BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 308| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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. CONTINUED AB 308 Page 2 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 CONTINUED AB 308 Page 3 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 CONTINUED AB 308 Page 4 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 CONTINUED AB 308 Page 5 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 CONTINUED AB 308 Page 6 SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED