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