BILL ANALYSIS                                                                                                                                                                                                    

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

          BILL NO:       SB 1380
          AUTHOR:        Hancock
          AMENDED:       April 15, 2010
          FISCAL COMM:   Yes            HEARING DATE:  April 21, 2010
          URGENCY:       No             CONSULTANT:Kathleen Chavira

           SUBJECT  :  Career Technical Education Facilities
           KEY POLICY ISSUES  

          Should a portion of bond funds authorized by voters for the  
          purpose of providing relief to overcrowded school sites be  
          redesignated for the purpose of constructing career  
          technical education facilities?  

          Is it necessary to impose additional  
          requirements/conditions on the use of career technical  
          education facilities constructed with bond funds to ensure  
          their use as intended?


          This bill transfers $200 million of the proceeds from the  
          sale of bonds authorized for school facility construction  
          within Proposition 1D from the Overcrowded Relief Grants  
          Program to the Career Technical and Education Facilities  
          Program (CTEFP), adds new requirements and conditions to be  
          met by districts that apply for and receive CTEFP funding,  
          and requires the California Department of Education (CDE)  
          to review and make recommendations on specified elements of  
          the CTEFP. 


           Proposition 1D
          AB 127 (Nunez and Perata), the Kindergarten-University  
          Public Education Facilities Bond Act of 2006, authorized  
          Proposition 1D a statewide general obligation bond proposal  
          for $10.4 billion.  Proposition 1D, approved by the voters  


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          in November 2006, provided $7.3 billion for K-12 education  
          facilities and allocated specified amounts from the sale of  
          these bonds for modernization, new construction, charter  
          schools, career technical education facilities, joint use  
          projects for new construction on severely overcrowded  
          schoolsites, and high performance incentive grants to  
          promote energy efficient designs and materials.  In  
          addition, portions of the amounts allocated for new  
          construction and modernization were authorized for purposes  
          of funding smaller learning communities and high schools  
          and for seismic retrofit projects.

          Proposition 1D also authorized the Legislature to adjust  
          the amounts expended for each of the above programs, but  
          prohibited the increase or decrease of the total amount to  
          be expended pursuant to the Proposition. Adjustment of the  
          funding requires legislative enactment of statute which is  
          consistent with, and furthers the purposes of, Proposition  
          1D by a two-thirds membership vote of each house. In  
          addition, amounts may be adjusted via a voter approved  
          statute. (Education Code  101012)

           Career Technical Education Facilities Program
          Proposition 1D established the Career Technical Education  
          Facilities Program (CTEFP) within the SFP and provided $500  
          million for school districts and joint powers authorities  
          to construct or modernize facilities and to purchase  
          equipment with an average useful life expectancy of at  
          least 10 years for career technical education programs at  
          existing high schools. Current law requires a school  
          district to contribute from local resources a dollar amount  
          equal to the amount of the state grant provided and  
          authorizes the contribution to come from private industry  
          groups, the school district, or a joint powers authority.  
          Local agencies may enter into a loan agreement with the  
          Office of Public School construction to cover their share  
          of the project costs.  Grants are calculated on a square  
          foot basis, with a maximum of $3 million for each new  
          facility and $1.5 million for each modernization project  
          purpose. (Education Code  17078.70-17078.72)

           Overcrowded Relief Grants Program (ORG)
          Proposition 1D established the Overcrowded Relief Grants  
          Program   within the SFP and provided $1 billion for school  


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          districts with overcrowded school sites to build new  
          permanent facilities.  As with other new construction  
          projects, districts are required to match the state's  
          contribution toward the project costs (fifty percent).  To  
          be eligible for a relief grant, districts must have at  
          least one overcrowded school (defined as at least 175  
          percent of the state recommended pupil density). The size  
          of the relief grant is based on the number of pupils in  
          portable classrooms at eligible schools.  As a condition of  
          receiving a relief grant, school districts are required to  
          replace portable classrooms with new permanent classrooms,  
          remove portable classrooms from overcrowded schools, and  
          reduce the total number of portable classrooms in the  
          district. (Education Code 17079-17079.30)

           This bill  :

          1)   Transfers $200 million of the proceeds from the sale  
               of bonds authorized for school facility construction  
               by Proposition 1D, from the Overcrowded Relief Grant  
               (ORG) Program to the Career Technical and Education  
               Program (CTEFP).  More specifically it:

                    a)             Reduces the amount authorized for  
                    providing new construction funding to severely  
                    overcrowded schoolsites from $1 billion to $800  
                    b)             Increases the amount authorized  
                    for purposes of facilities for career technical  
                    education (CTE) programs from $500 million to  
                    $700 million.

