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<ns0:Id>20250SB__112699INT</ns0:Id>
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<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-17</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:MeasureNum>1126</ns0:MeasureNum>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Senator Choi</ns0:AuthorText>
<ns0:AuthorText authorType="COAUTHOR_ORIGINATING">(Coauthors: Senators Alvarado-Gil and Strickland)</ns0:AuthorText>
<ns0:Authors>
<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>SENATE</ns0:House>
<ns0:Name>Choi</ns0:Name>
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<ns0:Contribution>COAUTHOR</ns0:Contribution>
<ns0:House>SENATE</ns0:House>
<ns0:Name>Alvarado-Gil</ns0:Name>
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<ns0:Contribution>COAUTHOR</ns0:Contribution>
<ns0:House>SENATE</ns0:House>
<ns0:Name>Strickland</ns0:Name>
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<ns0:Title> An act to add Section 41020.4 to the Education Code, and to add Article 10.2 (commencing with Section 53905) to Chapter 4 of Part 1 of Division 2 of Title 5 of the Government Code, relating to local government. </ns0:Title>
<ns0:RelatingClause>local government</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>School districts, county offices of education, and local agencies: financial postings.</ns0:Subject>
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(1)
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Existing law requires, not later than May 1 of each fiscal year, each county superintendent of schools to provide for an audit of all funds under their jurisdiction and control, and requires the governing board of each 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, by January 31 of each year, the governing body of each local educational agency to review, at a public meeting, the annual audit of the local educational agency for the prior year, any audit exceptions identified in that audit, the recommendations or findings of any management letter issued by the auditor, and any description of correction or plans to correct any
exceptions or management letter issue.
</html:p>
<html:p>This bill would require governing boards of school districts and county superintendents of schools to post their annual audit report on their internet websites within 30 days of the report being filed with the county superintendent of schools or formally received by the governing board, as specified. The bill would impose a civil penalty of $1,000 on a school district or county superintendent of schools that fails to post the report within that time period and would authorize the Superintendent of Public Instruction to assess this penalty upon a finding of that violation, or upon receipt of a valid complaint from a member of the public of that violation, as prescribed.</html:p>
<html:p>
(2)
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Existing law requires, within 7 months after the close of each fiscal year or within the time prescribed by the Controller, whichever is later, the
officer of each local agency, as defined, who has charge of the financial records to furnish to the Controller a report of all the financial transactions of the local agency during the preceding fiscal year, as specified. Existing law requires the report to contain underlying data from audited financial statements prepared in accordance with generally accepted accounting principles, as specified, and to state certain information, including the aggregate income during the preceding fiscal year. Existing law requires the legislative body, upon completion of the report, to either post the report in a conspicuous location on its internet website or to cause copies of the report to be prepared and the clerk of the legislative body to furnish a copy to any person requesting it, as specified.
</html:p>
<html:p>This bill would require a local agency, as defined, that maintains an internet website to post its audited financial statements, or its annual comprehensive financial report, on its
internet website within 30 days of the date that the statements or report are formally received, approved, or accepted by the legislative body of the local agency, as specified. The bill would impose a civil penalty of $1,000 on a local agency that fails to post the report within that time period and would authorize the Controller to assess this penalty upon a finding of that violation, or upon receipt of a valid complaint from a member of the public of that violation, as prescribed. The bill would require penalties collected pursuant that provision to be deposited into the Local Agency Transparency Fund, which the bill would create in the State Treasury, to be available upon appropriation for the administrative costs of the Controller in enforcing the provision. By imposing additional duties on school districts, county superintendents of schools, and local agencies, the bill would impose a state-mandated local program.</html:p>
<html:p>
(3)
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The bill would
include findings and declarations related to these provisions.
</html:p>
<html:p>
(4)
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The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
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<html:p>
(5)
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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.
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<html:p>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 the statutory provisions noted above.</html:p>
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<ns0:VoteRequired>MAJORITY</ns0:VoteRequired>
<ns0:Appropriation>NO</ns0:Appropriation>
<ns0:FiscalCommittee>YES</ns0:FiscalCommittee>
<ns0:LocalProgram>YES</ns0:LocalProgram>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
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<ns0:Num>SECTION 1.</ns0:Num>
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<html:p>The Legislature finds and declares all of the following:</html:p>
<html:p>
(a)
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Under the California Constitution, the people have the right of access to information concerning the conduct of the people’s business. Access to the audited financial statements of local agencies and school districts is a fundamental and necessary right of every resident to ensure the proper stewardship of public funds.
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(b)
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Recent instances of fiscal distress and mismanagement in various local jurisdictions have highlighted the need for timely, accessible, and transparent financial reporting. Publicly available audits serve as an “early warning system” for taxpayers, creditors, and state oversight agencies.
