BILL ANALYSIS AB 346 Page 1 Date of Hearing: April 1, 2009 ASSEMBLY COMMITTEE ON EDUCATION Julia Brownley, Chair AB 346 (Torlakson) - As Amended: March 24, 2009 SUBJECT : School facilities: Joint-use projects SUMMARY : Expands the type of projects, partners, and local contribution that are allowed by the Joint-Use Facilities Program. Specifically, this bill : 1)Authorizes the joint-use funds to construct facilities adjacent to a kindergarten and grades 1-12 (K-12) schoolsite that is owned by a state or local governmental entity. 2)Requires the joint-use agreement to construct facilities on land owned by a state or local governmental agency to provide that the land be leased to the school district for a time period that reflects the useful life of the facility constructed. 3)Expands the types of joint-use projects authorized for funding to include a child health and wellness clinic, career technical building or shop, science and technology laboratory, science center with exhibits or educational program that meet current state content standards, historical or cultural education center with exhibits or educational programs that meet current state content standards, performing arts center, physical education and outdoor recreation site development, and parking facility. 4)Authorizes a school district to enter into a joint-use agreement with one or a combination of existing authorized entities. Adds as an authorized local joint-use partner, an entity renting or leasing school facilities through the local joint use program, which includes other school districts; educational agencies, except private educational institutions which maintain kindergarten or grades 1 to 12, inclusive; governmental units; nonprofit organizations; community agencies; professional agencies; commercial and noncommercial firms; corporations; partnerships; businesses; and individuals. Specifies that prior to entering into a joint-use agreement, the local governing board shall determine all of the following: AB 346 Page 2 a) The shared use of the facility will not interfere with the educational program or activities of a school or class conducted on the real property or in a building; b) The shared use of the facility will not jeopardize the safety of the pupils of the school; and c) The shared use of the facility and the joint-use agreement benefit the school district and the public at large through beneficial and efficient land use, through a savings, or with the generation of revenue for the school district. 5)Authorizes the inclusion of the value of land or real property as part of the local contribution for a joint-use project if the land or real property is district property not paid or acquired with state funds, or if the district does not own the land or real property but will be given the land free of charge. 6)Clarifies that a school district can provide the full 50 percent local match from a local bond that specifies that the proceeds of the sale are to be used for joint use projects in general, rather than for specified projects. 7)Authorizes a portion of the joint-use partner's contribution, up to 10 percent of eligible project costs, to include equipment with an average useful life expectancy of at least 10 years if the contribution is part of a career technical education joint-use project. 8)Specifies that a facility created by the joint-use agreement shall be a public facility with access to the facility guaranteed for public use and requires the joint-use agreement to ensure that the school district maintains priority for use of the facilities. 9)Specifies that a Joint-Use Facilities Project grant shall not exceed $1.25 million per project per elementary schoolsite, $1.875 million per project per middle schoolsite, or $2.5 million per project per high schoolsite. Requires the grant amounts to be adjusted annually for construction cost changes. EXISTING LAW : AB 346 Page 3 1)Establishes the Joint-Use Facilities program within the School Facility Program (SFP) for both school and community purposes to improve academic achievement. 2)Specifies that a joint-use project is a part of an application for new construction funding and will increase the size or extra cost of the project. 3)Specifies that the joint-use project proposes to either reconfigure existing school buildings or construct new school buildings or both, and the project will be located at a school that does not have the type of facility for which funds are requested or the existing facility is inadequate. 4)Specifies that an eligible joint-use project includes a multipurpose room, gymnasium, child care facility, library, or teacher education facility. 5)Specifies the eligibility requirements for funding, including: a) The school district has entered into a joint-use agreement with a governmental agency, public community college, public college or university, or a nonprofit organization approved by the State Allocation Board (SAB). b) The joint-use agreement specifies the method of sharing capital and operating costs, relative responsibilities for the operation and staffing of the facility, and the manner in which the safety of the pupils will be ensured. c) The joint-use agreement specifies the amount of the contribution to be made by the school district and the joint-use partner toward the 50% local share. Requires the joint-use partner to contribute no less than 25% of eligible project costs, unless the school district has passed a local bond which specifies that such funds are to be use for the joint-use project, in which case the district may opt to provide up to the full 50% local share. 