BILL ANALYSIS                                                                                                                                                                                                    Ó






                           SENATE COMMITTEE ON EDUCATION
                                 Carol Liu, Chair
                             2013-2014 Regular Session
                                         

          BILL NO:       SB 594
          AUTHOR:        Steinberg
          AMENDED:       April 18, 2013
          FISCAL COMM:   Yes            HEARING DATE:  May 1, 2013
          URGENCY:       No             CONSULTANT:Lenin Del Castillo

           SUBJECT  :  Career Pathways Investment.
           
          SUMMARY 

          This bill authorizes several forms of financing mechanisms to  
          provide financial assistance for local educational agencies  
          (LEAs), community college districts, and business partnerships  
          to operate career pathways programs.  

           BACKGROUND  

          Existing law also establishes the following career technical  
          education (CTE) programs for public schools:
           
             1)   Regional Occupational Centers and Programs  .  Existing  
               law establishes various career technical education (CTE)  
               programs for public schools including Regional  
               Occupational Centers and Programs (ROCPs) that allow  
               students from multiple schools or districts to  
               participate in career technical training programs  
               regardless of the geographical location of their  
               residence in a county or region.  Existing law authorizes  
               the following types of ROCPs operational models:   
               (Education Code § 52300 et seq.)  

                   a)        County ROCP  

                   b)        Joint Powers Agency ROCP  

                   c)        Single District ROCP  

             2)   Partnership Academies  .  The Partnership Academy model  
               is a three-year program, for grades ten through twelve,  
               structured as a school-within-a-school and incorporates  
               (1) rigorous integrated academics with a career focus;  




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               (2) business partnerships that provide support through  
               curriculum resources, classroom speakers, field trips,  
               mentors, and internships; and (3) teachers who work as a  
               team in preparing students for careers and postsecondary  
               education. (Education Code § 54690 et seq.)  

             3)   Specialized Secondary Programs  .  A specialized  
               secondary program is a four-year grant program that  
               provides opportunities for students to obtain advanced  
               instruction, in addition to core course work, and skills  
               in technology appropriate to the curriculum.  
               Comprehensive high schools may use the grant funds for  
               programs that provide students with advanced learning  
               opportunities in a variety of subjects, including but not  
               limited to English-language arts, mathematics, science,  
               history and social science, foreign language, and the  
               visual performing arts.  The acquisition of technology  
               skills and the use of technology as a tool for  
               instruction and learning are also emphasized in these  
               programs. Frequently, specialized secondary programs are  
               established as a smaller learning community or a  
               school-within-a-school.   
                (Education Code § 58800 et seq.)  
                 
               4)   Agricultural Career Technical Education Incentive  
               Program  .  The Agricultural Career Technical Education  
               Incentive program provides local educational agencies  
               (LEAs) with funds to improve the quality of their  
               agricultural vocational education programs. The goal is  
               to maintain a high-quality, comprehensive agricultural  
               vocational program in California's public school system  
               to ensure a constant source of employable, trained, and  
               skilled individuals.  (Education Code § 52460)  
           
           ANALYSIS  

          1)   This bill establishes the  California Career Pathways  
               Investment Committee (Committee)  composed of the  
               following members:

               a)        The Chancellor of the California Community  
               Colleges, who will serve as 
                    the Chair.

               b)        The Superintendent of Public Instruction.





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               c)        The Chair of the California Workforce  
 
               Investment Board.

               d)        One appointee of the Senate Committee on Rules,  
               who shall represent 
                    the business community and serve a four-year term.

               e)        One appointee of the Speaker of the Assembly,  
               who shall represent the 
                    business community and serve a four-year term.

          2)   Provides authority for the Committee to allocate to LEAs,  
               community college districts, and applicants, monies  
               appropriated to the Career Pathways State Revolving Fund  
               for state financial assistance, including grants, loans,  
               and the repayment of Workforce Development Bonds issued  
               by the Committee.  

          3)   Defines an applicant as a business entity that enters  
               into a contract or memorandum of understanding with an  
               LEA, community college, or workforce investment board to  
               provide career technical education that connects pupils  
               to real-world experience and provides sustained exposure  
               to applied academics, skill development, work-related  
               education, and potential future employment, and that  
               applies to the Committee for state financial assistance,  
               as specified.  

