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?
SUMMARY
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.
BACKGROUND
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)
ANALYSIS
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
million.
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
expectancy.
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
following:
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
construction?
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
loses?
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
17070.95)
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
17070.955).
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
project.
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
requirements.
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.
SUPPORT
California Business Education Association
California Space Authority
Small School Districts' Association
OPPOSITION
None received.