BILL ANALYSIS                                                                                                                                                                                                    






                         SENATE COMMITTEE ON EDUCATION
                              Gloria Romero, Chair
                           2009-2010 Regular Session
                                        

          BILL NO:       SB 675
          AUTHOR:        Steinberg
          AMENDED:       As proposed
          FISCAL COMM:   Yes            HEARING DATE:  April 1, 2009
          URGENCY:       No             CONSULTANT:Kathleen Chavira

           NOTE  :  This bill has been double referred to the Senate  
          Education Committee and the Senate Rules Committee.  A do  
          pass motion should include a referral to the Senate Rules  
          Committee.  
           
          SUBJECT  :  Clean Technology and Renewable Energy Job  
          Training, Career
                              Technical Education, and Dropout  
          Prevention Act
          
           SUMMARY  

          This bill would enact the Clean Technology and Renewable  
          Energy Job Training, Career Technical Education, and  
          Dropout Prevention Act of 2010 to provide funds to  
          qualifying entities for construction or reconfiguring  
          facilities to provide program participants with skills and  
          knowledge necessary for successful employment related to  
          clean technology, renewable energy, or energy efficiency.

           BACKGROUND  

          Proposition 1D, authorized by AB 127 (Nunez and Perata) and  
          approved by the voters in November 2006, provided $7.3  
          billion for K-12 school facilities, and established the  
          Career Technical Education Facilities Program, providing  
          $500 million to construct or modernize facilities for this  
          purpose. 

          Current law creates the Public Interest Research,  
          Development, and Demonstration Fund (PIER) for the purpose  
          of making awards for projects or programs that are not  
          provided for by competitive and regulated markets.  The  
          revenue for this fund comes from electrical utility  
          corporations and is available upon appropriation by the  




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          Legislature.   
           
          ANALYSIS
           
           This bill  establishes the Clean Technology and Renewable  
          Energy Job Training, Career Technical Education and Dropout  
          Prevention Act of 2010.  More specifically it:

          1)   Establishes the Clean Technology and Renewable Energy  
               Job Training, Career Technical Education and Dropout  
               Prevention fund in the State Treasury to provide  
               competitive grants for the purpose of constructing or  
               reconfiguring new facilities with a useful life  
               expectancy of at least           20 years or the  
               length of bond maturity to provide program  
               participants with skills and knowledge necessary for  
               successful employment related to clean technology,  
               renewable energy, or energy efficiency.

          2)   Defines various terms in the bill including:

                     a)             Council  :  The Clean Technology and  
                    Renewable Energy Job Training, Career Technical  
                    Education and Dropout Prevention Council  
                    comprised of the Secretaries of the Natural  
                    Resources Agency (chair), Labor and Workforce  
                    Development, Environmental Protection, the  
                    Superintendent of Public Instruction, the  
                    Chancellor of the California Community Colleges,  
                    two members appointed by the Senate Rules  
                    Committee and two members appointed by the  
                    Speaker of the Assembly, as specified.  

                     b)             Eligible entity  : Those eligible to  
                    apply for the competitive grants to include a  
                    public school serving any of grades 7-12, a  
                    California community college, a public entity  
                    providing career technical education including a  
                    county office of education or school agency joint  
                    powers authority, a publicly or investor owned  
                    facility, a non-profit organization, a labor  
                    organization, a business entity, a state-approved  
                    apprenticeship program, a regional collaborative,  
                    as specified, the California Conservation Corp or  
                    a certified local conservation corp, a public  
                    postsecondary educational institution or any  




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                    other entity approved by the Council.

                     c)             Program participants  : Those served  
                    by the eligible entities including middle or high  
                    school pupils, community college students, job  
                    trainees, incumbent workers, members of the  
                    California Conservation corps, as specified, or  
                    minors or adults under 22 years of age either on  
                    probation or participating in programs that  
                    include career technical education as an  
                    alternative to conviction, incarceration or  
                    adjudication, as specified.

