BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           675 (Steinberg)
          
          Hearing Date:  05/11/2009           Amended: 04/02/2009
          Consultant:  Dan Troy           Policy Vote: ED 7-0, BP&ED 8-1
          _________________________________________________________________ 
          ____
          BILL SUMMARY:   SB 675 would enact the Clean Technology and  
          Renewable Energy Job Training, Career Technical Education, and  
          Dropout Prevention Act of 2010, for the purpose of providing  
          funds to qualifying entities for construction or reconfiguring  
          facilities that prepare program participants (pupils) for  
          employment related to clean technology, renewable energy or  
          energy efficiency.  Funds would be provided in the form of  
          grants for $3 million for qualifying new education-related  
          construction projects and $1.5 million for qualifying  
          education-related modernization projects.  

          This bill would create a council for the purpose of developing  
          guidelines to implement this act and would be empowered to issue  
          and renew negotiable bonds, notes, debentures, or other sources  
          of security that would be secured by moneys appropriated by the  
          Legislature from the Public Interest Research, Development, and  
          Demonstration Fund.  
          _________________________________________________________________ 
          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2009-10     2010-11       2011-12     Fund
                                                                  
          Bond issuance            Amount unspecified,              Bond
                                   Potential costs in the 100s of millions
                                   over 20 years

          OPSC workload                         $900    $900        Bond
          _________________________________________________________________ 
          ____

          STAFF COMMENTS: This bill meets the criteria for referral to the  
          Suspense File.
          
          Current law establishes the Public Interest Research,  
          Development, and Demonstration Fund (PIER), administered by the  
          California Energy Commission (CEC) 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 Legislature. This fund is authorized for  
          this purpose until 2012.    

          Proposition 1D, authorized by AB 127 (Nunez and Perata. Chapter  
          35, Statutes of 2008) and approved by the voters in November  
          2006 authorized the issuance of $7.3 billion on general  
          obligation bonds for K-12 school facilities, and established the  
          Career Technical Education Facilities Program, which allocated  
          $500 million for the construction and modernization of career  
          technical education facilities.

          This bill enacts the Clean Technology and Renewable Energy Job  
          Training, Career Technical Education and Dropout Prevention Act  
          of 2010, and would also establish the 
          Page 2
          SB 675 (Steinberg)

          Clean Technology and Renewable Energy Job Training, Career  
          Technical Education and Dropout Prevention Fund in the State  
          Treasury to provide competitive grants for the construction or  
          reconfiguring of new education-related 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.  

          The bill would further establish the Clean Technology and  
          Renewable Energy Job Training, Career Technical Education and  
          Dropout Prevention Council comprised of the Secretaries' of the  
          Natural Resources Agency, 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  
          (one who is a renewable energy projects employer and another who  
          is a member of a nonprofit environmental advocacy organization)  
          and two members appointed by the Assembly Speaker (one who  
          represents disadvantage communities and another from a labor  
          organization that provides state approved renewable energy  
          development pre-apprenticeship or apprenticeship programs).

          According to information provided by the author's office, this  
          bill is intended to address two key state priorities: 1)  
          reducing the high school dropout rate by encouraging the  










          construction or reconfiguration of facilities that will provide  
          engaging career technical education (CTE) to students and, 2)  
          developing a skilled workforce that is prepared to take  
          advantage of opportunities created by emerging green  
          technologies.  

          This bill would provide grants to eligible entities which are  
          defined in the bill as public schools serving any of grades  
          7-12, California community colleges, public entities providing  
          CTE including county offices of education or school agency joint  
          powers authorities, publicly or investor owned facilities,  
          non-profit organizations, labor organizations, business  
          entities, state-approved  apprenticeship programs, regional  
          collaboratives, the California Conservation Corps or a certified  
          local conservation corps, public postsecondary educational  
          institutions or any other entity approved by the Council.

          The bill outlines various elements of the competitive grants  
          program proposed by the bill.  Specifically, it does the  
          following:

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

             2.   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.

             3.   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. 
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          SB 675 (Steinberg)

             4.   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. 

             5.   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.

             6.   Authorizes the repayment of the local contribution over  
               time but prohibits the SAB from waiving the local  
               contribution on any basis.

             7.   Requires 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.

             8.   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), 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.

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

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

             11.  Authorizes up to five percent of funds be allocated for  
               administrative costs of the program.

             12.  Requires the body awarding a contract for a public works  
               project financed from these funds to adopt and enforce a  
               labor compliance program, as specified.

             13.  Requires the Chair of the Council to provide for an  
               annual independent audit of expenditures from the fund.

          The bill provides that the Council would be authorized to incur  










          indebtedness and issue and renew negotiable bonds, notes,  
          debentures or other securities of any kind or class.  The  
          indebtedness incurred would be paid solely from the Public  
          Interest Research 
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          SB 675 (Steinberg)

          Development and Demonstration Fund (PIER) and from funds  
          appropriated by the Legislature in the annual Budget Act for  
          this purpose.   Proceeds from the sale of these instruments  
          would be deposited into the fund established through this act.   
          Rather than a statewide general obligation bond, then, 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.  

          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.  PIER funds are  
          currently used to fund research projects to develop new energy  
          technologies.  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.  To  
          make the funding mechanism of this bill viable, it will likely  
          be necessary to extend the statutory life of the PIER fund. 

          As the bill does not currently specify an amount of debt that  
          would be issued by the Council, the exact cost of this bill is  
          unknown.  Assuming, for one example, that the intent was to use  
          approximately half of the available amount of the PIER fund to  
          pay off the debt issued by the Council at an interest rate of  
          5%, the Council could issue $450 million in bonds.  The total  
          repayment over 20 years would be $722 million.  Of course, the  
          actual amount will be dependent on future legislative action  
          concerning the fund and the authority ultimately granted to the  
          Council.  

          In addition to the costs of debt repayment, the Office of Public  
          School Construction indicates costs of $900,000 for  
          administering grant applications and operating the program.   

          Similar legislation, SB 1672 (Steinberg, 2008), would have  
          authorized, upon voter approval at 2010 statewide election,  
          $2.25 billion worth of state general obligation bonds to fund  










          capital outlay projects at institutions offering career  
          development related to clean technology, renewable energy or  
          energy efficiency and to fund a revolving loan for capital  
          outlay projects undertaken by public and private entities  
          involved in such career development.  The measure was held under  
          submission by the Assembly Appropriations Committee last year.