41330-41344.6

EDUCATION CODE
SECTION 41330-41344.6




41330.  Commencing with the 2003-04 fiscal year, for the purposes of
allocating the advance apportionment for the current fiscal year,
the Superintendent of Public Instruction shall on or before July 20th
of each year certify to the Controller the amounts estimated to be
apportioned to each effective school district for the current fiscal
year on the basis of the report of the districts for the second
principal apportionment of the preceding fiscal year, the amounts
estimated to be apportioned to each county school tuition fund and to
each county school service fund for schools and classes to be
maintained by the county superintendent of schools during the current
fiscal year on the basis of reports provided by the county
superintendent of schools, and the amounts estimated by the
Superintendent of Public Instruction to be apportioned to the county
school service fund during the current fiscal year under subdivisions
(a) and (b) of Section 14054.



41332.  The Superintendent of Public Instruction shall, on or before
February 20th of each year, apportion to each elementary school
district, high school district, county school service fund, and
county school tuition fund the total amounts allowed to them under
Sections 14054, 14057, 14058, 41790, 41800, 41810, 41811, 41840,
41841, 41863, 41866, 41882, 41884, 41885, 41886, 41888, 41950, 41970,
41971, 42004, 42005, 42054, 42055, 42056, and 52205, whichever are
in effect. This apportionment shall be called the first principal
apportionment.


41333.  For purposes of determining the eligibility of a school for
the "necessary small school" foundation program, if by November 10th
of any current fiscal year, an additional teacher or teachers are
hired in elementary schools or high schools such teachers shall be
deemed to have been hired as of the beginning of the school year, and
the districts shall, if otherwise eligible, be entitled to the
appropriate small school foundation programs for purposes of
computation of the principal apportionments.



41334.  The Superintendent of Public Instruction shall on or before
December 10th of each year apportion:
   (a) To each elementary, high school, and county school service
fund the total of amounts allowed to them under Sections 41850 to
41862, inclusive, and Sections 41930 to 41936, inclusive, and
   (b) To each school district maintaining a high school or high
schools, each county superintendent of schools, the California Youth
Authority and the State Department of Education the total of amounts
allowed to them under Sections 41900 to 41912, inclusive.
   This apportionment shall be called the special purpose
apportionment.


41335.  (a) The Superintendent of Public Instruction shall on or
before July 2 of each year apportion to each elementary school
district, high school district, county school service fund, and
county school tuition fund the total amounts allowed to each
respective district or fund, as would have been apportioned on June
25 of the fiscal year of the apportionment pursuant to Section 41335
as it read on May 30, 2003, under Sections 14054, 14057, 14058,
41790, 41800, 41810, 41811, 41840, 41841, 41863, 41866, 41882, 41884,
41885, 41886, 41888, 41950, 41970, 41971, 42004, 42005, 42054,
42055, 42056, and 52205, whichever are in effect. This apportionment
shall be called the second principal apportionment.
   (b) This section shall become operative on June 1, 2003.



41336.  The Superintendent of Public Instruction shall on or before
June 25th of each year apportion to each school district or fund the
total of the amounts allowed to the district or fund under Section
41972. This apportionment shall be called the final apportionment.



41337.  The Superintendent of Public Instruction shall apportion at
such times as needed the amounts allowed pursuant to Section 14055.



41338.  The Superintendent of Public Instruction shall withhold from
the apportionment to an elementary school district, as a part of the
first principal apportionment and second principal apportionment,
the amount allowed the elementary school district for the average
daily attendance in grades 7 and 8 in a junior high school by reason
of the operation of subdivisions (a) and (b) of Section 41600. The
amount withheld shall be determined by multiplying the total amount
of basic state aid and state equalization aid computed for the
district by the foundation program for units of average daily
attendance in grades 7 and 8 and dividing the product by the total
foundation program of the district.
   The Superintendent of Public Instruction shall add the amount
withheld to the apportionment required to be made to the high school
district maintaining the junior high school.




41339.  (a) The Superintendent of Public Instruction shall certify
each apportionment made by him or her under Sections 41332 to 41340,
inclusive, whichever are in effect, to the Controller.
   (b) Ten working days prior to the dates prescribed in Sections
41330, 41332, and 41335, the superintendent shall notify the Joint
Legislative Budget Committee and the Department of Finance of the
average daily attendance numbers and the local property tax revenues
to be utilized in the respective certification.



41339.1.  Notwithstanding subdivision (b) of Section 41339, 10
working days prior to the dates prescribed in Section 41330 and
Section 41335, as Section 41335 reads on and after June 1, 2003, the
Superintendent of Public Instruction shall notify the Joint
Legislative Budget Committee and the Department of Finance of the
average daily attendance numbers and the local property tax revenues
to be utilized in the respective certification.



41340.  The Superintendent of Public Instruction shall furnish an
abstract of each apportionment of the State School Fund to the State
Controller, the Department of Finance and to the county and city and
county auditors, county and city and county treasurers, and to the
county superintendents of schools of the several counties of the
state.



41341.  (a) (1) If, during any fiscal year, the amount apportioned
to a school district or to any fund from Section A of the State
School Fund differs either positively or negatively from the amount
to which the district or fund was entitled by an amount equal to
revenue limit funding for one unit of average daily attendance, the
Superintendent of Public Instruction, in accordance with regulations
that he or she is hereby authorized to adopt, not later than the
first succeeding fiscal year from the fiscal year in which the
computational error was made, shall withhold from, or add to, the
apportionment made during that fiscal year, the amount of the excess
or deficiency, as the case may be. Notwithstanding any other
provision of this code to the contrary, excesses withheld or
deficiencies added by the Superintendent of Public Instruction under
this subdivision shall be added to or allowed from any portion of the
State School Fund.
   (2) Notwithstanding paragraph (1), excesses may be withheld or
deficiencies added to apportionments on account of audit exceptions
in any fiscal year in which they are certified by the Superintendent
of Public Instruction.
   (b) If, during any fiscal year, the amount apportioned to a
community college district or to any fund from Section B of the State
School Fund differs either positively or negatively from the amount
to which the district or fund was entitled, by an amount equal to the
funding of one full-time equivalent student, the Chancellor of the
California Community Colleges, in accordance with regulations that he
or she is hereby authorized to adopt, not later than the first
succeeding fiscal year from the fiscal year in which the
computational error was made, shall withhold from, or add to, the
apportionment made during that fiscal year, the amount of the excess
or deficiency, as the case may be. Notwithstanding any other
provision of this code to the contrary, excesses withheld or
deficiencies added by the Chancellor of the California Community
Colleges under this subdivision shall be added to or allowed from any
portion of the State School Fund.



41342.  When any judgment has been rendered which requires the
apportionment from the State School Fund to any school district, to
any other agency, or to any fund for any fiscal year of more than the
amount actually apportioned thereto during that fiscal year, the
difference shall be apportioned to the district, agency, or fund by
the Superintendent of Public Instruction from the State School Fund
during the fiscal year following that in which the judgment becomes
final before any other apportionment from the State School Fund is
made. Upon the becoming final of any judgment which requires the
apportionment from the State School Fund to any school district, to
any other agency, or to any fund for any fiscal year of less than the
amount actually apportioned thereto during any fiscal year, the
difference shall be deducted from the apportionment made to that
district, agency, or fund by the Superintendent of Public Instruction
from the State School Fund during the fiscal year following that in
which the judgment becomes final.



41343.  Wherever the attendance of pupils is not included in the
computation of the average daily attendance of a school district for
any fiscal year because the certification document of the person
employed by the district to instruct such pupils was not in force
during the period of such attendance, the governing board of the
district may, upon payment of the salary of such person pursuant to
Section 45036, or similar provisions of law, report such attendance
to the Superintendent of Public Instruction during the fiscal year in
which such salary is paid. Such report shall be made in such form as
shall be prescribed and furnished by the Superintendent of Public
Instruction. Thereafter the Superintendent of Public Instruction
shall add to the apportionment from the State School Fund to the
district during the next succeeding fiscal year or years, as
determined by him but not exceeding three, the additional amount to
which the district would have been entitled in the fiscal year next
succeeding that in which such attendance was not included in the
computation of the average daily attendance of the district if such
amount is at least one hundred dollars ($100) or more.
   Any such additional amount shall be apportioned from the State
School Fund before any other apportionment from such fund is made and
shall be allowed from any portion of such fund except that portion
reserved as allowances for basic state aid.



41344.  (a) If, as the result of an audit or review, a local
educational agency is required to repay an apportionment significant
audit exception or to pay a penalty arising from an audit exception,
the Superintendent and the Director of Finance, or their designees,
shall jointly establish a plan for repayment of state school funds
that the local educational agency received on the basis of average
daily attendance, or other data, that did not comply with statutory
or regulatory requirements that were conditions of the
apportionments, or for payment of a penalty arising from an audit
exception. A local educational agency shall request a plan within 90
days of receiving the final audit report or review, within 30 days of
withdrawing or receiving a final determination regarding an appeal
pursuant to subdivision (d), or, in the absence of an appeal pursuant
to subdivision (d), within 30 days of withdrawing or receiving a
determination of a summary review pursuant to subdivision (d) of
Section 41344.1. At the time the local educational agency is
notified, the Controller shall also be notified of the plan. The plan
shall be established in accordance with the following:
   (1) The Controller shall withhold the disallowed or penalty amount
at the next principal apportionment or pursuant to paragraph (2),
unless subdivision (d) of this section or subdivision (d) of Section
41344.1 applies, in which case the disallowed or penalty amount shall
be withheld, at the next principal apportionment or pursuant to
paragraph (2) following the determination regarding the appeal or
summary appeal. In calculating a disallowed amount, the Controller
shall determine the total amount of overpayment received by the local
educational agency on the basis of average daily attendance, or
other data, reported by the local educational agency that did not
comply with one or more statutory or regulatory requirements that are
conditions of apportionment.
   (2) If the Superintendent and the Director of the Department of
Finance concur that repayment of the full liability or payment of the
penalty in the current fiscal year would constitute a severe
financial hardship for the local agency, they may approve a plan of
equal annual payments over a period of up to eight years. The plan
shall include interest on each year's outstanding balance at the rate
earned on the state's Pooled Money Investment Account during that
year. The Superintendent and the Director of the Department of
Finance shall jointly establish this plan. The Controller shall
withhold amounts pursuant to the plan.
   (3) If the Superintendent and the Director of the Department of
Finance do not jointly establish a plan, the Controller shall
withhold the entire disallowed amount determined pursuant to
paragraph (1), or the penalty amount, at the next principal
apportionment.
   (b) (1) For purposes of computing average daily attendance
pursuant to Section 42238.5, a local educational agency's prior
fiscal year average daily attendance shall be reduced by an amount
equal to any average daily attendance disallowed in the current year,
by an audit or review, as defined in subdivision (e).
   (2) Commencing with the 1999-2000 fiscal year, this subdivision
may not result in a local educational agency repaying more than the
value of the average daily attendance disallowed in the audit
exception plus interest and other penalties or reductions in
apportionments as provided by existing law.
   (c) Notwithstanding any other provision of law, this section may
not be waived under any authority set forth in this code except as
provided in this section or Section 41344.1.
   (d) Within 60 days of the date on which a local educational agency
receives a final audit report resulting from an audit or review of
all or any part of the operations of the local educational agency, or
within 30 days of receiving a determination of a summary review
pursuant to subdivision (d) of Section 41344.1, a local educational
agency may appeal a finding contained in the final report, pursuant
to Section 41344.1. Within 90 days of the date on which the appeal is
received by the panel, a hearing shall be held at which the local
educational agency may present evidence or arguments if the local
educational agency believes that the final report contains any
finding that was based on errors of fact or interpretation of law, or
if the local educational agency believes in good faith that it was
in substantial compliance with all legal requirements. A repayment
schedule may not commence until the panel reaches a determination
regarding the appeal. If the panel determines that the local
educational agency is correct in its assertion, in whole or in part,
the allowable portion of any apportionment payment that was withheld
shall be paid at the next principal apportionment.
   (e) As used in this section, "audit or review" means an audit
conducted by the Controller's office, an annual audit conducted by a
certified public accountant or a public accounting firm pursuant to
Section 41020, and an audit or review conducted by a governmental
agency that provided the local educational agency with an opportunity
to provide a written response.



41344.1.  (a) The Education Audit Appeals Panel is hereby
established as a separate state agency. Its membership shall consist
of the Superintendent, the Director of the Department of Finance, and
the Chief Executive Officer of the Fiscal Crisis and Management
Assistance Team established pursuant to Section 42127.8 or their
designees. The panel shall have the authority to expend funds, hire
staff, make contracts, sue and be sued, and issue regulations in
furtherance of its duties.
   (b) The panel shall hear appeals filed pursuant to subdivision (d)
of Section 41344. The Controller shall be a party to all appeals.
The department and the Department of Finance may, at their election,
timely intervene as a party in any appeal. The panel shall consider
audit appeals pursuant to the administrative adjudication provisions
of the Administrative Procedure Act (Chapter 4.5 (commencing with
Section 11400) and Chapter 5 (commencing with Section 11500) of Part
1 of Division 3 of Title 2 of the Government Code), except that it
may adopt regulations specifying special pleadings that shall govern
audit appeals. The panel may approve settlements and make findings of
fact and interpretations of law.
   (c) Compliance with all legal requirements is a condition to the
state's obligation to make apportionments. A condition may be deemed
satisfied if the panel finds there has been compliance or substantial
compliance with all legal requirements. "Substantial compliance"
means nearly complete satisfaction of all material requirements of a
funding program that provide an educational benefit substantially
consistent with the program's purpose. A minor or inadvertent
noncompliance may be grounds for a finding of substantial compliance
provided that the local educational agency can demonstrate it acted
in good faith to comply with the conditions established in law or
regulation necessary for apportionment of funding. The panel may
further define "substantial compliance" by issuing regulations or
through adjudicative opinions, or both. If the panel finds there has
been substantial compliance, the panel may waive or reduce the
reimbursement or penalty amount and may also order other remedial
measures sufficient to induce full compliance in the future. Other
remedial measures may include restoration of a reduction or penalty
amount if full compliance is not rendered in the future, ordering
special audits, and requiring special training.
   (d) In addition to the normal appeal process specified above,
there is hereby created a voluntary, informal, summary appeals
process for noncompliant audit exceptions that clearly constitute
substantial compliance as that term is defined in subdivision (c).
Requests for summary review shall be made to the executive officer of
the panel who may seek comment from the Department of Finance or
Superintendent. Summary review shall be sought within 30 days of the
date on which a local educational agency receives a final audit
report resulting from an audit or review.
   (1) If the executive officer concludes the conditions for finding
substantial compliance are not clearly met or involve substantial
questions of fact, the executive officer may deny the request for
summary review and the appellant may pursue its claim through the
normal appeal process.
   (2) For appeals in which the total audit exceptions for full
repayment or penalty constitute less than 150 units of average daily
attendance or seven hundred fifty thousand dollars ($750,000),
whichever is less, the executive officer may waive or reduce the
reimbursement or penalty upon a finding of substantial compliance and
that other remedial measures are sufficient to induce full
compliance in the future.
   (3) For appeals in which the total audit exceptions for full
repayment or penalty meet or exceed 150 units of average daily
attendance or seven hundred fifty thousand dollars ($750,000),
whichever is greater, the executive officer may waive or reduce the
reimbursement or penalty upon a finding of substantial compliance and
order other remedial measures that are sufficient to induce full
compliance in the future, if he or she has the written approval of
the Department of Finance and the Superintendent. The executive
officer shall provide the details of the proposed settlement and the
rationale in writing to the Department of Finance and Superintendent
and allow at least 30 days for their review.
   (4) The right to appeal pursuant to subdivision (d) of Section
41344 is independent of this subdivision and an appellant may pursue
his or her appeal under subdivision (b) regardless of the result
under this subdivision. A local educational agency that has
unresolved audit appeals pursuant to subdivision (d) of Section 41344
pending on January 1, 2003, may file a request for summary review
under this subdivision for a period of 60 days after January 1, 2003.




41344.2.  Notwithstanding subdivision (c) of Section 41344 or any
other provision of law, the State Board of Education may consider and
act upon requests to retroactively waive any provision of this code
or any regulation adopted by the State Board of Education that is the
basis of an apportionment significant audit if the request was
received in writing by the State Department of Education prior to
July 7, 1999.



41344.3.  Notwithstanding subdivision (c) of Section 41344 or any
other provision of law, the State Board of Education may, upon a
finding that violations were minor or inadvertent and the intent of
Section 60119 was substantially met, consider and act upon requests
to waive Section 60119 to the extent that a failure to comply with
that section would otherwise subject the school district to a
repayment due to an apportionment significant audit. The board may
act on requests to waive Section 60119 regardless of whether the
request was received before or after the effective date of this
section.


41344.4.  Notwithstanding any other provision of law, a local
educational agency is not required to repay an apportionment based on
a significant audit exception related to the requirements specified
in paragraphs (1), (2), and (3) of subdivision (b) of Section 14501
if the county superintendent of schools certifies to the
Superintendent of Public Instruction and the Controller that the
audit exception was corrected by the local educational agency or that
an acceptable plan of correction was submitted to the county
superintendent of schools pursuant to subdivision (k) of Section
41020. With respect to textbooks and instructional materials, the
plan shall be consistent with the requirements of subparagraph (A) of
paragraph (2) of subdivision (a) of Section 60119.



41344.6.  (a) Notwithstanding Sections 17456, 17457, 17462, and
17463, or any other law, from June 1, 2004, to June 30, 2015,
inclusive, the Vallejo City Unified School District may sell property
owned by the district and use the proceeds from the sale to reduce
or retire the emergency loan provided in Section 9 of Chapter 53 of
the Statutes of 2004. The sale only of property pursuant to this
subdivision is not subject to Section 17459 or 17464.
   (b) Notwithstanding any other provision of law, from June 1, 2004,
to June 30, 2015, inclusive, the Vallejo City Unified School
District is not eligible for hardship assistance pursuant to Article
8 (commencing with Section 17075.10) of Chapter 12.5 of Part 10 of
Division 1 of Title 1.