          3)   Outlines various elements of the competitive grants  
               program proposed by the bill.  Specifically it:

                    a)             Requires the State Allocation  
                    Board (SAB) to administer grant applications and  
                    to implement the program pursuant to regulations  
                    and guidelines established by the Council.

                    b)             Requires grants be allocated on a  
                    per square foot basis and prohibits any  
                    requirement that students be unhoused or that  
                    facilities meet any age requirements to receive a  
                    grant under the program.

                    c)             Establishes a maximum of $3  
                    million per project per eligible entity for new  
                    construction grants for either stand-alone  
                    projects or as supplements to the per pupil  
                    allocation under the existing new construction  
                    program. Establishes a maximum of $1.5 million  
                    per project per eligible entity for modernization  
                    grants for the purpose of reconfiguration and  
                    provides that the grant be supplemental to the  
                    per pupil allocation provided under the existing  
                    modernization program. 

                    d)             Requires the eligible entity to  
                    contribute toward the project on a 50/50 match  
                    basis and authorizes the local contribution to  
                    come from private industry groups, the school  
                    district or a joint powers authority and  
                    authorizes the reduction, but not the elimination  
                    of the match at the discretion of the Council.




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                    e)             Authorizes the repayment of the  
                    local contribution over time but prohibits the  
                    State Allocation Board (SAB) from waiving the  
                    local contribution on any basis.

                    f)             Requires that applicants meet any  
                    criteria established by the Council and also  
                    enter into agreements, as specified, to engage in  
                    specified activities related to education, job  
                    training, or providing employment and career  
                    opportunities to program participants.

                    g)             Requires the Council to develop  
                    guidelines for awarding the competitive grants,  
                    specifies a number of elements to be included in  
                    the grant application and requires priority be  
                    given to projects serving students in grades  
                    7-12, dedicated to dropout prevention and career  
                    technical education, in communities with schools  
                    that rank in the bottom three deciles of the  
                    Academic Performance Index (API), as specified,  
                    in communities with higher than average rates of  
                    dropouts, low-income households, or other  
                    challenges, as specified, and projects initiated  
                    by the California Conservation Corps or a  
                    certified local conservation corps.

                    h)             Authorizes the Council to use  
                    state agency personnel in administering outreach,  
                    education, technical assistance, guideline  
                    development and grant application review.

                    i)             Requires that every proposed  
                    activity or project financed be in compliance  
                    with the California Environmental Quality Act,  
                    and that real property acquisitions are from  
                    willing sellers.

                    j)             Authorizes up to 5 percent of  
                    funds be allocated for administrative costs of  
                    the program.

                    aa)            Requires the body awarding a  
                    contract for a public works project financed from  
                    these funds to adopt and enforce a labor  




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                    compliance program, as specified.

                    bb)            Requires the chair of the Council  
                    to provide for an annual independent audit of  
                    expenditures from the fund.

          4)   Makes fiscal provision for the funding of the grant  
               program.  Specifically it:

                    a)             Authorizes the Council to incur  
                    indebtedness and issue and renew negotiable  
                    bonds, notes, debentures or other securities of  
                    any kind or class.

                    b)             Requires all indebted incurred to  
                    be paid solely from moneys from the Public  
                    Interest Research Development and Demonstration  
                    Fund (PIER) and from funds appropriated by the  
                    Legislature in the annual Budget Act for this  
                    purpose and requires that proceeds from the sale  
                    of these instrument be deposited into the Clean  
                    Technology and Renewable Energy Job Training,  
                    Career Technical Education and Dropout Prevention  
                    fund in the State Treasury. 

                    c)             Specifies that the funds  
                    appropriated by the Legislature in the annual  
                    Budget Act for this purpose shall not exceed an  
                    unspecified amount.

                    d)             Authorizes the Legislature by  
                    statute, to authorize the Council to issue bonds  
                    in excess of the unspecified amount provided for  
                    in the bill.

                    e)             Declares that bonds issued do not  
                    constitute a debt or liability of the state or  
                    any political subdivision of the state other than  
                    the Council and that the issuance of bonds under  
                    these provisions does not obligate the state or  
                    any political subdivision of the state to levy or  
                    pledge of any form of taxation or to make any  
                    appropriation for their payment. 

           STAFF COMMENTS  





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           1)   Further clarification  .  According to information  
               provided by the author, it is the intent to use funds  
               from the Energy Commission's Public Interest Energy  
               Research Fund (PIER) to securitize an unspecified  
               amount in bonds to finance the competitive grant  
               program proposed by this bill.  Essentially, it is the  
               intent of the author that bonds to support the program  
               created by the bill be backed by the revenues that  
               accrue to the PIER fund.  According to the California  
               Energy Commission, its proposed        FY 2009/10  
               budget includes $74.2 million in PIER funds to support  
               approximately 70 positions, operating and baseline  
               technical support contracts and $62.5 million for pass  
               through research, development and demonstration  
               projects.  

               Rather than a statewide general obligation bond, this  
               bill proposes the creation of a revenue backed bond  
               issuance, i.e. bonds backed by the revenue that  
               accrues to the PIER fund as well as appropriations  
               made by the Legislature.  
           
          2)   Who guarantees repayment of the bonds  ?  This bill  
               specifically declares that the State bears no  
               financial responsibility for the bonds and has no  
               obligation to levy any taxes or make any appropriation  
               for their payment.  The bill further declares that  
               debt or liability would only be incurred by the  
               Council.  Staff notes, however, that the Council is  
               comprised of the leaders of various state agencies and  
               representation from the Legislature, all  
               state-affiliated entities.  Is it reasonable to assume  
               that the state would face no pressure, both  
               politically and legally, to guarantee repayment of the  
               bonds issued by the Council?  What controls exist on  
               the Council to ensure that it does not exceed the  
               capacity of the fund and appropriations to support the  
               debt it issues?  
           
           3)   PIER Funds  .  PIER funds are currently used to fund  
               research projects to develop new energy technologies.   
               If enacted these funds would be redirected for the  
               purposes outlined in this bill.  Current law restricts  
               the expenditure of these funds for specified purposes  
               from 2007 until 2012. It is unclear whether the  
               purposes outlined in this bill are consistent with the  




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               existing purposes.  

          4)   Council vs. SAB  . This bill creates a Council made up  
               of various leaders of state agencies and assigns them  
               a variety of responsibilities relative to the grant  
               program it creates, but assigns no staff to the  
               Council for these purposes.  In addition, it assigns  
               responsibility for implementing the program developed  
               by the Council to the State Allocation Board, a policy  
               level body for programs administered by the Office of  
               Public School Construction.   Would it make more sense  
               to assign these responsibilities to the SAB and to  
               have the Council act in an advisory capacity relative  
               to the competitive grant program?  
           
          5)   Gift of public funds  ?  According to the author's  
               office, it is their intent that eligible entities must  
               enter into agreements with schools or colleges to  
               qualify for grants.  However, the bill defines  
               eligible entities to include a number of non-profit  
               and private entities and does not clearly require that  
               the grant recipient be a public school, college or  
               other public entity.  In order to ensure that there is  
               no gift of public funds the author may wish to  
               consider restricting eligibility for the grants to  
               public schools serving any of grades 7-12, California  
               community colleges, or other public entities providing  
               career technical education.

           6)   Prior legislation  .  This bill is very similar to SB  
               1672 (Steinberg) which was heard and passed by this  
               committee by a vote of 7-1 in April 2008.  Although SB  
               1672 authorized a statewide obligation bond when heard  
               by this committee, it was subsequently amended and was  
               essentially identical to the bill before this  
               committee today. That bill was ultimately held under  
               submission in the Assembly Appropriations Committee.



           

          SUPPORT  

          American Federation of State, County and Municipal  
          Employees




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          Board of Governors, California Community Colleges
          California Catholic Conference
          California School Boards Association
          Long Beach Community College District
          San Francisco Unified School District
          State Building and Construction Trades Council of  
          California

           OPPOSITION

           None received.