BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 39| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 39 Author: De León (D) and Steinberg (D), et al. Amended: 5/28/13 Vote: 21 SENATE EDUCATION COMMITTEE : 8-0, 4/17/13 AYES: Liu, Block, Correa, Hancock, Hueso, Huff, Jackson, Monning NO VOTE RECORDED: Wyland SENATE ENERGY, UTIL. & COMMUNIC. COMM. : 11-0, 4/30/13 AYES: Padilla, Fuller, Cannella, Corbett, De León, DeSaulnier, Hill, Knight, Pavley, Wolk, Wright SENATE APPROPRIATIONS COMMITTEE : 5-0, 5/23/13 AYES: De León, Hill, Lara, Padilla, Steinberg NO VOTE RECORDED: Walters, Gaines SUBJECT : Energy: school facilities: energy efficiency upgrade projects SOURCE : Author DIGEST : This bill enacts the Clean Energy Employment and Student Advancement (CEESA) Act of 2013 and requires the Office of Public School Construction (OPSC), in coordination with the State Energy Resources Conservation and Development Commission (SERCDC), to develop the CEESA Program to award grants, based on the average daily attendance, to a school district, weighted as CONTINUED SB 39 Page 2 specified, for energy efficiency upgrade projects pursuant to the California Clean Energy Jobs Act, as specified. This bill specifies the bidding requirements for contracts for projects that are funded, in whole or in part, by monies from the Clean Energy Job Creation Fund (Fund) and requires contractors for those contracts to meet specified requirements. This bill requires, with specified exceptions, the Department of Industrial Relations (DIR) to monitor and enforce applicable prevailing wage requirements and authorizes the Director of DIR to charge the contracting agency for its reasonable and directly related costs incurred. ANALYSIS : In November 2012, the voters passed Proposition 39, enacting the Act which changed the way 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 Fund. Monies 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. CONTINUED SB 39 Page 3 D. All projects are subject to audit. E. Program overhead costs are capped at 4%. F. Funds only are appropriated to agencies with established expertise in managing energy projects and programs. G. All funded programs are required to coordinate with the California Energy Commission (CEC) and the Public Utilities Commission (PUC) in order to avoid duplication and leverage existing energy efficiency and clean energy efforts. 1.Establishment of a Citizens Oversight Board (COB) 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 COB is also required to submit an evaluation of the program to the Legislature identifying any necessary changes to meet the Act's objectives. Existing law: 1.Establishes the ten-member State Allocation Board (SAB) and provides that members consist of the Director of Finance; the Director of Department of General Services (DGS); 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. 2.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. CONTINUED SB 39 Page 4 3.Establishes OPSC within DGS 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. This bill: 1. Enacts the CEESA Act of 2013 and requires the Office of Public School Construction, in coordination with the SERCDC, to develop the CEESA Program to award grants, based on the average daily attendance, to a school district, weighted as specified, for energy efficiency upgrade projects pursuant to the California Clean Energy Jobs Act. 2. Requires the SERCDC to develop criteria for project development, approval, and energy savings reporting. 3. Requires the SERCDC to establish a technical assistance grant program to assist in the assessment, development, and implementation of energy upgrade projects for school districts and charter schools without access to a utility-sponsored technical assistance program. 4. Requires the SERCDC, in coordination with the University of California energy research centers, to develop innovative facility evaluation systems to assist school districts with facility evaluations, benchmarking, scoping, and investigation. 5. Authorizes the SERCDC, in consultation with the California Conservation Corps and the certified community conservation corps, to provide pre-audit, audit, and post-installation verification services to assist school districts. 6. Requires the SERCDC to develop guidelines for a financing program for projects for which grants are inappropriate or not needed for implementation. 7. Requires the SERCDC to develop a database to quantify the costs and benefits of funded projects. 8. Requires a school district or a charter school facility receiving monies from the Fund to repay those monies under CONTINUED SB 39 Page 5 specified conditions. For the 2013-14 fiscal year, this bill provides that monies from the fund, upon appropriation by the Legislature, would be available to fund energy efficiency projects that are on the Emergency Repair Program unfunded approval list as of January 1, 2013. 9. Specifies the bidding requirements for contracts for projects that are funded, in whole or in part, by monies from the Fund and requires contractors for those contracts to meet specified requirements. 10.Requires, with specified exceptions, the DIR to monitor and enforce applicable prevailing wage requirements and authorizes the DIR to charge the contracting agency for its reasonable and directly related costs incurred. Comments 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: 1.Projects to conduct energy efficiency retrofits and clean energy installations in public schools, universities and colleges, and other public facilities. 2.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. 3.Training and employment of disadvantaged youth, veterans, and others, on energy efficiency and clean energy projects, specifically citing the California Conservation Corps, Certified Community Conservation Corps, YouthBuild, and other existing workforce development programs. The Governor's proposed 2013-14 Budget includes a plan to implement the provisions of Proposition 39 by designating all Fund monies for K-12 schools and community colleges in 2013-14 and for the subsequent four years. CONTINUED SB 39 Page 6 The Governor's proposal appropriates 89% of the funding to the California Department of Education (CDE) and 11% to the 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 CEC and the PUC, 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. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No According to the Senate Appropriations Committee: Annual costs likely in the hundreds of thousands to low millions from the Fund (special fund) for OPSC for the administration of the program. Annual costs of approximately $200,000 from the Fund for SDE staff and outreach travel. Annual costs likely in the hundreds of thousands from the Fund for SAB to approve grants. Minor and absorbable cost to the PUC for consulting with OPSC. CONTINUED SB 39 Page 7 One-time costs in the millions of dollars from the Fund in FY 2013-14 to the CEC to develop criteria and guidelines. SUPPORT : (Verified 6/3/13) State Superintendent of Public Instruction African American Student Social Work Association Alta Med AMERESCO American Civil Liberties Union American Lung Association Asian Pacific Environmental Network Bay Area Parent Leadership Action Network Bloom Energy Blue Green Alliance BRONZE California Charter Schools Association California Energy Efficiency Industry Council California Environmental Justice Alliance California Labor Federation, AFL-CIO California Rural Legal Assistance Foundation California School Employees Association, AFL-CIO California Special Districts Association California State Parents and Teachers Association California's Coalition for Adequate School Housing Center for Community Action and Environmental Justice Center on Race, Poverty & the Environment Centro La Familia Clean Tech San Diego CLUE California Coalition for Adequate School Housing Communities for Better Environment Corps Network County School Facilities Consortium Emerald Cities Collaborative (Bay Area) Environment California Environmental Defense Fund Environmental Health Coalition ETAGEN FirstFuel Software, Inc. Global Green USA Greenlining Institute Johns Manville - A Berkshire Hathaway Company Latino Environmental Advancement Project CONTINUED SB 39 Page 8 League of California Cities Los Angeles Business Council Los Angeles Unified School District Natural Resources Defense Council People Organizing to Demand Environmental & Economic Rights PolicyLink Public Employees Union, Local One School Energy Coalition SCOPE - Strategic Community Agenda South Coast Air Quality Management District Southern California Pipe Trades District Council 16 State Building and Construction Trades Council Sunrun TRANE- a brand of Ingersoll Rand Workforce & Economic Development YouthBuild USA PQ:ej 6/3/13 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED