BILL ANALYSIS Ó
SENATE COMMITTEE ON EDUCATION
Carol Liu, Chair
2013-2014 Regular Session
BILL NO: SB 39
AUTHOR: De Leon and Steinberg
AMENDED: March 21, 2013
FISCAL COMM: Yes HEARING DATE: April 17, 2013
URGENCY: No CONSULTANT:Kathleen Chavira
NOTE : This bill has been referred to the Committees on
Education and Energy, Utilities and Communications. A "do pass"
motion should include a referral to the Senate Energy, Utilities
and Communications Committee.
SUBJECT : Clean Energy Employment and Student Advancement Act of
2013.
SUMMARY
This bill enacts the Clean Energy Employment and Student
Advancement Act of 2013 which requires the Office of Public
School Construction, in consultation with the State Energy
Resources Conservation and Development Commission (CEC) and the
Public Utilities Commission (PUC), and pursuant to the
provisions of the Clean Energy Jobs Act established by
Proposition 39 in November 2012, to:
1)Establish a competitive grant program to provide assistance to K-12
school districts for the purpose of energy efficiency
upgrade projects.
2)Develop a financing program by evaluating the potential to fund
energy
efficiency projects for K-12 schools, California Community
Colleges (CCC) and campuses of the University of California
(UC) and the California State University (CSU), through
matching funds, low-interest loans, or other financing
methods.
BACKGROUND
In November 2012, the voters passed Proposition 39, enacting the
California Clean Energy Jobs Act (Act) which changed the way
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multistate corporations are taxed in California and provided for
the use of the new revenues this change would generate. Elements
of the Act include the following:
1) From 2013-14 through 2017-18, half of the annual revenue
(up to $550 million) raised from the measure must be
transferred to a new Clean Energy Job Creation Fund (Fund).
Moneys in the fund are to be available for appropriation to
fund projects that create jobs in California, improving
energy efficiency and expanding clean energy generation.
2) An outline of the type of eligible projects that could be
included at public schools, colleges, universities, and
other public buildings and for job training and workforce
development purposes and public-private partnerships.
3) Criteria applicable to all fund expenditures which includes
that:
a) Project selection and oversight be managed by
state and local government agencies with expertise in
managing energy projects and programs.
b) Projects be selected on the basis of in-state job
creation and energy benefits, cost-effectiveness
(total benefits greater than project costs over time,
including non-energy benefits).
c) Contract requirements to identify project
specifications, costs, and project energy savings.
d) All projects are subject to audit.
e) Program overhead costs are capped at four
percent.
f) Funds only be appropriated to agencies with
established expertise in managing energy projects and
programs.
g) All funded programs be required to coordinate
with the California Energy Commission (CEC) and the
California Public Utilities Commission (PUC) in order
to avoid duplication and leverage existing energy
efficiency and clean energy efforts.
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4) Establishment of a Citizens Oversight Board comprised of
nine members, to be appointed by the Treasurer, Controller,
and Attorney General and tasked with the responsibility of
annually reviewing all fund expenditures, commissioning and
reviewing an independent audit of the fund and a selection
of completed projects and their effectiveness in meeting
the Act's objectives, and annually publishing a complete
accounting of all expenditures. The Citizen's Oversight
Board is also required to submit an evaluation of the
program to the Legislature identifying any necessary
changes to meet the Act's objectives. (Public Resources
Code Division 16.3, commencing with 26200)
Current law establishes the 10-member State Allocation Board and
provides that members consist of the Director of Finance; the
Director of Department of General Services; a person appointed
by the Governor; the Superintendent of Public Instruction; three
members of the Senate appointed by the Senate Committee on Rules
two of whom shall belong to the majority party and one of whom
shall belong to the minority party; and three members of the
Assembly appointed by the Speaker of the Assembly, two of whom
shall belong to the majority party and one of whom shall belong
to the minority party. Current law authorizes the SAB to
apportion funds for the construction of school facilities and to
establish any qualifications, procedures and policies, and rules
and regulations it deems necessary to administer and expend
funds made available for school facility construction purposes.
(Education Code § 17070.35, Government
Code § 15490)
Current law also establishes the Office of Public School
Construction (OPSC) within the Department of General Services
and authorizes DGS to assign an executive officer to the OPSC.
The executive officer may be appointed by the Governor, upon
recommendation of the Director of DGS and serves at the
Director's pleasure. (Government Code § 14620)
ANALYSIS
This bill establishes the Clean Energy Employment and Student
Advancement Act of 2013 to provide for the use of funds
generated as a result of the Clean Energy Jobs Act established
by Proposition 39 in November 2012.
More specifically it:
1) Requires the OPSC, in consultation with the State Energy
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Resources Conservation and Development Commission and the
Public Utilities Commission to establish a competitive
grant program to distribute funds to economically
disadvantaged school communities for energy efficiency
upgrade projects that offer the highest energy efficiency
savings. Additionally it requires the OPSC to:
a) Encourage full participation in the
program by offering technical assistance to all
applicants.
b) Use existing benchmarking tools to
determine present average energy consumption for a
school facility by size and type.
2) Requires the OPSC to award a grant, upon approval of the
State Allocation Board, only to proposed projects that:
a) Meet the qualifications of an energy
efficiency upgrade project.
b) Assure district compliance with the
required labor compliance and contractor qualification
standards.
c) Meet all implementation costs for the
project with the grant and any other matching
contribution.
d) The school district agrees to allow
OPSC to audit all expenditures made with grant funds
and to track and report to OPSC the number of jobs
created by the project and the operational costs
savings and the district and site level.
3) Requires the OPSC to assign higher priority to energy
efficiency upgrade project applications that meet
additional criteria. Specifically, higher priority is
assigned if the proposed project:
a) Is located at a school facility with an
above average energy consumption, as specified.
b) Is located in an economically
disadvantaged school community based on the percentage
of pupils eligible for the federal free and
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reduced-price lunch program.
c) Is located in an area with an above
average unemployment rate as compared to the statewide
unemployment rate.
d) Has actively involved pupils and
classified school employees at the school facility
site in the planning and design of the energy
efficiency upgrade project.
e) Includes a plan to fund and train
classified school employees to service and maintain
the projects.
f) Enhances workforce development and
employment opportunities, utilizes members of the
California Conservation Corps or certified local
conservation corps, or accommodates learning
opportunities for school pupils or at risk youth in
the community.
g) Maximizes the investment and benefit to
the public through a joint partnership between two or
more agencies including, but not limited to, other
school districts, nonprofit organizations, and local
government agencies.
4) Requires the Office of Public School Construction (OPSC),
in consultation with the State Energy Resources
Conservation and Development Commission, to develop a
financing program by evaluating the potential to fund
projects, for K-12 schools, community colleges, and
campuses of the UC and the CSU through the use of matching
funds, low-interest loans, or other financing methods.
5) Authorizes the OPSC to establish standards for
implementation of the financing program required by the
bill upon the appropriation of funds to implement the
financing program by the Legislature.
6) Makes a number of related declarations and findings.
STAFF COMMENTS
1) Why schools ? According to the author, seventy percent of
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school facilities in California are over 25 years old, and
there are over 919,000 K-12 students in classrooms that are
in need of modernization. The author asserts that studies
show that the continuing high cost of energy and utilities
due to inefficient lighting, insulation, heating
ventilation and air conditioning systems, plumbing, windows
and irrigation systems, take needed money away from
educational programs. Energy efficiency improvements for
public schools will reduce long-term energy costs and the
savings can be directed to classroom needs. According to
the US Environmental Protection Agency (EPA), modification
of pre-existing buildings for energy efficiency can save a
typical 100,000 square-foot school building between $10,000
and $16,000 annually, and simple behavioral and operational
measures alone can reduce energy costs by up to 25 percent.
(U.S. EPA 2008).
Proposition 39 specifically provides that project selection
may include consideration of non-energy benefits. In the
case of schools, benefits could include the redirection of
operational savings from the use of more energy efficient
systems to educational programs and the realization of
healthier and more productive learning environments for
students.
2) More on Proposition 39 . Proposition 39 specifically
articulates as its objective the creation and then
employment of Californians in energy efficiency and clean
energy jobs and achievement of the maximum amount of job
creation and energy benefits with available funds. It also
provides that funding to achieve these objectives may be
provided for:
a) Projects to conduct energy efficiency
retrofits and clean energy installations in public
schools, universities and colleges, and other public
facilities.
b) Financial and technical assistance that
includes revolving loan funds and reduced interests
loans for these projects at other public facilities
and for public-private partnerships.
c) Training and employment of
disadvantaged youth, veterans, and others, on energy
efficiency and clean energy projects, specifically
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citing the California Conservation Corps, Certified
Community Conservation Corps, YouthBuild, and other
existing workforce development programs.
3) Related budget proposal . The Governor's proposed 2013-14
budget includes a plan to implement the provisions of
Proposition 39 by designating all Clean Energy Job Creation
Fund monies for K-12 schools and community colleges in
2013-14 and for the subsequent four years.
The Governor's proposal appropriates 89 percent of the
funding to the California Department of Education (CDE) and
11 percent to the California Community Colleges (CCC)
Chancellor's Office who are to allocate this funding to
districts on a per-student basis.
The CDE and Chancellor's Office would issue guidelines,
which could be developed in consultation with California
Energy Commission and the Public Utilities Commission, for
prioritizing the use of the funds by districts. School
districts and community college districts would report
their project expenditure information to CDE and the
Chancellor's Office, respectively, upon project completion.
According to the Legislative Analyst's Office (LAO), in
2013-14, the Governor's proposal for distribution of these
funds would result in school districts and community
college districts receiving $67 and $45 per student,
respectively.
The LAO has proposed an alternative to the Governor's
proposal which would designate the CEC as the lead agency,
in consultation with the PUC for distributing Fund monies
through a competitive grant program open to all public
agencies. Applicants would first be required to have an
energy audit performed to identify potential cost-effective
energy upgrades, and include in their application
information regarding climate zone, size, design, and age
of a building.
4) Is this the appropriate agency/structure ? Although this
bill requires the Office of Public School Construction
(OPSC) to consult with the California Energy Commission
(CEC) and Public Utilities Commission (PUC), as currently
drafted this bill extends very broad authority to the OPSC
to implement the provisions of Proposition 39. It may be
that other agencies are better equipped to develop
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processes, criteria, and programs for implementing
Proposition 39 and for evaluating savings from energy
efficiency and renewable energy projects. However, to the
extent that it is the intent to distribute Proposition 39
funding to school districts, arguably no single agency
possesses all the expertise necessary to administer every
element of a successful program. The OPSC's strength is in
its experience and existing infrastructure for
administering and processing applications for school
facility programs and projects, as well as the performance
of the program audit function. The California Department
of Education may be more appropriate to conduct outreach,
marketing and analysis of applicants to ensure broad
participation in the program. The CEC likely has the best
understanding of energy audit standards and procedures.
Staff recommends the bill be amended to assign
responsibility as follows:
a) CEC to outline criteria which must be met in
order to participate in the program and to establish
energy audit standards and procedures, reporting
standards, project approval criteria, and priorities
relative to energy standards
b) OPSC to administer, process and distribute funds
to local educational agencies that meet the conditions
outlined in
EC § 26234, to rank priority for these funds on the
basis of criteria outlined in EC § 26235, and to
perform program expenditure audits, as specified in EC
§ 26234.
c) CDE, in consultation with the OPSC, to provide
technical assistance to schools, implement outreach
and marketing strategies for the program and conduct
analysis of participation, to inform and modify their
outreach and marketing efforts.
5) Conditions versus Criteria . It is the intent of this bill
to outline conditions which must be met in order to
participate in the program and then establish criteria for
evaluating and ranking applications received from school
districts. As currently drafted, the bill appears to
establish two sets of criteria, and to require districts to
achieve all elements outlined in order to be granted higher
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priority. Staff recommends the bill be amended on page 6
line 7 to replace "criteria" with "conditions" and on page
6 line 23 to clarify that, "In evaluating and ranking
applications for grants that meet the conditions of EC §
26234, the office shall develop a methodology to assign
priority points to an application that meets any of the
following criteria."
6) Clarification of criteria for prioritization . This bill
currently establishes criteria for ranking an application
that requires the district has actively involved pupil and
classified school employees in the planning and design of
the project and that includes a plan to fund and train
classified school employees to service and maintain the
project. It is questionable whether students and classified
employees have the skills necessary to engage in facility
planning and design, and requirements to fund and train
specific employees could place the Office of Public School
Construction (OPSC) in the inappropriate position of
enforcing the hiring and professional development of a
specific group of employees, elements more appropriately
left to the bargaining process. According to the author,
it was the intent of these provisions to ensure that
students and employees receive training and information to
understand how they can support and maximize the
achievement of energy efficiency savings envisioned by
these projects. Staff recommends the bill be amended to
delete the current relevant provisions and to reflect the
author's intent.
