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