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