SECTIONS 41325-41328 - California Statutes

EDUCATION CODE

SECTION 41325-41328

41325. (a) The Legislature finds and declares that when a school
district becomes insolvent and requires an emergency apportionment
from the state in the amount designated in this article, it is
necessary that the Superintendent of Public Instruction assume
control of the district in order to ensure the district's return to
fiscal solvency.
(b) It is the intent of the Legislature that the Superintendent of
Public Instruction, operating through an appointed administrator, do
all of the following:
(1) Implement substantial changes in the district's fiscal
policies and practices, including, if necessary, the filing of a
petition under Chapter 9 of the federal Bankruptcy Code for the
adjustment of indebtedness.
(2) Revise the district's educational program to reflect realistic
income projections, in response to the dramatic effect of the
changes in fiscal policies and practices upon educational program
quality and the potential for the success of all pupils.
(3) Encourage all members of the school community to accept a fair
share of the burden of the district's fiscal recovery.
(4) Consult, for the purposes described in this subdivision, with
the school district governing board, the exclusive representatives of
the employees of the district, parents, and the community.
(5) Consult with and seek recommendations from the county
superintendent of schools for the purposes described in this
subdivision.

41326. (a) Notwithstanding any other provision of this code, the
acceptance by a school district of an apportionment made pursuant to
Section 41320 that exceeds an amount equal to 200 percent of the
amount of the reserve recommended for that district under the
standards and criteria adopted pursuant to Section 33127 constitutes
the agreement by the district to the conditions set forth in this
article. Prior to applying for an emergency apportionment in the
amount identified in this subdivision, a school district governing
board shall discuss the need for that apportionment at a regular or
special meeting of the governing board and, at that meeting, shall
receive testimony regarding the apportionment from parents, exclusive
representatives of employees of the district, and other members of
the community. For purposes of this article, "qualifying school
district" means a school district that accepts a loan as described in
this subdivision.
(b) The Superintendent shall assume all the legal rights, duties,
and powers of the governing board of a qualifying school district.
The Superintendent, in consultation with the county superintendent of
schools, shall appoint an administrator to act on his or her behalf
in exercising the authority described in this subdivision in
accordance with all of the following:
(1) The administrator shall serve under the direction and
supervision of the Superintendent until terminated by the
Superintendent at his or her discretion. The Superintendent shall
consult with the county superintendent of schools before terminating
the administrator.
(2) The administrator shall have recognized expertise in
management and finance.
(3) To facilitate the appointment of the administrator and the
employment of any necessary staff, for the purposes of this section,
the Superintendent of Public Instruction is exempt from the
requirements of Article 6 (commencing with Section 999) of Chapter 6
of Division 4 of the Military and Veterans Code and Part 2
(commencing with Section 10100) of the Public Contracts Code.
(4) Notwithstanding any other law, the Superintendent may appoint
an employee of the state or the office of the county superintendent
of schools to act as administrator for up to the duration of the
administratorship. During the tenure of his or her appointment, the
administrator, if he or she is an employee of the state or the office
of the county superintendent of schools, is an employee of the
school district, but shall remain in the same retirement system under
the same plan that has been provided by his or her employment with
the state or the office of the county superintendent of schools. Upon
the expiration or termination of the appointment, the employee shall
have the right to return to his or her former position, or to a
position at substantially the same level as that position, with the
state or the office of the county superintendent of schools. The time
served in the appointment shall be counted for all purposes as if
the administrator had served that time in his or her former position
with the state or the office of the county superintendent of schools.
(5) Except for an individual appointed as an administrator by the
Superintendent of Public Instruction pursuant to paragraph (4), the
administrator shall be a member of the State Teachers' Retirement
System, if qualified, for the period of service as administrator,
unless he or she elects in writing not to become a member. A person
who is a member or retirant of the State Teachers' Retirement System
at the time of appointment shall continue to be a member or retirant
of the system for the duration of the appointment. If the
administrator chooses to become a member or is already a member, the
administrator shall be placed on the payroll of the school district
for the purposes of providing appropriate contributions to the
system. The Superintendent may also require the administrator to be
placed on the payroll of the school district for purposes of
remuneration, other benefits, and payroll deductions.
(6) For the purposes of workers' compensation benefits, the
administrator is an employee of the qualifying district, except that
an administrator appointed pursuant to paragraph (4) may be deemed an
employee of the state or office of the county superintendent of
schools, as applicable.
(7) The qualifying district shall add the administrator as a
covered employee of the school district all for purposes of errors
and omissions liability insurance policies.
(8) The salary and benefits of the administrator shall be
established by the Superintendent of Public Instruction and paid by
the qualifying school district.
(9) The Superintendent or the administrator may, on a short-term
basis, employ at district expense any staff necessary to assist the
administrator, including, but not limited to, a certified public
accountant.
(10) The administrator may do all of the following:
(A) Implement substantial changes in the fiscal policies and
practices of the district, including, if necessary, the filing of a
petition under Chapter 9 of the federal Bankruptcy Code for the
adjustment of indebtedness.
(B) Revise the educational program of the district to reflect
realistic income projections and pupil performance relative to state
standards.
(C) Encourage all members of the school community to accept a fair
share of the burden of the fiscal recovery of the district.
(D) Consult, for the purposes described in this subdivision, with
the governing board of the school district, the exclusive
representatives of the employees of the district, parents, and the
community.
(E) Consult with, and seek recommendations from, the
Superintendent, county superintendent of schools, and the County
Office Fiscal Crisis and Management Assistance Team authorized
pursuant to subdivision (c) of Section 42127.8 for the purposes
described in this article.
(F) With the approval of the Superintendent, enter into agreements
on behalf of the district and, subject to any contractual obligation
of the district, change any existing district rules, regulations,