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<html:p>
(c)
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While existing law requires the performance of annual audits, there is currently no uniform requirement for these documents to be posted prominently online. This lack of standardization creates “transparency deserts,” where residents must navigate complex requests under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code) to view basic financial health data.
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<html:p>
(d)
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In a modern democracy, “publicly available” must mean “available online.” Requiring local agencies and educational entities to host their audited financial statements on their internet websites ensures that information is accessible to all Californians regardless of their ability to visit a physical government office during business hours.
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(e)
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It is the intent of the Legislature in enacting this
act to provide a simple, no-cost mechanism for the public to monitor the fiscal health of their local governments and to ensure that financial accountability is a proactive duty of the state’s political subdivisions rather than a reactive response to inquiry.
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 41020.4 is added to the
<ns0:DocName>Education Code</ns0:DocName>
, to read:
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<ns0:Num>41020.4.</ns0:Num>
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<html:p>
(a)
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The governing board of each school district and each county superintendent of schools shall post the annual audit report required by Section 41020 on its internet website. All of the following shall apply to the posting:
</html:p>
<html:p>
(1)
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The annual audit report shall be posted in a prominent location on the internet website and be accessible to the public without a password or fee.
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<html:p>
(2)
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The annual audit report shall be posted within 30 days of the date it is filed with the county superintendent of schools or formally received by the governing board, whichever occurs first.
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<html:p>
(3)
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The school district or county superintendent of
schools shall maintain the posted audit report on its internet website for a period of not less than three years.
</html:p>
<html:p>
(b)
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(1)
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A school district or county superintendent of schools that fails to comply with paragraph (2) of subdivision (a) shall be liable for a civil penalty of one thousand dollars ($1,000) for each audit report not posted within the time prescribed.
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<html:p>
(2)
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The civil penalty may be assessed by the Superintendent upon a finding of noncompliance or upon receipt of a verified complaint from a member of the public.
</html:p>
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(3)
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Before assessing the penalty, the Superintendent shall provide the school district or county superintendent of schools with a written notice of violation. The school district or county superintendent of schools shall have 10 business days from the date of the notice to cure
the violation. If the violation is cured within this period, no penalty shall be assessed.
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<ns0:Num>SEC. 3.</ns0:Num>
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Article 10.2 (commencing with Section 53905) is added to Chapter 4 of Part 1 of Division 2 of Title 5 of the
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, to read:
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<ns0:Num>10.2.</ns0:Num>
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<ns0:LawHeadingText>Financial Postings</ns0:LawHeadingText>
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<ns0:Num>53905.</ns0:Num>
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<html:p>
(a)
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Notwithstanding any other law, for purposes of this section, “local agency” means a city, including a charter city, county, city and county, or an independent special district, as defined in Section 56044.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
If a local agency maintains an internet website, the local agency shall post its audited financial statements, or its annual comprehensive financial report, on that internet website. All the following apply to the posting:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The audited financial statement or annual comprehensive financial report shall be posted in a prominent location on the internet website and be accessible to the public without a password or fee.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The audited financial statement or annual comprehensive financial report shall be posted within 30 days of the date that the statements or report are formally received, approved, or accepted by the legislative body of the local agency.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The local agency shall maintain the posted audited financial statement or annual comprehensive financial report on its internet website for a period of not less than three years.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
A local agency that fails to comply with paragraph (2) of subdivision (b) shall be liable for a civil penalty of one thousand dollars ($1,000) for each statement or report not posted within the time prescribed.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The civil penalty may be assessed by the Controller upon a finding of noncompliance or upon receipt of a verified complaint from a member of the
public.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Before assessing the penalty, the Controller shall provide the local agency with a written notice of violation. The local agency shall have 10 business days from the date of the notice to cure the violation by posting the required statement or report. If the violation is cured within this period, no penalty shall be assessed.
</html:p>
<html:p>
(4)
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Penalties collected pursuant to this section shall be deposited into the Local Agency Transparency Fund, which is hereby created in the State Treasury, to be available upon appropriation for the administrative costs of the Controller in enforcing this section.
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<ns0:Num>SEC. 4.</ns0:Num>
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<html:p>The Legislature finds and declares that the fiscal integrity of local agencies and school districts is a matter of statewide concern and is not a municipal affair as that term is used in Section 5 of Article XI of the California Constitution, and that the financial failure of a single local entity can have cascading effects on the state’s credit rating, the stability of the public employee retirement systems, and the delivery of essential services like education and public safety. Therefore, Section 3 of this act adding Article 10.2 (commencing with Section 53905) to Chapter 4 of Part 1 of Division 2 of Title 5 of the Government Code applies to all cities, including charter cities.</html:p>
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<ns0:Num>SEC. 5.</ns0:Num>
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<html:p>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.</html:p>
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