          4)   Requires the Committee to establish criteria and  
               guidelines for evaluating applications for state  
               financial assistance, as specified, and give priority in  
               the allocation of state financial assistance as follows:


               a)        LEAs and community college districts that have  
               an unemployment rate 
                    higher than the statewide average unemployment rate  
                    for the most recent calendar year, as determined by  
                    the Employment Development Department, or a high  
                    school graduation rate lower than the statewide high  
                    school graduation rate for the most recent calendar  
                    year, as determined by the Committee using the  
                    California Longitudinal Pupil Achievement Data  
                    System.





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               b)        Local education agencies (LEAs) and community  
               college districts that 
                    include in their application a significant amount of  
                    private funding support from their business  
                    partners.

               c)        LEAs and community college districts that  
               include in their application 
                    articulated pathways connecting high school and  
                    postsecondary certificate and degree programs in  
                    their region.

               d)        LEAs and community college districts that  
               include in their application 
                    articulated pathways connecting high school and  
                    postsecondary certificate and degree programs in  
                    their region.

               e)        LEAs and community college districts that are  
               not seeking state 
                    financial assistance for existing activities.   
                    However, priority in allocating state financial  
                    assistance shall be given to applicants that seek to  
                    expand or augment existing investments in career  
                    pathways programs.

          5)   Defines career pathways programs as programs that support  
               various functions, including integrated academic and  
               technical learning that prepares pupils for both  
               postsecondary education and careers in high-growth or  
               high-need sectors of the economy, as specified,  
               curriculum and professional development, middle school  
               and early high school career exploration activities, and  
               externship and fellowship opportunities that expose  
               middle school and high school teachers and community  
               college faculty to the skills and competencies that  
               pupils need for successful employment in high-growth  
               sectors of the economy. 

          6)   Provides that the Committee allocate proceeds from the  
               sale of  Workforce Development Bonds  to applicants that  
               have entered into a memorandum of understanding with an  
               LEA or community college district to fund career pathways  
               programs.  Repayment of the bonds will be linked to  
               performance-based contracts that measure the academic  
               progress and employment records of students participating  




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               in the programs.

          7)   Requires the Committee to develop performance criteria  
               for determining the financial returns to private entities  
               investing in Workforce Development Bonds.  The  
               performance criteria shall include, but are not limited  
               to, high school pupil and community college student  
               achievement and opportunity in the following areas:


               a)        High school graduation.

               b)        Completion of postsecondary programs that  
               culminate in a certificate or 
                    degree.

               c)        Attainment of industry-recognized credentials  
               that are valued in high-
                    growth, high-need, or emerging economic sectors.

               d)        Provision of internships to high school pupils  
               and community college 
                    students.

               e)        Provision of paid summer jobs for high school  
               pupils and community 
                    college students.

               f)        Provision of externships for high school  
               teachers and community 
                    college faculty.

               g)        Provision of scholarships or other financial  
               assistance for students 
                    pursuing postsecondary education or training in a  
                    relevant career pathway.

               h)        Offer of paid employment or apprenticeship to  
               high school pupils or 
                    community college students who are participants or  
                    graduates of a career pathways program.

          8)   Provides that the Committee prepare forms, establish  
               procedures, set priorities, assess, and perform other  
               administrative functions as necessary.





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          9)   Requires the Superintendent of Public Instruction, the  
               Chancellor of the Community Colleges, and the California  
               Workforce Investment Board to enter into a memorandum of  
               understanding to allocate staff resources to the  
               Committee.  The costs to these entities shall be offset  
               by fees charged to applicants for Career Pathways Tax  
               Credits.

          10)  Allows local educational agencies (LEAs) and community  
               college districts to issue  lease revenue bonds  secured by  
               the lease of any of their property or enter into loan or  
               lease agreements not subject to the California  
               Constitution's debt limits with the California Career  
               Pathways Investment Committee, to finance the operation  
               of career pathways programs.

          11)  Establishes the  Career Pathways Investment Trust Fund  in  
               each LEA or community college district for the purpose of  
               financing program and administrative costs relating to  
               the operation of career pathways programs.  The trust  
               fund may accept revenues from any source, including  
               one-time property tax revenues resulting from the  
               dissolution of the assets of the former redevelopment  
               agencies, proceeds from the sale of Workforce Development  
               Bonds, other tax revenues, grants, loans, and  
               contributions or employment training funds made available  
               through the employment training panel or workforce  
               investment boards.  The trust fund shall be administered  
               by each LEA or community college district and shall be  
               used for qualified expenditures, administrative costs,  
               and grants, loans, and program costs associated with  
               career pathways programs.
                 