6)Requires the SAB to establish standards for determining the amount of supplemental grant funding to be made available for each project. 7)Requires the SAB to annually adjust grant levels according to AB 346 Page 4 the statewide cost index for class B construction to reflect construction cost changes. 8)Provides that the provisions of this bill shall become operative only if the voters approve a statewide general obligation bond act for the purpose of providing aid to school districts to construct and modernize educational facilities at a statewide election on or after January 1, 2010. FISCAL EFFECT : Unknown COMMENTS : Background . AB 16 (Hertzberg), Chapter 33, Statutes of 2002, established the joint-use program and allocated $50 million each from Proposition 47, passed by voters in 2002, and Proposition 55, passed by voters in 2004. AB 16, developed by a Senate and Assembly conference committee, limited the use of joint-use funds to a multipurpose room, gymnasium, child care facility, library, or teacher education facility. The bill also required the projects to be part of the schoolsite, and limited joint-use partners to governmental agencies, public community colleges, public colleges or universities, or nonprofit organizations approved by the SAB. All the funds from Proposition 47 and Proposition 55 have been apportioned. Proposition 1D, the Kindergarten-University Public Education Facilities Bond Act of 2006, passed by voters in November, 2006, provided $29 million for this purpose and authorized the transfer of $21 million from unused Leased Purchase Program funds for joint-use projects. AB 127 also authorized the transfer of any remaining funds derived from the sale of bonds issued or before January 1, 2006 to be transferred to any SFP program. The SAB has increased the program by a total of $23 million through this authorization. As of March 25, 2009, a total of $8.5 million remain. This bill expands joint-use projects to sites adjacent to a schoolsite if the land is owned by a state or local governmental agency and expands the type of projects allowable to include career technical building or shop, science and technology laboratory, science center with exhibits or educational program that meet current state content standards, historical or cultural center with exhibits or educational program that meet current state content standards, performing arts center, physical education and outdoor recreation site development, and parking facility. AB 346 Page 5 This bill also provides more flexibility in negotiations with a joint-use partner by expanding the type of contribution a joint-use partner can provide to include, up to 10 percent of eligible project costs, equipment with an average useful life expectancy of at least 10 years if the project is a career technical education facility. AB 346 is substantially similar to SB 35 (Torlakson), which was vetoed by the Governor in 2007 with the following message: "I am supportive of the joint-use facilities projects when they actually encourage creative mutually beneficial relationships between school districts and community partners. However, I am concerned that this bill would expand the Joint-Use Facilities Program (Program) without ensuring that any additional funding will be available for its purposes. Furthermore, the Program's intent to fund joint-use ventures with equal local and State contributions could be undermined if joint-use partners were able to contribute something other than fiscal resources, such as equipment with a 10-year useful life, where as the State share of the project is being funded with 30-year General Obligation Bonds. Finally, any changes to the Program should be debated within the context of a future bond measure, to assure that these projects are not funded at the expense of other educational facility priorities." AB 346 varies from last year's SB 35 in the following ways: 1)AB 346 authorizes construction of joint-use facilities on property owned by a state governmental entity adjacent to a K-12 schoolsite. SB 36 limited the authority to local governmental entities. 2)AB 346 expands joint-use partners to include professional agencies, commercial and noncommercial firms, corporations, partnerships, businesses, and individuals. 