BILL ANALYSIS                                                                                                                                                                                                    



                                                                       


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          |SENATE RULES COMMITTEE            |                    AB 16|
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                              CONFERENCE COMPLETED


          Bill No:  AB 16
          Author:   Hertzberg (D), et al
          Amended:  Conference Report No. 1, 3/20/02
          Vote:     27 - Urgency

           
           SENATE EDUCATION COMMITTEE  :  11-1, 8/22/01
          AYES:  Vasconcellos, McPherson, Alarcon, Alpert, Chesbro,  
            Karnette, O'Connell, Ortiz, Scott, Sher, Vincent
          NOES:  Knight

           SENATE FLOOR  :  26-7, 8/27/01
          AYES:  Alarcon, Alpert, Bowen, Burton, Chesbro, Costa,  
            Dunn, Escutia, Figueroa, Karnette, Kuehl, Machado,  
            McPherson, Murray, O'Connell, Ortiz, Peace, Perata,  
            Polanco, Romero, Scott, Sher, Soto, Speier, Torlakson,  
            Vasconcellos
          NOES:  Ackerman, Brulte, Haynes, Knight, Margett,  
            McClintock, Oller

           CONFERENCE COMMITTEE VOTE  :  4-0, 3/20/02
          AYES:  Senate Members:  Alpert and Chesbro
                  Assembly Members:  Strom-Martin and Goldberg

           ASSEMBLY FLOOR  :  71-8, 3/21/02 - See last page for vote


           SUBJECT  :    Kindergarten-University Public Education  
          Facilities Bond
                      Acts of 2002 and 2004

           SOURCE  :     Author


                                                           CONTINUED





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          DIGEST  :    This bill enacts the Kindergarten-University  
          Public Education Facilities Bond Acts of 2002 and 2004, and  
          specifies procedures for the expenditure of the funds.

           Conference Committee Amendments add all provisions relating  
          to the bond acts.  The bill previously contained intent  
          language.

           ANALYSIS  :    Under current law, the State School Facilities  
          Program (SFP), funding for construction of new schools and  
          modernization of old schools comes from both state and  
          local sources.  State funding comes from voter-approved  
          General Obligation bonds and is allocated to school  
          districts by the State Allocation Board (SAB) pursuant to  
          the Leroy F. Greene School Facilities Act of 1998 (SB 50,  
          Chapter 407, Statutes of 1998), which was designed to be  
          less complex then was the previous law.  Local funding  
          comes from a variety of sources including local General  
          Obligation bonds, Mello-Roos bonds and developer fees.

          In November 1998, the voters approved Proposition 1A that  
          authorized a total of $9.2 billion in state General  
          Obligation bonds for education facilities.  $2.5 billion of  
          the amount was for higher education facilities and the  
          remaining $6.7 billion was for K-12 facilities.  These  
          state bond funds will be fully allocated by mid-2002.

           Education Facility Bond Provisions  :

          1. Authorizes two statewide general obligation (GO) bond  
             elections, one in 2002 and one in 2004, in the total  
             amounts of $13.05 billion and $12.3 billion  
             respectively. 

          2. Specifies that the bonds would be known as the  
             Kindergarten-University Public Education Facilities Bond  
             Act of 2002 and the Kindergarten-University Public  
             Education Facilities Bond Act of 2004 respectively. 

          3. Specifies that the $13.05 billion 2002 bond would be  
             allocated as follows: 

             A.    $11.4 billion in GO bonds would be for K-12  
                education facilities as follows:  







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                (1) $4.8 billion for new construction and  
                   modernization projects that have been filed with  
                   the State by February 1, 2002 (also known as the  
                   "pipeline" projects). 

                (2) $3.45 billion for new school construction related  
                   to growth. Of this amount:  (a) $100 million is  
                   for charter schools, subject to subsequent  
                   legislation; and, (b) $25 million is for school  
                   fee relief, if the housing bond is not approved by  
                   the voters at the November 2002 election. 

                (3) $1.4 billion for modernization of older schools. 

                (4) $1.7 billion for Critically Overcrowded Schools  
                   (COS). 

                (5) $50 million for joint-use facilities. 

             A.    $1.65 billion in GO bonds would be for higher  
                education facilities as follows: 

                (1) $408.2 million for the University of California  
                   (UC), 

                (2) $495.9 million for the California State  
                   University (CSU), and 

                (3) $745.9 million for the California Community  
                   Colleges (CCC). 

          1. Appropriates $651 million in lease revenue bonds for  
             higher education projects. Of this amount approximately  
             $279 million is for UC projects, $191 million is for CSU  
             projects, and $170.5 is for CCC projects. (The combined  
             GO and lease revenue amounts total $2.3 billion for  
             higher education.) 

          2. Specifies that the $12.3 billion 2004 GO bond would be  
             allocated as follows: 

             A.    $10 billion would be for K-12 education facilities  
                as follows: 







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                (1) $5.26 billion for new school construction related  
                   to growth. Of this amount:  (a) $300 million is  
                   for charter schools, subject to subsequent  
                   legislation; and, (b) $25 million is for school  
                   fee relief, if the housing bond is  not approved  
                   by the voters at the November 2002 election. 

                (2) $2.25 billion for modernization of older schools.  


                (3) $2.44 billion for Critically Overcrowded Schools  
                   (COS). 

                (4) $50 million for joint-use facilities. 

               A.      $2.3 billion would be for higher education  
                  facilities as follows: 

               (1)      $690 million for UC; 

               (2)      $690 million for CSU; and, 

               (3)      $920 million for CCC. 

           Construction Program Reforms  : 

          1. The bill proposes other changes in school facility  
             construction as follows: 

             A.    Expands the membership of the State Allocation  
                Board from 7 to 10 members by adding one member of  
                the Senate to be appointed by the Senate Rules  
                Committee, one member of the Assembly to be appointed  
                by the Speaker, and one member appointed by the  
                Governor. Requires that the Senate and Assembly  
                members consist of two members from the majority  
                party and one member from the minority party. 

             B.    Requires the Seismic Safety Commission to  
                establish an advisory group to determine if  
                regulations can be developed that would bring  
                existing commercial buildings into compliance with  
                the seismic safety standards of the Field Act.  







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                Requires the Seismic Safety Commission to report to  
                the Legislature and the Governor by January 8, 2003.  
                If the Seismic Safety Commission reports that such  
                regulations can be developed, the State Architect  
                shall promulgate such emergency regulations by April  
                1, 2003. 

             C.    Eliminates the priority point system contained in  
                current law. 

             D.    Extends permanently the "small district  
                assistance"  program. Provides that small rural  
                districts will be able to use their approved  
                eligibility for three years. 

             E.    Requires that the state modernization grants be  
                matched by the school districts on a 60%  
                (state)-to-40% (local) basis for projects filed after  
                March 15, 2002. This is an increase from the current  
                80-20 match. However, the dollar amount of the state  
                per-pupil modernization grant will remain the same. 

             F.    Defers the implementation of "level 3" developer  
                fees until the state no longer has funding for new  
                construction apportionments after the 2004 primary  
                election. 

             G.    Tightens standards to qualify for financial  
                hardship funding by placing into statute the recently  
                adopted State Allocation Board (SAB) regulations  
                which require districts to hold an election for a  
                local bond measure and require a district to bond  
                itself to 60% of capacity. 

             H.    Eliminates the eligibility reduction imposed on  
                high school districts which assumes a percentage of  
                Multi Track Year Round Education (MTYRE) (the "6%  
                hit"). 

             I.    Provides that SAB will develop regulations to  
                supplement modernization grants for buildings that  
                are 50 years or older. 

             J.    Provides that public schools are authorized to  







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                receive an allowance not to exceed 5% of the total  
                construction or modernization cost under this section  
                to maximize the use of energy efficiency,  
                conservation, and renewable energy technologies in  
                all new school construction and school modernization  
                projects, towards the goal of ultimately achieving  
                zero-energy-use schools in California. 

                (1) Establishes a joint use program of $50 million in  
                   2002 and $50 million in 2004 to build facilities  
                   that are jointly used by the school and the  
                   community. 

                (2) Establishes a set aside of funds for COS to allow  
                   qualifying districts (districts with schoolsites  
                   that have high numbers of students per acre)  
                   additional time to file their application for a  
                   final apportionment. Specifics related to the COS  
                   program:  

                   (a)The 2002 bond includes $1.7 billion for COS;  
                      and the 2004 bond includes $2.44 billion for  
                      COS. 

                   (b)Projects may receive a preliminary  
                      apportionment for four years, with a single  
                      one-year extension permitted. 