          12)  Establishes the  Career Pathways State Revolving Fund  for  
               the purpose of providing financial assistance to LEAs,  
               community college districts, and business entities that  
               have entered into agreements to implement and operate  
               career pathways programs.  Within the fund there shall  
               also be established a Career Pathways Financing Account,  
               a Career Pathways Grant Account, a Career Pathways Loan  
               Account, and additional accounts and subaccounts that the  
               Committee may establish from time to time, for purposes  
               as specified.  

          13)  Provides that all monies in the Career Pathways State  
               Revolving Fund shall be continuously appropriated without  




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               regard to fiscal year for the support of the Committee  
               and for expenditures for career pathways programs.  The  
               bill also provides that expenses incurred in carrying out  
               these purposes shall be payable solely from funds  
               provided pursuant to the bill's provisions and no  
               liability or obligation shall be imposed upon the state  
               and none shall be incurred by the Committee beyond the  
               extent to which money shall have been provided.

          14)  Requires for the calendar years beginning on or after  
               January 1, 2014, the Committee to allocate the  Career  
               Pathways Investment Credit  in an amount authorized in the  
               Budget Act for that calendar year.

          15)  Requires the Committee to:

               a)        Allocate the Career Pathways Investment Credit  
               for up to five calendar 
                    years for each application the Committee approves,  
                    as long as the amount allocated does not exceed the  
                    amount authorized in the Budget Act.

               b)        Give priority in allocating tax credits to the  
               following:

                    i)             Applicants that have entered into  
                  contracts or memorandums of 
                         understanding with Local education agencies  
                         (LEAs), community colleges, or workforce  
                         investment boards in communities that have an  
                         unemployment rate higher than the statewide  
                         unemployment rate, as determined by the United  
                         States Census, and a high school graduation  
                         rate lower than the statewide high school  
                         graduation rate, as determined by the Committee  
                         using the California Longitudinal Pupil  
                         Achievement Data System.

                    ii)            Applicants that have entered into a  
                  contract or memorandum of 
                         understanding with LEAs, community colleges, or  
                         workforce investment boards with proportions of  
                         private funding support that exceed the  
                         one-to-one match requirement as specified.






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                    iii)           Applicants that have entered into a  
                  contract or memorandum of 
                         understanding with LEAs or community colleges  
                         that offer articulated pathways connecting high  
                         school and postsecondary certificate and degree  
                         programs in their region.

                    iv)            Applicants that are not seeking tax  
                  credits for existing activities.  
                         However, priority shall be given to applicants  
                         that seek to expand or augment existing  
                         investments in career pathways programs.

               c)        To the maximum extent practicable, give  
               priority in allocating career 
                    pathways investment credits to applicants that seek  
                    to expand or augment existing investments in career  
                    pathways programs.

               d)        The Committee shall not give priority to any  
               applicant by virtue of the 
                    date of submission except to break a tie between two  
                    applicants with the same rating.

          16)  Requires applicants to enter into an enforceable contract  
               or memorandum of understanding with the Committee to  
               comply with the requirements of this bill.  The contract  
               or memorandum of understanding shall provide for legal  
               action to obtain specific performance or monetary damages  
               for breach of contract and shall require regular  
               programmatic audits.

          17)  Requires the Committee to adopt criteria that awards  
               credits to applicants that demonstrate that either the  
               applicant or the local education agency (LEA), community  
               college, or workforce investment board meets the  
               following criteria:

               a)        The effectiveness of the career pathways  
               program toward preparing 
                    students for productive, high-wage employment in  
                    growing or high-need sectors of the California  
                    economy, as specified.

               b)        The level of the applicant's investment in,  




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               oversight of, and ability to 
                    leverage and sustain current career pathways  
                    programs and current career technical education  
                    programs.

          18)  Requires the Committee to develop and provide forms for  
               the purposes of informing potential applicants.

          19)  Provides that the amount of credit reserved for a  
               calendar year shall not exceed 50 percent of the  
               qualified expenditures by the applicant for the calendar  
               year.

          20)  Requires the Committee to report to the Franchise Tax  
               Board, once each year, the identity of the qualified  
               taxpayers for whom the career pathway credits are  
               allocated each year.

          21)  Provides that the Committee may consult with the  
               Treasurer or the Tax Credit Allocation Committee  
               regarding allocation of credits, and they must aid the  
               Committee upon request.  The bill also provides that the  
               Committee shall adopt audit requirements.

          22)  Defines various terms for purposes of the bill.

          23)  Expresses legislative intent to appropriate $250 million  
               from the General Fund in 2013-14 to the Career Pathways  
               State Revolving Fund.  The source of the funds may  
               include Proposition 98 apportionments and offsetting  
               budget savings resulting from reforms to the Enterprise  
               Zone Program and the New Jobs Tax Credit.  The bill also  
               expresses legislative intent to reduce the statutory cap  
               on the authorization for the New Jobs Tax Credit from  
               $400 million to $300 million and to authorize $100  
               million for the Career Pathways Investment Credit,  
               effective January 1, 2014.

          24)  Makes a number of related declarations and findings. 

           STAFF COMMENTS  

           1)   Need for the bill  .  According to the author's office,  
               California suffers from too many high school dropouts,  
               too little meaningful career pathways programs at the  
               middle and high school levels, and shortages of skilled  




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               workers in high-growth sectors such as biotechnology,  
               nursing, and advanced manufacturing to fuel these sectors  
               of our economy. Investments in high quality career  
               pathways programs at the secondary school level through  
               public-private partnerships would bring a greater return  
               on the state's tax expenditure investment by enhancing  
               our workforce and leading to wage and employment growth. 

           2)   What are career pathways programs  ?  This bill defines an  
               "applicant" as a business entity that enters into a  
               contract or memorandum of understanding with a local  
               education agency (LEA), community college, or workforce  
               investment board to provide career technical education.   
               According to the bill, the business entities would be  
               required to connect pupils to real-world experience and  
               provide sustained exposure to applied academics, skill  
               development, work-related education, and potential future  
               employment.

               Career pathways programs would support various functions,  
               including integrated academic and technical learning that  
               prepares pupils for both postsecondary education and  
               careers in high-growth or high-need sectors of the  
               economy, curriculum and professional development, middle  
               school and early high school career exploration  
               activities, and externship and fellowship opportunities  
               that expose middle school and high school teachers and  
               community college faculty to the skills and competencies  
               that pupils need for successful employment in high-growth  
               sectors of the economy.  Programs include academically  
               relevant and rigorous curriculum working in tandem with  
               local industry experts, paid and unpaid jobs or  
               internships, and permanent or part-time hires of recent  
               graduates.

           3)   Will it work  ?  Will the bill's financial assistance and  
               tax credits lead to better education outcomes for  
               students?  SB 594 is premised on the belief that better  
               linkages between public school curriculum and real world  
               work experience will result in more engaged and  
               successful students, increased graduation rates, and  
               better prepared students for both college and career.   
               According to a 2006 study of California Regional  
               Occupational Centers and Programs (CROCP) conducted by  
               the School Improvement Research Group at the University  
               of California, Riverside and funded by the State  




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               Department Education, ROCP students improve their high  
               school grade point averages at a greater rate than  
               comparison students, enroll in post-secondary education  
               in large numbers, earn higher wages than comparison group  
               peers, have more success in securing raises and  
               promotions on the job, prefer ROCP classes over other  
               subjects, and question the value and relevance of many of  
                                                                      their high school courses.  A 2010 study conducted by the  
               Career Academy Support Network finds that, after more  
               than four decades of development and three decades of  
               evaluation, career academies (small learning communities  
               that provide a college-preparatory curriculum with a  
               career-related theme) have been effective in improving  
               outcomes for students during and after high school and  
               declares them a proven strategy to prepare high school  
               students for college and careers.

           4)   Priorities  .  The Committee may wish to consider whether  
               career technical education program partnerships between  
               local educational agencies and private business entities  
               should be encouraged through the use of tax credits and  
               the other financing tools proposed.  The bill would  
               provide significant state assistance for the  
               establishment of career pathways programs at a time when  
               schools have many other compelling needs such as hiring  
               quality teachers and providing professional development  
               for existing teachers.  Additionally, the bill would  
               allow local educational agencies and community college  
               districts to issue lease revenue bonds to establish  
               career pathways programs allowing them to further  
               increase their existing debt levels.  Is this the  
               appropriate time for additional borrowing?   

           SUPPORT  

          America's Edge California
          Bay Area Council
          California Association of Regional Occupational Centers and  
          Programs
          California School Boards Association
          Sacramento City Unified School District
          San Bernardino County District Advocates for Better Schools
          San Francisco Unified School District

           OPPOSITION





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           None received.