BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
675 (Steinberg)
Hearing Date: 05/28/2009 Amended: 04/02/2009
Consultant: Dan Troy Policy Vote: ED 7-0, BP&ED 8-1
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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.
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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
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STAFF COMMENTS: 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
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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.