BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                  AB 2717|
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                                 THIRD READING


          Bill No:  AB 2717
          Author:   Walters (R)
          Amended:  5/26/06 in Assembly
          Vote:     21

           
           SENATE EDUCATION COMMITTEE  :  10-0, 6/28/06
          AYES:  Scott, Maldonado, Alquist, Denham, Lowenthal,  
            Romero, Simitian, Soto, Speier, Torlakson
          NO VOTE RECORDED:  Morrow
           
          SENATE APPROPRIATIONS COMMITTEE  :  7-3, 8/7/06
          AYES:  Aanestad, Alarcon, Alquist, Ashburn, Battin, Dutton,  
            Poochigian
          NOES:  Murray, Escutia, Florez
          NO VOTE RECORDED:  Ortiz, Romero, Torlakson
           
          ASSEMBLY FLOOR  :  76-0, 5/30/06 - See last page for vote


           SUBJECT  :    Charter school finance

           SOURCE  :     Author


           DIGEST  :    This bill allows the California School Finance  
          Authority to provide tax-exempt, low cost financing to  
          charter schools for use in the construction, repair, or  
          lease of school facilities.   

           ANALYSIS  :    Current law establishes the California School  
          Finance Authority (CSFA) to assist school districts and  
          community college districts by providing access to  
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          financing for working capital and capital improvements.   
          Charter schools cannot access facility financing through  
          the CSFA unless their chartering school district or county  
          office of education agrees to act in their behalf. 
           
           This bill: 

          1. Revises the definitions of various terms governing the  
             operation of the CSFA.

          2. Provides that bonds issued by the CSFA do not constitute  
             a debt or liability of any entity that is authorized to  
             grant a charter to a charter school, except a charter  
             school that is a dependent of a school district or  
             county office of education, or is itself a school  
             district.

          3. Authorizes the State Controller to make payments for  
             various debt and debt-related costs by deducting the  
             funds directly from the general-purpose entitlements of  
             charter schools.

          4. Provides that the charter school or its agent and its  
             creditors do not have a claim to funds apportioned by  
             the State Controller for payment of various debts and  
             expenses related to CSFA financing, thereby  
             subordinating any other debt of, or claims against, the  
             charter school.

          5. Provides that a charter school may by resolution  
             authorize its chartering district or educational  
             management organization to act as its agent in the  
             performance of any of the matters permitted by the  
             statutes governing services provided by the CSFA.

           Comments
           
          The CSFA was established in 1985 to oversee the statewide  
          system for the sale of revenue bonds to reconstruct,  
          remodel or replace existing school buildings, acquire new  
          school sites and buildings to be made available to public  
          school districts (K-12) and community colleges, and to  
          assist school districts by providing access to financing  
          for working capital and capital improvements.  The CSFA,  







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          which serves as conduit to access financing, also  
          administers the state's $400 million Charter School  
          Facilities Program.

          Dependent charter schools cannot access facility financing  
          through the CSFA unless their chartering school district or  
          county office of education agrees to act in their behalf.   
          Charter schools organized as a nonprofit 501 (c) (3)  
          corporation may legally borrow the proceeds of a tax-exempt  
          financing issued by a governmental entity such as the CSFA.  
           Under this bill, these independent charter schools,  
          charters which receive their funding directly from the  
          state, would be permitted to access the CSFA directly.   
          (Charter schools have attempted to obtain facility  
          financing secured by their state apportionment but  
          financial institutions are reluctant to offer financing to  
          an entity which must renew its charter, the source of its  
          state apportionment, every five years.)

          There is no direct fiscal impact on the state because the  
          CSFA, which has the authority to use intercept financing,  
          also has the authority to charge fees to recover its costs.  
           Additionally, any debt issued through the CSFA is the sole  
          obligation of the borrower.  Section 17185 of the Education  
          Code provides that revenue bonds issued under CSFA  
          authority are not and shall not be deemed to constitute a  
          debt or liability of the state, or any political  
          subdivision of the state thereof, and are not and shall not  
          be deemed to be a pledge of the faith and credit of the  
          state, or any political subdivision thereof, other than the  
          authority.

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

          No direct state costs, CSFA costs offset by fees.

           SUPPORT  :   (Verified  8/9/06)

          California Charter Schools Association
          Charter Voice


           ASSEMBLY FLOOR  : 







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          AYES:  Aghazarian, Arambula, Baca, Bass, Benoit, Berg,  
            Bermudez, Blakeslee, Bogh, Calderon, Canciamilla, Chan,  
            Chavez, Chu, Cogdill, Cohn, Coto, Daucher, De La Torre,  
            DeVore, Dymally, Emmerson, Evans, Frommer, Garcia,  
            Goldberg, Hancock, Harman, Haynes, Jerome Horton, Shirley  
            Horton, Houston, Huff, Jones, Karnette, Keene, Klehs,  
            Koretz, La Malfa, La Suer, Laird, Leno, Leslie, Levine,  
            Lieu, Liu, Matthews, Maze, McCarthy, Montanez, Mountjoy,  
            Mullin, Nakanishi, Nation, Nava, Negrete McLeod, Niello,  
            Parra, Plescia, Richman, Ridley-Thomas, Sharon Runner,  
            Ruskin, Salinas, Spitzer, Strickland, Torrico, Tran,  
            Umberg, Vargas, Villines, Walters, Wolk, Wyland, Yee,  
            Nunez
          NO VOTE RECORDED:  Lieber, Oropeza, Pavley, Saldana


          NC:mel  8/11/06   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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