BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 477| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ UNFINISHED BUSINESS Bill No: SB 477 Author: Wright (D) Amended: 7/3/12 Vote: 21 PRIOR VOTES NOT RELEVANT SENATE EDUCATION COMMITTEE : 9-0, 8/27/12 (pursuant to Senate Rule 29.10) AYES: Lowenthal, Alquist, Blakeslee, Hancock, Huff, Liu, Price, Simitian, Vargas NO VOTE RECORDED: Runner, Vacancy ASSEMBLY FLOOR : 77-0, 8/22/12 - See last page for vote SUBJECT : School district reorganization: bonded indebtedness: Wiseburn Unified School District: Centinela Valley Union High School District SOURCE : Wiseburn School District DIGEST : This bill addresses issues of bonded indebtedness, debt capacity, and the establishment of a revenue limit related to the creation of the Wiseburn Unified School District. Assembly Amendments delete the Senate version of the bill and insert the current language. CONTINUED SB 477 Page 2 ANALYSIS : Existing law allows funds from the sale of previously issued school bonds to be used for the acquisition, construction, or improvement of school property that was a part of a former district or to discharge bonded indebtedness in the former district. However, if the new district accepts and assumes the former district's bonded indebtedness, the funds may be used anywhere in the new district for the purposes for which the bonds were originally voted. Existing law also establishes a method for calculating a revenue limit for the new district based on the weighted average revenue limit for the districts involved in the reorganization. This bill: 1.Provides that any tax for repayment of bonds of the current Wiseburn School District (Wiseburn Elementary) shall be levied on all taxable property of the new Wiseburn Unified School District (Wiseburn Unified). 2.Provides that any tax for repayment of bonds issued by Wiseburn Unified, including bonds authorized by Wiseburn Elementary, shall be levied on all taxable property of Wiseburn Unified. 3.Provides that, when Wiseburn Unified is formed, any tax for repayment of voter-approved bonds of the Centinela Valley Union High School District (Centinela) approved on or before January 1, 2012, shall be levied on both of the following: A. All taxable property located within Centinela as the district exists following the effective date of the reorganization; and, B. All taxable property located within Wiseburn Unified that was formerly part of the territory of Centinela. 1.Requires Centinela to transfer to Wiseburn Unified $4 million from the proceeds of the sale of bonds approved by voters on November 2, 2010, and issued after January 1, 2012, in recognition of the authority for Centinela to CONTINUED SB 477 Page 3 continue levying property taxes on taxable property located within Wiseburn Unified. 2.Requires Wiseburn Unified to expend the $4 million for purposes consistent with the original voter authorization for the bonds. 3.Provides that, for purposes of establishing the bonding limit, the limit for Wiseburn Unified and Centinela shall each be 1.25% of the assessed value of all non-residential property located in Wiseburn Unified. 4.Provides that the bonding limit applicable to bonds payable from ad valorem property taxes of a joint powers authority (JPA) created by Wiseburn Unified and Centinela shall be equal to the limit of the two districts. 5.Authorizes a JPA created by Wiseburn Unified and Centinela to hold facilities bond elections and provides that debt service of the JPA shall be allocated to each district in proportion to its assessed value of taxable property. 6.Provides that this bill does not prohibit either district from seeking a waiver of bonding limits established by this bill or any other statutory bonding limit. A. Establishes a formula for calculating a revenue limit for the new Wiseburn Unified district as follows: B. Multiply the Wiseburn Elementary revenue limit per ADA in 2012-13 by nine (for the nine grade levels in the K-8 district). C. Multiply the Centinela revenue limit per ADA in 2012-13 by four (for the four grade levels in the 9-12 district). D. Add the amount in #a and #b above. 1. Divide the amount in #C above, by 13. 2. Provides that a high school pupil who resides in CONTINUED SB 477 Page 4 Wiseburn Unified may attend a school in Centinela without an interdistrict attendance agreement if Centinela accepts that pupil for attendance. 3. Provides that the election to approve the unification of Wiseburn Unified shall be conducted within the territory of the Wiseburn Elementary. Comments This bill reflects an agreement between the Wiseburn School District, which is currently a K-8 school district, and Centinela to reorganize Wiseburn as a unified district, serving K-12. Currently, the territory of Centinela includes four elementary school districts, one of which is Wiseburn. The other districts are Hawthorne School District, Lawndale Elementary School District, and Lennox School District. This bill reflects an agreement among all five districts that addresses the following issues: Protecting the tax rates of all five school districts for approved but unissued bonds by Centinela. This is achieved by allowing the Wiseburn Unified taxpayers to continue to pay debt service on authorized but unissued bonds passed for Centinela. Absent this provision, tax rates in the remaining four districts would go up. The transfer of $4 million of bond revenue from Centinela to Wiseburn Unified ensures that Wiseburn Unified taxpayers receive a benefit for the taxes they are paying for the bonds. Ensuring that the unification of Wiseburn Elementary does not cause tax rates for future bond authorizations for Centinela to be substantially higher and that Centinela will have a larger assessed valuation and bond capacity after Wiseburn unification than it would have under existing law . This is achieved by allowing Centinela and Wiseburn Unified to share a portion of Wiseburn's tax base-specifically, an area of non-residential property-for bonding purposes. Existing law establishes a debt limit of 2.5% of assessed valuation for unified school districts. When an elementary school district and a high school district share the same territory, the debt limit is 1.25% of assessed valuation for each district. This bill treats an area of non-residential property in Washburn Unified in CONTINUED SB 477 Page 5 the same manner, with Centinela and Washburn Unified each applying 1.25% of the assessed valuation toward its debt limit and applying revenues from that property to debt service on future bonds, if any. This bill authorizes this arrangement to be administered by a JPA. Under existing law, a JPA has the powers of each of its component members. Therefore, through the JPA, Centinela would be able to use the non-residential property in Washburn Unified for bonding purposes. Creating a revenue limit for the new unified district . This bill establishes a methodology for computing a base revenue limit for Wiseburn Unified that results in a base revenue limit of $6,600.26 according to the author's office. By comparison, the statewide average revenue limit for unified school districts in 2011-12 is $6,393. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes According to the Assembly Appropriations Committee, unknown, potential increased General Fund/Proposition 98 revenue limit (general purpose) funding costs, likely between $500,000 and $800,000, to reorganize school districts pursuant to this measure. The cost is attributed to the increased revenue limit funding a unified district receives versus an elementary district. School districts receive revenue limit funding based on what type of district they are: elementary, high school, and unified (elementary and high schools). The average revenue limit in the 2010-11 fiscal year for elementary school districts is slightly less ($6,110 per ADA) than the average unified rate ($6,393 per ADA). As a result, the state will incur increased General Fund/Prop. 98 costs per ADA due to the district reorganization SUPPORT : (Verified 8/22/12) Wiseburn School District (source) ARGUMENTS IN SUPPORT : The Wiseburn School District writes in support, "SB 477 contains the statutory changes needed to implement the unification proposal for the Wiseburn School District. The District started the process CONTINUED SB 477 Page 6 eleven years ago in 2001. Since then the District and three other elementary school districts (Hawthorne, Lawndale and Lennox) and the Centinela Valley Union High School District have been working on an agreement that would be acceptable to all of the districts." ASSEMBLY FLOOR : 77-0, 8/22/12 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, Block, Bonilla, Bradford, Brownley, Buchanan, Butler, Charles Calderon, Campos, Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson, Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani, Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell, Grove, Hagman, Halderman, Hall, Harkey, Hayashi, Hill, Huber, Hueso, Huffman, Jeffries, Jones, Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell, Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan, Perea, V. Manuel Pérez, Portantino, Silva, Skinner, Smyth, Solorio, Swanson, Torres, Valadao, Wagner, Wieckowski, Williams, Yamada, John A. Pérez NO VOTE RECORDED: Bill Berryhill, Blumenfield, Roger Hernández PQ:n 8/29/12 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED