BILL ANALYSIS Ó
AB 1088
Page 1
Date of Hearing: April 29, 2015
ASSEMBLY COMMITTEE ON EDUCATION
Patrick O'Donnell, Chair
AB 1088
(O'Donnell) - As Amended April 22, 2015
SUBJECT: Education facilities: bond act: Greene Act
SUMMARY: Places the Kindergarten-University Public Education
Facilities Bond Act on an unspecified statewide general
election, to be operative only if approved by voters at the
unspecified statewide general election. Makes changes to the
School Facility Program (SFP). Specifically, this bill:
1)Establishes the ___ State School Facilities Fund and
authorizes the State Allocation Board (SAB) to apportion funds
to school districts from funds transferred to the ___ State
School Facilities Fund from any source for the purposes
specified in the SFP.
2)Authorizes an unspecified amount of general obligation (G.O.)
school facilities bond to be placed on an unspecified
statewide general election and specifies the funds to be
allocated as follows:
a) An unspecified amount for kindergarten through grade 12
(K-12) allocated to the following programs:
i) New Construction;
ii) Modernization; and,
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iii) Charter School Facilities Program.
b) An unspecified amount for higher education facilities
allocated to the following:
i) California Community Colleges (CCC);
ii) University of California (UC) and the Hastings
College of Law; and,
iii) California State University (CSU).
3)Establishes the ___ California Community College Capital
Outlay Bond Fund and authorizes the deposit of funds from the
proceeds of bonds issued and sold pursuant to this bill to be
deposited into the fund for the purposes of construction;
renovation and reconstruction of CCC facilities; site
acquisition; the equipping of new, renovated or reconstructed
facilities; and to provide funds for the payment of
preconstruction costs, including, but not limited to,
preliminary plans and working drawings for CCC facilities.
4)Establishes the ___ University Capital Outlay Bond Fund and
authorizes the deposit of funds from the proceeds of bonds
issued and sold pursuant to this bill to be deposited into the
fund for the purposes of construction; renovation and
reconstruction of facilities; site acquisition; the equipping
of new, renovated or reconstructed facilities; and to provide
funds for the payment of preconstruction costs, including, but
not limited to, preliminary plans and working drawings for
facilities of the UC, CSU, and Hastings College of Law.
5)Makes the following changes to the SFP:
a) Requires the SAB to convene a workgroup comprised of
representatives of the Office of Public School Construction
(OPSC), the Department of Finance (DOF), the Division of
State Architect (DSA), the California Department of
Education (CDE), other state agencies, and interested
stakeholders to recommend changes to the SFP that will
shorten and streamline the process for the construction and
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modernization of school facilities. Requires the SAB to
submit a report with recommendations to the Legislature by
September 1, 2016.
b) Strikes an obsolete provision requiring the SAB to
conduct an evaluation on the costs of new construction and
modernization of small high schools.
c) Authorizes the SAB to require the following:
i) Each school district that elects to participate in
the new construction program funded by the proceeds of
any bond approved by voters after January 1, 2016 to
reestablish eligibility pursuant to regulations adopted
by the SAB; and,
ii) Submit information describing existing facilities in
the school district for the purpose of establishing a
statewide inventory pursuant to regulations adopted by
the SAB.
d) Repeals the provisions that do the following:
i) Requires, for the purpose of determining existing
school building capacity, the calculation to be adjusted
for first priority status as that calculation would have
been made under the policies of the SAB in effected
immediately preceding September 1, 1998.
ii) Requires the maximum school building capacity for
each applicant district be increased by the number of
pupils reported by the Superintendent of Public
Instruction (SPI) as excess capacity as a result of
participation in the Year-Round School Grant Program.