policies, or practices as necessary for the effective implementation
of the recovery plans referred to in Sections 41327 and 41327.1.
(c) (1) For the period of time during which the Superintendent of
Public Instruction exercises the authority described in subdivision
(b), the governing board of the qualifying school district shall
serve as an advisory body reporting to the state-appointed
administrator, and has no rights, duties, or powers, and is not
entitled to any stipend, benefits, or other compensation from the
district.
(2) Upon the appointment of an administrator pursuant to this
section, the district superintendent of schools is no longer an
employee of the district.
(3) A determination of the severance compensation for the district
superintendent shall be made pursuant to subdivision (j).
(d) Notwithstanding Section 35031 or any other law, the
administrator may, after according the employee reasonable notice and
the opportunity for a hearing, terminate the employment of any
deputy, associate, assistant superintendent of schools, or any other
district level administrator who is employed by a school district
under a contract of employment signed or renewed after January 1,
1992, if the employee fails to document, to the satisfaction of the
administrator, that prior to the date of the acceptance of the
apportionment he or she either advised the governing board of the
district, or his or her superior, that actions contemplated or taken
by the governing board could result in the fiscal insolvency of the
district, or took other appropriate action to avert that fiscal
insolvency.
(e) The authority of the Superintendent, and the administrator,
under this section shall continue until all of the following occur:
(1) (A) At any time after one complete fiscal year has elapsed
following the district's acceptance of a loan as described in
subdivision (a), the administrator determines, and so notifies the
Superintendent and the county superintendent of schools, that future
compliance by the school district with the recovery plans approved
pursuant to paragraph (2) is probable.
(B) The Superintendent may return power to the governing board for
any area listed in subdivision (a) of Section 41327.1 if performance
under the recovery plan for that area has been demonstrated to the
satisfaction of the Superintendent.
(2) The Superintendent has approved all of the recovery plans
referred to in subdivision (a) of Section 41327 and the County Office
Fiscal Crisis and Management Assistance Team completes the
improvement plans specified in Section 41327.1 and has completed a
minimum of two reports identifying the district's progress in
implementing the improvement plans.
(3) The 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.
(4) The district has completed all reports required by the
Superintendent and the administrator.
(5) The Superintendent determines that future compliance by the
school district with the recovery plans approved pursuant to
paragraph (2) is probable.
(f) When the conditions stated in subdivision (e) have been met,
and at least 60 days after the Superintendent of Public Instruction
has notified the Legislature, the Department of Finance, the
Controller, and the county superintendent of schools that he or she
expects the conditions prescribed pursuant to this section to be met,
the school district governing board shall regain all of its legal
rights, duties, and powers, except for the powers held by the trustee
provided for pursuant to Article 2 (commencing with Section 41320).
The Superintendent shall appoint a trustee under Section 41320.1 to
monitor and review the operations of the district until the
conditions of subdivision (b) of that section have been met.
(g) Notwithstanding subdivision (f), if the district violates any
provision of the recovery plans approved by the Superintendent
pursuant to this article within five years after the trustee
appointed pursuant to Section 41320.1 is removed, the Superintendent
may reassume, either directly or through an administrator appointed
in accordance with this section, all of the legal rights, duties, and
powers of the governing board of the district. The Superintendent
shall return to the school district governing board all of its legal
rights, duties, and powers reassumed under this subdivision when he
or she determines that future compliance with the approved recovery
plans is probable, or after a period of one year, whichever occurs
later.
(h) Article 2 (commencing with Section 41320) shall apply except
as otherwise specified in this article.
(i) It is the intent of the Legislature that the legislative
budget subcommittees annually conduct a review of each qualifying
school district that includes an evaluation of the financial
condition of the district, the impact of the recovery plans upon the
district's educational program, and the efforts made by the
state-appointed administrator to obtain input from the community and
the governing board of the district.
(j) (1) The district superintendent is entitled to a due process
hearing for purposes of determining final compensation. The final
compensation of the district superintendent shall be between zero and
six times his or her monthly salary. The outcome of the due process
hearing shall be reported to the Superintendent of Public Instruction
and the public. The information provided to the public shall explain
the rationale for the compensation.
(2) This subdivision applies only to a contract for employment
negotiated on or after June 21, 2004.
(k) (1) When the Superintendent assumes control over a school
district pursuant to subdivision (b), he or she shall, in
consultation with the County Office Fiscal Crisis and Management
Assistance Team, review the fiscal oversight of the district by the
county superintendent of schools. The Superintendent may consult with
other fiscal experts, including other county superintendents of
schools and regional fiscal teams in conducting this review.
(2) Within three months of assuming control over a qualifying
district, the Superintendent shall report his or her findings to the
Legislature and shall provide a copy of that report to the Department
of Finance. This report shall include findings as to fiscal
oversight actions that were or were not taken and may include
recommendations as to an appropriate legislative response to improve
fiscal oversight.
(3) If after performing the duties described in paragraphs (1) and
(2), the Superintendent determines that the county superintendent of
schools failed to carry out his or her responsibilities for fiscal
oversight as required by this code, the Superintendent may exercise
the authority of the county superintendent of schools who has
oversight responsibilities for a qualifying school district. If the
Superintendent finds, based on the report required in paragraph (1),
that the county superintendent of schools failed to appropriately
take into account particular types of indicators of financial
distress or failed to take appropriate remedial actions in the
qualifying district, the Superintendent shall further investigate
whether the county superintendent of schools failed to take into
account those indicators or similarly failed to take appropriate
actions in other districts with negative or qualified certifications
and shall provide an additional report on the fiscal oversight
practices of the county superintendent to the appropriate policy and
fiscal committees of each house of the Legislature and the Department
of Finance.

41326.1. Within 30 days of assuming authority, an administrator who
has control over a school district pursuant to Section 41326 shall
discuss options for resolving the fiscal problems of the district
with all of the following groups and shall consider, on a monthly
basis, or more frequently if so desired by the administrator,
information from one or more of the following groups:
(a) The governing board of the school district.
(b) Any advisory council of the school district.
(c) Any parent-teacher organization of the school district.
(d) Representatives from the community in which the school
district is located.
(e) The district administrative team.
(f) The County Office Fiscal Crisis and Management Assistance
Team.
(g) Representatives of employee bargaining units.
(h) The county superintendent of schools.

41327. (a) In accordance with timelines, instructions, and a format
established by the Superintendent of Public Instruction, the
state-appointed administrator shall prepare or obtain the following
reports and plans:
(1) A management review and recovery plan.
(2) A multiyear financial recovery plan. The multiyear financial
recovery plan shall include a plan, to be submitted annually on or
before July 1, to repay to the state any and all loans owed by the
district.
(3) During the period of service by the state-appointed
administrator, an annual report on the financial condition of the
district, including, but not necessarily limited to, all of the
following information:
(A) Specific actions taken to reduce district expenditures or
increase income to the district, and the amount of the resulting cost
savings and increases in income.
(B) A copy of the adopted district budget for the current fiscal
year.
(C) The amount of the district budgetary reserve.
(D) The status of employee contracts.
(E) Any obstacles to the implementation of the recovery plans
described in paragraphs (1) and (2).
(b) Each of the reports or plans required under this section, or
under any other law that requires the district to prepare reports or
plans, shall be submitted to the Superintendent of Public Instruction
for approval, after his or her consideration of comments and
recommendations of the county superintendent of schools. The
Superintendent of Public Instruction may accept and approve, for the
purposes of this section, any reports or plans that were prepared by
or for the district prior to the district's acceptance of a loan as
described in subdivision (a) of Section 41326.
(c) With the approval of the Superintendent of Public Instruction,
the state-appointed administrator may enter into agreements on
behalf of the district and, subject to any contractual obligation of
the district, change any existing district rules, regulations,
policies, or practices as necessary for the effective implementation
of the recovery plans referred to in subdivision (a).

