BILL ANALYSIS �
AB 308
Page 1
Date of Hearing: May 15, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 308 (Hagman) - As Amended: May 6, 2013
Policy Committee: Education
Vote:7-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill authorizes the State Allocation Board (SAB) to
establish a program that requires a school district or county
office of education (COE) that sells or leases real property
purchased with state school facilities program (SFP) funds
(i.e., modernization or construction funds) to return to the SAB
the moneys received for these purposes, as specified.
Specifically, this bill:
1)Requires the money to be returned to SAB if all of the
following conditions are met:
a) The real property is not sold or leased to a charter
school pursuant to existing law that sunsets in July 2013.
b) The proceeds from the sale or lease of the real property
are not used for capital outlay.
c) The real property was purchased, or the improvements
were constructed on the real property, within 10 years
before the property is sold or leased.
2)Requires a proportionate amount of funds received from the SFP
to be returned to the SAB based on the percentage of the
property sold or leased, as specified.
FISCAL EFFECT
Potential one-time SFP savings if the SAB establishes a program
pursuant to this measure. As referenced below, not many LEAs
have taken advantage of existing surplus property provisions and
as such, any SFP funding returned to the state will likely be
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minimal. The state no longer has any modernization or new
construction funds available for allocation under the SFP.
COMMENTS
1)Purpose . SB 50 (Greene), Chapter 407, Statutes of 1998,
established the SFP. This program drastically altered how
school facilities are constructed and modernized in the state.
Specifically, the program provides state school construction
bond funds to local education agencies (LEAs) to construct
school facilities. Chapter 407 established new per pupil
construction and modernization grants meant to provide 50% of
the total cost of the facility project; this is considered the
state portion. The LEA is required to provide the other 50% of
the cost from local revenue.
Given the state's lack of state school construction bond funds
and the need for billions of dollars in school facilities
funding, it is prudent to enact legislation that requires
districts who sell facilities constructed or modernized with
SFP funds to return a portion of this money to the state.
2)Technical amendment . This bill applies to school districts
and COEs; however, COEs are not referenced appropriately
throughout the bill. As such, the committee recommends the
bill be amended on page 2, line 8, after the word "district,"
to include COEs.
3)Existing law regarding the use of proceeds from the sale of
surplus property . Due to the state's severe budget crisis and
its effect on K-12 school funding, the Legislature, with
approval from Governor Schwarzenegger, enacted several
provisions designed to provide flexibility to school districts
to mitigate their loss of funding, including allowing
districts to utilize the sale of surplus property for one-time
GF purposes. Specifically, AB 2 X4 (Evans), Chapter 2, Fourth
Extraordinary Session, Statutes of 2009, authorized school
districts to deposit the proceeds from the sale of surplus
property (purchased entirely with local funds) into the GF of
the district, and authorized the district to use the proceeds
for any one-time GF purpose. Chapter 2 established this
authorization until January 1, 2012. SB 70 (Committee on
Budget and Fiscal Review), Chapter 7, Statutes of 2011,
extended this authorization until January 1, 2014. The
governor's 2013 proposed budget repeals the sunset date of
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these surplus property provisions, thereby allowing districts
to permanently use the proceeds of the sale of surplus
property (purchased entirely with local funds) for any
one-time GF purpose.
According to the Office of Public School Construction (OPSC),
five school districts have exercised this authority to
purchase a variety of things for schools, including
instructional materials, IT equipment, school supplies, and
staff development. OPSC reports a large portion of districts
have used these proceeds for postemployment benefits other
than pensions.
Prior to the enactment of Chapter 2 in 2009, school districts
were restricted in their use of proceeds from the sale of
surplus property. Specifically, a district could use the
proceeds for one-time GF purposes, but it had to demonstrate
it had no need for additional schoolsites or construction for
a 10-year period following the sale of the property. In
addition, the school district could not apply for state bond
funds for at least five years. According to OPSC, six school
districts have utilized this provision since its enactment.
4)Existing law regarding surplus property and charter schools .
SB 1028 (Committee on Budget and Fiscal Review), Chapter 575,
Statutes of 2012, required school districts to offer charter
schools the option to purchase or lease surplus property
designed for instruction or instructional support prior to
offering the property to other agencies or soliciting
competitive bids, as specified. Chapter 575 specifies the
price of the sale or lease of the property is subject to
certain caps and can be significantly below market value.
Likewise, under either a sale or lease agreement, the charter
school is required to use the property exclusively for
instructional activities or support for at least five years.
After five years, Chapter 575 provides no further restrictions
on the usage or sale of the property. These sale and lease
provisions are operative only from July 1, 2012 through June
30, 2013.
The governor's 2013 proposed budget extends these surplus
property provisions for charter schools until June 30, 2018.
5)Previous legislation . AB 2234 (Block) extended the sunset of
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provisions authorizing a school district to deposit the
proceeds from the sale of surplus property into its general
fund (GF) for any one-time GF purpose from January 1, 2014 to
January 1, 2016. This bill was held on this committee's
Suspense File in May 2012.
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081