BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 675
                                                                  Page  1

          Date of Hearing:   August 4, 2010

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                   SB 675 (Steinberg) - As Amended:  April 2, 2010 

          Policy Committee:                             Education Vote:7-1
                       Natural Resources                               6-3

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              No

           SUMMARY  

          This bill establishes the Clean Technology and Renewable Energy  
          Job Training, Career Technical Education (CTE), and Dropout  
          Prevention Fund Act (the Act), which awards grants for  
          construction and enhancement projects associated with educating  
          and training individuals for jobs in clean technology  
          industries.  This measure further establishes the funding source  
          for this Act as the proceeds from the sale of bonds (in an  
          unspecified amount). Specifically, this bill:  

          1)Defines "eligible entity" as a public school serving grades  
            7-12 inclusive; a California Community College (CCC); a public  
            entity that provides CTE (i.e., county office of education or  
            school joint powers authority); a publicly owned or  
            investor-owned utility; a nonprofit organization; a labor  
            organization; a business entity; a state-approved  
            apprenticeship program; a regional collaborative consisting of  
            local education agencies (LEAs), higher education  
            institutions; business and labor organizations; the California  
            Conservation Corp; a public postsecondary institution; or any  
            other entity approved by the Council.  


          2)Creates the Renewable Energy, Climate Change, CTE, and Clean  
            Technology Job Creation Council (the Council), comprised of  
            the Resources Secretary, the Labor and Workforce Development  
            Secretary, the CalEPA Secretary, the Superintendent of Public  
            Instruction, the CCC Chancellor, two members appointed by the  
            Senate Committee on Rules; and two members appointed by the  
            Speaker of the Assembly to develop criteria to evaluate the  
            fund.








                                                                  SB 675
                                                                  Page  2




          3)Authorizes the Council to incur indebtedness and issue and  
            renew negotiable bonds, notes, debentures, or other  
            securities.  This measure requires all indebtedness to be paid  
            solely from moneys from the Public Interest Research,  
            Development and Demonstration (PIER) fund.  


           FISCAL EFFECT  

          1)This measure does not authorize a specific amount of bond  
            debt.  Instead, the Council is authorized to issue bonds,  
            notes, debentures, or other securities (bonds) "form time to  
            time." Assuming the Council issues a lease revenue bond of  
            $500 million to be repaid over 25 years at an interest rate of  
            five percent, there would be a special fund reallocation, of  
            $36 million, from the PIER fund to secure debt issued for the  
            purposes of implementing this Act.  Total principal and  
            interest repaid on a bond of this size would be $900 million.   
            The governor's proposed 2010-11 budget provides $75.4 milion  
            for the PIER fund.  

          2)GF administrative costs, of approximately $800,000, to the  
            Office of Public School Construction (OPSC).  This costs  
            assumes nine positions to administer a $500 million grant  
            program.  This bill does not specifify a grant amount.  OPSC,  
            however, reports that for every $200 million in grant funding  
            provided, it would need one position at a cost of $80,000 GF.   
            This measure specifies not more than five percent of funds  
            allocated for this Act may be used for administrative puprose.  
             It is not known how much the Council would need to develop  
            grant criteria, as specified.  

           SUMMARY CONTINUED  : 

          4)Allocates competitive grants to qualifying entities for the  
            purpose of constructing new facilities or reconfiguring  
            existing facilities, including purchasing equipment, in order  
            to provide individuals with skills to obtain careers directly  
            related to clean technology, renewable energy, or energy  
            efficiency, as specified.

          5)Requires new construction grants not to exceed $3 million per  








                                                                  SB 675
                                                                  Page  3

            project and modernization grants not to exceed $1.5 million  
            per project.  This bill also requires the grants to be  
            supplemental to grant amounts allocated pursuant to the State  
            School Facilities Program (SSFP) and requires entities to  
            provide an unspecified local match, as specified.

          6)Requires the SAB to administer the grant program pursuant to  
            this Act.  

          7)Applicants are required to do one of the following: (a) enter  
            into agreements with entities to support integrated academic  
            and technical learning to prepare pupils for college and  
            career; (b) enter into agreements with entities to provide  
            high school dropouts or high school graduates with job skills  
            necessary for employment; or (c) enter into agreements with  
            entities to provide individuals under 22 who are on probation  
            or parole with job training, as specified.  

           COMMENTS  

           1)Purpose  .  According to the author, "California suffers from  
            too many high school dropouts, too little meaningful CTE at  
            the middle and high school levels, and the lack of a skilled  
            workforce to fuel the emerging green economy. California must  
            lead the world in addressing both the problems of its youth  
            and the opportunities created by the new green economy.  [This  
            bill] offers solutions at the intersection of these two state  
            priorities. Investment in these emerging careers and  
            industries will drive the next phase of California's economic  
            growth in a way that helps us meet the challenge of climate  
            change. This investment in reducing the dropout rate,  
            expanding workforce opportunities, and targeting climate  
            change will create major economic stimulus for clean energy  
            and technology jobs in California that will jumpstart our  
            economy and improve our quality of life."

           2)Is the PIER fund the appropriate source to secure the sale of  
            bonds for the purposes of this Act ?  Current law establishes  
            the PIER fund, administered by the California Energy  
            Commission, for the purpose of making awards for public  
            interest energy, research, development, and demonstration  
            projects that are not adequately provided by competitive and  
            regulated markets.  The goal of the PIER program is to bring  
            to market energy technologies that provide increased  
            environmental benefits, greater system reliability, lower  








                                                                  SB 675
                                                                  Page  4

            system costs, and provide tangible benefits to electric  
            utility customers.  Statute also restricts the expenditures of  
            proceeds in the fund for these purposes until 2012.   The  
            revenue source for this fund is a surcharge on electrical and  
            natural gas utilities.  

            This bill proposes to repurpose these funds to secure bonds  
            sold by the Council to provide capital outlay grants for  
            construction and modernization projects associated with  
            educating and training individuals for jobs in clean  
            technology industries.  The committee may wish to consider  
            whether PIER funds, paid by ratepayers, should be redirected  
            to establish a grant program for the purpose of constructing  
            facilities that provide CTE programs to pupils, as specified.   



           3)Existing law  establishes the SSFP, administered by the SAB, to  
            provide funding primarily to LEAs to construct or modernize  
            education facilities.  The SSFP receives funding from a  
            variety of sources, including the state GF and proceeds from  
            the sale of general obligation (G.O.) bonds.  Programs under  
            the SSFP include new construction, modernization, and CTE  
            facilities.    



            AB 127 (Nunez), Chapter 35, Statutes of 2006, authorized  
            Proposition 1D: the Kindergarten-University Public Education  
            Facilities Bond Act of 2006 for $10.416 billion. The voters  
            passed Proposition 1D on November 7, 2006. Of the $10.416  
            billion, $7.329 billion was allocated for K-12 education  
            facilities, including $500 million for CTE facilities.  


            Chapter 35 also established the CTE school facilities (CTESF)  
            program for the purpose of allocating $500 million in bond  
            funds to construct or modernize CTE facilities, including, but  
            not limited to, purchasing equipment with an average life  
            expectancy of at least 10 years.  Program grants are capped at  
            $3 million for new construction and $1.5 million for  
            modernization projects.    

            As of June 2010, approximately $91 million CTESF program funds  
            remain.  Therefore, $409 million in CTE bond funds have been  








                                                                  SB 675
                                                                  Page  5

            appropriated in the first and second funding cycles.  LEAs  
            submitted approximately $231 million in project requests for  
            the third funding cycle.  The SAB is anticipated to allocate  
            the remaining $91 million by the end of the year.  


            This bill establishes grant programs to fund capital outlay  
            projects related to green technology and career development  
            provided by schools, community colleges, and other entities  
            involved in public-private partnerships.  The CTESF program  
            requires applicants to have a CTE plan; describe methods of  
            accountability for pupil outcomes; and evidence of  
            coordination with feeder schools, as specified.  The current  
            program also authorizes LEAs to construct or modernize a  
            school facility with the purpose of establishing any CTE  
            program.  


            Unlike the CTESF program, this bill authorizes entities other  
            than LEAs to apply for capital outlay funds for the purpose of  
            establishing CTE programs.  Applicants are required to  
            demonstrate their ability to meet more rigorous programmatic  
            requirements than required under the CTESF program, as  
            specified.  Likewise, this measure limits the allocation of  
            capital outlay funding to programs providing instruction in  
            clean technology industries.



           4)Previous legislation  .  SB 1672 (Steinberg), held on this  
            committee's suspense file in August 2008, is similar to this  
            measure in terms of its programmatic requirements and purpose  
            to award grants to for construction and enhancement projects  
            associated with educating and training individuals for jobs in  
            clean technology industries.  



            The main difference between the two measures is the fund  
            source.  SB 1672 authorized the sale of a general obligation  
            bond to fund the Act.  SB 675, however, specifies the source  
            of funding as an unspecified amount of bond debt issued by the  
            Council and secured by PIER funds, as specified.  










                                                                  SB 675
                                                                  Page  6


           5)Related legislation  .  AB 220 (Brownley), pending in the Senate  
            Appropriations Committee, authorizes the  
            Kindergarten-University Public Education Facilities Bond Act  
            of 2010 for the issuance of $6.1 billion in G.O. bonds for  
            construction and modernization of education facilities.  



           Analysis Prepared by  :    Kimberly Rodriguez / APPR. / (916)  
          319-2081