AB 1344 Enacts New Transparency and Accountability Measures for Public Agency Executive Contracts

November 2011

In an attempt to increase transparency and accountability in public agency executive contracts, effective January 1, 2012, Assembly Bill (AB) 1344 amends the California Government Code to add substantive limitations on employment contracts for senior public officials, as well as Brown Act meeting requirements and penalties for abuse of public office.  Enacted primarily in reaction to the City of Bell controversy, AB 1344 added the following provisions of relevance to school districts:

New Substantive Contracting Requirements:  As applied to public education agencies, AB 1344 prohibits the governing board of a school district or community college district from executing or renewing a contract for a local agency executive that includes an automatic increase in compensation that exceeds a cost-of-living adjustment (“COLA”).  (Gov. Code § 3511.2(a).)  

AB 1344 also mandates that if a governing board enters into or renews a contract with a local agency executive that provides for: (1) paid leave for the official pending an investigation; (2) funds for the legal criminal defense of the official, or (3) any cash settlement related to the official’s termination, the contract must include a provision that such sums be fully reimbursed by the official to the local public agency if the official is convicted of a crime involving abuse of his or her office or position.  In addition, AB 1344 provides that if a local public agency provides these types of payments absent a contractual obligation, such sums must be fully reimbursed by the official to the agency if the official is convicted of a crime involving abuse of his or her office or position.  (Gov. Code §53243.3.)

New Definitions:  The law broadly defines “local agency” to include, among others, school districts and any “other public agency.” (Gov. Code § 3511.1(c).)  A “local agency executive” is defined as the chief executive officer or any non-union head of a department of an agency.  (Gov. Code § 3511.1(d).)  This would include the superintendent, deputy, assistant, and associate superintendents, and other educational agency department heads that are not part of a collective bargaining group. 

AB 1344 defines “compensation” to mean an annual salary or stipend; automobile and equipment allowances; and/or incentives and bonus payments.  (Gov. Code §3511.1(a).)  Additionally, “cost-of-living” is defined as the California Consumer Price Index for Urban Wage Earners and Clerical Workers as calculated by the Department of Industrial Relations.  (Gov. Code §3511.1(b).) 

Under the new law, an “abuse of office or position” includes, but is not limited to: (1) waste, fraud and violation of the law under the color of authority; or (2) a crime against public justice, including but not limited to those defined under specified provisions of the California Penal Code.  (Gov. Code § 53243.4; see Penal Code §§ 92-186.33.)

New Brown Act Requirements:  AB 1344 amends Government Code section 54956(b), to now prohibit the legislative body of a local agency (e.g., a governing board) from calling a special meeting regarding the salaries, salary schedules, or compensation paid in the form of fringe benefits to a local agency executive.  Thus, beginning on January 1, 2012, new contracts and contract renewals must be acted upon during a regularly scheduled meeting of the governing board.  However, this does not prohibit a board from calling a special meeting to discuss the educational agency’s budget.

Finally, AB 1344 also requires any public entity that maintains an agency Internet website to post the agenda of a regularly scheduled meeting of the governing board at least 72 hours in advance on its website.  Similarly, they must post the agenda for special meetings 24 hours in advance.

It is important to remember that this significant legislation goes into effect on January 1, 2012.  If you have any questions regarding this matter, please call one of our six offices.

F3 NewsFlash prepared by Howard Friedman and Lyndsy Rutherford.
Howard is a partner in the F3 Los Angeles office.
Lyndsy is an associate in the F3 Los Angeles office.

This F3 NewsFlash is a summary only and not legal advice.  We recommend that you consult with legal counsel to determine how this new law may apply to your specific facts and circumstances.  Information on a free NewsFlash subscription can be found at www.fagenfriedman.com.

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