BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    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  
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          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  

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                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.


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             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  

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             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  

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                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:


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             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

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