SB 949: Conflicts of interest: public officers and employees: charter schools.
- Session Year: 2017-2018
- House: Senate
- Latest Version Date: 2018-04-16
(1)Existing law, the Charter Schools Act of 1992, provides for the establishment and operation of charter schools and provides that a charter school may operate as, or be operated by, a nonprofit public benefit corporation.
Existing law prohibits certain public officials, including, but not limited to, state, county, or district officers or employees, from being financially interested in any contract made by them in their official capacity, or by any body or board of which they are members, except as provided. A willful violation of these provisions is a crime.
This bill would expressly state that members of governing bodies of charter schools, the governing body of a charter school, solely with respect to the operations of a that charter school, are subject to those conflict of interest conflict-of-interest provisions, except in limited circumstances, as prescribed. The bill would further specify that, as used in those conflict of interest provisions, a member of the governing body of a charter school is considered a public officer, a charter school is considered a government entity, district, public board or commission, public agency or public district, and a member means a person who serves on a governing body of a charter school, excluding members of nonprofit public benefit corporations, as defined, not serving on the governing body of the charter school.
(2)Existing law excepts from the above conflict-of-interest provisions certain remote interests, as described, including those of officers or employees of a nonprofit entity exempt from taxation or a nonprofit corporation, except as prescribed, and those of persons receiving salary, per diem, or reimbursement for expenses from a government entity. prescribed.
This bill would also except from these remote interest provisions those of a nonprofit limited liability company and of a person receiving salary, per diem, or reimbursement for expenses from a charter school. company.
(3)Existing law also excepts from those conflict-of-interest provisions the remote interest of an owner or partner of a firm serving as an appointed member of an unelected board or commission of a contracting agency, if the owner or partner recuses himself or herself from providing any advice to the contracting agency regarding the contract between the firm and the contracting agency and from all participation in reviewing a project resulting from that contract.
This bill would expressly apply that specific remote interest exception to a nonprofit corporation or nonprofit limited liability company that governs a charter school. The bill would create another remote interest exception for a member of the governing body or board regarding collective bargaining agreements and personnel matters that affect a class of employees to which the members relative belongs, as prescribed. The bill would also create a remote interest exception for an employee of or independent contractor to a charter school, serving as a member of the governing body of the charter school by which he or she is employed or under contract with, if that employee or independent contractor abstains from voting on, or influencing or attempting to influence another member of the governing body regarding matters uniquely affecting, his or her own employment or contract.
(4)Existing law specifies that the willful failure of an officer to disclose the fact of his or her interest in a contract is punishable as a crime.This bill would revise that provision to also require that the officers failure to disclose be a knowing failure.(5)(4)Existing law identifies other situations in which officers or employees are deemed to not be interested in a contract. These include when the officer or employees interest is: (A) as a recipient of public services generally provided by the body or board of which he or she is a member, on the same terms and conditions as if he or she were not a member of the body or board; (B) that of a landlord or tenant of the contracting party, if the contracting party is, among others, the state or any department or agency of this state; (C) that of the spouse of an officer or employee of a public agency in his or her spouses employment, as prescribed; and (D) that of a person receiving salary, per diem, or reimbursement for expenses from a government entity.
This bill would expressly apply these provisions identifying certain noninterests to charter schools. The bill would create 2 additional exceptions for the situation in which an officer or employee provides a loan to a public school, including a charter school, due to a fiscal emergency, or leases real property to be used for public school purposes. Additionally, the bill would make other specified, noninterests provisions apply to nonsalaried directors or members and noncompensated officers of nonprofit limited liability companies.
(6)(5)Under existing law, a contract made in violation of the conflict-of-interest provisions may be avoided at the instance of any party, except the officer interested in the contract. Existing law establishes that an action under this provision may be commenced within 4 years after the plaintiff discovered, or in the exercise of reasonable care should have discovered, the violation.
This bill would require an interested person, before commencing an action under this provision, to make a written demand to cure or correct the alleged violation. The bill would authorize the demanding party, if the contract is not set aside or reformed within 30 days of the demand, to bring an action under that provision. The bill would prohibit an action from being brought for any penal sanction, including removal or disqualification from holding public office, except for a knowing and willful violation.
(1)Existing law, the Charter Schools Act of 1992, provides for the establishment and operation of charter schools and provides that a charter school may operate as, or be operated by, a nonprofit public benefit corporation.
Existing law prohibits certain public officials, including, but not limited to, state, county, or district officers or employees, from being financially interested in any contract made by them in their official capacity, or by any body or board of which they are members, except as provided. A willful violation of these provisions is a crime.
This bill would expressly state that members of governing bodies of charter schools, solely with respect to the operations of a charter school, are subject to those conflict of interest provisions, except in limited circumstances, as prescribed.
(2)Existing law excepts from the above conflict-of-interest provisions certain remote interests, as described, including those of officers or employees of a nonprofit entity exempt from taxation or a nonprofit corporation, except as prescribed, and those of persons receiving salary, per diem, or reimbursement for expenses from a government entity.
This bill would also except from these remote interest provisions those of a nonprofit limited liability company and of a person receiving salary, per diem, or reimbursement for expenses from a charter school.
(3)Existing law also excepts from those conflict-of-interest provisions the remote interest of an owner or partner of a firm serving as an appointed member of an unelected board or commission of a contracting agency, if the owner or partner recuses himself or herself from providing any advice to the contracting agency regarding the contract between the firm and the contracting agency and from all participation in reviewing a project resulting from that contract.
This bill would expressly apply that specific remote interest exception to a nonprofit corporation or nonprofit limited liability company that governs a charter school. The bill would create another remote interest exception for a member of the governing body regarding collective bargaining agreements and personnel matters that affect a class of employees to which the members relative belongs, as prescribed.
(4)Existing law specifies that the willful failure of an officer to disclose the fact of his or her interest in a contract is punishable as a crime.
This bill would revise that provision to also require that the officers failure to disclose be a knowing failure.
(5)Existing law identifies other situations in which officers or employees are deemed to not be interested in a contract. These include when the officer or employees interest is: (A) as a recipient of public services generally provided by the body or board of which he or she is a member, on the same terms and conditions as if he or she were not a member of the body or board; (B) that of a landlord or tenant of the contracting party, if the contracting party is, among others, the state or any department or agency of this state; (C) that of the spouse of an officer or employee of a public agency in his or her spouses employment, as prescribed; and (D) that of a person receiving salary, per diem, or reimbursement for expenses from a government entity.
This bill would expressly apply these provisions identifying certain noninterests to charter schools. The bill would create 2 additional exceptions for the situation in which an officer or employee provides a loan to a public school, including a charter school, due to a fiscal emergency, or leases real property to be used for public school purposes. Additionally, the bill would make other specified, noninterests provisions apply to nonsalaried directors or members and noncompensated officers of nonprofit limited liability companies.
(6)Under existing law, a contract made in violation of the conflict-of-interest provisions may be avoided at the instance of any party, except the officer interested in the contract. Existing law establishes that an action under this provision may be commenced within 4 years after the plaintiff discovered, or in the exercise of reasonable care should have discovered, the violation.
This bill would require an interested person, before commencing an action under this provision, to make a written demand to cure or correct the alleged violation. The bill would authorize the demanding party, if the contract is not set aside or reformed within 30 days of the demand, to bring an action under that provision. The bill would prohibit an action from being brought for any penal sanction, including removal or disqualification from holding public office, except for a knowing and willful violation.
(1)Existing law requires the State Board of Education to adopt statewide academically rigorous content standards in the core curriculum areas of reading, writing, and mathematics to serve as the basis for assessing the academic achievement of individual pupils and of schools, school districts, and the California educational system. Existing law makes these provisions inoperative on July 1, 2011.This bill would repeal these provisions.(2)Existing law requires the State Department of Education to develop a 3-year plan of activities, with the approval of the State Board of Education, supporting the continuous improvement of the assessments developed and administered pursuant to the California Assessment of Student Performance and Progress. Existing law requires the department to periodically contract for a 3-year independent evaluation of the consortium computer-adaptive assessments in English language arts and mathematics in designated grades. Existing law further requires these independent evaluation reports and specified interim annual reports to be submitted to the Governor, the Superintendent of Public Instruction, the state board, and the chairs of the education policy committees of both houses of the Legislature by October 31 of each year. These provisions become inoperative on July 1, 2021, and as of January 1, 2022, are repealed.This bill would repeal these provisions.(1)Existing law requires the State Board of Education to adopt statewide academically rigorous content standards in the core curriculum areas of reading, writing, and mathematics to serve as the basis for assessing the academic achievement of individual pupils and of schools, school districts, and the California educational system. Existing law makes these provisions inoperative on July 1, 2011.
This bill would repeal these provisions.
(2)Existing law requires the State Department of Education to develop a 3-year plan of activities, with the approval of the State Board of Education, supporting the continuous improvement of the assessments developed and administered pursuant to the California Assessment of Student Performance and Progress. Existing law requires the department to periodically contract for a 3-year independent evaluation of the consortium computer-adaptive assessments in English language arts and mathematics in designated grades. Existing law further requires these independent evaluation reports and specified interim annual reports to be submitted to the Governor, the Superintendent of Public Instruction, the state board, and the chairs of the education policy committees of both houses of the Legislature by October 31 of each year. These provisions become inoperative on July 1, 2021, and as of January 1, 2022, are repealed.
This bill would repeal these provisions.
(a)Notwithstanding Section 47610, the prohibitions contained in Article 4 (commencing with Section 1090) of Chapter 1 of Division 4 of Title 1 of the Government Code, except Section 1099, apply to the members of the governing bodies of charter schools body of a charter school solely with respect to the operations of a that charter school. To the extent that the governing body of an organization that operates a charter school engages in activities that are not related to the operation of the charter school, this section does not make those unrelated activities subject to the prohibitions contained in Article 4 (commencing with Section 1090) of Chapter 1 of Division 4 of Title 1 of the Government Code.
(b)As used in Article 4 (commencing with Section 1090) of Chapter 1 of Division 4 of Title 1 of the Government Code: (1) a member of the governing body of a charter school shall be considered a public officer; (2) a charter school shall be considered a government entity, district, public board or commission, public agency or public district; and (3) a member means a person who serves on a governing body of a charter school, and excludes members of a nonprofit public benefit corporation, formed pursuant to Chapter 3 (commencing with Section 5310) of Part 2 of Division 2 of Title 1 of the Corporations Code and similar provisions of law, not serving on the governing body of the charter school.
SEC. 2.Section 1091 of the Government Code is amended to read:1091.(a)An officer shall not be deemed to be interested in a contract entered into by a body or board of which the officer is a member within the meaning of this article if the officer has only a remote interest in the contract and if the fact of that interest is disclosed to the body or board of which the officer is a member and noted in its official records, and thereafter the body or board authorizes, approves, or ratifies the contract in good faith by a vote of its membership sufficient for the purpose without counting the vote or votes of the officer or member with the remote interest.
(b)As used in this article, remote interest means any of the following:
(1)That of an officer or employee of a nonprofit entity exempt from taxation pursuant to Section 501(c)(3) of the Internal Revenue Code (26 U.S.C. Sec. 501(c)(3)), pursuant to Section 501(c)(5) of the Internal Revenue Code (26 U.S.C. Sec. 501(c)(5)), or a nonprofit corporation, or a nonprofit limited liability company, except as provided in paragraph (8) of subdivision (a) of Section 1091.5.
(2)That of an employee or agent of the contracting party, if the contracting party has 10 or more other employees and if the officer was an employee or agent of that contracting party for at least three years prior to the officer initially accepting his or her office and the officer owns less than 3 percent of the shares of stock of the contracting party; and the employee or agent is not an officer or director of the contracting party and did not directly participate in formulating the bid of the contracting party.
For purposes of this paragraph, time of employment with the contracting party by the officer shall be counted in computing the three-year period specified in this paragraph even though the contracting party has been converted from one form of business organization to a different form of business organization within three years of the initial taking of office by the officer. Time of employment in that case shall be counted only if, after the transfer or change in organization, the real or ultimate ownership of the contracting party is the same or substantially similar to that which existed before the transfer or change in organization. For purposes of this paragraph, stockholders, bondholders, partners, or other persons holding an interest in the contracting party are regarded as having the real or ultimate ownership of the contracting party.
(3)That of an employee or agent of the contracting party, if all of the following conditions are met:
(A)The agency of which the person is an officer is a local public agency located in a county with a population of less than 4,000,000.
(B)The contract is competitively bid and is not for personal services.
(C)The employee or agent is not in a primary management capacity with the contracting party, is not an officer or director of the contracting party, and holds no ownership interest in the contracting party.
(D)The contracting party has 10 or more other employees.
(E)The employee or agent did not directly participate in formulating the bid of the contracting party.
(F)The contracting party is the lowest responsible bidder.
(4)That of a parent in the earnings of his or her minor child for personal services.
(5)That of a landlord or tenant of the contracting party.
(6)That of an attorney of the contracting party or that of an owner, officer, employee, or agent of a firm that renders, or has rendered, service to the contracting party in the capacity of stockbroker, insurance agent, insurance broker, real estate agent, or real estate broker, if these individuals have not received and will not receive remuneration, consideration, or a commission as a result of the contract and if these individuals have an ownership interest of 10 percent or more in the law practice or firm, stock brokerage firm, insurance firm, or real estate firm.
(7)That of a member of a nonprofit corporation formed under the Food and Agricultural Code or a nonprofit corporation formed under the Corporations Code for the sole purpose of engaging in the merchandising of agricultural products or the supplying of water.
(8)That of a supplier of goods or services when those goods or services have been supplied to the contracting party by the officer for at least five years prior to his or her election or appointment to office.
(9)That of a person subject to the provisions of Section 1090 in any contract or agreement entered into pursuant to the provisions of the California Land Conservation Act of 1965.
(10)Except as provided in subdivision (b) of Section 1091.5, that of a director of, or a person having an ownership interest of, 10 percent or more in a bank, bank holding company, or savings and loan association with which a party to the contract has a relationship of borrower or depositor, debtor or creditor.
(11)That of an engineer, geologist, architect, or planner employed by a consulting engineering, architectural, or planning firm. This paragraph applies only to an employee of a consulting firm who does not serve in a primary management capacity, and does not apply to an officer or director of a consulting firm.
(12)That of an elected officer otherwise subject to Section 1090, in any housing assistance payment contract entered into pursuant to Section 8 of the United States Housing Act of 1937 (42 U.S.C. Sec. 1437f) as amended, provided that the housing assistance payment contract was in existence before Section 1090 became applicable to the officer and will be renewed or extended only as to the existing tenant, or, in a jurisdiction in which the rental vacancy rate is less than 5 percent, as to new tenants in a unit previously under a Section 8 contract. This section applies to any person who became a public official on or after November 1, 1986.
(13)That of a person receiving salary, per diem, or reimbursement for expenses from a government entity, including a charter school. entity.
(14)That of a person owning less than 3 percent of the shares of a contracting party that is a for-profit corporation, provided that the ownership of the shares derived from the persons employment with that corporation.
(15)That of a party to litigation involving the body or board of which the officer is a member in connection with an agreement in which all of the following apply:
(A)The agreement is entered into as part of a settlement of litigation in which the body or board is represented by legal counsel.
(B)After a review of the merits of the agreement and other relevant facts and circumstances, a court of competent jurisdiction finds that the agreement serves the public interest.
(C)The interested member has recused himself or herself from all participation, direct or indirect, in the making of the agreement on behalf of the body or board.
(16)That of a person who is an officer or employee of an investor-owned utility that is regulated by the Public Utilities Commission with respect to a contract between the investor-owned utility and a state, county, district, judicial district, or city body or board of which the person is a member, if the contract requires the investor-owned utility to provide energy efficiency rebates or other type of program to encourage energy efficiency that benefits the public when all of the following apply:
(A)The contract is funded by utility consumers pursuant to regulations of the Public Utilities Commission.
(B)The contract provides no individual benefit to the person that is not also provided to the public, and the investor-owned utility receives no direct financial profit from the contract.
(C)The person has recused himself or herself from all participation in making the contract on behalf of the state, county, district, judicial district, or city body or board of which he or she is a member.
(D)The contract implements a program authorized by the Public Utilities Commission.
(17)That of an owner or partner of a firm serving as an appointed member of an unelected board or commission of the contracting agency if the owner or partner recuses himself or herself from providing any advice to the contracting agency regarding the contract between the firm and the contracting agency and from all participation in reviewing a project that results from that contract. This paragraph applies to a nonprofit corporation or nonprofit limited liability company that governs a charter school.
(18)That of a member of the governing body or board regarding collective bargaining agreements and personnel matters that affect a class of employees to which the members relative belongs, provided that personnel excluding matters that uniquely affect a relative of the member may not be voted upon. member. For purposes of this section, relative means an adult who is related to the person by blood or affinity within the third degree, as determined by the common law, or an individual in an adoptive relationship within the third degree.
(19)That of an employee of or independent contractor to a charter school serving as a member of the governing body of the charter school by which he or she is employed or under contract with, provided that the employee or independent contractor abstains from voting on, or influencing or attempting to influence another member of the governing body regarding, all matters uniquely affecting his or her own employment or contract.
(c)This section is not applicable to any officer interested in a contract who influences or attempts to influence another member of the body or board of which he or she is a member to enter into the contract.
(d)The knowing and willful failure of an officer to disclose the fact of his or her interest in a contract pursuant to this section is punishable as provided in Section 1097. That violation does not void the contract unless the contracting party had knowledge of the fact of the remote interest of the officer at the time the contract was executed.
SEC. 3.Section 1091.5 of the Government Code is amended to read:1091.5.(a)An officer or employee shall not be deemed to be interested in a contract if his or her interest is any of the following:
(1)The ownership of less than 3 percent of the shares of a corporation for profit, provided that the total annual income to him or her from dividends, including the value of stock dividends, from the corporation does not exceed 5 percent of his or her total annual income, and any other payments made to him or her by the corporation do not exceed 5 percent of his or her total annual income.
(2)That of an officer or employee in being reimbursed for his or her actual and necessary expenses incurred in the performance of official duties.
(3)That of a recipient of public services, including educational services, generally provided by the public body or board of which he or she is a member, on the same terms and conditions as if he or she were not a member of the body or board. For purposes of this paragraph, a public body or board includes the governing body of a charter school.
(4)That of a landlord or tenant of the contracting party if the contracting party is the federal government or any federal department or agency, this state or an adjoining state, any department or agency of this state, including a charter school, or an adjoining state, any county or city of this state or an adjoining state, or any public corporation or special, judicial, or other public district of this state or an adjoining state unless the subject matter of the contract is the property in which the officer or employee has the interest as landlord or tenant in which event his or her interest shall be deemed a remote interest within the meaning of, and subject to, the provisions of Section 1091.
(5)That of a tenant in a public housing authority created pursuant to Part 2 (commencing with Section 34200) of Division 24 of the Health and Safety Code in which he or she serves as a member of the board of commissioners of the authority or of a community development commission created pursuant to Part 1.7 (commencing with Section 34100) of Division 24 of the Health and Safety Code.
(6)That of a spouse of an officer or employee of a public agency in his or her spouses employment or officeholding if his or her spouses employment or officeholding has existed for at least one year prior to his or her election or appointment. For the purposes of this paragraph, a public agency includes the governing body of a charter school.
(7)That of a nonsalaried director or member of a nonprofit corporation or nonprofit limited liability company, provided that this interest is disclosed to the body or board at the time of the first consideration of the contract, and provided further that this interest is noted in its official records.
(8)That of a noncompensated officer of a nonprofit, tax-exempt corporation, which, as one of its primary purposes, supports the functions of the body or board or to which the body or board has a legal obligation to give particular consideration, and provided further that this interest is noted in its official records.
For purposes of this paragraph, an officer is noncompensated even though he or she receives reimbursement from the nonprofit, tax-exempt corporation, or tax-exempt limited liability company for necessary travel and other actual expenses incurred in performing the duties of his or her office.
(9)That of a person receiving salary, per diem, or reimbursement for expenses from a government entity, unless the contract directly involves the department of the government entity that employs the officer or employee, provided that the interest is disclosed to the body or board at the time of consideration of the contract, and provided further that the interest is noted in its official record. For purposes of this paragraph, a government entity includes a charter school.
(10)That of an attorney of the contracting party or that of an owner, officer, employee, or agent of a firm which renders, or has rendered, service to the contracting party in the capacity of stockbroker, insurance agent, insurance broker, real estate agent, or real estate broker, if these individuals have not received and will not receive remuneration, consideration, or a commission as a result of the contract and if these individuals have an ownership interest of less than 10 percent in the law practice or firm, stock brokerage firm, insurance firm, or real estate firm.
(11)Except as provided in subdivision (b), that of an officer or employee of, or a person having less than a 10-percent ownership interest in, a bank, bank holding company, or savings and loan association with which a party to the contract has a relationship of borrower, depositor, debtor, or creditor.
(12)That of (A) a bona fide nonprofit, tax-exempt corporation having among its primary purposes the conservation, preservation, or restoration of park and natural lands or historical resources for public benefit, which corporation enters into an agreement with a public agency to provide services related to park and natural lands or historical resources and which services are found by the public agency, prior to entering into the agreement or as part of the agreement, to be necessary to the public interest to plan for, acquire, protect, conserve, improve, or restore park and natural lands or historical resources for public purposes and (B) any officer, director, or employee acting pursuant to the agreement on behalf of the nonprofit corporation. For purposes of this paragraph, agreement includes contracts and grants, and park, natural lands, and historical resources shall have the meanings set forth in subdivisions (d), (g), and (i) of Section 5902 of the Public Resources Code. Services to be provided to the public agency may include those studies and related services, acquisitions of property and property interests, and any activities related to those studies and acquisitions necessary for the conservation, preservation, improvement, or restoration of park and natural lands or historical resources.
(13)That of an officer, employee, or member of the Board of Directors of the California Housing Finance Agency with respect to a loan product or programs if the officer, employee, or member participated in the planning, discussions, development, or approval of the loan product or program and both of the following two conditions exist:
(A)The loan product or program is or may be originated by any lender approved by the agency.
(B)The loan product or program is generally available to qualifying borrowers on terms and conditions that are substantially the same for all qualifying borrowers at the time the loan is made.
(14)That of a party to a contract for public services entered into by a special district that requires a person to be a landowner or a representative of a landowner to serve on the board of which the officer or employee is a member, on the same terms and conditions as if he or she were not a member of the body or board. For purposes of this paragraph, public services includes the powers and purposes generally provided pursuant to provisions of the Water Code relating to irrigation districts, California water districts, water storage districts, or reclamation districts.
(15)That of a person who provides a loan to a public school, including a charter school, due to a fiscal emergency, and who also serves as a member of the governing body or board of the school or as an employee of a public school, including a charter school. A member of a governing body or board who provides a loan as described in this paragraph shall abstain from voting on, or influencing or attempting to influence another member of the governing body or board regarding, all matters affecting the loan agreement. The loan agreement shall not disqualify the member from serving on the governing body or board from being an employee if the governing body, body or board, before entering into the loan agreement, declares the existence of and describes the fiscal emergency by adopting a resolution at a public meeting of the governing body. meeting. The governing body or board shall disclose and approve the loan agreement, including the terms of the loan, during a public meeting. This paragraph shall apply to a member of the governing body or board or an employee who signs a guarantor agreement relative to a line of credit, provided that the funds from the line of credit shall not be accessed until a fiscal emergency is declared and described as required pursuant to this paragraph. The interest rate for the loan or line of credit described in this paragraph shall not be more than 50 percent of the fair market rate. be 0 percent plus the applicable federal rate as set by the Internal Revenue Service.
(16)That of a person who leases real property to be used for public school purposes, including a charter school, or who signs a guarantor agreement relative to the lease of real property to be used for public school purposes, and who also serves as a member of the governing body or board or an employee of the public school, provided that: (1) that all of the following conditions are met: (A) the agreement is arranged by a licensed real estate broker solely on behalf of the charter public school; or (2) the governing body reasonably determines that the agreement will permit the charter school to meet its ongoing financial obligations and there is no available alternative to meet the needs of the school. (B) the transaction was authorized in good faith by a vote of a majority of the members without counting the vote of the lessor or guarantor and with knowledge of the material facts concerning the transaction and the lessor or guarantors interest in the transaction; and (C) the governing body or board determined after reasonable investigation that the public school could not have obtained a more advantageous arrangement. A member of a governing body or board who is a lessor or guarantor as described in this paragraph shall abstain from voting on, or influencing or attempting to influence another member of the governing body or board regarding, all matters affecting the real property lease agreement. The governing body or board shall disclose and approve the real property lease agreement or guarantee, including the terms of the lease or guarantee during a public meeting.
(b)An officer or employee shall not be deemed to be interested in a contract made pursuant to competitive bidding under a procedure established by law if his or her sole interest is that of an officer, director, or employee of a bank or savings and loan association with which a party to the contract has the relationship of borrower or depositor, debtor or creditor.
SEC. 4.Section 1092 of the Government Code is amended to read:1092.(a)A contract made in violation of any of the provisions of Section 1090 may be avoided at the instance of any party except the officer interested therein. The contract shall not be avoided because of the interest of an officer therein unless the contract is made in the official capacity of the officer, or by a board or body of which he or she is a member.
(b)An action under this section shall be commenced within four years after the plaintiff has discovered, or in the exercise of reasonable care should have discovered, a violation described in subdivision (a).
(c)Before commencing an action under this section, any interested person shall make a written demand to cure or correct the alleged violation. If the contract is not set aside or reformed by the parties within 30 days of the demand, the demanding party may bring an action within the time period provided by subdivision (b).