          2)   Changes the requirements and conditions to be met by  
               school districts that apply for and receive CTEFP  
               funding.  Specifically it:

                    a)             Requires that facilities  
                    constructed or modernized using CTEFP funding be  
                    used for CTE purposes for a minimum of 25 years  
                    and requires that a school district provide  
                    certification of such in the first year of  
                    occupancy and every five years thereafter.
                    b)             Requires the inclusion of teachers  
                    of CTE and members of the local CTE advisory  


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                    committee in the design and planning process  
                    leading to the submission of an application for a  
                    CTEFP grant.
                    c)             Authorizes the use of up to 10% of  
                    funds provided for equipment to be expended on  
                    items or equipment with at least a five-year life  

          3)   Requires the California Department of Education (CDE)  
               to examine the "reservation of funds" component of the  
               program, as specified, and to make recommendations to  
               facilitate the timely use of state bond funds to be  
               submitted to the State Allocation Board (SAB) by  
               December 31, 2011.  

           STAFF COMMENTS  

           1)   Need for the bill  .  According to the author, there  
               have been requests to replenish the nearly depleted  
               Proposition 1D Career Technical Education Facilities  
               account by transferring funds from the Overcrowded  
               Relief Grant account, as those monies may exceed  
               current need.  The author contends that, given the  
               strong demand for CTE facility construction and  
               modernization, a timely shift in funds could lead to  
               new jobs in the near future.  In addition, the author  
               contends the CTEFP is in need of modification to  
               assure that classrooms built or modernized with these  
               funds are truly used for CTE in the future.

           2)   Total funding provided .  The table below reflects the  
               total amounts allocated under Proposition 1D and their  
               current disposition as reflected in the March 2010  
               agenda of the SAB.

               As noted in the background of this analysis, the  
               Legislature is authorized to adjust the amounts  
               provided within each program subject to a two-thirds  
               vote of the membership of each house. Staff notes  
               that, contrary to this statutory language, Legislative  
               Counsel has flagged this as a majority vote bill.  

           3)   Current status of ORG  .  The State Allocation Board  
               recently took action to amend the regulations  
               governing the ORG program to create an additional  


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               funding cycle.  According to the Notice of Proposed  
               Regulatory Action distributed on March 19, 2010, five  
               funding cycles through January 29, 2010, have  
               allocated/requested about half of the $1 billion  
               authorized.  The proposed amendments to the  
               regulations add an additional application submittal  
               date of July 30, 2010 and authorize the SAB to  
               establish subsequent funding cycles in order to  
               apportion any or all remaining ORG funds.  According  
               to the OPSC, about $128 million in applications is  
               pending approval at the April meeting of the SAB,  
               leaving approximately $459 million in the ORG program.  

               Staff notes that this program was intended and  
               specifically designed to respond to facilities issues  
               faced by primarily low-income and low-performing  
               schools in urban settings. It is unclear what the  
               demand for these remaining funds is likely to be or  
               whether the issue of severely overcrowded schoolsites  
               which the program was designed to resolve has been  
               fully addressed.

           4)   Current status of CTE  .  Current SFP regulations  
               established two funding cycles for the program and  
               authorize subsequent funding cycles to continue every  
               six months thereafter at the discretion of the SAB.   
               In March 2009, the SAB reported that it had  
               apportioned $417.2 million in the first and second  
               funding cycles and a third funding cycle was  
               established.  There is currently $90.9 million  
               available for distribution for CTE projects.  OPSC  
               reports that the deadline for receipt of applications  
               for these funds was March 31, 2010 and they are  
               currently in the process of reviewing these  
               applications for presentation to the SAB.  The program  
               is currently oversubscribed and it is expected that  
               all remaining CTEFP funds will be exhausted in this  
               funding cycle. 

