BILL ANALYSIS
SENATE LOCAL GOVERNMENT COMMITTEE
Senator Christine Kehoe, Chair
BILL NO: AB 1234 HEARING: 6/15/05
AUTHOR: Salinas FISCAL: Yes
VERSION: 6/1/05 CONSULTANT: Detwiler
LOCAL OFFICIALS' COMPENSATON AND ETHICS TRAINING
Background
Reacting to a series of editorials and news articles in the
Sacramento Bee, legislators began looking into the
governance of California's 3,300 special districts. In
November 2003, at the request of Senator Ortiz, the Senate
Local Government Committee held an interim hearing called,
"Integrity and Accountability: Exploring Special Districts'
Governance." There was general, although not universal,
support for statutory reforms.
When Senator Ortiz authored bills in 2003, 2004, and 2005,
many special districts objected to the focus on special
districts. They argued that if statutory reforms were good
ideas, they should also apply to cities and counties.
As awareness of public integrity topics grew, local
government groups increased the advice and training they
gave to their members. The Institute for Local Self
Government published Of Cookie Jars and Fishbowls: A Public
Officials' Guide To Use of Public Resources, and the
Association of California Water Agencies created its
Guidelines for Conduct: A Primer for Public Water Agency
Officials.
Proposed Law
I. Compensation . The most common compensation for special
districts' board members are stipends. Many districts pay
stipends to their board members for attending a meeting or
performing a day's work, following statutory schedules.
Recreation and park districts, for example, may pay
stipends of up to $100 a day for attending board meetings,
but directors can't receive more than $500 a month. A few
types of special districts have statutory permission to pay
regular monthly salaries to their board members: irrigation
districts that are in the electricity business, harbor
AB 1234 -- 6/1/05 -- Page 2
districts, and the East Bay Municipal Water District.
The California Constitution requires county supervisors in
general law counties to set their own compensation by
referendable ordinances. Charter counties must provide for
setting their county supervisors' compensation in their
charters. Most counties pay salaries to their county
supervisors.
Charter cities set their own city councilmembers'
compensation; most pay salaries. General law cities may
pay salaries to their councilmembers, using a
population-based statutory schedule.
Provided that state law authorizes compensation, Assembly
Bill 1234 allows a local agency to compensate members of
its legislative body for attending:
A meeting of the legislative body.
A meeting of an advisory body.
A conference or educational activity that complies
with the Brown Act, including ethics training.
Other events, but only if the governing body has
adopted a written policy specifying those other
occasions.
The bill inserts cross-references to these requirements
into special districts' principal acts.
AB 1234 does not apply to local agencies that pay salaries
to the members of the their legislative bodies, including
general law cities, certain irrigation districts, certain
municipal utility districts, harbor districts, and
counties.
II. Expenses . Cities, counties, and most special
districts may reimburse the members of the legislative
bodies for their actual and necessary expenses.
Provided that state law authorizes reimbursement for
expenses and if a local agency pays reimbursement, Assembly
Bill 1234 requires the agency to adopt written policies for
reimbursing travel, meals, lodging, and other actual and
necessary expenses. The agency's written policies may
specify reasonable reimbursement rates. If the agency
AB 1234 -- 6/1/05 -- Page 3
doesn't adopt its own rates, it must use the Internal
Revenue Service's reimbursement rates. Reimbursement for
lodging at a conference or an educational activity can't
exceed the maximum available group rate. If group rate
lodging is not available, the official must use comparable
lodging.
AB 1234 requires the local legislative body's members to
use government and group rates for travel and lodging when
available. Expenses that fall outside the agency's travel
policy or the Internal Revenue Service's rates must be
approved by the agency in advance, unless services are not
available at those rates. These limits do not supersede
other laws setting local reimbursement rates.
Local legislative body members must use expense report
forms to claim reimbursement for meals, lodging, and
travel. The expense reports must document compliance with
the agency's reimbursement policies. Legislative body
members must submit their expense reports within a
reasonable time, along with expense receipts. At their
next regular meeting, legislative body members must give
brief reports about the meetings they attended at the
agency's expense. The documents are subject to disclosure
under the California Public Records Act.
Penalties for misusing public resources or falsifying
expense reports include:
Loss of reimbursement privileges.
Restitution to the local agency.
Civil penalties under existing law.
Criminal prosecution, leading to prison and
disqualification from office.
The bill inserts cross-references to these requirements
into special districts' principal acts.
III. Ethics Training . State law prohibits unethical
conduct by public officials:
Public officials cannot have financial interests in
contracts made in their official capacities. Those
contracts are void. Violations are crimes and can
result in permanent disqualification from public
office.
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Those prohibitions don't apply to public officials
who have only specified "remote interests" in
contracts.
Local officials cannot engage in paid activities
that conflict with their public duties. Local
agencies can adopt their own rules and disciplinary
procedures.
