Article Legal Notes JoAnne Speers

New Laws on Ethics Training and More for 2006

JoAnne Speers is general counsel for the League and can be reached at jspeers@cacities.org.

Adverse publicity and prosecutions related to local officials’ compensation and use of public resources has led to new state laws that take effect Jan. 1, 2006. One law, AB 11, targets city council member compensation levels. Another, AB 1234, takes aim at expense reimbursement practices.

AB 1234 also requires biannual ethics training for local elected officials or officials who otherwise serve on bodies subject to the Brown Act’s requirements — if those individuals receive compensation or expense reimbursement.

Let’s examine what these new laws do and how they fit in with the existing legal frameworks.

City Official Compensation

California’s Constitution gives charter cities plenary (absolute) authority to set council member salaries, subject to any limits in the charter.1

For general law cities, however, the state Constitution requires the Legislature to specify city powers2; it also gives all cities and counties authority to enact and enforce all ordinances not in conflict with general laws (typically known as the “police power”).3 These constitutional provisions are one of the reasons the courts have noted that a general law city only has those powers that are expressly given to it by the state Constitution or statute, or that are necessarily implied in such grants of authority.4

The power for general law cities to pay compensation to their city council members is found in the Government Code,5 which creates a salary system based on city population.6 That code section, which was last updated in 1984, also allows increases in the statutory baseline salaries of up to 5 percent per year. General law cities may also go to the voters for a different salary level.

When did the state start meddling in the issue of general law city officials’ compensation? Way back in 1883 — 15 years before the League was first organized.

What the New Law Does

Assembly Member De La Torre (D-50, South Gate) authored the changes to the law related to council member compensation.7 He explained to the League’s Administrative Services Policy Committee that the bill was motivated by what he perceived as inappropriate practices when he served as a council member in South Gate.

The new law affects three areas:

General law city council member compensation. Unless specifically authorized by another statute, a city council may not enact an ordinance providing for compensation to elected city council members in excess of the schedules authorized under the Government Code.8

Compensation for service on community redevelopment agency or community development commissions. If a community development commission is formed to oversee redevelopment functions, commissioner compensation may not exceed $75 per commissioner per meeting, with a maximum of two meetings ($150) per month.9

If a community development commission is formed to oversee both redevelopment and housing authority functions, commissioner compensation may not exceed $150 per commissioner per meeting, with a maximum of two meetings ($300) per month.10

Compensation for service on other commissions authorized by statute. If a statute does indeed provide for additional council member compensation for serving on a commission — but that statute does not specify an amount of compensation — the compensation shall be $150 per month.11

Should general law city officials feel singled out vis-à-vis other local officials as the result of this bill? Not necessarily. Another bill, AB 1234, also addressed perceived problems with special district compensation.12

Expense Reimbursement Practices Also Under Scrutiny

AB 1234 was carried by Assembly Local Government Committee Chairperson Simon Salinas (D-28, Salinas), with the encouragement of the special district community. That community recognized, as does the city official community, that practices ranging from being very close to the line to stepping way over the line tend to portray all officials in a negative light with the public.

In addition to the issue of compensation for special district officials, AB 1234 creates new state requirements related to expense reimbursement. Under the law prior to AB 1234’s passage, the general rule was that city officials could be reimbursed for actual and necessary expenses. A good practice was for local agencies to adopt policies specifying what the agency considered to be reimbursable necessary expenses and what constituted reasonable levels of such expenses.

AB 1234 now takes that concept a step further by requiring local agencies that reimburse their elected and appointed officials to adopt expense reimbursement policies that would specify when expenses are, in effect, “necessary.”13 The Institute for Local Government (ILG) has developed a sample annotated expense reimbursement policy to help local officials with this task. The policy is available free online at www.ca-ilg.org/reimbursementpolicy.