           5)   Solomon's choice  ?  This bill requires the transfer of  
               funding authority for 50 percent of the remaining  
               authorization from one school facility construction  
               program to another.  Staff notes that, like CTE  
               funding, new construction funding is also nearly  
               depleted and, absent a new bond authorization, funding  


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               authority in all categories, except modernization, is  
               projected to be exhausted by early summer.  The  
               largest category of funding authority remaining is in  
               modernization with about $1.5 billion available. Given  
               this context, the Committee may wish to consider the  

                        Which program(s) within the SFP should be  
                    the priority to receive remaining funding?
                        If funds are to be transferred across  
                    programs, is CTE a higher priority than new  

                        If a transfer of $200 million is warranted,  
                    should we take 50 percent of the remaining ORG  
                    funds or, transfer approximately 1 percent from  
                    modernization funds instead? 

                        With no current proposal to authorize a new  
                    construction bond, what is gained by transferring  
                    funds between any programs at this time?  

                        Do some districts benefit more than others  
                    as the result of a transfer?  Who wins and who  

               Staff recommends, in light of the aforementioned, the  
               bill be amended to delete the transfer of funds  
               provisions in order to focus future discussions on the  
               underlying issue, i.e. how to ensure funding to  
               realize  all  the policy objectives associated with the  
               School Facility Program. 

           1)   CDE report  .  The CTEFP offers two options to districts  
               applying for funding. The first option is to request  
               full funding if the project is "construction-ready".   
               A "construction-ready" project must have plans and  
               specifications approved by the Division of State  
               Architect (DSA) and the CDE prior to submitting a  
               funding application. The second option is to submit  
               the project as a reservation of funds if the project  
               is not "construction-ready."  The CTEFP funds can be  
               reserved for up to 12 months.  This bill requires the  
               CDE to examine and report on the reservation of funds  
               portion of the program.  Under current law, the SAB  


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               would have the regulatory authority to make any  
               changes to the CTEFP it deems necessary, as a result  
               of the report findings and recommendations. 

           2)   How much is enough  ?  Below are some of the statutory  
               and procedural requirements which must be met by  
               applicants for SFP funding relative to CTE:

                        As a part of its application for large  
                    construction and modernization projects, a school  
                    district is required to certify, in consultation  
                    with its Career Technical Education Advisory  
                    Committee (CTEAC), that it has considered the  
                    need for vocational and career technical  
                    facilities to adequately meet its program needs  
                    consistent with specified state law (EC  

                        As a condition of the receipt of funds for a  
                    project, the CTEAC for a district is required to  
                    provide written confirmation that the need for  
                    vocational and career technical facilities is  
                    being adequately met within the district  
                    consistent with specified state law (EC  

                        The OPSC requires school districts to  
                    certify that they have met the requirements for  
                    CTE when signing an application for funding form  
                    and to provide proof of compliance with CTE  
                    requirements at the time the application is  
                    accepted by the Office of Public School  
                    Construction (OPSC) or during the audit of the  

                        The CDE requires districts to certify  
                    compliance with 
                    EC  17070.95 and to provide the date of  
                    consultation with the CTEAC.  

               This bill would additionally require the inclusion of  
               teachers of CTE and members of the local CTEAC in the  
                design and planning process  leading to the submission  
               of an application for a CTEFP grant.  Why is it  
               necessary to include yet another layer of  
               consultation? What expertise do these individuals  


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               offer relevant to the design and planning process?

           1)   Or else  ? This bill imposes a significant new  
               requirement on districts that receive CTEFP by  
               requiring that facilities constructed with these funds  
               be used for this purpose for 25 years and to verify  
               such use every five years.  Presumably, this term is  
               intended to ensure the full use of the facility  
               (consistent with the term of the underlying bond  
               financing) for the purposes authorized under the voter  
               approved initiative. It is unclear what consequence a  
               district faces if it fails to comply with these  

           2)   Life-expectancy of equipment.   A unique feature of the  
               CTEFP is that funding for a new construction or  
               modernization project can include CTE equipment or  
               consist solely of equipment with an average useful  
               life expectancy of 10 years. This bill reduces the  
               minimum required life expectancy for equipment  
               purchased with this funding from 10 years to 5 years  
               for a small portion of the funds provided for  
               equipment purchase.  According to the author many  
               districts find themselves without the funds to  
               purchase expensive equipment (such as video cameras  
               and high tech automotive machines) key to preparing  
               students for jobs in the new economy. The author  
               opines that CTEFP needs some revision in this regard  
               to ensure that funds can be used for equipment  
               students will encounter as they enter the work world.   


          California Business Education Association
          California Space Authority
          Small School Districts' Association


           None received.