BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 594| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 594 Author: Steinberg (D) Amended: 5/24/13 Vote: 21 SENATE GOVERNANCE & FINANCE COMMITTEE : 5-0, 4/24/13 AYES: Knight, Beall, DeSaulnier, Emmerson, Hernandez NO VOTE RECORDED: Wolk, Liu SENATE EDUCATION COMMITTEE : 8-0, 5/01/13 AYES: Liu, Wyland, Block, Correa, Hancock, Hueso, Jackson, Monning NO VOTE RECORDED: Huff SENATE APPROPRIATIONS COMMITTEE : 7-0, 5/23/13 AYES: De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg SUBJECT : California Career Pathways Investment SOURCE : Author DIGEST : This bill establishes the California Career Pathways State Revolving Fund (Fund) for the purpose of providing financial assistance to local educational agencies and community college districts (CCDs) that have entered into agreements to implement and operate career pathways programs. Within the Fund there shall be established a Career Pathways Grant Account and additional accounts and subaccounts that the California Career Pathways State Investment Committee (Committee) may establish. This bill authorizes the Committee and local educational CONTINUED SB 594 Page 2 agencies and CCDs, to enter into, a pay-for-performance contract for a career pathways pay-for-performance pilot project (Pilot Project) to fund career pathways programs operated by the business entity and a school district, CCD, or a consortium of school districts and CCDs and under which a business entity partner may be compensated for its costs. ANALYSIS : California provides various tax credits designed to provide incentives for taxpayers that incur certain expenses, such as child adoption, or to influence behavior, including business practices and decisions, such as research and development credits and Geographically Targeted Economic Development Area credits. The Legislature typically enacts such tax incentives to encourage taxpayers to do something, but for the tax credit, they would not otherwise do. The California Constitution requires counties, cities, and school districts to get voter approval for long-term debt. Counties, cities, school districts, CCDs, and some special districts can issue general obligation bonds, secured by ad valorem property tax revenues, with 2/3-voter approval, and implemented in statute in the Government Code. State law allows public agencies to buy and sell property. Public agencies have used this authority to enter into various forms of lease transactions, including certificates of participation and sale-leasebacks, among others. State law applies specific laws to school and CCDs when leasing property. Additionally, state law authorizes public agencies to use certain vehicles to issue lease-revenue bonds, where investors provide cash to the issuer to build a project, which in turn produces revenues to repay bond investors. This bill: 1. Establishes in state government the Committee. The Committee shall be composed of the following members: A. The Chancellor of the California Community Colleges (CCC), or his/her designee, who will serve as the chairperson of the Committee. B. The Superintendent of Public Instruction (SPI) or CONTINUED SB 594 Page 3 his/her designee. C. The Chair of the California Workforce Investment Board (Board), or his/her designee. D. One appointee of the Senate Rules Committee, who shall represent the business community and will serve a four-year term. E. One appointee of the Speaker of the Assembly, who will serve a four-year term. The Committee shall be granted the sole authority to allocate to local educational agencies and CCDs moneys appropriated to the Fund for state financial assistance, including grants and pay-for-performance contracts entered into as part of a Pilot Project. The Committee shall establish criteria and guidelines for state financial assistance, including requirements for commitments of financial or other resources by applicants or a local educational agency, CCD, or workforce investment board. The Committee shall give priority in allocating state financial assistance to the following: A. Proposals that would fund a work-based learning specialist to convene, connect, measure, or broker efforts to establish or enhance a locally defined career pathways program that provides connections between local educational agencies and business entities. B. Local educational agencies and CCDs that have an unemployment rate higher than the statewide average 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. C. Local educational agencies and CCDs that include in their application a significant amount of private funding support from their business partners. CONTINUED SB 594 Page 4 D. Local educational agencies and CCDs that include in their application articulated pathways connecting high school and postsecondary certificate and degree programs in their region. E. Local educational agencies and CCDs 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. The SPI, the Chancellor of the CCC and the Board shall 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 state financial assistance. 