41327.1. (a) The State Board of Education shall adopt and may
periodically update by regulation a comprehensive list of
professional and legal standards that all districts are encouraged to
use as a guide to conduct a good educational program and fiscal and
management practices that shall be used as the basis of evaluating
the improvement of qualifying districts pursuant to this article.
These standards shall, at a minimum, address all of the following
areas:
(1) Financial management.
(2) Pupil achievement.
(3) Personnel management.
(4) Facilities management.
(5) Community relations.
(b) If an administrator is appointed pursuant to Section 41326,
the County Office Fiscal Crisis and Management Assistance Team
established pursuant to Section 42127.8 shall conduct comprehensive
assessments in the five areas specified in subdivision (a).
(c) After the assessments specified in subdivision (b) are
completed, the Superintendent, in consultation with the County Office
Fiscal Crisis and Management Assistance Team and the county
superintendent of schools, shall determine, based upon the district's
particular needs and circumstances, the level of improvement needed
in the standards adopted pursuant to subdivision (a) before local
authority will be returned pursuant to subdivision (f) of Section
41326. Based upon this determination, the County Office Fiscal Crisis
and Management Assistance Team shall complete improvement plans in
the five areas specified in subdivision (a) that focus on the agreed
upon standards, and that are consistent with the financial
improvement plan.
(d) Beginning six months after an emergency loan is approved, and
every six months thereafter until local authority is returned
pursuant to subdivision (f) of Section 41326, the County Office
Fiscal Crisis and Management Assistance Team shall file a written
status report with the appropriate fiscal and policy committees of
the Legislature, the Members of the Legislature that represent the
qualifying district, any advisory council of the school district, the
Superintendent, the county superintendent of schools, the Director
of Finance, and the Secretary for Education. The reports shall
indicate the progress that the district is making in meeting the
recommendations of the improvement plans developed pursuant to this
section.
(e) If the County Office Fiscal Crisis and Management Assistance
Team indicates in writing that it has insufficient resources to
complete the comprehensive assessments, improvement plans, and
progress reports required pursuant to this section, the department
shall request proposals to complete these tasks, and subject to the
approval of the Department of Finance, select an entity to complete
the tasks assigned to the County Office Fiscal Crisis and Management
Assistance Team pursuant to this section.

41327.2. (a) The appointment of an administrator pursuant to
Section 41326 does not remove any statutory rights, duties, or
obligations from the county superintendent of schools. The county
superintendent of schools retains the responsibility to superintend
school districts under his or her jurisdiction.
(b) The county superintendent of schools shall submit reports to
the Superintendent, the appropriate fiscal and policy committees of
the Legislature, the Director of Finance, and the Secretary for
Education subsequent to review by the county superintendent of
schools of the district's budget and interim reports in accordance
with subdivisions (d) and (g) of, and paragraph (3) of subdivision
(i) of, Section 42127, and paragraph (2) of subdivision (a) of, and
subdivision (e) of, Section 42131. These reports shall document the
fiscal and administrative status of the qualifying district,
particularly in regard to the implementation of fiscal and management
recovery plans. Each report shall also include a determination of
whether the revenue streams to the district appear to be consistent
with its expenditure plan, according to the most recent data
available at the time of the report. These reports are required until
six months after all rights, duties, and powers are returned to the
school district pursuant to this article.

41328. The qualifying district shall bear 100 percent of all costs
associated with implementing this article, including the activities
of the County Office Fiscal Crisis and Management Assistance Team or
the regional team. The Superintendent of Public Instruction shall
withhold from the apportionments to be made from the State School
Fund to the district the amounts due pursuant to this section.