BILL ANALYSIS
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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
CONTINUED
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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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