BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair SB 128 (Lowenthal) Hearing Date: 05/26/2011 Amended: 03/22/2011 Consultant: Jacqueline Wong-HernandezPolicy Vote: Education 7-1 _________________________________________________________________ ____ BILL SUMMARY: SB 128 would expand the use of modernization funding under the School Facility Program (SFP) to include the cost of designs and materials that promote the characteristics of high-performance schools. This bill would also expand eligibility for funding from the High Performance Incentive (HPI) grant to include projects approved to receive a Career Technical Education Facilities Program (CETEFP) grant. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2011-12 2012-13 2013-14 Fund Expands SFP eligibility -----Potentially substantial cost pressure--- General* Expands HPI eligibility -----Potentially significant cost pressure---- General* *Proposition 1D or other future K-12 construction bonds _________________________________________________________________ ____ STAFF COMMENTS: SUSPENSE FILE. Proposition 1D, approved by the voters in November 2006, provided $7.3 billion for K-12 education facilities and allocated specified amounts from the sale of these bonds for funding grants for school districts to acquire school sites, construct new school facilities, or modernize existing school facilities. Funding for projects approved in the SFP comes exclusively from statewide Government Obligation (GO) bonds approved by the voters through Proposition 1D. The two major funding types available are "new construction" and "modernization". The new construction grant provides funding on a 50/50 State and local match basis. The modernization grant provides funding on a 60/40 match basis. Modernization grants currently provide funds for improvements to educationally enhance school facilities. Projects eligible under this program include such modifications as air conditioning, plumbing, lighting, and electrical systems. This bill would expand the potential uses of a modernization apportionment to include the cost of designs and materials that SB 128 (Lowenthal) Page 3 promote the efficient use of energy and water, the maximum use of natural lighting and indoor air quality, the use of recycled materials and materials that emit a minimum of toxic substances, the use of acoustics conducive to teaching and learning, and other characteristics of high-performance schools. Under existing law, these costs would not be eligible for modernization grant funding. Expanding the possible uses for specified bond funding creates cost pressure to expend those funds and incur debt service charges earlier. Additionally, by allowing districts to use modernization funds on components that may not extend the useful life of school facilities (such as "maximum use of natural lighting") at the expense of currently eligible projects, this bill increases cost pressure on future bonds to maintain, repair, and replace facilities if Proposition 1D bond funding is used for other purposes. Proposition 1D also allocated $100 million in GO bond funding for HPI grants to augment the funding of new construction and modernization projects for the use of designs and materials that promote characteristics of high performance schools. The purpose of the HPI grants was to promote the use of designs and materials in new construction and modernization projects that include the attributes of high-performance schools, including, but not limited to, designs and materials that promote energy and water efficiency, maximize the use of natural lighting, improve indoor air quality, utilize recycled materials and materials that emit a minimum of toxic substances, and employ acoustics conducive to teaching and learning. (EC §17070.96) This bill would allow CTEFP projects to receive the HPI grant as an augmentation to other project funding. Making another group of projects eligible for an apportionment from the $100 million, puts additional cost pressure on HPI funds and could allow CTEFP projects to be funded above the current CTEFP cap. SB 128 (Lowenthal) Page 4