                   (c)If funds remain unused after preliminary  
                      apportionments have been made, the unneeded  
                      funds will be transferred to the regular new  
                      construction program. 

                   (d)Districts qualify to participate in COS set  
                      aside if existing schools in the district  
                      exceed, by 210%, the recommended numbers of  
                      students per acre (site density standards). 

                   (e)A district receiving funds from COS is required  
                      to build in the general location of the  
                      qualifying densely overcrowded schools and must  
                      enroll at least 75% of its pupils from such  
                      overcrowded schools. 








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                (1) Requires that as a part of its application for  
                   large construction and modernization projects, a  
                   school district shall certify that it has  
                   considered the need for vocational and career  
                   technical facilities to adequately meet its  
                   program needs consistent with current law. 

                (2) Sets aside funds for facilities for charter  
                   schools, subject to subsequent legislation, in the  
                   amounts of $100 million in the 2002 bond and $300  
                   million in the 2004 bond. 

           Comments
           
          1.  Estimate of Need for Additional Bond Resources  .   
            According to the Office of Public School Construction,  
            over the next four years, there is a need for $21.1  
            billion in state bonds for school facilities to meet  
            increasing enrollment demand and modernization needs.   
            According to higher education officials, $9 billion is  
            needed over the next four years for the facility needs of  
            the University of California, California State University  
            and the California Community Colleges.  

           2.  Previous Voter-Approved State Education Bonds  .   
             California voters have voted on the following state  
             propositions to provide General-Obligation bonds for  
             K-12 school construction.  The only one that has failed,  
             as noted below, was Proposition 1B in June 1994, which  
             failed by .4 percent of the vote.

              November  1982                             Proposition  
              1                   $500 million
              November  1984                             Proposition  
              2                     450 million
              November  1986                             Proposition  
              53                    800 million
              June           1988                              
              Proposition 75                            800 million
              November  1988                             Proposition  
              79                    800 million
              June           1990                              
              Proposition 123                           800 million
              November  1990                             Proposition  







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          146                        800 million
              June           1992                              
          Proposition 152             1.9 billion
              November  1992                             Proposition  
          155                        900 million
              June           1994 (Failed)     Proposition 1B   1.0  
          billion
              March        1996                          Proposition  
          203                         3.0 billion
                                     ($2.025 billion K-12 + $975  
          million Higher Ed.)
              November  1998                             Proposition  
          1A                     9.2 billion
                                    ($6.7 billion K-12 + $2.5 million  
          Higher  Ed.)

           FISCAL EFFECT  :    Appropriation:  Yes   Fiscal Com.:  Yes    
          Local:  No

          General Fund debt service costs would vary depending on the  
          rate at which the bonds would be sold (many of these bonds  
          may not be sold for several years). According to the  
          Legislative Analyst for every $1 billion of GO bonds sold   
          with a 25 year term with level debt payments at an average  
          interest rate of 5%, the annual debt service would be $71  
          million. 


           ASSEMBLY FLOOR  :
          AYES:  Alquist, Aroner, Ashburn, Bates, Briggs, Calderon,  
            Bill Campbell, Canciamilla, Cardenas, Cardoza, Cedillo,  
            Chan, Chavez, Chu, Cogdill, Cohn, Corbett, Correa, Cox,  
            Daucher, Diaz, Dickerson, Dutra, Firebaugh, Florez,  
            Frommer, Goldberg, Harman, Havice, Hertzberg, Horton,  
            Jackson, Keeley, Kehoe, Kelley, Koretz, La Suer, Leach,  
            Leonard, Leslie, Liu, Longville, Lowenthal, Maddox,  
            Maldonado, Matthews, Migden, Nakano, Nation, Negrete  
            McLeod, Oropeza, Robert Pacheco, Papan, Pavley, Reyes,  
            Richman, Runner, Salinas, Shelley, Simitian, Steinberg,  
            Strickland, Strom-Martin, Thomson, Vargas, Washington,  
            Wayne, Wiggins, Wright, Wyland, Wesson
          NOES:  Aanestad, Bogh, John Campbell, Hollingsworth,  
            Mountjoy, Rod Pacheco, Wyman, Zettel








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          NC:jk  4/3/02   Senate Floor Analyses 

                       SUPPORT/OPPOSITION:  NONE RECEIVED

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