(d)No action shall be brought for a violation of Section 1090 seeking any penal sanction, including removal or disqualification from holding public office, except for a knowing and willful violation.Notwithstanding Section 47610, the prohibitions contained in Article 4 (commencing with Section 1090) of Chapter 1 of Division 4 of Title 1 of the Government Code, except Section 1099, apply to the members of the governing bodies of charter schools solely with respect to the operations of a charter school. To the extent that the governing body of an organization that operates a charter school engages in activities that are not related to the operation of the charter school, this section does not make those unrelated activities subject to the prohibitions contained in Article 4 (commencing with Section 1090) of Chapter 1 of Division 4 of Title 1 of the Government Code.
SEC. 2.Section 1091 of the Government Code is amended to read:1091.(a)An officer shall not be deemed to be interested in a contract entered into by a body or board of which the officer is a member within the meaning of this article if the officer has only a remote interest in the contract and if the fact of that interest is disclosed to the body or board of which the officer is a member and noted in its official records, and thereafter the body or board authorizes, approves, or ratifies the contract in good faith by a vote of its membership sufficient for the purpose without counting the vote or votes of the officer or member with the remote interest.
(b)As used in this article, remote interest means any of the following:
(1)That of an officer or employee of a nonprofit entity exempt from taxation pursuant to Section 501(c)(3) of the Internal Revenue Code (26 U.S.C. Sec. 501(c)(3)), pursuant to Section 501(c)(5) of the Internal Revenue Code (26 U.S.C. Sec. 501(c)(5)), or a nonprofit corporation, or a nonprofit limited liability company, except as provided in paragraph (8) of subdivision (a) of Section 1091.5.
(2)That of an employee or agent of the contracting party, if the contracting party has 10 or more other employees and if the officer was an employee or agent of that contracting party for at least three years prior to the officer initially accepting his or her office and the officer owns less than 3 percent of the shares of stock of the contracting party; and the employee or agent is not an officer or director of the contracting party and did not directly participate in formulating the bid of the contracting party.
For purposes of this paragraph, time of employment with the contracting party by the officer shall be counted in computing the three-year period specified in this paragraph even though the contracting party has been converted from one form of business organization to a different form of business organization within three years of the initial taking of office by the officer. Time of employment in that case shall be counted only if, after the transfer or change in organization, the real or ultimate ownership of the contracting party is the same or substantially similar to that which existed before the transfer or change in organization. For purposes of this paragraph, stockholders, bondholders, partners, or other persons holding an interest in the contracting party are regarded as having the real or ultimate ownership of the contracting party.
(3)That of an employee or agent of the contracting party, if all of the following conditions are met:
(A)The agency of which the person is an officer is a local public agency located in a county with a population of less than 4,000,000.
(B)The contract is competitively bid and is not for personal services.
(C)The employee or agent is not in a primary management capacity with the contracting party, is not an officer or director of the contracting party, and holds no ownership interest in the contracting party.
(D)The contracting party has 10 or more other employees.
(E)The employee or agent did not directly participate in formulating the bid of the contracting party.
(F)The contracting party is the lowest responsible bidder.
(4)That of a parent in the earnings of his or her minor child for personal services.
(5)That of a landlord or tenant of the contracting party.
(6)That of an attorney of the contracting party or that of an owner, officer, employee, or agent of a firm that renders, or has rendered, service to the contracting party in the capacity of stockbroker, insurance agent, insurance broker, real estate agent, or real estate broker, if these individuals have not received and will not receive remuneration, consideration, or a commission as a result of the contract and if these individuals have an ownership interest of 10 percent or more in the law practice or firm, stock brokerage firm, insurance firm, or real estate firm.
(7)That of a member of a nonprofit corporation formed under the Food and Agricultural Code or a nonprofit corporation formed under the Corporations Code for the sole purpose of engaging in the merchandising of agricultural products or the supplying of water.
(8)That of a supplier of goods or services when those goods or services have been supplied to the contracting party by the officer for at least five years prior to his or her election or appointment to office.
(9)That of a person subject to the provisions of Section 1090 in any contract or agreement entered into pursuant to the provisions of the California Land Conservation Act of 1965.
(10)Except as provided in subdivision (b) of Section 1091.5, that of a director of, or a person having an ownership interest of, 10 percent or more in a bank, bank holding company, or savings and loan association with which a party to the contract has a relationship of borrower or depositor, debtor or creditor.
(11)That of an engineer, geologist, architect, or planner employed by a consulting engineering, architectural, or planning firm. This paragraph applies only to an employee of a consulting firm who does not serve in a primary management capacity, and does not apply to an officer or director of a consulting firm.
(12)That of an elected officer otherwise subject to Section 1090, in any housing assistance payment contract entered into pursuant to Section 8 of the United States Housing Act of 1937 (42 U.S.C. Sec. 1437f) as amended, provided that the housing assistance payment contract was in existence before Section 1090 became applicable to the officer and will be renewed or extended only as to the existing tenant, or, in a jurisdiction in which the rental vacancy rate is less than 5 percent, as to new tenants in a unit previously under a Section 8 contract. This section applies to any person who became a public official on or after November 1, 1986.
(13)That of a person receiving salary, per diem, or reimbursement for expenses from a government entity. entity, including a charter school.
(14)That of a person owning less than 3 percent of the shares of a contracting party that is a for-profit corporation, provided that the ownership of the shares derived from the persons employment with that corporation.
(15)That of a party to litigation involving the body or board of which the officer is a member in connection with an agreement in which all of the following apply:
(A)The agreement is entered into as part of a settlement of litigation in which the body or board is represented by legal counsel.
(B)After a review of the merits of the agreement and other relevant facts and circumstances, a court of competent jurisdiction finds that the agreement serves the public interest.
(C)The interested member has recused himself or herself from all participation, direct or indirect, in the making of the agreement on behalf of the body or board.
(16)That of a person who is an officer or employee of an investor-owned utility that is regulated by the Public Utilities Commission with respect to a contract between the investor-owned utility and a state, county, district, judicial district, or city body or board of which the person is a member, if the contract requires the investor-owned utility to provide energy efficiency rebates or other type of program to encourage energy efficiency that benefits the public when all of the following apply:
(A)The contract is funded by utility consumers pursuant to regulations of the Public Utilities Commission.
(B)The contract provides no individual benefit to the person that is not also provided to the public, and the investor-owned utility receives no direct financial profit from the contract.
(C)The person has recused himself or herself from all participation in making the contract on behalf of the state, county, district, judicial district, or city body or board of which he or she is a member.
(D)The contract implements a program authorized by the Public Utilities Commission.
(17)That of an owner or partner of a firm serving as an appointed member of an unelected board or commission of the contracting agency if the owner or partner recuses himself or herself from providing any advice to the contracting agency regarding the contract between the firm and the contracting agency and from all participation in reviewing a project that results from that contract. This paragraph applies to a nonprofit corporation or nonprofit limited liability company that governs a charter school.
(18)That of a member of the governing body regarding collective bargaining agreements and personnel matters that affect a class of employees to which the members relative belongs, provided that personnel matters that uniquely affect a relative of the member may not be voted upon. For purposes of this section, relative means an adult who is related to the person by blood or affinity within the third degree, as determined by the common law, or an individual in an adoptive relationship within the third degree.
(c)This section is not applicable to any officer interested in a contract who influences or attempts to influence another member of the body or board of which he or she is a member to enter into the contract.
(d)The knowing and willful failure of an officer to disclose the fact of his or her interest in a contract pursuant to this section is punishable as provided in Section 1097. That violation does not void the contract unless the contracting party had knowledge of the fact of the remote interest of the officer at the time the contract was executed.
SEC. 3.Section 1091.5 of the Government Code is amended to read:1091.5.(a)An officer or employee shall not be deemed to be interested in a contract if his or her interest is any of the following:
(1)The ownership of less than 3 percent of the shares of a corporation for profit, provided that the total annual income to him or her from dividends, including the value of stock dividends, from the corporation does not exceed 5 percent of his or her total annual income, and any other payments made to him or her by the corporation do not exceed 5 percent of his or her total annual income.
(2)That of an officer or employee in being reimbursed for his or her actual and necessary expenses incurred in the performance of official duties.
(3)That of a recipient of public services services, including educational services, generally provided by the public body or board of which he or she is a member, on the same terms and conditions as if he or she were not a member of the body or board. For purposes of this paragraph, a public body or board includes the governing body of a charter school.
(4)That of a landlord or tenant of the contracting party if the contracting party is the federal government or any federal department or agency, this state or an adjoining state, any department or agency of this state state, including a charter school, or an adjoining state, any county or city of this state or an adjoining state, or any public corporation or special, judicial, or other public district of this state or an adjoining state unless the subject matter of the contract is the property in which the officer or employee has the interest as landlord or tenant in which event his or her interest shall be deemed a remote interest within the meaning of, and subject to, the provisions of Section 1091.
(5)That of a tenant in a public housing authority created pursuant to Part 2 (commencing with Section 34200) of Division 24 of the Health and Safety Code in which he or she serves as a member of the board of commissioners of the authority or of a community development commission created pursuant to Part 1.7 (commencing with Section 34100) of Division 24 of the Health and Safety Code.
(6)That of a spouse of an officer or employee of a public agency in his or her spouses employment or officeholding if his or her spouses employment or officeholding has existed for at least one year prior to his or her election or appointment. For the purposes of this paragraph, a public agency includes the governing body of a charter school.
(7)That of a nonsalaried director or member of a nonprofit corporation, corporation or nonprofit limited liability company, provided that this interest is disclosed to the body or board at the time of the first consideration of the contract, and provided further that this interest is noted in its official records.
(8)That of a noncompensated officer of a nonprofit, tax-exempt corporation, which, as one of its primary purposes, supports the functions of the body or board or to which the body or board has a legal obligation to give particular consideration, and provided further that this interest is noted in its official records.
For purposes of this paragraph, an officer is noncompensated even though he or she receives reimbursement from the nonprofit, tax-exempt corporation corporation, or tax-exempt limited liability company for necessary travel and other actual expenses incurred in performing the duties of his or her office.
(9)That of a person receiving salary, per diem, or reimbursement for expenses from a government entity, unless the contract directly involves the department of the government entity that employs the officer or employee, provided that the interest is disclosed to the body or board at the time of consideration of the contract, and provided further that the interest is noted in its official record. For purposes of this paragraph, a government entity includes a charter school.
(10)That of an attorney of the contracting party or that of an owner, officer, employee, or agent of a firm which renders, or has rendered, service to the contracting party in the capacity of stockbroker, insurance agent, insurance broker, real estate agent, or real estate broker, if these individuals have not received and will not receive remuneration, consideration, or a commission as a result of the contract and if these individuals have an ownership interest of less than 10 percent in the law practice or firm, stock brokerage firm, insurance firm, or real estate firm.
(11)Except as provided in subdivision (b), that of an officer or employee of, or a person having less than a 10-percent ownership interest in, a bank, bank holding company, or savings and loan association with which a party to the contract has a relationship of borrower, depositor, debtor, or creditor.
(12)That of (A) a bona fide nonprofit, tax-exempt corporation having among its primary purposes the conservation, preservation, or restoration of park and natural lands or historical resources for public benefit, which corporation enters into an agreement with a public agency to provide services related to park and natural lands or historical resources and which services are found by the public agency, prior to entering into the agreement or as part of the agreement, to be necessary to the public interest to plan for, acquire, protect, conserve, improve, or restore park and natural lands or historical resources for public purposes and (B) any officer, director, or employee acting pursuant to the agreement on behalf of the nonprofit corporation. For purposes of this paragraph, agreement includes contracts and grants, and park, natural lands, and historical resources shall have the meanings set forth in subdivisions (d), (g), and (i) of Section 5902 of the Public Resources Code. Services to be provided to the public agency may include those studies and related services, acquisitions of property and property interests, and any activities related to those studies and acquisitions necessary for the conservation, preservation, improvement, or restoration of park and natural lands or historical resources.
(13)That of an officer, employee, or member of the Board of Directors of the California Housing Finance Agency with respect to a loan product or programs if the officer, employee, or member participated in the planning, discussions, development, or approval of the loan product or program and both of the following two conditions exist:
(A)The loan product or program is or may be originated by any lender approved by the agency.
(B)The loan product or program is generally available to qualifying borrowers on terms and conditions that are substantially the same for all qualifying borrowers at the time the loan is made.
(14)That of a party to a contract for public services entered into by a special district that requires a person to be a landowner or a representative of a landowner to serve on the board of which the officer or employee is a member, on the same terms and conditions as if he or she were not a member of the body or board. For purposes of this paragraph, public services includes the powers and purposes generally provided pursuant to provisions of the Water Code relating to irrigation districts, California water districts, water storage districts, or reclamation districts.