2. Establishes the Pilot Project. The Committee may spend up to $10 million of the amount appropriated to the Fund for the Pilot Project. The performance-based compensation shall be paid to private entities by educational agency participants pursuant to a pay-for-performance contract between the school district or CCD that specifies the accountability and performance measurements that determine the extent to which a business entity partnering with the district may be compensated for its costs. The amount of compensation shall vary in accordance with demonstrated performance. Performance measures shall include all of the following: A. Demonstrated improvement in academic performance. B. Demonstrated improvement in postsecondary enrollment. C. Decreased dropout rates. D. Demonstrated improvement in transitions to appropriate employment, apprenticeships, or any other job training school, if applicable. E. Measurements of pupil, parent, and employer satisfaction. 3. Establishes in each local educational agency and CCD a Career CONTINUED SB 594 Page 5 Pathways Investment Trust Fund (Trust Fund) 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 state grants, one-time property tax revenues resulting from the dissolution of the assets of the former redevelopment agencies, other tax revenues, grants, loans, or contributions or employment training funds made available the employment training panel or workforce investment boards. The Trust Fund shall be administered by each local educational agency or CCD. Moneys in a Trust Fund may be used for any of the following purposes: A. Career pathways program operations. B. Development of rigorous and career-relevant curriculum by the applicant and school district, CCD or consortium of districts. C. Paid internships. D. Post-high-school financial aid for college, licensing, and credentialing programs. E. Wage subsidies for full-time employment for pupils who successfully complete a career pathways program. 4. The Committee shall develop performance criteria for determining the financial returns to private entities participating in a Pilot Project. The performance-based compensation to be paid to private entities by educational agency participants for each pay-for-performance contract shall be specified in the contract. 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 post-secondary programs that culminate in a certificate or degree. C. Attainment of industry-recognized credentials that are CONTINUED SB 594 Page 6 valued in high-growth, high-need or emerging economic sectors. D. Provision of high school pupil and community college student internships. E. Provision of paid summer jobs for high school pupils and community college students. F. Provision of high school teacher and community college faculty externships. G. Provision of scholarships or other financial assistance for students pursuing post-secondary education or training in a relevant career pathway. H. Offers of paid employment or apprenticeship to high school pupils or college students who are program participants or graduates. 5. Expresses legislative intent to appropriate $250 million from the General Fund (GF) in 2013-14 to the Fund, and says that the source of funds may include Proposition 98 apportionments and offsetting budget savings resulting from reforms to the Enterprise Zone Program and the New Jobs Tax Credit. This bill states legislative intent to reduce allocations of tax credits for the New Jobs Tax Credit from $400 million to $300 million SB 15X3 (Calderon, Chapter 17, Statutes of 2009), and to authorize $100 million in Career Pathways Investment Tax Credit, effective January 1, 2014. 6. Makes other legislative findings and declarations supporting its provisions. This bill also defines many terms, including "applicant," "authentic application," "budget," "career pathways investment trust fund," "career pathways programs," "career pathways state revolving fund," "committee," "qualified expenditures," and "career pathways pay-for-performance pilot project." FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes According to the Senate Appropriations Committee: CONTINUED SB 594 Page 7 Unknown (greater than $50,000 GF) costs to the Franchise Tax Board related to printing, processing and information technology costs. Unknown, likely significant costs to the Department of Education, Chancellor of the CCC, and the Board, to provide staff and resources to the Committee. In addition, this bill states intent (1) to appropriate $250 million from the GF to the Fund, and (2) to redirect $100 million from a current tax credit program to the Career Pathways Investment Credit. SUPPORT : (Verified 5/24/13) America's Edge Bay Area Council California Association of Regional Occupational Programs and Centers California Chamber of Commerce California School Board Association California School Employees Association Metropolitan Education District Sacramento City Unified School District San Bernardino County District Advocates for Better Schools San Francisco Unified School District Silicon Valley Leadership Group Southwest California Legislative Council United Way of California AB:k 5/25/13 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED