Volume XXII
Number 5

The Board of Governors of the California Community Colleges took the following actions at its June 14, 2004, teleconference meeting:

• Title 5 Regulations: Authority to Appoint Special Trustee to Restore Fiscal Stability to Districts Under Limited Circumstances (Item 1) (060104) Adopted a Resolution adopting emergency tile 5 regulation section 58317. (Attached).
  

RESOLUTION

Be It Resolved that the Board of Governors of the California Community Colleges, acting pursuant to section 206 of the Procedures and Standing Orders of the Board of Governors, hereby adopts the attached proposed emergency regulation to remain in effect for 120 days following adoption.

The proposed emergency regulation is intended to clarify the authority of the Chancellor to appoint a special trustee having particular powers and duties with respect to districts likely to have a balance under 2% or facing imminent fiscal problems such that those districts have been placed in the priority one category of the System Office's fiscal watch list, where those districts have been asked to prepare plans to achieve fiscal stability or to come into compliance with established principles for sound fiscal management, and were notified of the inadequacy of corrective plans prior to May 31, 2004. The regulatory action is necessary to preserve the fiscal and educational welfare of the Compton Community College District, to preserve and increase educational opportunity and enhance student access, and to avoid the continuation of litigation to clarify the Chancellor's authority in this area.

ATTACHMENT

1. Section 58317 is added to subchapter 4 (commencing with section 58300) of chapter 9 of division 6 of title 5 of the California code of regulations to read:

58317. Special Trustee Following Notice of Inadequate Plan.
(a) Notwithstanding any other provision of this subchapter, in the circumstances described in subdivision (b), the Chancellor may appoint or assign a special trustee at district expense for the period of time necessary for the district to achieve fiscal stability or solvency or to ensure compliance with the principles of sound fiscal management in section 58311. The special trustee shall have recognized expertise in finance, and may employ any staff necessary, or contract for services necessary, to assist the trustee. The Chancellor shall determine the duties of the special trustee, which may include, but are not limited to, any or all of the following:
(1) Reviewing and monitoring the plans, reports, and other financial materials required under sections 58310 and 58312.
(2) Requiring any further modifications to the fiscal or educational plans which he or she deems necessary.
(3) Determining district spending levels and priorities to further the district's achievement of fiscal stability or solvency or to become compliant with the principles of sound fiscal management.
(4) Approving or disapproving actions of the district which affect or relate to the implementation of the fiscal or educational plans, which affect or relate to achieving fiscal stability or solvency, or which affect or relate to becoming compliant with the principles of sound fiscal management.
(5) Assuming overall management and control of the district for the time necessary to achieve fiscal stability or solvency or to achieve compliance with the principles of sound fiscal management, including assumption of the legal rights, duties, and powers of the governing board of the district to the full extent deemed appropriate by the trustee.
(b) The Chancellor may appoint a special trustee as provided in subdivision (a) if all of the following circumstances exist:
(1) The Chancellor or his or her designee has placed a district in the priority one category of the Chancellor's Office fiscal watch list which indicates that the district has a reserve balance below 2% or faces imminent fiscal problems requiring immediate corrective action to avoid the need for an emergency apportionment;
(2) The district has been asked to prepare a plan under section 58310; and
(3) Prior to May 31, 2004, the district was notified by the Chancellor or his or her designee that the plan failed to address fully questions regarding the district's fiscal problems or was otherwise inadequate.
(c) The Chancellor may transfer the funds necessary to pay all costs incurred in performing the services described herein to the support budget of the Office of the Chancellor from funding that would otherwise have been apportioned to the district under Section B of the State School Fund.
(d) The Chancellor may assign or appoint a special trustee having the authority described in subdivision (a) to any district that requires intervention described in section 58310 within the five fiscal years immediately following the ending date of the services of a previously assigned special trustee. The renewed assignment or appointment of a special trustee under this subdivision may be made without first satisfying the conditions specified in subdivision (b) where the Chancellor or his or her designee makes a finding that if trends continue unabated, the district will need an emergency apportionment within three years or that the district is noncompliant with the principles of sound management specified in section 58311. The district shall pay all costs incurred by the special trustee in accordance with subdivision (c).

Note: Authority cited: Sections 66700, 70901, and 84040, Education Code. Reference: Section 70901, Education Code.