AB84 - School accountability: Office of the Education Inspector General: school financial and performance audits: charter school authorization, oversight, funding, operations, networks, and contracting: data systems: local educational agency contractor background checks and contracting.

Amended IN Senate September 09, 2025 Amended IN Senate August 29, 2025 Amended IN Senate July 17, 2025 Amended IN Senate July 08, 2025 Amended IN Assembly June 03, 2025 Amended IN Assembly June 02, 2025 Amended IN Assembly May 05, 2025 Amended IN Assembly March 19, 2025 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 84 Introduced by Assembly Members Muratsuchi and Garcia (Coauthor: Senator Arreguín) December 20, 2024 An act to amend Sections 1240, 14500, 14501, 14502.1, 14503, 14504, 14504.2, 14505, 14506, 14507, 14508, 14509, 41020, 41020.2, 41020.3, 41020.5, 41020.8, 41341, 41344.4, 42100, 44258.9, 45037, 45125.1, 47604.32, 47604.33, 47605, 47605.6, 47612.5, 47634.2, 51745.6, 51746, 51747.5, and 51748 of, to add Sections 33309.5, 41020.4, 46149, 47604.35, 47604.6, 47605.8, 47605.10, 47609, and 47634.3 to, to add Article 7 (commencing with Section 47670) to Chapter 6 of Part 26.8 of Division 4 of Title 2 of, and to add Article 11.5 (commencing with Section 51827) to Chapter 5 of Part 28 of Division 4 of Title 2 of, and to add and repeal Section 46306 of, the Education Code, relating to school accountability. LEGISLATIVE COUNSEL'S DIGEST AB 84, as amended, Muratsuchi. School accountability: Office of the Education Inspector General: school financial and performance audits: charter school authorization, oversight, funding, operations, networks, and contracting: data systems: local educational agency contractor background checks. checks and contracting. (1) Existing law requires county superintendents 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 county superintendents of schools to provide for that auditing. Existing law requires the governing board of each school district and each office of the county superintendent of schools to include specified provisions in their contracts for audits and requires financial and compliance audits to be performed in accordance with specified standards. If the governing board of a school district has entered into a contract for an independent audit of its financial statements and the audited financial statements have not been filed with the county superintendent of schools on or before a specified due date, existing law authorizes the county superintendent of schools to, among other things, investigate the causes for the delay, as provided. This bill would expressly apply the above-described provisions to educational joint powers authorities and charter schools. The bill, among other things, would require those financial and compliance audits of local educational agencies to be conducted in accordance with specified filing deadlines and would revise requirements regarding which entity is responsible for providing an audit if a local educational agency has not provided for an audit of their respective books and accounts to include the Controller or a chartering authority, as provided. The bill would require, instead of authorize, a county superintendent of schools to investigate the causes for an above-described delay. The bill would require a local educational agency to post the local educational agency’s annual financial and compliance audits on its internet website. Existing law requires the Controller to, among other things, on an annual basis, review and monitor the audit reports performed by independent auditors, determine whether audit reports are in conformance with specified reporting provisions, and notify each local educational agency, the responsible county superintendent of schools, the Superintendent, the Department of Finance, and the auditor regarding each determination. Existing law authorizes the Controller to perform quality control reviews of audit working papers to determine whether audits are performed in conformity with those specified standards. Existing law requires the Controller to annually report to the State Department of Education to apprise the department of school districts and offices of county superintendents of schools that are not in compliance with applicable statutes and regulations related to audits and requires the Controller to make recommendations as to what action should be taken by the department. The bill would require the Controller to, if applicable, notify the responsible chartering authority of each determination made, as referenced above, and would require notification to applicable entities to be made within 6 months of the audit report due date or the audit report issue date, whichever is later. The bill would require the Controller to establish and publish as part of the audit guide a weighted risk-based criteria that considers auditor experience and quality factors in determining which audit engagements are required to undergo a quality control review, as provided. The bill would require the Controller to instead report and provide recommendations to the Superintendent of entities not in compliance with applicable statutes and regulations and would include educational joint powers authorities and charter schools as reported entities. The bill, commencing with the 2027–28 fiscal year Guide for Annual Audits of K–12 Local Education Agencies and State Compliance Reporting, would require the Controller to include, among other things, instructions requiring specified supplemental information and schedules in audit report components for local educational agency audits and an appendix with the Controller’s desk review checklist that is used to determine whether audit reports are in conformance with specified reporting requirements, as provided. Existing law requires audits to be made by a certified public accountant or a public accountant, licensed by the California Board of Accountancy, and selected by a 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. In order to be added to, or remain on, the Controller’s directory of certified public accountants and public accountants as described above, the bill would require, commencing with the 2027–28 fiscal year, and every 2 years thereafter, audit engagement partners and certified public accountants or public accountants responsible for local educational agency audits to, among other things, complete 16 hours of continuing education, demonstrate specified experience, and maintain compliance with the California Board of Accountancy requirements to keep applicable licenses in active status and good standing, as provided. The bill would also apply the continuing education requirement to audit staff who perform audit procedures of local educational agencies. To the extent the bill would impose additional duties on local educational agencies or local officials, the bill would impose a state-mandated local program. (2) Existing law establishes the State Department of Education, under the administration of the Superintendent of Public Instruction, and assigns to it numerous duties relating to the governance and financing of the public elementary and secondary schools of this state. This bill would establish the Office of the Education Inspector General in the department. General. The bill would provide for the appointment of the Education Inspector General by the Governor, Governor from a list of 3 qualified individuals nominated by the Joint Legislative Audit Committee, subject to confirmation by a vote of the majority of the membership of the Senate. The bill would require the Education Inspector General to to, among other things, (A) conduct and supervise forensic audits and investigations relating to of the programs and operations of the department, school districts, county offices of education, charter schools, educational joint powers authorities, state special schools, and entities managing charter schools, schools related to fraud, misappropriation of funds, and other illegal practices and (B) provide leadership and coordination and recommend policies to prevent and detect fraud and abuse in programs and operations of the department, local educational agencies, and entities managing charter schools, and (C) provide a means for keeping the State Board of Education and the Legislature fully and currently informed about problems and deficiencies relating to the administration of the programs and operations of the department, local educational agencies, and entities managing charter schools and the necessity for and progress of corrective actions that the Inspector General deems to be appropriate. annually report to the appropriate policy committees of the Legislature on investigations and audits of the programs and operations of the department, local educational agencies, and entities managing a charter school. (3) Existing law requires the Commission on Teacher Credentialing to establish standards for the issuance and renewal of credentials, certificates, and permits. Existing law requires the commission and the department to enter into a data sharing agreement for the department to provide the commission with educator assignment data necessary to annually identify educator misassignments and vacant positions at local educational agencies, as provided, as part of the State Assignment Accountability System. Existing law requires the commission to annually use data it receives from the department to produce an initial data file of vacant positions and educator assignments that do not have a clear match of credential to assignment and requires the commission to notify local educational agencies and monitoring authorities of the opportunity to access and review the initial data file of potential misassignments, as defined, and vacant positions. Existing law grants the commission the authority to make a final determination for all potential misassignments. Existing law requires, commencing with the 2020–21 school year, the commission to make annual educator assignment, misassignment, and vacant position data publicly available on its internet website. This bill would require teachers employed by a local educational agency and offering certain courses to hold the certificate, permit, or other document required by the commission for that assignment and be monitored. To the extent that this provision would create new duties for county superintendents of schools and local educational agencies, it would constitute a state-mandated local program. (4) Existing law establishes a public school financing system that requires state funding for school districts, county offices of education, and charter schools to be calculated pursuant to a local control funding formula, as specified. Existing law includes average daily attendance as a component of the calculation under the local control funding formula. Existing law establishes the California Longitudinal Pupil Achievement Data System, which is maintained by the State Department of Education and consists of pupil data from elementary and secondary schools, as specified, relating to demographics, program participation, enrollment, and statewide assessments, among other things. This bill would require the department to, by January 1, 2030, and in consultation with the County Office Fiscal Crisis Management Assistance Team, complete a report with specified data relating to the possible integration of the California Longitudinal Pupil Achievement Data System and the average daily attendance apportionment data system, and would require the department to provide the report to the appropriate policy and fiscal committees of the Legislature, as provided. (5) Existing law requires the Superintendent, 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 school district or fund was entitled by an amount equal to the local control funding formula allocation for one unit of average daily attendance, not later than the first succeeding fiscal year from the fiscal year in which the computational error was made, to withhold from, or add to, the apportionment made during that fiscal year, the amount of the excess of deficiency, as the case may be. This bill would require the Superintendent to apply the above-described provisions to county offices of education and charter schools. If, during any fiscal year, a school district, county office of education, or charter school determines that the amount apportioned to the school district, county office of education, charter school, or to any fund from Section A of the State School Fund differs either positively or negatively from the amount to which the school district, county office of education, charter school, or fund was entitled by an amount equal to the local control funding formula allocation for one or more units of average daily attendance, the bill would require the local educational agency to report the corrected amount to the Superintendent. To the extent the bill would impose additional duties on a local educational agency, the bill would impose a state-mandated local program. Existing law requires state funding to be calculated and withheld from a school district or county office of education for any fiscal year in which a person renders service as a teacher in kindergarten or any of grades 1 to 12, inclusive, who does not have a valid certification document, as provided. The bill would apply the above-described provisions relating to the penalties for a person rendering services as a teacher who does not have a valid certification document to charter schools, as provided. (6) The Charter Schools Act of 1992 authorizes the establishment, operation, and governance of charter schools. Existing law requires a petition to establish a charter school to include reasonably comprehensive descriptions of certain things, including the manner in which annual, independent financial audits shall be conducted, and the manner in which audit exceptions and deficiencies shall be resolved to the satisfaction of the chartering authority. Commencing July 1, 2028, the bill would require each chartering authority to annually (A) verify to, with respect to each charter school under its authority, (A) annually review specified data relating to the reporting of average daily attendance by nonclassroom-based charter schools, (B) notify the certified public accountant or accountant performing the audit of the charter school if the charter school does not provide the required documentation needed to verify the specified data, review the agenda and minutes of the meetings of the governing body of the charter school, (C) annually attend a at least one meeting of the governing body of the charter school and, if applicab [Text truncated for display. Full text available on Congress.gov.]