
subdivision (a).
(c) Each county superintendent of schools shall adopt a policy
establishing the procedures for submitting exemption requests and the
criteria by which the county superintendent of schools shall
determine whether extraordinary fiscal circumstances exist.
(c) The governing board of a school district, at budget adoption
and as part of the reports required in Article 3 (commencing with
Section 42130), shall report in a public meeting its assigned and
unassigned fund balances in the school district's general fund and
special reserve fund for other than capital outlay projects. The
report shall include a description of the amounts and intended
purpose for each assignment of funds, the date or time period when
those funds are expected to be expended, and any changes from the
previous report.
(d) This section shall not apply to school districts with fewer
than 2,501 units of average daily attendance or to basic aid
school districts, defined as those school districts that do not
receive funding from the state pursuant to Section 42238.02 or
42238.03. attendance.
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.
