BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair


          SB 39 (DeLeon/Steinberg) - Energy: school facilities: energy  
          efficiency upgrade projects. 
          
          Amended: May 7, 2013            Policy Vote: Ed 8-0, EU&C 11-0
          Urgency: No                     Mandate: No
          Hearing Date: May 20, 2013      Consultant: Marie Liu
          
          This bill meets the criteria for referral to the Suspense File.
          
          
          Bill Summary: SB 39 would require the State office of Public  
          School Construction (OPSC), in consultation with the Public  
          Utilities Commission (CPUC), the State Department of Education  
          (SDE), California Energy Commission (CEC), and the State  
          Allocation Board (SAB), to administer a competitive grant  
          program for energy efficiency upgrade projects for K-12 schools,  
          funded by Proposition 39 revenues.

          Fiscal Impact: 
              Annual costs likely in the hundreds of thousands to low  
              millions from the Clean Energy Job Creation Fund (special  
              fund) for OPSC for the administration of the program. 
              Annual costs of approximately $200,000 from the Clean  
              Energy Job Creation Fund for SDE staff and outreach travel.
              Annual costs likely in the hundreds of thousands from the  
              Clean Energy Job Creation Fund for the State Allocation  
              Board to approve grants.
              Minor and absorbable cost to the PUC for consulting with  
              OPSC. 
              One-time costs in the millions of dollars from the Clean  
              Energy Job Creation Fund in FY 2013-14 to the CEC to develop  
              criteria and guidelines.

          Background: The California Clean Energy Jobs Act of 2012  
          (Proposition 39), which was approved by the voters in November  
          2012, requires most multistate businesses to determine their  
          California taxable income using a single sales factor method.  
          This change has the effect of increasing state corporate tax  
          revenue. For a five year period (FY 2013-14 through FY 2017-18),  
          Proposition 39 requires that half of the annual revenue raised  
          from the measure, up to $550 million, be transferred to a new  
          Clean Energy Job Creation Fund to support projects intended to  








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          improve energy efficiency and expand clean energy generation.  
          Proposition 39 caps administrative costs at four percent of  
          total funding. 

          The Governor's revised proposed budget would exclusively  
          allocate Proposition 39 funds in the Job Creation Fund to energy  
          efficiency and alternative energy projects at K-14 schools. For  
          FY 2013-14, $413 million for K-12 schools and $51 million to CCC  
          would be appropriated on a per-student basis. The minimum grant  
          size would be $50,000 or $15,000 for districts with less than  
          200 students. Eight positions and $4 million are proposed for  
          CEC to provide technical assistance to small districts.

          Proposed Law: This bill would require the creation of a  
          competitive grant program for school districts. The CEC would be  
          responsible for developing the criteria for project development,  
          ranking, approval, and energy savings reporting. The SDE, in  
          consultation with the OPSC, would be responsible for offering  
          technical assistance to applicants and providing outreach. The  
          SAB would be responsible for approving the grants and the OPSC  
          would be responsible for administering, processing, and  
          distributing funds to the school districts.

          The grant program would be required to give priority to  
          applications for projects that would provide an energy upgrade  
          at a school facility with above average energy consumption, will  
          benefit an economically disadvantaged school community, are  
          located in an area with above average unemployment, include  
          training and information to pupils and classified school  
          employees, enhance workforce development or utilize members of  
          the California Conservation Corps, and are a joint partnership  
          between two or more agencies.

          Related Legislation: 
              SB 35 (Pavley) would require the California State  
              University (CSU) and the California Community Colleges  
              (CCC), and requests the University of California (UC), to  
              develop and implement a near- and long- term strategy for  
              energy savings projects. Status: Sen. Education, hearing  
              canceled.
              SB 64 (Corbett) would require the State Energy Resources  
              Conservation and Development Commission (CEC) to provide  
              financial assistance, from monies resulting from the passage  
              of Proposition 39, to school districts, cities, and counties  








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              to install energy efficiency or clean energy technology in  
              public schools or municipal facilities. SB 64 is on the  
              Senate Appropriations Suspense File.
              SB 729 (Fuller) states Legislative intent to enact  
              Legislation to implement Proposition 39. Status: Senate  
              Rules Committee.
              AB 29 (Williams) would allocate $152 million over five  
              years to the CEC to administer financial assistance for the  
              UC, CSU, and CCC, to reduce energy demand and consumption.  
              Status: Assembly Utilities and Commerce, hearing canceled.
              AB 39 (Skinner) would direct the CEC to develop and provide  
              financial assistance to K-12 schools and community colleges  
              to improve energy efficiency, install clean energy  
              technology, or make energy system improvements. Status:  
              Assembly Appropriations.
              AB 114 (Salas) would direct the Labor and Workforce  
              Development Agency to award grants to eligible entities for  
              projects to provide job training on energy efficiency and  
              clean energy projects that are located in economically  
              disadvantaged communities. Status: Assembly Appropriations.
              AB 239 (Hagman) would require the Office of Public School  
              Construction to fund a zero-interest revolving loan program  
              and grant program for school districts to perform energy  
              efficiency retrofit or clean energy installation projects at  
              public schools. Status: Assembly Utilities and Commerce,  
              failed, reconsideration granted.

          Staff Comments: This bill would have five agencies coordinate in  
          developing and administering a competitive grant program. Staff  
          notes that the bill expresses a specific role for all of the  
          five agencies except for the CPUC. 

          Proposition 39 capped administrative costs to 4% of the funds  
          made available. Given that Proposition 39 is anticipated to make  
          $550 million available for energy efficiency projects, 4%  
          translates to $22 million, a substantial amount which should be  
          more than sufficient for administrative costs. However, this  
          bill proposes a grant program that will be developed and  
          administered by five agencies. While each of these agencies  
          bring a unique perspective and expertise to the program, the  
          administrative costs for five agencies to co-develop and  
          administer a grant program is likely to be significantly more  
          expensive than a program administered by one agency. 









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          This bill seems to suggest that the CEC would likely only be  
          involved in in the initial year for the development of criteria  
          and guidelines, but the SDE, OPSC, and SAB would have ongoing  
          roles in the program. The CEC estimates that their  
          responsibilities can be completed with between one and three  
          percent of the allocated funding. SDE estimates costs of  
          approximately $200,000 annually. CPUC believes their costs will  
          be minor and absorbable. Staff estimates that OPSC costs will  
          likely be in the hundreds of thousands to low millions and SAB  
          costs are likely in the hundreds of thousands annually.

          This bill would give priority to projects that are a joint  
          partnership between two or more agencies. Staff notes that the  
          benefit of that criterion is unclear as such a partnership does  
          not necessarily mean that a project will be more energy  
          efficient or more efficiently implemented.