(15)That of a person who provides a loan to a public school, including a charter school, due to a fiscal emergency, and who also serves as a member of the governing body of the school or as an employee of a public school, including a charter school. A member of a governing body who provides a loan as described in this paragraph shall abstain from voting on, or influencing or attempting to influence another member of the governing body regarding, all matters affecting the loan agreement. The loan agreement shall not disqualify the member from serving on the governing body from being an employee if the governing body, before entering into the loan agreement, declares the existence of and describes the fiscal emergency by adopting a resolution at a public meeting of the governing body. The governing body shall disclose and approve the loan agreement, including the terms of the loan, during a public meeting. This paragraph shall apply to a member of the governing body or an employee who signs a guarantor agreement relative to a line of credit, provided that the funds from the line of credit shall not be accessed until a fiscal emergency is declared and described as required pursuant to this paragraph. The interest rate for the loan or line of credit described in this paragraph shall not be more than 50 percent of the fair market rate.
(16)That of a person who leases real property to be used for public school purposes, including a charter school, or who signs a guarantor agreement relative to the lease of real property to be used for public school purposes, and who also serves as a member of the governing body or an employee of the public school, provided that: (1) the agreement is arranged by a licensed real estate broker solely on behalf of the charter school; or (2) the governing body reasonably determines that the agreement will permit the charter school to meet its ongoing financial obligations and there is no available alternative to meet the needs of the school. A member of a governing body who is a lessor or guarantor as described in this paragraph shall abstain from voting on, or influencing or attempting to influence another member of the governing body regarding, all matters affecting the real property lease agreement. The governing body shall disclose and approve the real property lease agreement or guarantee, including the terms of the lease or guarantee during a public meeting.
(b)An officer or employee shall not be deemed to be interested in a contract made pursuant to competitive bidding under a procedure established by law if his or her sole interest is that of an officer, director, or employee of a bank or savings and loan association with which a party to the contract has the relationship of borrower or depositor, debtor or creditor.
SEC. 4.Section 1092 of the Government Code is amended to read:1092.(a)Every A contract made in violation of any of the provisions of Section 1090 may be avoided at the instance of any party except the officer interested therein. No such The contract may shall not be avoided because of the interest of an officer therein unless the contract is made in the official capacity of the officer, or by a board or body of which he or she is a member.
(b)An action under this section shall be commenced within four years after the plaintiff has discovered, or in the exercise of reasonable care should have discovered, a violation described in subdivision (a).
(c)Before commencing an action under this section, any interested person shall make a written demand to cure or correct the alleged violation. If the contract is not set aside or reformed by the parties within 30 days of the demand, the demanding party may bring an action within the time period provided by subdivision (b).
(d)No action shall be brought for a violation of Section 1090 seeking any penal sanction, including removal or disqualification from holding public office, except for a knowing and willful violation.
SECTION 1.Section 60605 of the Education Code is repealed.SEC. 2.Section 60649 of the Education Code is repealed.|
Date
|
Status
|
|---|---|
| Apr 19, 2018 | April 24 set for first hearing canceled at the request of author. |
| Apr 17, 2018 | Set for hearing April 24. |
| Apr 16, 2018 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on JUD. |
| Apr 12, 2018 | Re-referred to Com. on JUD. |
| Apr 5, 2018 | From committee: Do pass and re-refer to Com. on RLS. (Ayes 6. Noes 0.) (April 4). Re-referred to Com. on RLS. |
| Mar 22, 2018 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on ED. |
| Mar 13, 2018 | Set for hearing April 4. |
| Feb 8, 2018 | Referred to Com. on ED. |
| Jan 31, 2018 | From printer. May be acted upon on or after March 2. |
| Jan 30, 2018 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
|
Date
|
Description
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Location
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Votes
|
|
|---|---|---|---|---|
| Apr 4, 2018 | Do pass, but first be re-referred to the Committee on [Rules] | Senate Standing Committee on Education |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| California School of Police Association | * Indeterminate | Apr 4, 2018 |
| California Teacher's Association | * Indeterminate | Apr 4, 2018 |
| Charter Schools Development Center | * Against | Apr 4, 2018 |
| Learn for Life Charter Schools | * Indeterminate | Apr 4, 2018 |
| Procopio Law Firm | * Support | Apr 4, 2018 |
SENATE COMMITTEE ON EDUCATION
Senator Benjamin Allen, Chair
2017 - 2018 Regular
Bill No: SB 949 Hearing Date: April 4, 2018
Author: | |||
Version: | March 22, 2018 | ||
Urgency: | No | Fiscal: | Yes |
Consultant: | Ian Johnson | ||
Subject: Conflicts of interest: public officers and employees: charter schools
NOTE: The Rules Committee has requested that this bill be returned if approved by the Committee on Education. A "do pass" motion should include referral to the Committee on Rules.
SUMMARY
This bill amends certain conflict-of-interest requirements mandated by Government Code Section 1090 and specifies that charter school governing boards are subject to the same requirements and exceptions as school district governing boards.
BACKGROUND
Existing law prohibits officers, board members, and employees of a school district from having a financial interest in any contract made by the officer, board member, or employee, in an official capacity on behalf of the school district. Government Code Section 1090 prohibits an officer or employee of the enumerated entities from being financially interested in a contract made by the officer or employee in his or her official capacity or by a body or board of which the officer or employee is a member. Section 1090 also prohibits an officer or employee of the enumerated entities from making, in their official capacity, either a purchase from the entity or a sale to the entity. As used here, the term “financially interested” refers to any financial interest that might interfere with the officer or employee’s unqualified devotion to their public duty. However, an officer is not deemed to be interested in a contract entered into by a board or school district in which the officer, board member, or employee is a member if that individual has only a remote interest in the contract and that interest is disclosed to the board or district of which the individual is a member, as specified. Under existing law, a contract in which a public officer is interested is void, not merely voidable.
Existing law, the Charter Schools Act of 1992, provides for the establishment of charter schools in California for the purpose, among other things, of improving student learning and expanding learning experiences for pupils who are identified as academically low achieving. Existing law declares that charter schools are part of the public school system as defined in Article IX of the California Constitution and are “under the exclusive control of the officers of the public schools.” A charter school is required to comply with statutes governing charter schools and all of the provisions set forth in its charter, but is otherwise exempt from most laws governing school districts except where specifically noted.
ANALYSIS
This bill amends certain conflict-of-interest requirements mandated by Government Code Section 1090 and specifies that charter school governing boards are subject to the same requirements and exceptions as school district governing boards. Specifically, this bill:
- Specifies that the prohibitions contained in GC 1090, except Section 1099, apply to the members of the governing bodies of charter schools solely with respect to the operations of a charter school.
- Includes the following within the definition of a remote interest, the peripheral interests that an officer is not prohibited from:
- A person receiving a salary, per diem, or expenditure reimbursement from a charter school.
- An owner or partner of a firm serving as an appointed member of an unelected board of a nonprofit corporation or nonprofit limited liability company that governs a charter school, if the owner or partner recuses himself or herself from providing any advice to the contracting agency regarding the contract between the firm and the contracting agency and from all participation in reviewing a project that results from that contract.
- A member of the governing body regarding collective bargaining agreements and personnel matters that affect a class of employees to which the member’s relative belongs, provided that personnel matters that uniquely affect a relative of the member may not be voted upon.
- Specifies that the failure of an officer to disclose his or her interest in a contract is only punishable, and only voids the contract, if it is knowing and willful.
- Clarifies that the services that an officer or employee may receive from the public body or board of which he or she is a member include educational services, and that the public body or board includes charter school boards in addition to school district governing boards.
- Specifies that an officer or employee is not to be deemed interested in a contract if they are a landlord or tenant of the contracting party, including a charter school.
- Specifies that the existing exception for an officer or employee whose spouse has worked for the public agency for at least one year also applies to the governing body of a charter school.
- Clarifies that a director, in addition to a member, of a nonprofit corporation or nonprofit limited liability company is also deemed uninterested, provided that the interest is disclosed to the body or board at the time of the first consideration of the contract and noted in official records.
- Allows a person who serves as a member of the governing body or as an employee of a public school, including a charter school, to provide the school with a loan or line of credit due to a fiscal emergency, subject to the following requirements:
- The person providing the loan or line of credit shall abstain from voting on, or influencing or attempting to influence another member of the governing body regarding, all matters affecting the loan or line of credit.
- The governing body, before entering into the agreement, declares the existence of and describes the fiscal emergency by adopting a resolution at a public meeting.
- The governing body discloses and approves the agreement, including the terms of the loan or line of credit, during a public meeting.
- The interest rate for the loan or line of credit is not be more than 50 percent of the fair market rate.
- Allows a person who serves as a member of the governing board or as an employee of a public school, including a charter school, to lease real property or sign a guarantor agreement relative to the lease of real property to be used for public school purposes, subject to the following requirements:
- The agreement is arranged by a licensed real estate broker solely on behalf of the charter school or the governing body reasonably determines that the agreement will permit the charter school to meet its ongoing financial obligations and there is no available alternative to meet the needs of the school.
- The member of a governing body who is a lessor or guarantor abstains from voting on, or influencing or attempting to influence another member of the governing body regarding, all matters affecting the real property lease agreement.
- The governing body discloses and approves the real property lease agreement or guarantee, including the terms of the lease or guarantee, during a public meeting.
- Requires any interested person to make a written demand to cure or correct an alleged violation within 30 days before commencing a penal action.
- Prohibits any action seeking penal sanction, including removal or disqualification from holding public office, except for a knowing and willful violation.
STAFF COMMENTS
- Need for the bill. According to the author, “Government Code Section 1090 is the state’s central conflict-of-interest act. It ensures that public officials do not have a financial interest in contracts made in their official capacity. While charter schools are operated differently than traditional public schools, they are public schools and receive public funds. There has been a longstanding debate within the education community about whether charter school board members should be subject to the same conflict-of-interest requirements that school district board members already comply with under state law.
SB 949 ends that debate by specifying that charter school boards are subject to GC Section 1090, except in limited, specified circumstances. The bill permits a school district or charter board member to provide a loan or line-of-credit to a public school if there is a fiscal emergency and the interest rate for the loan is no more than 50% of the fair market rate. This provides schools flexibility during fiscal emergencies, but prevents profiteering or other inappropriate financial relationships. The bill also permits a school district or charter board member to lease property to public schools if the agreement is arranged by a licensed real estate broker and the governing body has determined that this lease is the only available alternative to meet ongoing financial obligations. The board member is required to abstain from voting on matters related to the loan, line-of-credit or lease. Finding appropriate physical space continues to be a challenge for some schools, so this will help solve that ongoing problem, while requiring the board member to recuse him or herself from voting on or influencing these decisions.
SB 949 also specifies that violations of GC Section 1090 must be both knowing and willful, and permits the ability to cure or correct an alleged violation within 30 days.”
- Government Code 1090. This is the state’s central conflict-of-interest act. It applies to public officials from members of the Legislature to local officials and employees, including those of school districts. In a 1983 opinion, the Attorney General stated, “Section 1090 of the Government Code codifies the common law prohibition and the general policy of this state against public officials having a personal interest in contracts they make in their official capacity.” This bill specifies that charter schools operated by nonprofit corporations and nonprofit limited liability companies are subject to Government Code 1090.
- Longstanding debate about applying Government Code 1090 to charter schools. Charter school advocates have previously expressed concern with subjecting charter school governing boards to the provisions of Government Code 1090 because it could make it more difficult for philanthropic board members to provide financial assistance or low-interest loans or make facilities available to charter schools, which may happen during the start-up phase of a charter school. However, others argue that since charter schools are public schools and receive public funds, they have a fiduciary duty to taxpayers with regards to the use of those funds and should be subject to the same conflict-of-interest and disclosure requirements as traditional school district governing boards.
Several measures have attempted to apply GC 1090 to charter school governing boards, including AB 709 (Gipson, 2015), which was vetoed by the Governor. In his veto message, the Governor wrote the following:
“Starting a charter school requires the strong commitment of dedicated individuals willing to serve on a governing board. While I support transparency, this bill goes further than simply addressing issues of potential conflicts of interest and goes too far in prescribing how these boards must operate.”
- Corporations Code. Statute governing corporations requires not more than 49 percent of persons serving on the board of any corporation to be interested persons. "Interested persons" is defined as either of the following: (1) any person currently compensated by the corporation for services rendered to it within the previous 12 months (excluding any reasonable compensation paid to a director); or, (2) any relative, as specified, of any such person. Advocates of charter schools have long contended that they should abide by conflict of interest provisions related to corporations, not local educational agencies, due to the fact that some charter schools are operated by nonprofit corporations. While this committee has passed measures previously that would apply the corporations code to charter school governing boards, rather than Government Code 1090, requiring school district and charter school governing boards to abide by the same conflict-of-interest requirements is reasonable.
- This bill addresses concerns that have been raised from all sides. This bill amends GC 1090 in ways that (1) address far-reaching concerns by board members from every level of government related to potentially facing criminal penalties for approving contracts that they were not knowing and willfully interested in without the right to cure, (2) address potential concerns by school board members related to collective bargaining, and (3) address several concerns from charter school advocates related to loans and lines of credit, leases, and ensuring that the existing exceptions for school districts also apply to charter schools.
SUPPORT
None received
OPPOSITION
Charter Schools Development Center
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Bill Author
Bill Co-Author(s):