BILL ANALYSIS Ó AB 2227 Page 1 ASSEMBLY THIRD READING AB 2227 (Quirk) As Amended May 23, 2014 Majority vote NATURAL RESOURCES 9-0 APPROPRIATIONS 12-0 ----------------------------------------------------------------- |Ayes:|Chesbro, Dahle, Bigelow, |Ayes:|Gatto, Bocanegra, | | |Garcia, Muratsuchi, | |Bradford, | | |Patterson, Skinner, | |Ian Calderon, Campos, | | |Stone, Williams | |Eggman, Gomez, Holden, | | | | |Pan, Quirk, | | | | |Ridley-Thomas, Weber | |-----+--------------------------+-----+--------------------------| | | | | | ----------------------------------------------------------------- SUMMARY : Establishes procedures and guidance for the Citizens Oversight Board (COB) created by the California Clean Energy Jobs Act (Proposition 39). Specifically, this bill : 1)Requires that funding for the COB shall be available, upon appropriation by the Legislature, in the annual Budget Act. 2)Specifies that COB members serve for a four-year term and may be reappointed for two additional terms. 3)Requires that the COB principal office be located in the California Energy Commission (CEC) office in Sacramento. 4)Specifies procedures for COB meetings and requires COB to meet at least quarterly. 5)Authorizes COB to elect a chair and vice chair. Specifies that the chair oversee meetings, work with staff to ensure COB resolutions are carried out, call special meetings if necessary, appoint committee chairs, coordinate the hiring of staff and consultants, and other duties as specified. 6)Requires the COB to: a) Review and evaluate the progress and status of projects; AB 2227 Page 2 b) Prepare, approve, and distribute annual reports of its activities, findings, and recommendations to the Governor, Legislature, and the public; and, c) Establish procedures for the preparation and distribution of the annual reports. 7)Provides that the bill's provisions become inoperative on July 1, 2019, and are repealed as of January 1, 2020. EXISTING LAW : 1)Pursuant to Proposition 39, which was approved by the voters at the November 6, 2012, statewide general election: a) Repeals prior law allowing multistate businesses to choose a formula for calculating their California income or franchise tax liability and, instead, requires those businesses, starting in 2013, to utilize the "single sales factor" (SSF) method of determining their taxable income. b) Establishes the COB, composed of nine members appointed by the State Treasurer, the State Controller, and the Attorney General, as specified. The COB is tasked with: i) Annually reviewing all expenditures from the Clean Energy Job Creation Fund (Fund); ii) Commission and review an annual independent audit of the Fund and of a selection of projects completed to assess the effectiveness of the expenditures; iii) Publish a complete accounting of all expenditures annually; and, iv) Submit an evaluation of the program to the Legislature that identifies any changes needed to meet the directives. c) Dedicates $550 million or 50% of the annual increase in revenues from the SSF, whichever is less, annually for five fiscal years (2013-14 through 2017-18) to the Fund for projects that create energy efficiency and clean energy jobs in California, upon appropriation by the Legislature. AB 2227 Page 3 The funding may include: i) Energy efficiency and clean energy installations at public schools, universities and colleges, and other public buildings; ii) Job training and workforce development on clean energy and energy efficiency programs; and, iii) Financing and technical assistance to fund Property Assessed Clean Energy (PACE) programs. 2)Pursuant to SB 73 (Budget Committee), Chapter 29, Statutes of 2013: a) Specifies the allocation of Proposition 39 funding available for energy efficiency projects at K-12 schools and community college districts. b) Requires the CEC, in consultation with the California Department of Education (CDE), the Chancellor of California Community College districts, and the Public Utilities Commission, to develop guidelines for contracts, as specified. c) Appropriates $28 million from Proposition 39 funds to the State Energy Conservation Assistance Account (ECAA) for energy efficiency loans. d) Appropriates $3 million from Proposition 39 funds to the California Workforce Investment Board to develop and implement a competitive grant program for organizations that prepare disadvantaged youth or veterans for employment. FISCAL EFFECT : According to the Assembly Appropriations Committee, initial increased costs for the CEC in the range of $300,000 to $500,000 to staff the COB and perform the required audits, evaluations, and reports. Ongoing annual costs of up to $300,000 (Proposition 39 funds). COMMENTS : The COB was established by voters in Proposition 39 and consists of nine members. Three members are to be appointed each by the State Controller, the State Treasurer, and the AB 2227 Page 4 Attorney General. To date, the Controller and Treasurer have appointed members. The purpose of the COB is to review Fund expenditures, commission and review annual independent audits of the Fund and selected projects, publish an accounting of annual expenditures, and submit a program evaluation to the Legislature. While Proposition 39 created the COB and its purpose, it was largely silent on the structure, procedures, and other details relating to COB operations. On December 19, 2013, CEC published Proposition 39: California Clean Energy Jobs Act -2013 Program Implementation Guidelines in accordance with SB 73. The guidelines define how the state plans to implement Proposition 39, provide information on the types of awards and proposal requirements, explain screening and evaluation criteria, describe the standards that will be used to evaluate project proposals, and outline the award process. According to the author, "this legislation provides all the necessary detail for the board to accomplish its mission." This bill establishes general governance requirements for the operations of the COB. Analysis Prepared by : Elizabeth MacMillan / NAT. RES. / (916) 319-2092 FN: 0003746