BILL ANALYSIS Ó AB 165 Page 1 Date of Hearing: April 27, 2011 ASSEMBLY COMMITTEE ON EDUCATION Julia Brownley, Chair AB 165 (Lara) - As Amended: April 13, 2011 SUBJECT : Pupil fees SUMMARY : Creates an urgency statute that reinforces the prohibition on the imposition of pupil fees and establishes policies to ensure compliance with that prohibition. Specifically, this bill : 1)Adds compliance with state statutory and constitutional prohibitions against pupil fees, as well as other fee-related requirements, to the list of compliance items required to be verified as part of the annual financial and compliance audit required of school districts. 2)Requires 1) above to be added to the audit guide requirements as soon as possible. 3)Extends the uniform complaint process to include complaints related to the imposition of pupil fees. 4)Requires a school district and a charter school to use its adopted uniform complaint process to identify and resolve any deficiencies related to the imposition of pupil fees. 5)Makes the principal or designee of a charter school responsible for investigation and resolution of complaints related to the imposition of pupil fees. 6)Requires the Superintendent of Public Instruction (SPI) to require a school, school district, or charter school that has unlawfully imposed a pupil fee to fully reimburse all affected parties with interest paid at the rate earned on the school's or district's cash holdings. 7)Requires a notice to be posted in each classroom in each school in a district stating that pupils should not be charged fees or be required to make a purchase in order to participate in a class or extracurricular activity, as well as other related information. AB 165 Page 2 8)Requires the county superintendent to review and resolve audit findings related to the imposition of pupil fees, and to not deem any findings to be corrected until repayments pursuant to 6) above are completed. 9)Requires the county office of education, upon the reporting of any audit finding related to the imposition of pupil fees, to withhold one percent of the local educational agency's (LEA's) administrative expenditures from the next principal apportionment until the LEA makes repayment pursuant to 6) above. 10)Requires the withholding of an amount 10 times the amount of pupil fees imposed if the auditor is unable to calculate the amount equal to one percent of the administrative expenditures of a charter school or if the fees collected are greater than one percent of administrative expenditures. 11)Provides a statutory prohibition on the imposition of pupil fees, and specifies the nature of those prohibited fees. 12)Requires the governing board of a LEA to hold a public hearing within eight weeks after the start of the school year, and to determine by resolution whether pupil fees have been or are being charged during the current fiscal year; also specifies the content of that resolution. 13)Provides for the exception of claims for money or damages related to the reimbursement of pupil fees from a school district's ability to file for compensation with the California Victim Compensation and Government Claims Board. EXISTING LAW : 1)Requires, in the California Constitution, the Legislature to "provide for a system of common schools by which a free school shall be kept up and supported in each district at least six months in every year, after the first year in which a school has been established." 2)Requires each local educational agency to adopt policies and procedures to insure compliance with applicable state and federal laws and regulations, including the establishment of a AB 165 Page 3 uniform system of complaint processing for specified programs, activities or requirements that will provide for the filing, investigation and resolution of complaints. 3)Requires each local education agency to provide for an annual audit of its books and accounts, including all fund sources and expenditures; requires the audit to be completed by a certified public accountant or a public accountant, licensed by the California Board of Accountancy, who is deemed by the State Controller as qualified. 4)Requires, when filing a petition for authorization, a charter school to describe the manner in which annual, independent financial audits shall be conducted, and the manner in which audit exceptions and deficiencies shall be resolved to the satisfaction of the chartering authority. 5)Requires a notice to be posted in each classroom in each school in a district notifying parents, guardians, pupils and teachers of specific compliance requirements, including sufficiency of textbooks, maintenance of facilities, misassignment of teachers FISCAL EFFECT : Unknown COMMENTS : The primary impact of this bill is to provide statutory reinforcement of the constitutional prohibition on the imposition of pupil fees in California's public schools. According to the author, "AB 165 will establish procedures that will help identify, eliminate, and prevent the charging of student fees in violation of a student's constitutional right to a free public education." In addition the author states that, "AB 165 will use existing accountability mechanisms to efficiently prevent and address any fees imposed on students as conditions of participation in educational activities." Background on pupil fees : The Constitutional prohibition on the imposition of pupil fees in California was clearly defined in Hartzell v. Connell (1984; 35 Cal.3d 899, 201); the California Supreme Court decision in this case, authored by then Chief Justice Rose Bird, clearly articulates the Court's interpretation as to how pupil fees on educational activities, AB 165 Page 4 including those imposed for sports or extracurricular activities, violate the California Constitution. In 1980 the governing board of the Santa Barbara High School District made budget cuts in the area of sports and extracurricular activities in excess of $1 million; this action was in response to high inflation, declining enrollment, and the loss of local property tax revenue as a result of the passage of Proposition 13. The governing board considered two proposals when it made this budget decision: 1) cut the number of interscholastic sports teams from over 30 to 8, eliminate 9th grade sports, and decrease the number of other extracurricular activities; 2) eliminate only the 9th grade sports teams and backfill the cuts by imposing a fee for students participating in sports and extracurricular activities, including drama, music and cheer programs. The governing board chose the second option and voted to impose a required fee on students participating in interscholastic sports or extracurricular activities amounting to $25 per sport or activity (during the 4 years that this case moved through the court system that fee rose to $35 per sport or activity). Shortly before the start of the 1980-81 school year, Barbara Hartzell, who had two children enrolled in the district, along with a group of local grass-roots organizations calling themselves the Coalition Opposing Student Fees, filed litigation claiming the mandatory fee violated the free-school and equal-protection guarantees of the California Constitution. The school district argued that a fee-waiver policy, which they had adopted at the same time as the fee, that allowed needy students to play once they applied for and received the waiver, was enough to satisfy the constitutional requirements for free-schools and equal-protection. This argument prevailed in the lower court, but that lower court decision was overturned by the California Supreme Court in a 6-1 decision. The majority opinion, authored by Chief Justice Bird, basically stated that fees may be charged for activities that are recreational, but not for those that are educational. It went on to opine that extracurricular activities are an integral component of public education, that they are a part of the educational program, and that they thus must be free. The opinion stated that, "Once the community has decided that a particular educational program is AB 165 Page 5 important enough to be offered by its public schools, a student's participation in that program cannot be made to depend upon his or her family's decision whether to pay a fee or buy a toaster?imposition of fees as a precondition for participation in non-statutory educational programs offered by public high school districts on a non-credit basis violates the free school guarantee." The court further stated that, "The constitutional defect in such fees can neither be corrected by providing waivers to indigent students nor justified by pleading financial hardship." Thus the Court explicitly disagreed with the district's argument and decided that a school district may not charge a fee or require students to purchase necessary materials even if the district maintains a special fund to assist students with financial need, or waives the fee or charge for students with financial need; a fee waiver policy for needy students does not make the fee allowable. The Bird opinion stated, "Nor may a student's participation be conditioned upon application for a special waiver. The stigma that results from recording some students as needy was recognized early in the struggle for free schools." Additional lawsuits alleging Hartzell violations have been filed against school districts over the last 25 years; in nearly all of the cases, the issue has either been settled out of court or the plaintiff has prevailed. The American Civil Liberties Union (ACLU) has been active in some of these past cases, and has also been active in identifying districts that appear to be out of compliance with the Hartzell decision. There appears to be no shortage of districts that fall out of compliance, and this seems to occur with more frequency when there are budget shortfalls that lead districts to look for alternatives to deeper cuts (as was the case in the Santa Barbara High School District 30 years ago). It has also become clear in recent years that public awareness, or at least a full understanding, of the Hartzell ruling has generally faded over the past 25 years. The author recognizes the current fiscal conditions faced by public schools, when he states that, "Our State and our schools AB 165 Page 6 are operating under historically difficult budget conditions and understandably are seeking revenue from every possible source, but our constitution demands we ensure educational opportunities are not conditioned on a student's ability to pay a fee. As countless districts have demonstrated, fundraising can be accomplished through constitutional means that include solicitation of voluntary donations of funds or property and voluntary participation in fundraising activities." In response to reports from parents that schools in Southern California were charging students mandatory fees as a condition for participating in academic courses and school-sponsored activities, the ACLU of Southern California began investigating this practice. What started as a limited inquiry into a few school districts grew into a wider investigation based on a random sampling of websites for public high schools in California; though wider, that sample covered well under half of the public high schools in California. On August 10, 2010, ACLU released a report, "PAY-TO-LEARN: An Investigation of Mandatory Fees for Educational Activities in California's Public Schools," that details the results of this investigation. The investigation uncovered more than 50 public school districts in which at least one high school acknowledges on its website that students must pay fees in order to participate in educational programs; ACLU, during the investigation, also learned of a number of schools that illegally charge fees, but that do not have an active website link that documents the mandatory fee - these schools were not reported among the 50 school districts mentioned above. The types of fees that ACLU found being charged included charges for text books and workbooks, lab fees for science classes, material fees for fine arts classes, and required purchases of P.E. uniforms, as well as charges in the hundreds, and in some cases thousands, of dollars for participation in extracurricular activities. In September 2010, the ACLU filed a class action lawsuit against the state, claiming that many fees charged to students for school activities and supplies violated the California Constitution and various provisions of the Education Code ÝJane Doe, et al. v. State of California, et al., (Super. Ct. Los Angeles County, 2010, BC445151)]. Anonymous students "Jane Doe" and "Jason Roe," the plaintiffs, attend unnamed high schools in Orange County. The complaint states that Jane Doe's school requires students to purchase textbooks, workbooks, and novels assigned for credit courses. The school charges additional fees, AB 165 Page 7 including Advance Placement exam fees when the examination is a course requirement and affects students' grades, and an enrollment fee. Jason Roe's school requires students to purchase workbooks, lab manuals, and physical education uniforms, as well as locks and student agendas as a requirement of school enrollment. Former Governor Schwarzenegger and the ACLU announced a tentative settlement in Doe v. California on December 9; the settlement would have required trial court approval as well as legislation and regulations for implementation. In addition, former Governor Schwarzenegger's office issued compliance guidelines for schools to follow; there is evidence that schools and school districts in the state are examining existing policies on student fees and are making adjustments. At an initial hearing on the settlement in late December, the court expressed concerns about technical issues and did not approve the settlement; the settlement, though initially signed and approved by the parties, was never finalized by the court, and the parties are no longer presenting that settlement agreement to the court. The settlement would have established a monitoring and enforcement system, substantially similar to the provisions of this bill, in order to ensure that school districts do not unlawfully charge fees to students for educational activities, and would have been contingent on enactment of legislation. The ACLU filed an amended complaint in Doe v. California on April 7, 2011. The complaint was amended to drop the Governor as a defendant in the case, to add the SPI, the California Department of Education, and the California State Board of Education as defendants (since they would be the parties involved in any future remedies), and to provide more historical detail regarding state reaction to and oversight of the imposition of pupil fees. Though this bill is neither explicitly linked to the pending litigation nor to any settlement agreement that was or will be agreed to by the parties, the underlying issue motivating both the lawsuit and the bill is certainly the same, and the types of remedies being sought in the complaint are consistent with the proposals made in this bill. The ACLU's investigative findings were more recently verified when UCLA's Institute for Democracy, Education and Access (IDEA) released its annual California Educational Opportunity Report in March of this year; in that report, IDEA reported that many low-poverty (wealthier) schools now solicit donations or charge AB 165 Page 8 families fees to pay for services that had previously been freely provided by the school. Generally the more proactive approach to donations or the imposition of fees is in response to current fiscal conditions. In addition, IDEA found that administrators in high-poverty districts felt that fees constituted an extra burden that they could not place on families of their pupils. Despite this, IDEA found through responses to a survey item concerning imposition of pupil fees, that fees are frequently in place even in high poverty schools (see the table below). Not only are such fees likely unlawful, but IDEA concluded that as high schools shift costs to families through solicited donations and pupil fees, inequality between schools often grows; low-poverty high schools are better able to generate donations, charge fees in order to maintain services, and to thus free up funds to spend in other budget areas. ------------------------------------------------- |Has your school begun requiring students and | |families to pay for or make additional | |contributions to any of the following services | |as a consequence of the budget cuts? | |-------------------------------------------------| | | ------------------------------------------------- |----------------------+------+---------+---------| | | All | Low | High | | | HS | Poverty | Poverty | |----------------------+------+---------+---------| |Field Trips | 43%| 53%| 26%| |----------------------+------+---------+---------| |Arts and Music | 34%| 53%| 90%| |----------------------+------+---------+---------| |Instructional | 19%| 32%| 90%| |Materials | | | | |----------------------+------+---------+---------| |Summer School | 12%| 20%| 50%| |----------------------+------+---------+---------| |Tutoring | 10%| 15%| 40%| ------------------------------------------------- |Clubs | 12%| 17%| 90%| |----------------------+------+---------+---------| |Sports | 47%| 57%|30% | ------------------------------------------------- Where does this leave schools ? Schools can lawfully pursue AB 165 Page 9 fundraising, seek sponsorships and collect donations, including voluntary donations from participants, in order to support athletics programs and extracurricular activities; however, schools cannot lawfully exclude a student from belonging to a team or participating in an activity based on a lack of any required or voluntary financial contribution, whether in the form of a donation or paid fee. In addition, certain fees appear to remain legal under the Hartzell decision and this bill; however, all pupil fees and charges will be scrutinized more rigorously under the proposals in this bill. These certain fees include, but may not be limited to, charges for optional attendance as a spectator at a school sponsored activity, food served to students (subject to federal and state restrictions under school nutrition programs), replacement costs for District books or supplies that are loaned to a student, and lost or damaged, supplies that the students may need for specific activities (where the student uses and gets to keep those supplies, and takes the items that they produce home, such as for a woodworking or design/sewing class), covering the actual cost of duplicating public or student records, tuition (in the case of foreign or out-of-state pupils), transportation to and from school, or optional fingerprinting of pupils. The purpose of this bill is to ensure that these lawful activities can continue, while at the same time ensuring, through the establishment of various enforcement mechanisms, that unlawful pupil fees are eliminated. Committee Amendments : Committee staff recommends the following committee amendments to the bill: 1)Clarify to which audit guide or guides the compliance audit requirements in this bill will be added, and delete the explicitly provided authority for emergency regulations to put those requirements in the audit guide (the provision of this authority is redundant with current law and with the requirement that these audit requirements be placed in the audit guide "as soon as possible"). 2)With respect to provisions related to the uniform complaint process: a) Clarify that the "governing body," not the governing board of a charter school, takes on the proposed responsibilities, and clarify, consistent with the author's intent, that school districts, county offices of education, and charter schools must meet noticing requirements. AB 165 Page 10 b) Specify that the terms of the reimbursement of pupils, parents or guardians impacted by the imposition of pupil fees include interest accrued from the date the fee was paid and calculated to be based on the Pooled Money Investment Account (PMIA) rate, since the interest rate required in the bill may not exist for all school districts or charter schools. 3)With respect to provisions related to audits and the withholding of funds: a) The bill adds provisions to EC 41020 that deal with both local educational agencies and charter schools; however, EC 41020 does not apply to charter schools. Conforming language is necessary in order to apply these requirements to charter schools as the author intended. b) Clarify that any withholding of funding from a charter school is only authorized "until repayment is complete," in order to conform this language to the same provision as applied to school districts. c) Require the SPI, rather than the county office of education, to withhold funds as provided in this bill. This also removes the need to authorize the county office of education (a local agency, in some cases led by an appointed official) to request that the State Controller (a state-wide elected Constitutional Officer) perform the withholding; therefore delete that authorizing provision; this amendment also conforms to similar withholding provisions in current law. 4)With respect to hearing and resolution requirements: a) Clarify that these requirements apply to the governing board of a local educational agency and the governing body of a charter school. b) Clarify that the required public hearing or hearings take place during a regularly scheduled governing board or governing body meeting. 5)As a courtesy to the author and to correct a drafting oversight, delete the urgency clause. REGISTERED SUPPORT / OPPOSITION : Support American Civil Liberties Union (Sponsor) Association of American Publishers Opposition AB 165 Page 11 Committee for Safety of Foreign Exchange Students (with suggested amendments) Analysis Prepared by : Gerald Shelton / ED. / (916) 319-2087