Local officials cannot solicit political
contributions from other officials or their employees.
Public officials with prohibited financial
interests must disclose the conflict, recuse
themselves, and leave the discussion until matters
conclude.
The Political Reform Act of 1974 also governs local
officials' behavior, including disclosure of their economic
interests and campaign regulations.
If a local agency provides "any type of compensation" to a
member of its legislative body, Assembly Bill 1234 requires
all members of the legislative body and its designated
employees to receive two hours of ethics training every two
years.
The ethics training must cover ethics principles and
relevant ethics laws. The Fair Political Practices
Commission and the Attorney General must jointly develop
appropriate curricula for this training, after consulting
with relevant local government associations. A local
agency must annually tell its local officials about
available ethics training. A local agency or local
government association can offer ethics training courses
(in person or online) or self-study materials. The
training providers must give the participants proof of
participation.
AB 1234 sets deadlines for local officials to receive
ethics training:
Local officials in office on January 1, 2006 must
receive their ethics training by January 1, 2007.
This requirement does not apply to elected officials
whose terms end by January 1, 2007.
Local officials whose service begins on or after
January 1, 2006 must receive their ethics training
within a year of starting service. They must receive
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ethics training at least once every two years
thereafter.
Ethics training at least once every two years is
satisfactory for a local official who serves more than one
local agency.
Local agencies that require ethics training must keep
records of the dates that local officials met their
requirements and of the providing entity. Regardless of
other record retention statutes, local agencies must retain
their records for at least five years. Local agencies must
make the records available for public inspection.
IV. Local charters . The California Constitution gives
charter cities control over their "municipal affairs." The
Constitution requires county charters to provide for their
county supervisors' compensation. Because of these
constitutional authorizations, the Legislature cannot
control the governance of charter cities and charter
counties, except on matters of statewide concern.
Assembly Bill 1234 declares that its provisions apply to
charter cities, charter counties, and charter cities and
counties because "transparency in the activities of local
governments is a matter of statewide concern." AB 1234's
definition of "local agency" includes charter cities,
charter counties, and charter cities and counties.
Comments
1. Integrity and accountability . Good government requires
the support of the governed. Government leaders earn their
constituents' trust by acting in the public interest and
behaving with integrity. But the public's trust in
representative democracy is fragile; even small ethical
lapses can swiftly undermine confidence in public
institutions. Like Caesar's wife Calpurnia, public
officials must be seen to be above reproach. Responding to
legislators' concerns about local governance, AB 1234
boosts public confidence by instituting ethics training,
documenting reimbursement, and clarifying when compensation
is appropriate.
AB 1234 -- 6/1/05 -- Page 6
2. Not far enough ? The Senate Local Government Committee
passed Senator Ortiz's special district governance reforms
bills in both 2003 and 2004. Although AB 1234 reforms the
state laws on compensation, expenses, and ethics training
for cities, counties, and special districts, the bill
doesn't address the protections for local whistleblowers.
The Committee may wish to consider amendments to AB 1234
that require cities, counties, and special districts to
inform their employees of the existing statutory
protections for whistleblowers, and to give their employees
information on how to contact the Grand Jury and District
Attorney if they suspect illegal practices.
3. Who audits the auditors ? Unlike the Ortiz bills, AB
1234 doesn't reform local auditing practices. The
Committee may wish to consider amendments that allow the
State Controller to test the quality of local agencies'
audits, following the precedent that legislators set for
school districts. If the Controller finds that a school
district's auditor has missed important items, the
Controller can ban the auditor from school district work.
Further, the Committee may wish to consider amendments that
imitate the corporate precedent for rotating lead auditors
every six years. Keeping auditors on their toes should
rebuild the public's confidence in the auditing function.
4. Paying the piper . Unlike the Ortiz bills, AB 1234
allows local officials to say what constitutes official
business that's worth paying for. The Ortiz bill would
have defined four types of compensable service: agency
meetings, representing the agency at public events,
representing the agency at other agencies' public meetings,
and conferences and training programs. A local official
would have to get prior approval and afterwards file a
written report. The Salinas bill allows compensation for
agency meetings, advisory committee meetings, conferences
and training program, and other events if the agency has
adopted written policies. If an agency were willing to
adopt a compensation policy that allowed it, this last
feature would permit a local official to claim compensation
for meeting with individual constituents or even having
lunch with vendors. The Committee may wish to consider
whether the Legislature should adopt an open-ended list as
in the Salinas bill, or define what constitutes a
AB 1234 -- 6/1/05 -- Page 7
compensable event as in the Ortiz approach.
5. No mandate, but fiscal . AB 1234 must go to the Senate
Appropriations Committee because it requires the Fair
Political Practices Commission and the Attorney General to
develop ethics training curricula. Legislative Counsel
agrees that the bill doesn't create a new state-mandated
local program. The requirements for compensation, expense
reimbursement procedures, and ethics training apply only to
those local agencies that compensate their governing
bodies. If a city reimburses its councilmembers' expenses,
then the city must follow the rules set by AB 1234. But
because there's no requirement to reimburse expenses, the
bill is not a mandate. No compensation, no requirements,
no mandate.
6. Technical amendments . AB 1234 is the result of a long
series of negotiations among cities, counties, special
districts, and legislative staff. Different drafting
styles have left a few problems for which the Committee
should adopt technical amendments:
Consistent terms. In its discussion of ethics
training, the bill sometimes refers to "local agency
officials" (page 8) and sometimes to "members of a
legislative body and each designated employee" (pages
8 and 10). The bill should use a consistent phrase.
Training courses. The bill allows for self-study
materials and for ethics training courses that are
in-person or online (page 8, line 28). It should also
allow for home-study courses.
Continuing training. For local officials who start
serving on and after January 1, 2006, the bill
requires ethics training every two years (page 10,
lines 24-26). But for sitting local elected
officials, there is no similar requirement for ethics
training in future years. The bill should require
sitting officials to receive ethics training in future
years.
Appointed officials. The bill requires sitting
local elected officials to receive ethics training by
January 1, 2007, except for those whose terms end by
January 1, 2007 (page 10, line 16). The members of
public cemetery districts' governing bodies are
appointed (not elected) to fixed terms. The bill's
exception should apply to any official whose term ends
AB 1234 -- 6/1/05 -- Page 8
before January 1, 2007, elected or appointed.
Public records. The bill makes expense reports
subject to disclosure under the Public Records Act
(page 6, lines 13-16). The bill also says that
records of ethics training are public, but omits the
reference to the Public Records Act (page 10, lines
37-40). Those records should also be subject to the
Public Records Act.
Assembly Actions
Assembly Local Government Committee: 6-0
Assembly Floor: 71-0
Support and Opposition (6/9/05)
Support : Amador Water Agency, Bear Valley Community
Services District, Biggs-West Gridley Water District,
Bighorn-Desert View Water Agency, Borrego Water District,
Browns Valley Irrigation District, Calleguas Municipal
Water District, Castaic Lake Water Agency, Castroville
Water District, Central Basin Municipal Water District,
Contra Costa Water District, Cucamonga Valley Water
District, Del Rio Woods Recreation and Park District, East
Bay Municipal Utility District, Eastern Municipal Water
District, El Dorado Irrigation District, Elsinore Valley
Municipal Water District, El Toro Water District, Fall
River Mills Community Services District, Foothill Municipal
Water District, Goleta West Sanitary District, Helix Water
District, Hidden Valley Lake Community Services District,
Humboldt Bay Municipal Water District, Imperial Irrigation
District, Indian Wells Valley Water District, Irvine Ranch
Water District, Kern County Cemetery District, Kern County
Water Agency, Kings River Conservation District, Las
Virgenes Municipal Water District, Merced Irrigation
District, Metropolitan Water District of Southern
California, Midpeninsula Regional Open Space District,
Modesto Irrigation District, Monte Vista Water District,
Municipal Water District of Orange County, Nevada
Irrigation District, Olivenhain Municipal Water District,
Orange County Water District, Pajaro Valley Water
Management Agency, Reclamation District No. 108, Rio Alto
Water District, Rincon del Diablo Municipal Water District,
AB 1234 -- 6/1/05 -- Page 9
San Bernardino Valley Water Conservation District, San
Diego County Water Authority, San Juan Water District,
Santa Ana Watershed Project Authority, Santa Clara Valley
Water District, Stockton East Water District, Solano
Irrigation District, South San Joaquin Irrigation District,
South Tahoe Public Utility District, Tehama-Colusa Canal
Authority, Tulare Irrigation District, Tuolumne Utilities
District, United Water Conservation District, Vallecitos
Water District, Valley Center Municipal Water District,
Vista Irrigation District, Walnut Valley Water District,
Water Replenishment District of Southern California, West
Basin Municipal Water District, Yorba Linda Water District.
American Federation of State, County and Municipal
Employees, Association of California Water Agencies,
California Association of Recreation and Park Districts,
California Association of Sanitation Agencies, California
Fire Chiefs Association, California Municipal Utilities
Association, California Special Districts Association,
California State Association of Counties, Fire Districts
Association of California, Hispanic Chamber of Commerce
Silicon Valley, League of California Cities, Mosquito and
Vector Control Association of California, Public Water
Agencies Group, Santa Clara County La Raza Roundtable,
Santa Clara County Special Districts Association.
Baker, Manock & Jensen; Lagerlof, Senecal, Bradley,
Gosney & Kruse, LLP; Lincoln Avenue Water Company, Patricia
Kite.
Opposition : City of Palm Desert.