3)AB 346 does not authorize a joint-use partner to contribute less than 25 percent while SB 35 did. 4)AB 346 limits the 10 percent of contribution of equipment only AB 346 Page 6 to career technical education projects while SB 35 provided the authorization for all projects. Intent of program . Over the last year, the SAB has questioned the legitimacy of some of the joint-use partners used in the applications for funding. For example, while district education foundations do meet the eligibility criteria as a nonprofit, SAB members questioned whether they meet the intent of the program. The intent of the Joint-Use Facilities Program is to expand partnerships with and facilities use to public higher education, local governments, and community organizations to benefit the local community. SAB members were concerned that educational foundations are simply extensions of a school or school district and therefore do not meet the intent of expanding partnerships with community organizations or local governmental entities. At the February, 2008 Board meeting, the SAB adopted regulations to specify that a nonprofit organization joint partner must operate programs and services for the community and pay for additional ongoing operational costs or program services associated with the joint-use purposes and/or a minimum of 25 percent of the project costs. This bill expands partnerships to entities renting or leasing school facilities through the local joint-use program. While many of these entities are already authorized partners (educational institutions, governmental agencies), this provision expands the types of partners to include private, for profit entities, except for private K-12 schools, professional agencies, and individuals. It can be argued that private, for profit entities and individuals also do not meet the spirit and intent of the program. Moreover, depending on how the private, for profit entity and individual use the facility, who uses it, and for what purpose the facility is used for, districts may be violating California's Constitution prohibiting any public agency from making "any gift of any public money or thing of value to any individual, municipal or other corporation whatever." Staff recommends striking lines 33 through 39 on page 4 and lines 1 through 6 on page 5. The sponsor, Coalition for Adequate School Housing (CASH), argues that private, for profit entities can participate in the non-funding local joint use program - which enables private and public parties to rent or lease public school facilities - and therefore should be authorized to participate in the funding program. AB 346 Page 7 Local bond . Current law requires the joint-use partner to provide 25 percent of the 50 percent local match, but allows the districts to pay the full 50 percent through local bond funds if the bond specifies that proceeds shall be used for the joint-use project. This bill changes the requirement that the local bond specify the project and instead authorizes the bond language to say that proceeds from the sale of bond funds shall be used for joint-use projects generally. Funding caps . Funding caps for projects serving elementary ($1 million), middle ($1.5 million), and high ($2 million) pupils are established by the SAB through regulations. According to the author, "since these regulatory caps were established, they have not been adjusted for increased construction costs. OPSC [Office of Public School Construction] found that the base per-pupil grants, as well as the square-footage allowances for Joint-Use Projects, have been increased by approximately 33 percent (2003-2008) in accordance with the Class B Construction Cost Index [CCI]. AB 346 provides a 25% increase to the current funding caps with the requirement to adjust them annually per the CCI." This bill proposes to increase the grants to $1.25 million for elementary school projects, $1.875 million for middle school projects and $2.5 million for high school projects. Current law requires the SAB to adjust per pupil grants annually using a Class B Construction Cost Index. This bill provides the same annual adjustment to this program. Arguments in Support . The author states, "The traditional education model in California is evolving where the core instructional spaces and traditional facilities may no longer be adequate or appropriate to meet the educational needs of a given community. Allowing for joint enterprises to build the aforementioned facilities, in partnership with the State, seeks to maximize the use of limited local and state resources." Prior Legislation. In addition to SB 35, SB 1677 (Torlakson) was a similar bill that was vetoed by the Governor in 2006. Earlier versions of AB 2446 (Montanez), introduced in 2004, added cultural arts center, recreational center, technology center, health clinic, park, preschool facilities, or athletic field as eligible joint-use facilities. The version vetoed by the Governor removed teacher education facilities as an eligible joint-use facility project and allowed park and preschool AB 346 Page 8 facilities as eligible joint-use facilities. The Governor vetoed the bill stating that there are higher priority needs for school bond funds, including relieving overcrowding. REGISTERED SUPPORT / OPPOSITION : Support American Heart Association Antioch Unified School District Coalition for Adequate School Housing (sponsor) California Immigrant Policy Center California Pan-Ethnic Health Network California Park & Recreation Society California School Boards Association California School Health Centers Association Long Beach Unified School District Los Angeles Unified School District San Francisco Unified School District Opposition None on file Analysis Prepared by : Sophia Kwong Kim / ED. / (916) 319-2087