BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
2560 (Brownley)
Hearing Date: 08/02/2010 Amended: 06/15/2010
Consultant: Dan Troy Policy Vote: ED 5-2
_________________________________________________________________
____
BILL SUMMARY: AB 2560, an urgency measure, would authorize the
California Department of Education (CDE) and the California
School Finance Authority (CSFA), as specified, to distribute the
state's 2010 volume cap for the Qualified School Construction
Bonds (QSCB) tax credit program authorized through the federal
American Recovery and Reinvestment Act of 2009.
_________________________________________________________________
____
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
QCSB allocation Allows for
allocation of $720 million in Federal
federal tax credits
_________________________________________________________________
____
STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
As part of the American Recovery and Reinvestment Act of 2009
(ARRA), the federal government allocated $22 billion in tax
credits under the Qualified School Construction Bonds (QSCB)
program. The QSCB program provides savings for school districts
issuing local bonds for the construction and renovation of
school facilities by lowering or eliminating interest payments.
The federal government provides federal tax credits for
bondholders in lieu of interest normally paid by issuers.
According to CDE, interest payments typically equal about 50
percent of the cost of a bond.
QSCB allocations to the state are determined based upon the
state's Federal Title 1 allocation, 40 percent of which are
allocated directly by the federal government to large school
districts and the remaining to be allocated to school districts
by the state. California already received a total of $1.3
billion for 2009 and will receive a total $1.267 billion for
2010. Of the 2010 amount, $547 million was directly allocated
to 11 large school districts and is not impacted by this bill.
The remaining $720 million has been reserved for school
districts, county office of educations (COEs), and charter
schools for allocation by the state. This bill would assign and
distribute this $720 million and specify eligibility criteria.
Specifically, this bill would:
Assign $651,652,000 of the state's 2010 federal tax
credit bond volume cap for the QSCB program to CDE for
further assignment and distribution to school districts and
county offices of education.
Assign $68,406,000 million of the state's 2010 federal
tax credit bond volume cap for the QSCB program to CSFA to
be issued for the benefit of charter schools.
Page 2
AB 2560 (Brownley)
Require local education agencies (LEAs) to receive
project approval from the Division of the State Architect
before applying for the QSCB program.
Require that projects be funded by local voter approved
bonds, as specified.
Require the local governing board to commit to meeting
CHPS and LEED standards.
Prohibit LEAs that received QSCB allocations in 2009 or
through direct federal allocations from applying.
Requires applications meeting these conditions be
accepted on a first come first served basis, as specified.
Caps requests at $25 million.
As relates to charter school applications to the CSFA, this bill
would require charters to comply with requirements of the
Charter School Facilities Program if it uses any QSCB
allocations in conjunction with a bond that will serve as a
match for that program. It would also apply the parameters
specified in the CSFA's "Borrowing Authority Parameters and
Applications" to applications for purposes of the QSCB
application.
As the dollars in question are federal tax credits, this bill
should have no impact on the state's general fund.
Chapter 11 of the Statutes of 2010 (SB 205, Hancock) provided
authority for the CDE and the CSFA to administer the QSCB
program and assigned the and distributed the state's volume cap
for the 2009 fiscal year, as specified.