Some of the circumstances that incur “necessary” expenses suggested by ILG’s sample policy include:

  • Communicating with representatives of regional, state and national government on agency-adopted policy positions;
  • Attending educational seminars designed to improve officials’ skill and information levels;
  • Participating in regional, state and nationalorganizations whose activities affect the agency’sinterests;
  • Attending agencyevents; and
  • Implementing an agency-approved strategy for attracting or retaining businesses to the agency, which will typically involve at least one staff member.

Under the new state law, if an official wants to seek reimbursement for something that is not on the list, the official has the option of seeking prior approval for such reimbursement from the governing body.14

The new law says that the policy may specify what constitutes reasonable rates for travel, meals and lodging. If the policy does not, then the reimbursable rates default to those specified in the Internal Revenue Service guidelines.15

The law also specifies certain thresholds for what constitutes reasonable levels of expenses. For example, for lodging in connection with conferences, the rate may not exceed the maximum group rates published for the conference.16 If those rates are not available at the time the lodging is booked, the lodging rates must be comparable to those allowed by the Internal Revenue Service or government rates.17 Similarly, the new law requires local agency officials to use group or government rates for non-conference-related lodging and transportation services.18

Local agencies must use expense report forms,19 and all expenses must be documented with receipts.20(These documents are, of course, public records subject to disclosure.21 The expense reimbursement policy must specify what constitutes a “reasonable time” within which requests for reimbursement must be submitted.22

The law notes that penalties for misuse of public resources include civil and criminal penalties, repayment and loss of reimbursement privileges.23

The law also requires officials to give reports on meetings attended at public expense at the next meeting of the governing body.24 Presumably this can be either a written or oral report. The report should be agendized in some manner, both to remind the official of the obligation to report and to comply with Brown Act requirements.

State Ethics Requirements Extended to Local Officials

There are also two instances in which new laws extend ethics-related requirements that state officials were subject to local officials.

Revolving Door Restrictions

For example, state officials were precluded from representing individuals before their agencies for one year after leaving office.25 Now that requirement also applies to a number of local officials, including elected officials and city managers.26

Ethics Training

Similarly, state officials must take ethics training every two years.27 The primary mechanism for obtaining this training is an online course developed by the Fair Political Practices Commission and Attorney General’s Office, which takes about two hours to complete.28

Now local and appointed officials, including employees designated by a local agency, must also take two hours of ethics training if they receive compensation for their service or are reimbursed for their expenses.29 The training must cover general ethics principles relating to public service and ethics laws.30 Ethics laws are defined as including:

  • Laws related to personal financial gain by public officials (including bribery and conflict-of-interest laws);
  • Laws related to office-holder perks, including gifts and travel restrictions, personal and political use of public resources and prohibitions against gifts of public funds;
  • Governmental transparency laws, including financial disclosure requirements and open government laws (the Brown Act and Public Records Act); and
  • Laws related to fair processes, including fair contracting requirements, common law bias requirements and due process.31

Local officials who are subject to training requirements and who hold office as of Jan. 1, 2006, must receive that training by the end of the year.32 Newly elected and appointed officials must receive their first training within one year of commencing service.33 After that, the requirement is every two years.34

The new law also requires the agency to keep records documenting officials’ compliance.35 Providers of such training must provide proof of participation in their training activities.36

The new law gives the attorney general and Fair Political Practices Commission a consulting role on course content.37

The League and ILG are working on training courses and materials to affordably satisfy these requirements. For example, ILG has received a grant from the SBC Foundation to develop an online course analogous to that offered on the attorney general’s website. Self-study materials are also an allowed approach, and ILG is exploring that option as well. More information is available through the League’s Priority Focus newsletter and the ethics area of the ILG website at www.ca-ilg.org/trust.

For More Information on Expense Reimbursement and Compensation Issues

The Institute for Local Government has published an extensive analysis of expense reimbursement and compensation for local officials in Of Cookie Jars and Fishbowls: A Public Official’s Guide to the Use of Public Resources. The publication is available free in electronic form at www.ca-ilg.org/fishbowl or in hard copy from CityBooks; phone: (916) 658-8257; online at www.cacities.org/store. It also covers other related issues, such as the personal and political use of public resources.

Footnotes:

[1] See Cal. Const. Art XI, §5(b).

[2] See Cal. Const. Art. XI, §2(a).

[3] See Cal. Const. Art. XI, §7.

[4] Irwin v. City of Manhattan Beach, 65 Cal.2d 13, 20-21 (1966); 54 Ops.Cal.Atty.Gen. 135 (1971).

[5] See Cal. Gov’t §36516.

[6] The schedule is as follows: 

(1) In cities up to and including 35,000 in population, up to and including $300 per month.
(2) In cities over 35,000 up to and including 50,000 in population, up to and including $400 per month.
(3) In cities over 50,000 up to and including 75,000 in population, up to and including $500 per month.
(4) In cities over 75,000 up to and including 150,000 in population, up to and including $600 per month.
(5) In cities over 150,000 up to and including 250,000 in population, up to and including $800 per month.
(6) In cities over 250,000 population, up to and including $1,000 per month. 

[7] Chapter 178, Statutes of 2005 (AB 11).

[8] See Cal. Gov’t Code §36516(d) (effective Jan. 1, 2006).

[9] See Cal. Health & Safety Code §34130.5(b) (effective Jan. 1, 2006).

[10] See Cal. Health & Safety Code §34130.5(c) (effective Jan. 1, 2006).

[11] See Cal. Gov’t Code §36516(d) (effective Jan. 1, 2006).

[12] See Cal. Gov’t Code §53232.1 (effective Jan. 1, 2006).

[13] See Cal. Gov’t Code §53232.2(b) (effective Jan. 1, 2006).

[14] See Cal. Gov’t Code §53232.2(f) (effective Jan. 1, 2006).

[15] See Cal. Gov’t Code §53232.2(c) (effective Jan. 1, 2006). See also Publication 1542 at www.irs.gov or www.policyworks.gov/perdiem.

[16] See Cal. Gov’t Code §53232.2(d) (effective Jan. 1, 2006).

[17] See Cal. Gov’t Code §53232.2(d) (effective Jan. 1, 2006).

[18] See Cal. Gov’t Code §53232.2(e) (effective Jan. 1, 2006).

[19] See Cal. Gov’t Code §53232.3(a) (effective Jan. 1, 2006).

[20] See Cal. Gov’t Code §53232.3(c) (effective Jan. 1, 2006).

[21] See Cal. Gov’t Code §53232.3(e) (effective Jan. 1, 2006).

[22] See Cal. Gov’t Code §53232.3(c) (effective Jan. 1, 2006).

[23] See Cal. Gov’t Code §53232.4 (effective Jan. 1, 2006).

[24] See Cal. Gov’t Code §53232.3(d) (effective Jan. 1, 2006).

[25] See Cal. Gov’t Code §87406.

[26] See Cal. Gov’t Code §87406.3 (effective Jan. 1, 2006).

[27] See Cal. Gov’t Code §8_______.

[28] See http://caag.state.ca.us/ethics/index.htm

[29] See Cal. Gov’t Code §53235(a), (b) (effective Jan. 1, 2006).

[30] See Cal. Gov’t Code §53235(b) (effective Jan. 1, 2006).

[31] See Cal. Gov’t Code §53234(d) (effective Jan. 1, 2006).

[32] See Cal. Gov’t Code §53235.1(a) (effective Jan. 1, 2006).

[33] See Cal. Gov’t Code §53235.1(b) (effective Jan. 1, 2006).

[34] See Cal. Gov’t Code §53235.1 (a), (b) (effective Jan. 1, 2006).

[35] See Cal. Gov’t Code §53235.2 (effective Jan. 1, 2006).

[36] See Cal. Gov’t Code §53235(e) (effective Jan. 1, 2006).

[37] See Cal. Gov’t Code §53235© (effective Jan. 1, 2006).

About Legal Notes

This column is provided as general information and not as legal advice. The law is constantly evolving, and attorneys can and do disagree about what the law requires. Local agencies interested in determining how the law applies in a particular situation should consult their local agency attorneys.

This article appears in the January 2006 issue of Western City
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