California Assembly Bill AB165 Amended / Bill

 BILL NUMBER: AB 165AMENDED BILL TEXT AMENDED IN ASSEMBLY APRIL 13, 2011 INTRODUCED BY Assembly Member Lara (  Coauthor:   Assembly Member   John A. Prez   Coauthors:   Assembly Members   Alejo,   Davis,   Roger Hernndez,   and John A. Prez  ) JANUARY 20, 2011 An act to amend Sections 14501, 35186, and 41020 of, and to add Article 5.5 (commencing with Section 49010) to Chapter 6 of Part 27 of Division 4 of Title 2 of, the Education Code,  and to amend Section 905 of the Government Code,  relating to  school   pupil  fees, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST AB 165, as amended, Lara. Pupil fees. (1) Existing law requires the Legislature to provide for a system of common schools by which a free school shall be kept up and supported in each district. Existing law prohibits a pupil enrolled in school from being required to pay a fee, deposit, or other charge not specifically authorized by law. This bill would prohibit a school district, school, or other entity working under the supervision of, or in coordination with, a district or school from imposing a pupil fee, as defined, for participation in educational activities, as defined, as specified. The bill would provide that this prohibition is not to be interpreted to prohibit  an entire school, class, sports team, or club from voluntarily participating in fundraising or to prohibit   solicitation of voluntary donations, voluntary participation in fundraising activities, or  school districts and schools from providing pupils prizes or other recognition for voluntarily participating in fundraising activities. The bill would specify that these provisions  apply to all public schools, including, but not limited to, charter schools and alternative schools,  are declarative of existing law  ,  and should not be interpreted to prohibit a school district or school from imposing a fee, deposit, or other charge otherwise allowed by law.  The bill would require the governing board of a local educational agency, commencing with the 2011-12 fiscal year, to hold a public hearing or hearings, as specified, to make a determination, through a resolution, as to whether unlawful pupil fees have been, or are being, charged within its jurisdiction. If the governing board determines that an unlawful pupil fee was charged, the bill would require the governing board to describe specified things in the resolution. By imposing additional duties on local educational agencies, this bill would impose a state-mandated local program.  (2) Existing law requires the Controller, in consultation with the Department of Finance and the State Department of Education, to develop a plan to review and report on financial and compliance audits, and with representatives of other entities, to recommend the statements and other information to be included in the audit reports filed with the state by local educational agencies  ,  and to propose the content of an audit guide. This bill would require a compliance audit  , commencing with audits of the 2011-12 fiscal year,  to include the verification of compliance with the prohibition against the imposition of pupil fees for participation in educational activities in violation of specified law.  Notwithstanding specified law, the bill would require this verification to be added to the audit guide as soon as possible and would allow the adoption of emergency regulations to achieve that goal.  (3) Existing law requires a school district to use its uniform complaint process to help identify and resolve any deficiencies related to instructional materials, emergency or urgent facilities conditions that pose a threat to the health and safety of pupils or staff, teacher vacancy or misassignment, and intensive instruction and services provided to pupils who have not passed one or both parts of the high school exit examination after the completion of grade 12. Existing law provides certain complainants the right to file an appeal to the Superintendent of Public Instruction, who is required to provide a written report to the State Board of Education that describes the basis for the complaint and, as appropriate, proposes a remedy. A notice regarding the appropriate subjects of a complaint is required to be posted in each classroom in each school in the school district and a complaint regarding those deficiencies is required to be filed with the principal of the school or his or her designee, except as specified. This bill also would require a school district  and a charter school  to use its uniform complaint process to help identify and resolve any deficiencies related to the imposition of pupil fees for participation in educational activities, as those terms are defined. The bill would also provide persons with a complaint regarding the imposition of pupil fees the right to file an appeal to the Superintendent and would require the Superintendent to provide the written report to the state board and the complainant no later than 30 working days after the appeal was received by the Superintendent.  The bill would require that a remedy proposed in the Superintendent's report regarding the imposition of an unlawful pupil fee shall include, but not be limited to, requiring   If the report finds a violation, the bill would require the Superintendent to require  the offending school district  , charter school,  or school to fully reimburse all affected pupils, parents, or guardians. The bill would also require the classroom notice to include certain information about the prohibition against charging pupil fees for participation in educational activities. The bill would require a local educational   agency to establish local policies and procedures, post notices, and implement the uniform complaint process provisions regarding the imposition of pupil fees for participation in educational activities by January 1, 2012.  By imposing additional duties on school districts, this bill would impose a state-mandated local program. (4) Existing law requires a county superintendent of schools to provide for an audit of all funds under his or her jurisdiction and requires the governing board of a local educational agency to either provide for an audit of the books and accounts of the local educational agency or make arrangements with the county superintendent of schools having jurisdiction over the local educational agency to provide for that auditing. Existing law requires a county superintendent of schools to be responsible for reviewing the audit exceptions contained in an audit of a local educational agency under his or her jurisdiction related to specified topics, and determining whether the exceptions were either corrected or an acceptable plan of correction was developed. Existing law requires the county office of education to review certain audit exceptions upon submission and receipt of a final audit report. Existing law requires the Superintendent of Public Instruction to be responsible for ensuring that local educational agencies have either corrected or developed plans of correction for specified audit exceptions. This bill, commencing with the  2010-11   2011-12  audit of local educational agencies, would require the county superintendent of schools to also include in the review of audit exceptions those audit exceptions related to the imposition of pupil fees for participation in educational activities in violation of specified law, and to determine whether the exceptions are either corrected or an acceptable plan of correction is developed.  The bill would prohibit an audit exception related to the imposition of pupil fees from being deemed corrected until the local educational agency fully reimburses all affected parents, guardians, and pupils, with interest.  The bill would also require the county office of education to review audit exceptions relating to the imposition of unlawful pupil fees.  The bill would require the auditor to notify the Controller, among others, if the auditor determines that an exception related to the imposition of unlawful pupil fees has not been corrected, or the local educational agency has a new audit exception related to those unlawful pupil fees, and would require the Controller   If, in an audit for a subsequent year, the auditor finds an uncorrected or new audit exception related to the imposition of unlawful pupil fees, the bill would require the auditor to make a specified disclosure and would require the county office of education  to withhold certain payments to the local educational agency until the agency provides reimbursement, as specified.  The bill would also require the Superintendent to ensure that local educational agencies have either corrected or developed plans of correction for audit exceptions related to the imposition of unlawful pupil fees.  By imposing additional duties on local educational agencies, this bill would impose a state-mandated local program.  (5) Existing law excepts certain claims from the requirement that all claims for money or damages against local public entities be presented in accordance with specified law.   This bill would additionally except specified claims for reimbursement of pupil fees for participation in educational activities.   (5)   (6)  The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.  (6)   (7)  This bill would declare that it is to take effect immediately as an urgency statute. Vote: 2/3. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 14501 of the Education Code is amended to read: 14501. (a) As used in this chapter, "financial and compliance audit" shall be consistent with the definition provided in the "Standards for Audits of Governmental Organizations, Programs, Activities, and Functions" promulgated by the Comptroller General of the United States. Financial and compliance audits conducted under this chapter shall fulfill federal single audit requirements. (b) As used in this chapter, "compliance audit" means an audit that ascertains and verifies whether or not funds provided through apportionment, contract, or grant, either federal or state, have been properly disbursed and expended as required by law or regulation or both and includes the verification of each of the following: (1) The reporting requirements for the sufficiency of textbooks or instructional materials, or both, as defined in Section 60119. (2) Teacher misassignments pursuant to Section 44258.9. (3) The accuracy of information reported on the School Accountability Report Card required by Section 33126. The requirements set forth in paragraphs (1) and (2) and this paragraph shall be added to the audit guide requirements pursuant to subdivision (b) of Section 14502.1. (4)  (A)    Compliance with  Section 49011   Article 5.5 (commencing with Section 49010) of Chapter 6 of Part 27 of Division 4 of Title 2  and Section 5 of Article IX of the California Constitution  .   , commencing with audits of the 2011-12 fiscal year, notwithstanding subdivision (b) of Section 14502.1.   (B) The requirements of this paragraph shall be added to the audit guide requirements as soon as possible. To meet this goal, the process for adopting emergency regulations provided for in Section 11346.1 of the Government Code may be followed.  SEC. 2. Section 35186 of the Education Code is amended to read: 35186. (a) A school district shall use the uniform complaint process it has adopted as required by Chapter 5.1 (commencing with Section 4600) of  Division 1 of  Title 5 of the California Code of Regulations, with modifications, as necessary, to help identify and resolve any deficiencies related to instructional materials, emergency or urgent facilities conditions that pose a threat to the health and safety of pupils or staff, teacher vacancy or misassignment, intensive instruction and services provided pursuant to Section 37254 to pupils who have not passed one or both parts of the high school exit examination after the completion of grade 12, and the imposition of pupil fees for participation in educational activities.  A charter school shall use the uniform complaint process it has adopted as required by Chapter 5.1 (commencing with Section 4600) of Division 1 of Title 5 of the California Code of Regulations, with modifications, as necessary, to help identify and resolve any deficiencies related to the imposition of pupil fees for participation in educational activities.  (1) A complaint may be filed anonymously. A complainant who identifies himself or herself is entitled to a response if he or she indicates that a response is requested. A complaint form shall include a space to mark to indicate whether a response is requested. If Section 48985 is otherwise applicable, the response, if requested, and report shall be written in English and the primary language in which the complaint was filed. All complaints and responses are public records. (2) The complaint form shall specify the location for filing a complaint. A complainant may add as much text to explain the complaint as he or she wishes. (3) Except as provided pursuant to paragraph (4), a complaint shall be filed with the principal of the school or his or her designee. A complaint about problems beyond the authority of the school principal shall be forwarded in a timely manner but not to exceed 10 working days to the appropriate school district  or charter school  official for resolution. (4) A complaint regarding any deficiencies related to intensive instruction and services provided pursuant to Section 37254 to pupils who have not passed one or both parts of the high school exit examination after the completion of grade 12 shall be submitted to the district official designated by the district superintendent. A complaint may be filed at the school district office, or it may be filed at the schoolsite and shall be immediately forwarded to the designee of the district superintendent. (b) The principal or the designee of the district superintendent  or charter school  , as applicable, shall make all reasonable efforts to investigate any problem within his or her authority. The principal or designee of the district superintendent  or charter school  shall remedy a valid complaint within a reasonable time period but not to exceed 30 working days from the date the complaint was received. The principal or designee of the district superintendent  or charter school  shall report to the complainant the resolution of the complaint within 45 working days of the initial filing. If the principal makes this report, the principal shall also report the same information in the same timeframe to the designee of the district superintendent  or charter school  . (c) A complainant not satisfied with the resolution of the principal or the designee of the district superintendent  or charter school  has the right to describe the complaint to the governing board of the school district  or charter school  at a regularly scheduled hearing of the governing board. As to complaints involving a condition of a facility that poses an emergency or urgent threat, as defined in paragraph (1) of subdivision (c) of Section 17592.72, or complaints involving the imposition of pupil fees for participation in educational activities, a complainant who is not satisfied with the resolution proffered by the principal or the designee of the district superintendent  or charter school  has the right to file an appeal to the Superintendent, who shall provide a written report to the state board and the complainant no later than 30 working days after the date the appeal was received by the Superintendent describing the basis for the complaint and, as appropriate, a proposed remedy for the issue described in the complaint. If the report finds that a school district  ,   charter school, or school has unlawfully imposed a pupil fee for participation in educational activities, the  Superintendent's remedy shall include, but not necessarily be limited to, requiring the school district   Superintendent shall require the school district, charter school,  or school to fully reimburse all affected pupils, parents, or guardians with interest, as calculated in subparagraph  (D)   (B)  of paragraph  (1)   (3)  of subdivision  (m)   (i)  of Section 41020. (d) A school district  or charter school  shall report summarized data on the nature and resolution of all complaints on a quarterly basis to the county superintendent of schools and the governing board of the school district  or charter school  . The summaries shall be publicly reported on a quarterly basis at a regularly scheduled meeting of the governing board of the school district  or charter school  . The report shall include the number of complaints by general subject area with the number of resolved and unresolved complaints. The complaints and written responses shall be available as public records. (e) The procedure required pursuant to this section is intended to address all of the following  in school districts, and the complaints described in paragraph (5) in charter schools  : (1) A complaint related to instructional materials as follows: (A) A pupil, including an English learner, does not have standards-aligned textbooks or instructional materials or state-adopted or district-adopted textbooks or other required instructional material to use in class. (B) A pupil does not have access to instructional materials to use at home or after school. (C) Textbooks or instructional materials are in poor or unusable condition, have missing pages, or are unreadable due to damage. (2) A complaint related to teacher vacancy or misassignment as follows: (A) A semester begins and a teacher vacancy exists. (B) A teacher who lacks credentials or training to teach English learners is assigned to teach a class with more than 20-percent English learner pupils in the class. This subparagraph does not relieve a school district from complying with state or federal law regarding teachers of English learners. (C) A teacher is assigned to teach a class for which the teacher lacks subject matter competency. (3) A complaint related to the condition of facilities that pose an emergency or urgent threat to the health or safety of pupils or staff as defined in paragraph (1) of subdivision (c) of Section 17592.72 and any other emergency conditions the school district determines appropriate and the requirements established pursuant to subdivision (a) of Section 35292.5. (4) A complaint related to the provision of intensive instruction and services pursuant to paragraphs (4) and (5) of subdivision (d) of Section 37254. (5) A complaint related to the imposition of pupil fees for participation in educational activities. (f)  (1)  In order to identify appropriate subjects of complaint, a notice shall be posted in each classroom in each school in the school district notifying parents, guardians, pupils, and teachers of the following:  (1)   (A)  There should be sufficient textbooks and instructional materials. For there to be sufficient textbooks and instructional materials each pupil, including English learners, must have a textbook or instructional materials, or both, to use in class and to take home.  (2)   (B)  School facilities must be clean, safe, and maintained in good repair.  (3)   (C)  There should be no teacher vacancies or misassignments as defined in paragraphs  (2) and (3)   (3) and (5)  of subdivision (h).  (4)   (D)  Pupils shall not be charged fees, including security deposits, or be required to purchase materials or equipment, to participate in a class or an extracurricular activity.  (5)   (E)  Pupils who have not passed the high school exit examination by the end of grade 12 are entitled to receive intensive instruction and services for up to two consecutive academic years after completion of grade 12 or until the pupil has passed both parts of the high school exit examination, whichever comes first, pursuant to paragraphs (4) and (5) of subdivision (d) of Section 37254. The information in this paragraph, which is to be included in the notice required pursuant to this subdivision, shall only be included in notices posted in classrooms in schools with grades 10 to 12, inclusive.  (6)   (F)  The location at which to obtain a form to file a complaint in case of a shortage  of complaint forms  . Posting a notice downloadable from the Internet Web site of the department shall satisfy this  posting  requirement.  (2) In order to identify appropriate subjects of complaint, a notice shall be posted in each classroom of each charter school notifying parents, guardians, pupils, and teachers of both of the following:   (A) Pupils shall not be charged fees, including security deposits, or be required to purchase materials or equipment, to participate in a class or an extracurricular activity.   (B) The location at which to obtain a form to file a complaint in case of a shortage of complaint forms. Posting a notice downloadable from the Internet Web site of the department shall satisfy this posting requirement.  (g)  (1)    A local educational agency shall establish local policies and procedures, post notices, and implement this section on or before January 1, 2005.  (2) A local educational agency shall establish local policies and procedures, post notices, and implement the provisions of this section regarding the imposition of pupil fees for participation in educational activities on or before January 1, 2012.  (h) For purposes of this section, the following definitions apply: (1) "Educational activity" has the same meaning as specified in subdivision (a) of Section 49010. (2) "Good repair" has the same meaning as specified in subdivision (d) of Section 17002. (3) "Misassignment" means the placement of a certificated employee in a teaching or services position for which the employee does not hold a legally recognized certificate or credential or the placement of a certificated employee in a teaching or services position that the employee is not otherwise authorized by statute to hold. (4) "Pupil fees" has the same meaning as specified in subdivision (b) of Section 49010. (5) "Teacher vacancy" means a position to which a single designated certificated employee has not been assigned at the beginning of the year for an entire year or, if the position is for a one-semester course, a position to which a single designated certificated employee has not been assigned at the beginning of a semester for an entire semester. SEC. 3. Section 41020 of the Education Code is amended to read: 41020. (a) It is the intent of the Legislature to encourage sound fiscal management practices among local educational agencies for the most efficient and effective use of public funds for the education of children in California by strengthening fiscal accountability at the district, county, and state levels. (b) (1) Not later than the first day of May of each fiscal year, each county superintendent of schools shall provide for an audit of all funds under his or her jurisdiction and control and the governing board of each local educational agency shall either provide for an audit of the books and accounts of the local educational agency, including an audit of income and expenditures by source of funds, or make arrangements with the county superintendent of schools having jurisdiction over the local educational agency to provide for that auditing. (2) A contract to perform the audit of a local educational agency that has a disapproved budget or has received a negative certification on any budget or interim financial report during the current fiscal year or either of the two preceding fiscal years, or for which the county superintendent of schools has otherwise determined that a lack of going concern exists, is not valid unless approved by the responsible county superintendent of schools and the governing board. (3) If the governing board of a local educational agency has not provided for an audit of the books and accounts of the local educational agency by April 1, the county superintendent of schools having jurisdiction over the local educational agency shall provide for the audit of each local educational agency. (4) An audit conducted pursuant to this section shall comply fully with the Government Auditing Standards issued by the Comptroller General of the United States. (5) For purposes of this section, "local educational agency" does not include community colleges. (c) Each audit conducted in accordance with this section shall include all funds of the local educational agency, including the student body and cafeteria funds and accounts and any other funds under the control or jurisdiction of the local educational agency. Each audit shall also include an audit of pupil attendance procedures. (d) All audit reports for each fiscal year shall be developed and reported using a format established by the Controller after consultation with the Superintendent and the Director of Finance. (e) (1) The cost of the audits provided for by the county superintendent of schools shall be paid from the county school service fund and the county superintendent of schools shall transfer the pro rata share of the cost chargeable to each district from district funds. (2) The cost of the audit provided for by a governing board shall be paid from local educational agency funds. The audit of the funds under the jurisdiction and control of the county superintendent of schools shall be paid from the county school service fund. (f) (1) The audits shall be made by a certified public accountant or a public accountant, licensed by the California Board of Accountancy, and selected by the local educational agency, as applicable, from a directory of certified public accountants and public accountants deemed by the Controller as qualified to conduct audits of local educational agencies, which shall be published by the Controller not later than December 31 of each year. (2) Commencing with the 2003-04 fiscal year and except as provided in subdivision (d) of Section 41320.1, it is unlawful for a public accounting firm to provide audit services to a local educational agency if the lead audit partner, or coordinating audit partner, having primary responsibility for the audit, or the audit partner responsible for reviewing the audit, has performed audit services for that local educational agency in each of the six previous fiscal years. The Education Audits Appeal Panel may waive this requirement if the panel finds that no otherwise eligible auditor is available to perform the audit. (3) It is the intent of the Legislature that, notwithstanding paragraph (2), the rotation within public accounting firms conform to provisions of the federal Sarbanes-Oxley Act of 2002 (P.L. 107-204; 15 U.S.C. Sec. 7201 et seq.), and upon release of the report required by the act of the Comptroller General of the United States addressing the mandatory rotation of registered public accounting firms, the Legislature intends to reconsider the provisions of paragraph (2). In determining which certified public accountants and public accountants shall be included in the directory, the Controller shall use the following criteria: (A) The certified public accountants or public accountants shall be in good standing as certified by the Board of Accountancy. (B) The certified public accountants or public accountants, as a result of a quality control review conducted by the Controller pursuant to Section 14504.2, shall not have been found to have conducted an audit in a manner constituting noncompliance with subdivision (a) of Section 14503. (g) (1) The auditor's report shall include each of the following: (A) A statement that the audit was conducted pursuant to standards and procedures developed in accordance with Chapter 3 (commencing with Section 14500) of Part 9 of Division 1 of Title 1. (B) A summary of audit exceptions and management improvement recommendations. (C) Each audit of a local educational agency shall include an evaluation by the auditor on whether there is substantial doubt about the ability of the local educational agency to continue as a going concern for a reasonable period of time. This evaluation shall be based on the Statement of Auditing Standards (SAS) No. 59, as issued by the AICPA regarding disclosure requirements relating to the ability of the entity to continue as a going concern. (2) To the extent possible, a description of correction or plan of correction shall be incorporated in the audit report, describing the specific actions that are planned to be taken, or that have been taken, to correct the problem identified by the auditor. The descriptions of specific actions to be taken or that have been taken shall not solely consist of general comments such as "will implement," "accepted the recommendation," or "will discuss at a later date." (h) Not later than December 15, a report of each local educational agency audit for the preceding fiscal year shall be filed with the county superintendent of schools of the county in which the local educational agency is located, the department, and the Controller. The Superintendent shall make any adjustments necessary in future apportionments of all state funds, to correct any audit exceptions revealed by those audit reports. (i) (1) Commencing with the 2002-03 audit of local educational agencies pursuant to this section and subdivision (d) of Section 41320.1, each county superintendent of schools shall be responsible for reviewing the audit exceptions contained in an audit of a local educational agency under his or her jurisdiction related to attendance, inventory of equipment, internal control, and any miscellaneous items, and determining whether the exceptions have been either corrected or an acceptable plan of correction has been developed. (2) Commencing with the 2004-05 audit of local educational agencies pursuant to this section and subdivision (d) of Section 41320.1, each county superintendent of schools shall include in the review of audit exceptions performed pursuant to this subdivision those audit exceptions related to use of instructional materials program funds, teacher misassignments pursuant to Section 44258.9, information reported on the school accountability report card required pursuant to Section 33126 and shall determine whether the exceptions are either corrected or an acceptable plan of correction has been developed. (3)  (A)    Commencing with the  2010-11   2011-12  audit of local educational agencies pursuant to this section and subdivision (d) of Section 41320.1, each county superintendent of schools shall include in the review of audit exceptions performed pursuant to this subdivision those audit exceptions related to the imposition of pupil fees for participation in educational activities in violation of Section 49011 and Section 5 of Article IX of the California Constitution and shall determine whether the exceptions are either corrected or an acceptable plan of correction has been developed.  (B) An audit exception related to the imposition of these pupil fees shall not be deemed corrected until the local educational agency has, at a minimum, fully reimbursed all affected parents, guardians, and pupils, with interest. The amount of the interest shall be calculated based on the date the unlawful fee was collected and the applicable interest rate applied to the actual cash held in the local educational agency's bank account.  (j) Upon submission of the final audit report to the governing board of each local educational agency and subsequent receipt of the audit by the county superintendent of schools having jurisdiction over the local educational agency, the county office of education shall do all of the following: (1) Review audit exceptions related to attendance, inventory of equipment, internal control, and other miscellaneous exceptions. Attendance exceptions or issues shall include, but not be limited to, those related to revenue limits, adult education, and independent study. (2) Review audit exceptions related to the imposition of pupil fees for participation in educational activities in violation of Section 49011 and Section 5 of Article IX of the California Constitution. (3) If a description of the correction or plan of correction has not been provided as part of the audit required by this section, then the county superintendent of schools shall notify the local educational agency and request the governing board of the local educational agency to provide to the county superintendent of schools a description of the corrections or plan of correction by March 15. (4) Review the description of correction or plan of correction and determine its adequacy. If the description of the correction or plan of correction is not adequate, the county superintendent of schools shall require the local educational agency to resubmit that portion of its response that is inadequate. (k) Each county superintendent of schools shall certify to the Superintendent and the Controller, not later than May 15, that his or her staff has reviewed all audits of local educational agencies under his or her jurisdiction for the prior fiscal year, that all exceptions that the county superintendent was required to review were reviewed, and that all of those exceptions, except as otherwise noted in the certification, have been corrected by the local educational agency or that an acceptable plan of correction has been submitted to the county superintendent of schools. In addition, the county superintendent shall identify, by local educational agency, any attendance-related audit exception or exceptions involving state funds, and require the local educational agency to which the audit exceptions were directed to submit appropriate reporting forms for processing by the Superintendent. (  l  ) (1) In the audit of a local educational agency for a subsequent year, the auditor shall review the correction or plan or plans of correction submitted by the local educational agency to determine if the exceptions have been resolved. If not, the auditor shall immediately notify the appropriate county office of education and the department and restate the exception in the audit report. After receiving that notification, the department shall either consult with the local educational agency to resolve the exception or require the county superintendent of schools to follow up with the local educational agency. (2) If, in the audit of a local educational agency for a subsequent year, the auditor determines that an exception related to the imposition of pupil fees for participation in educational activities in violation of Section 49011 and Section 5 of Article IX of the California Constitution has not been corrected, or that the local educational agency has a new audit exception related to the imposition of pupil fees for participation in educational activities in violation of Section 49011 and Section 5 of Article IX of the California Constitution,  the auditor shall immediately notify the appropriate county office of education, the Controller, the Superintendent, and the Director of Finance. Upon receiving this notification, the Controller shall   both of the following shall occur:   (A) The auditor shall disclose the unresolved or new audit exception, and the amount of withholding required pursuant to subparagraph (B), in the audit report.   (B)     (i)     The county office of education shall, based on the audit year's actual expenditures,  withhold 1 percent of the amount  authorized   expended  for administrative costs, which are expenditures coded to general administrative functions (codes 7000 to 7999, inclusive) pursuant to Procedure 325 of Section 300 of the California School Accounting Manual, from the next principal apportionment to the local educational agency, until the agency reimburses all pupil fees collected in violation of Section 49011 and Section 5 of Article IX of the California Constitution, with applicable interest, as provided for in subparagraph  (D)   (B)  of paragraph  (1)   (3)  of subdivision  (m)   (i)  .  (ii) If the auditor is unable to calculate 1 percent of the administrative costs of a charter school, or if the amount of pupil fees for participation in educational activities collected by the charter school is greater than the 1-percent administrative fee, then an amount equal to the amount of pupil fees for participation in educational activities collected, multiplied by 10, shall be withheld.   (iii) The county office of education may request the Controller to perform the withholding required pursuant to this subparagraph.  (m) (1) The Superintendent shall be responsible for ensuring that local educational agencies have either corrected or developed plans of correction for any one or more of the following: (A) All federal and state compliance audit exceptions identified in the audit. (B) Any exceptions that the county superintendent certifies as of May 15 have not been corrected. (C) Any repeat audit exceptions that are not assigned to a county superintendent to correct.  (D) All audit exceptions related to the imposition of pupil fees for participation in educational activities in violation of Section 49011 and Section 5 of Article IX of the California Constitution. An audit exception related to the imposition of these pupil fees shall not be deemed corrected until the local educational agency has, as a minimum, fully reimbursed all affected parents, guardians, and pupils, with interest. The amount of the interest shall be calculated based on the date the unlawful fee was collected and the applicable interest rate applied to the actual cash held in the local educational agency's bank account.  (2) In addition, the Superintendent shall be responsible for ensuring that county superintendents of schools and each county board of education that serves as the governing board of a local educational agency either correct all audit exceptions identified in the audits of county superintendents of schools and of the local educational agencies for which the county boards of education serve as the governing boards or develop acceptable plans of correction for those exceptions. (3) The Superintendent shall report annually to the Controller on his or her actions to ensure that school districts, county superintendents of schools, and each county board of education that serves as the governing board of a school district have either corrected or developed plans of correction for any of the exceptions noted pursuant to paragraph (1). (n) To facilitate correction of the exceptions identified by the audits issued pursuant to this section, commencing with 2002-03 audits pursuant to this section, the Controller shall require auditors to categorize audit exceptions in each audit report in a manner that will make it clear to both the county superintendent of schools and the Superintendent which exceptions they are responsible for ensuring the correction of by a local educational agency. In addition, the Controller annually shall select a sampling of county superintendents of schools and perform a followup of the audit resolution process of those county superintendents of schools and report the results of that followup to the Superintendent and the county superintendents of schools that were reviewed. (o) County superintendents of schools shall adjust subsequent local property tax requirements to correct audit exceptions relating to local educational agency tax rates and tax revenues. (p) If a governing board or county superintendent of schools fails or is unable to make satisfactory arrangements for the audit pursuant to this section, the Controller shall make arrangements for the audit and the cost of the audit shall be paid from local educational agency funds or the county school service fund, as the case may be. (q) Audits of regional occupational centers and programs are subject to the provisions of this section. (r) This section does not authorize examination of, or reports on, the curriculum used or provided for in any local educational agency. (s) Notwithstanding any other provision of law, a nonauditing, management, or other consulting service to be provided to a local educational agency by a certified public accounting firm while the certified public accounting firm is performing an audit of the agency pursuant to this section must be in accord with Government Accounting Standards, Amendment No. 3, as published by the United States General Accounting Office. SEC. 4. Article 5.5 (commencing with Section 49010) is added to Chapter 6 of Part 27 of Division 4 of Title 2 of the Education Code, to read: Article 5.5. Pupil Fees 49010. For purposes of this article, the following terms have the following meanings: (a) "Educational activity" means an activity that constitutes an integral fundamental part of elementary and secondary education, or that amounts to a necessary element of a school activity, including, but not limited to, curricular and extracurricular activities. (b) "Pupil fee" means a fee, deposit, or other charge imposed on pupils, or a pupil's parents or guardians, in violation of Section 49011 and Section 5 of Article IX of the California Constitution, which require educational activities to be provided free of charge to all pupils without regard to their families' ability or willingness to pay fees or request special waivers, as provided for in Hartzell v. Connell (1984) 35 Cal.3d 899. A pupil fee includes, but is not limited to, all of the following: (1) A fee charged to a pupil as a condition for registering for school or classes, or as a condition for participation in a class or an extracurricular activity, regardless of whether the class or activity is elective or compulsory, or is for credit. (2) A security deposit, or other payment, that a pupil is required to make to obtain a lock, locker, book, class apparatus, musical instrument, uniform, or other materials or equipment. (3) A purchase that a pupil is required to make to obtain materials, supplies, equipment, or uniforms associated with an educational activity. 49011. (a) A school district, school, or other entity working under the supervision of, or in coordination with, a district or school shall not impose a pupil fee for participation in educational activities. (b) All of the following requirements apply to the prohibition identified in subdivision (a): (1) All supplies, materials, and equipment needed to participate in educational activities shall be provided to pupils free of charge.  (2) A waiver process shall not render an otherwise impermissible pupil fee permissible.   (2) A fee waiver policy shall not make a pupil fee permissible.  (3) School districts and schools shall not establish a two-tier educational system by requiring a minimal educational standard and also offering a second, higher educational standard that pupils may only obtain through payment of a fee or purchase of additional supplies that the school district or school does not provide. (4) A school district or school shall not offer course credit or privileges related to educational activities in exchange for money or donations of goods or services from a pupil or a pupil's parents or guardians, and a school district or school shall not remove course credit or privileges related to educational activities, or otherwise discriminate against a pupil, because the pupil or the pupil's parents or guardians did not or will not provide money or donations of goods or services to the school district or school. (c) This article shall not be interpreted to prohibit  an entire school, class, sports team, or club from voluntarily participating in fundraising or to prohibit   solicitation of voluntary donations of funds or property, vol   untary participation in fundraising activities, or  school districts and schools from providing pupils prizes or other recognition for voluntarily participating in fundraising activities.  (d) This article applies to all public schools, including, but not limited to, charter schools and alternative schools.   (d)   (e)  This article is declarative of existing law and shall not be interpreted to prohibit a school district or school from imposing a fee, deposit, or other charge otherwise allowed by law.  49012. (a) Commencing with the 2011-12 fiscal year, the governing board of a local educational agency, including charter schools, shall take both of the following actions: (1) (A) The governing board shall hold a public hearing or hearings for which the governing board shall encourage participation by parents, teachers, and members of the community interested in the affairs of the local educational agency, and shall make a determination, through a resolution, based on evidence gathered through a review of the policies and practices at all schools within its jurisdiction, as to whether pupil fees for participation in educational activities have been charged, or are being charged, within its jurisdiction in the current fiscal year in violation of Section 49011 and Section 5 of Article IX of the California Constitution. (B) The public hearing or hearings shall take place on or before the end of the eighth week after the first day pupils attend school for that school year. For local educational agencies that operate schools on a multitrack, year-round calendar, the hearing or hearings shall be held on or before the end of the eighth week after the first day pupils attend school for that school year on any tracks that begin a school year in August or September. (2) If the governing board determines that a pupil fee for participation in educational activities was charged, the governing board shall describe, in the resolution, the pupil fees charged, including the nature of each fee, the number of pupils affected by each fee, and when all affected pupils, parents, or guardians received full reimbursement with interest, as calculated in subparagraph (B) of paragraph (3) of subdivision (i) of Section 41020. If pupil fees have not been fully reimbursed by the day of the public hearing, the governing board shall set forth in the resolution the actions that will be taken to ensure that all affected pupils, parents, or guardians receive full reimbursements with interest within 10 weeks of the beginning of the school year in which the determination is made. (b) The governing board shall provide 10 days' notice of the public hearing or hearings held pursuant to subdivision (a). The notice shall contain the time, place, and purpose of the hearing and shall be posted at the charter school or in three public places in the school district. The hearing shall be held at a time that will encourage the attendance of teachers and parents and guardians of pupils who attend the charter school or the schools within the district and shall not take place during, or immediately following, school hours. (c) For the 2011-12 fiscal year, the public hearing or hearings held pursuant to subdivision (a) shall take place as provided for in subparagraph (B) of paragraph (1) of subdivision (a), or within eight weeks from the date of the enactment of this section, whichever is later.   SEC. 5.   Section 905 of the   Government Code   is amended to read:  905. There shall be presented in accordance with Chapter 1 (commencing with Section 900) and Chapter 2 (commencing with Section 910) all claims for money or damages against local public entities except any of the following: (a) Claims under the Revenue and Taxation Code or other statute prescribing procedures for the refund, rebate, exemption, cancellation, amendment, modification, or adjustment of any tax, assessment, fee, or charge or any portion thereof, or of any penalties, costs, or charges related thereto. (b) Claims in connection with which the filing of a notice of lien, statement of claim, or stop notice is required under any law relating to liens of mechanics, laborers, or materialmen. (c) Claims by public employees for fees, salaries, wages, mileage, or other expenses and allowances. (d) Claims for which the workers' compensation authorized by Division 4 (commencing with Section 3200) of the Labor Code is the exclusive remedy. (e) Applications or claims for any form of public assistance under the Welfare and Institutions Code or other provisions of law relating to public assistance programs, and claims for goods, services, provisions, or other assistance rendered for or on behalf of any recipient of any form of public assistance. (f) Applications or claims for money or benefits under any public retirement or pension system. (g) Claims for principal or interest upon any bonds, notes, warrants, or other evidences of indebtedness. (h) Claims that relate to a special assessment constituting a specific lien against the property assessed and that are payable from the proceeds of the assessment, by offset of a claim for damages against it or by delivery of any warrant or bonds representing it. (i) Claims by the state or by a state department or agency or by another local public entity or by a judicial branch entity. (j) Claims arising under any provision of the Unemployment Insurance Code, including, but not limited to, claims for money or benefits, or for refunds or credits of employer or worker contributions, penalties, or interest, or for refunds to workers of deductions from wages in excess of the amount prescribed. (k) Claims for the recovery of penalties or forfeitures made pursuant to Article 1 (commencing with Section 1720) of Chapter 1 of Part 7 of Division 2 of the Labor Code. (l) Claims governed by the Pedestrian Mall Law of 1960 (Part 1 (commencing with Section 11000) of Division 13 of the Streets and Highways Code). (m) Claims made pursuant to Section 340.1 of the Code of Civil Procedure for the recovery of damages suffered as a result of childhood sexual abuse. This subdivision shall apply only to claims arising out of conduct occurring on or after January 1, 2009. (n) Claims made pursuant to Section 701.820 of the Code of Civil Procedure for the recovery of money pursuant to Section 26680.  (o) Claims made pursuant to Section 35186 of the Education Code for reimbursement of pupil fees for participation in educational activities.   SEC. 5.   SEC. 6.  If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.  SEC. 6.   SEC. 7.  This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:  In order to comply with a settlement agreement that requires a good faith effort to obtain the enactment of legislation that prevents and remedies the imposition of unlawful pupil fees as soon as possible   In   order to protect and enforce the right of pupils to attend free public schools pursuant to Section 5 of Article IX of the California Constitution  , it is necessary for this act to take effect immediately.