7) Financing program . This bill directs the OPSC, in
consultation with the California Energy Commission (CEC),
to evaluate the potential to develop a financing program
for K-12 districts, CCCs, CSU, and the UC and, to establish
standards for implementation of such a program. According
to the author, this section of the bill is intended to
respond to provisions in the Act which provide for
financial and technical assistance through revolving loan
funds, reduced interest loans, or other financial
assistance for achieving the goals outlined in the Act,
particularly for higher education institutions. The OPSC
has some limited experience with extending loans from state
bond funds to districts for purposes of the Career
Technical Education Facilities program, but it is the
California School Finance Authority within the Treasurer's
Office which conducts the financial soundness analysis that
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qualifies charter school applicants for grants and loans
through the Charter School Facility Program. In addition,
CEC has experience administering the Bright Schools Program
which offers school districts a number of energy efficiency
design services and low interest loans from the Energy
Commission to finance recommended projects.
To more appropriately achieve the author's intent, staff
recommends the bill be amended to delete lines 15-28 on
page 7 and to instead require the CEC, in coordination with
the Treasurer's Office to develop guidelines for a
financing program that utilizes revolving loan funds,
reduced interest loans or other financial assistance for
energy efficiency and clean energy projects at community
colleges, CSU and the UC.
8) Unresolved questions to consider . As currently drafted,
this bill fails to address a number of education policy
issues/questions. The committee may wish to consider the
following:
a) What structure is necessary to ensure access to
these funds for smaller school districts that may not
have the in-house staff to be successful in a
competitive grant program?
b) Should there be a cap on the amount of funding
able to be received by a single district?
c) Should a smaller district be assured a specified
level of funding whether or not an energy audit
indicates sufficient project costs to expend all
funds?
d) How will the assessment of needs and potential
savings via an energy audit be standardized across all
school districts throughout the state?
e) Should the priority for funds be adjusted to
reflect variations in energy savings across the state
based on climate zones in order to ensure fairer
competition for the funds by school districts?
f) How can a program be structured to ensure the
costs to a district to effectively compete for grants
are minimized and to maximize the use of moneys to
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fund local employment opportunities and actual project
costs?
g) Does/should the bill provide for sufficient
support of energy efficiency retrofits and clean
energy installations at the CCC, UC and CSU?
h) Should a parallel competitive grant program be
established for community colleges through the
Chancellor's Office?
i) How should efforts to ensure broad participation
be balanced against the initiative requirement to
maximize job creation and energy savings?
9) Similar Legislation . Several bills that propose
implementation of the provisions of Proposition 39 have
been introduced this session. These include:
SB 64 (Corbett) designates the California Energy Commission
as the lead agency to establish a grant program to
distribute Proposition 39 funds to school districts cities
and counties for energy efficiency and clean energy
technology in school and municipal facilities. SB 64 has
been referred to the Senate Energy, Utilities and
Communications Committee and is set for hearing on April
16, 2013.
SB 729 (Fuller) states the intent of the Legislature to
enact legislation
to implement the provisions of Proposition 39. SB 729 is
pending referral in the Senate Rules Committee.
AB 39 (Skinner and Perez) requires the CEC to administer
grants,
no-interest loans, or other financial assistance and to
establish a priority system to K-12 school districts for
projects that create jobs in California by reducing energy
demand and consumption at their institutions and further
requires the CEC to establish a priority system to
prioritize eligible institutions for this program, in
consultation with the Superintendent of Public Instruction.
AB 39 is pending hearing in the Assembly Natural Resources
Committee.
AB 114 (Salas) requires the Employment Development
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Department,
using funds made available from the Clean Energy Job
Creation Fund
for job training and workforce development purposes, to
administer
grants, no-interest loans, or other financial assistance
for allocation to
existing workforce development programs for the purposes of
creating
green energy jobs in California. AB 114 has been referred
to both the Assembly Natural Resources and Utilities and
Commerce committees.
AB 239 (Hagman) requires the Office of Public School
Construction, in consultation with the CEC and the PUC, to
expend moneys to fund a zero-interest revolving loan
program and a grant program for school districts to perform
energy efficiency retrofit or clean energy installation
projects at public schools. AB 239 has been referred to
both the Assembly Natural Resources and Utilities and
Commerce committees and is pending hearing in the Assembly
Natural Resources committee.
AB 293 (Allen) requires the CEC, in consultation with the
PUC and other state agencies it deems appropriate, to
develop a program to award funding, on a competitive basis,
for the purposes established by Proposition 39, and
requires a report to the Legislature on the progress,
applicants and disbursement of funds and to make
recommendations to improve allocation of these funds by
July 1, 2016.
SUPPORT
African American Student Social Work Association
American Lung Association
California School Boards Association
California School Employees Association, AFL-CIO
County Schools Facilities Consortium
Los Angeles Unified School District
PolicyLink
School Energy Coalition
South Coast Air Quality Management District
TRANE
OPPOSITION
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None received.