BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    THIRD READING


          Bill No:  AB 308
          Author:   Hagman (R)
          Amended:  6/26/13 in Senate
          Vote:     21

           
           SENATE EDUCATION COMMITTEE  :  9-0, 6/19/13
          AYES:  Liu, Wyland, Block, Correa, Hancock, Hueso, Huff,  
            Monning, Torres

           SENATE APPROPRIATIONS COMMITTEE  :  5-0, 8/12/13
          AYES:  De León, Gaines, Hill, Lara, Steinberg
          NO VOTE RECORDED:  Walters, Padilla

           ASSEMBLY FLOOR  :  74-0, 5/23/13 (Consent) - See last page for  
            vote


           SUBJECT  :    School facilities:  surplus property

           SOURCE  :     Author


           DIGEST  :    This bill authorizes the State Allocation Board (SAB)  
          to establish a program which requires the return of funding  
          received for purchase, construction, or modernization, under the  
          School Facilities Program (SFP), unless the property is sold for  
          specified purposes, or the proceeds are used for capital outlay  
          purposes.

           ANALYSIS  :    Existing law establishes the SFP under which the  
          state provides general obligation bond funding for various  
          school construction projects. 
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          Existing law authorizes the governing board of any school  
          district to sell or lease, for a term not exceeding 99 years,  
          any real property of the school district that is not or will not  
          be needed by the district for school classroom buildings,  
          subject to specified conditions.  Existing law requires that the  
          proceeds from the sale or lease of property be expended solely  
          for capital outlay purposes.  

          Existing law requires that funds derived from the sale of  
          surplus property be used for capital outlay or for costs of  
          maintenance of school district property that the governing board  
          determines will not recur within a five-year period.  Existing  
          law also authorizes proceeds from a lease of a school district  
          property with an option to purchase to be deposited into a  
          restricted fund for the routine repair of district facilities  
          for up to a five-year period.  Existing law authorizes the  
          proceeds from the sale or lease with option to purchase to be  
          deposited in the general fund of the district if the governing  
          board and the SAB have determined that the district has no  
          anticipated need for additional sites or building construction  
          for the ten-year period following the sale or lease with option  
          to purchase, and the district has no major deferred maintenance  
          requirements.  Proceeds from the sale or lease with option to  
          purchase of school district property shall be used for one-time  
          expenditures, and may not be used for ongoing expenditures,  
          including, but not limited to, salaries and other general  
          operating expenses.  

          Existing law authorizes, until January 1, 2014, a school  
          district to deposit the proceeds from the sale of surplus real  
          property, together with any personal property located on the  
          property, purchased entirely with local funds into the general  
          fund of the school district and authorizes the school district  
          to use the proceeds for any one-time general fund purpose. 

          Existing law requires the governing board of a school district  
          seeking to sell or lease surplus real property designed to  
          provide direct instruction or instructional support to first  
          offer that property to any charter school that has submitted a  
          written request to the school district and then to a contracting  
          agency to be used for child care and development services, any  
          city within which the land may be situated, any park or  
          recreation district, any regional park authority, or any county  

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          within which the land may be situated.

          This bill:

          1. Authorizes SAB to establish a program which requires a school  
             district, county office of education or a charter school to  
             return funding received under the SFP if it sells real  
             property purchased, modernized or constructed with those  
             funds if all the following conditions are met:

             A.    The property is not sold to a charter school, a  
                school district, a county office of education or an  
                agency that will use the property exclusively for the  
                delivery of child care and development services,  
                pursuant to existing provisions governing the sale of  
                surplus property.

             B.    The proceeds from the sale of the property are not  
                used for capital outlay.

             C.    The property was purchased, or improvements  
                constructed, within 10 years before the property is  
                sold.

          2. Specifies that any funding received within 10 years prior to  
             the property being sold be returned.

          3. Requires the return of a proportionate share of the funding  
             if a portion of the property is sold, as specified. 

           Comments
           
          According to the author's office, while voters have approved  
          over $38 billion in school construction bonds since 1998, these  
          funds are nearing exhaustion, and it is uncertain whether a  
          statewide school construction bond will be placed on the ballot  
          in 2014.  The author's office contends that it is an inefficient  
          use of state funds to allow a school district to build or  
          modernize a facility, sell that property, and then apply for  
          more state money to meet facility needs.  This bill ensures that  
          money allocated by the State goes to the purpose funded, and  
          ensures that state funds are spent on capital improvements. 

           SFP  .  The SFP provides funding grants for school districts to  

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          acquire school sites, construct new school facilities, or  
          modernize existing school facilities.  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 basis.  Districts that are unable to provide some, or  
          all, of the local match requirement and are able to meet the  
          financial hardship provisions may be eligible for state funding  
          at a reduced match amount.  

          With the authorization of Proposition 1D in 2006, $7.3 billion  
          was made available for K-12 education facilities, with specific  
          amounts allocated for modernization, new construction, charter  
          schools, career technical education facilities, joint use  
          projects, severely overcrowded schoolsites and high performance  
          incentive grants to promote energy efficient design and  
          materials.  

          As of the May meeting of SAB, the Office of Public School  
          construction reports that about $350 million of bond authority  
          remains of the amount authorized in 2006.  In addition, the May  
          agenda reflects that, as of April 30, the program has received  
          over $70 million in applications for new construction and  
          modernization projects beyond the bond authority list.  

           Prior Legislation
           
          SB 70 (Senate Budget and Fiscal Review Committee, Chapter 7,  
          Statutes of 2011) extended the authority to use proceeds from  
          the sale of surplus school property for one-time general fund  
          purposes by two years, until January 1, 2014.

          AB 2 (Evans, Chapter 2, Statutes of the 2009-10 Fourth  
          Extraordinary Session) authorized school districts to use the  
          proceeds from the sale of surplus school property for any  
          one-time general fund purposes until January 1, 2012.

          SB 1415 (Scott, Chapter 810, Statutes of 2006) authorized the  
          use of proceeds from the sale of surplus school property for any  
          one-time expenditures and prohibited the use of these funds for  
          ongoing expenditures. In exchange, it prohibited the  
          participation of the district in the SFP for 10 years, with an  
          exception provided if after five years, the SAB made a  
          determination that the district demonstrated enrollment growth  

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          or a need for additional sites or construction which the  
          district could not have reasonably anticipated.  

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No


          According to the Senate Appropriations Committee:


           SAB program:  Minor costs to the SAB, if it elects to  
            establish the program authorized by this bill.  The SAB has  
            indicated that it could absorb program the costs and workload  
            within its existing resources.

           Revenue/Returned SFP funds:  Unknown, potentially significant  
            revenue.  Any revenue returned to the SAB as a result of this  
            program would be available to the SFP for other projects.

           SUPPORT  :   (Verified  8/13/13)

          California Charter Schools Association Advocates



           ASSEMBLY FLOOR  :  74-0, 5/23/13
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,  
            Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,  
            Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway,  
            Cooley, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,  
            Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell,  
            Gray, Hagman, Hall, Harkey, Roger Hernández, Jones-Sawyer,  
            Levine, Linder, Logue, Lowenthal, Maienschein, Mansoor,  
            Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,  
            Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel  
            Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone,  
            Ting, Wagner, Weber, Wieckowski, Wilk, Williams, Yamada, John  
            A. Pérez
          NO VOTE RECORDED:  Grove, Holden, Jones, Waldron, Vacancy,  
            Vacancy


          PQ:d  8/14/13   Senate Floor Analyses 


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                           SUPPORT/OPPOSITION:  SEE ABOVE

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