Repeals the requirement that the adjustment be calculated
on the basis, at the district's option, of either the
district as a whole or the appropriate attendance area.
iii) Requires each school on a multitrack year-round
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calendar that has a density of 200 or more pupils
enrolled per acre that is located in a school district
with 40 percent of its pupils attending multitrack
year-round schools be exempted from the increase in
school building capacity required by Education Code (EC)
Section 17071.35.
e) Expresses the intent of the Legislature to adjust the
local match requirements for a new construction or
modernization grant based on a school district's ability to
raise local revenue, beginning with the proceeds from any
bond approved by voters after January 1, 2016.
f) Authorizes, beginning with the proceeds from any bond
approved by voters after January 1, 2016, a new
construction grant to be used for career technical
education (CTE) facilities, joint use facilities, and
preschool facilities located at a schoolsite.
g) Requires the OPSC, in consultation with the CDE, to
recommend to the SAB regulations that will provide school
districts with flexibility in designing instructional
facilities.
h) Authorizes the SAB to require each school district that
elects to participate in the modernization program funded
by the proceeds of any bond approved by voters after
January 1, 2016 to reestablish baseline eligibility for
each schoolsite pursuant to regulations adopted by the SAB.
i) Expresses the intent of the Legislature to adjust the
local match requirements for a modernization grant based on
a school district's ability to raise local revenue,
beginning with the proceeds from any bond approved by
voters after January 1, 2016.
j) Authorizes, beginning with the proceeds from any bonds
approved by voters after January 1, 2016, a modernization
grant to be used for rehabilitating CTE facilities, seismic
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retrofits, and rehabilitating existing facility for use by
a preschool located at an existing schoolsite.
aa) Finds and declares that the state has an aging and
deteriorating school facilities inventory and in certain
circumstances, it would be prudent to replace those
facilities rather than to expend state and local
modernization bond funds. Requires the OPSC to provide to
the SAB recommendations on the value of allowing school
districts to replace existing facilities on existing
schoolsite.
EXISTING LAW:
1)Requires, under the Leroy F. Greene School Facilities Act of
1998, the SAB to allocate to applicant school districts
prescribed per-unhoused-pupil state funding for construction
and modernization of school facilities, including hardship
funding, and supplemental funding for site development and
acquisition.
2)Provides that a school district's ongoing eligibility for new
construction funding is determined by making calculations
related to certain factors, including, but not limited to,
enrollment projections by utilizing a cohort survival
enrollment projection system, the number of students that may
be adequately housed in the existing school building capacity
of the district, and increases or decreases in enrollment
resulting from receipt of funding from the Year-Round School
Grant Program.
3)Provides that a school district is eligible to receive an
apportionment for the modernization of a permanent school
building that is more than 25 years old or a portable
classroom that is at least 20 years old. A school district is
eligible to receive an additional apportionment for
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modernization of a permanent school building every 25 years
after the date of the previous apportionment or a portable
classroom every 20 years after the previous apportionment.
FISCAL EFFECT: Unknown
COMMENTS: Background. The construction and rehabilitation of
public kindergarten through grade 12 (K-12) facilities are
funded by a combination of state and local G.O. bonds,
developer's fees and local assessments such as Mello Roos
community facilities districts. The New Construction program
requires a 50% match from local educational agencies (LEAs),
unless the LEA qualifies for financial hardship, which pays up
to 100% of project costs. Modernization funds are awarded at
60% with a 40% match. Since the inception of the SFP in 1998,
voters have approved $35.4 billion in state G.O. bonds for K-12
schools.
-----------------------------------------------------------------
| Ballot | Measure | Amount | % Passage |
| | | | |
| | | | |
|-------------+-------------+-----------------------+-------------|
|November |Proposition |$9.2 billion | 62.5 |
|1998 |1A | | |
| | | | |
| | | ($6.7 billion | |
| | |K-12 + | |
| | | | |
| | | | |
| | | $2.5 billion | |
| | |Higher Ed) | |
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| | | | |
| | | | |
|-------------+-------------+-----------------------+-------------|
|November |Proposition |$13.05 billion | 59.1 |
|2002 |47 | | |
| | | | |
| | | ($11.4 billion | |
| | |K-12 + | |
| | | | |
| | | | |
| | | $1.65 billion | |
| | |Higher Ed) | |
| | | | |
| | | | |
|-------------+-------------+-----------------------+-------------|
|March 2004 |Proposition |$12.3 billion |50.9 |
| |55 | | |
| | | | |
| | | ($10 billion K-12 | |
| | |+ | |
| | | | |
| | | | |
| | | | |
| | | $2.3 billion | |
| | |Higher Ed) | |
| | | | |
| | | | |
|-------------+-------------+-----------------------+-------------|
|November |Proposition |$10.416 billion |56.9 |
|2006 |1D | | |
| | | | |
| | | ($7.329 K-12 + | |
| | | | |
| | | | |
| | | $3.087 billion | |
| | |Higher Ed) | |
| | | | |
| | | | |
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The last education bond on the statewide ballot was Proposition
1D, which was passed by voters on the November 2006 ballot.
Proposition 1D provided $10.416 billion for K-12 and higher
education facilities and established new K-12 grant programs,
specified through the following allocations:
1)$7.329 billion for K-12 facilities as follows:
a) $1.9 billion for new construction projects (of which up
to $199.5 million can be set aside for seismic repairs);
b) $3.3 billion for modernization projects;
c) $1 billion for overcrowding relief grants through the
removal of portables;
d) $500 million for charter school facilities;
e) $500 million for career technical education (CTE)
facilities and equipment;
f) $100 million for high performance (green) projects; and,
g) $29 million for joint-use projects.
2)$3.087 billion for higher education facilities as follows:
a) $1.507 billion for CCC;
b) $890 million for UC, of which $200 million was available
for medical education programs; and,
c) $690 million for CSU.
K-12 remaining bond authority. Due to the state's budget crisis
and poor credit ratings, the Pool Money Investment Board halted
the regular sale of all G.O. bonds in December 2008 and slowed
the disbursement of funds. The SAB, comprised of ten members
that include appointments by the Governor, the Speaker of the
Assembly and the Senate President pro Tem, is the body that
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allocates bond funds and oversees the administration of the SFP
staffed by the OPSC, within the Department of General Services.
The SAB has been making unfunded approvals since 2009 to enable
districts to continue their facilities planning. The unfunded
approvals are converted to apportionments when bonds are sold
and cash becomes available.
According to the OPSC, as of April 15, 2015, approximately
$195.4 million remains in bond authority from the 2002, 2004,
and 2006 bonds, as follows:
-----------------------------------------------------------------
| Remaining Bond Authority - as of April 15, 2015 |
| |
| |
-----------------------------------------------------------------
|--------------------------------+--------------------------------|
|Program |Amount in millions |
| | |
| | |
|--------------------------------+--------------------------------|
|New Construction |$17.8* |
| | |
| | |
|Modernization |$4.5* |
| | |
| | |
|Seismic Mitigation |$141.2 |
| | |
| | |
|Career Technical Education |$2.3 |
| | |
| | |
|Charter |$27.1 |
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| | |
| | |
|High Performance |$.5 |
| | |
| | |
|Overcrowding Relief |$2 |
| | |
| | |
|--------------------------------+--------------------------------|
|Total |$195.4 |
| | |
| | |
|*Due to project rescissions | |
| | |
| | |
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Source: Office of Public School Construction
The majority of remaining authority is derived from funds for
seismic projects. Proposition 1D authorized up to 10.5% of New
Construction funds to be used for seismic repair,
reconstruction, or replacement. Seismic dollars have gone out
slowly, partly due to fairly narrow eligibility criteria. New
Construction and Modernization funds have been exhausted since
2012. The funds currently available are due to funds returned
to the program.
What does this bill do? This bill will place a K-12 and higher
education school facilities bond on an unspecified statewide
ballot. The bill currently contains unspecified amounts for
K-12 and higher education. According to the author, the amounts
will be determined pending further examinations of need and
discussions with the Administration and other parties. Contrary
to the three prior bonds, this bill proposes to fund just the
basic programs: New Construction, Modernization and Charter
School Facilities Program (charter Schools do not receive funds
from New Construction or Modernization).
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Need. The amount of funding needed for K-12 school facilities
is hard to calculate, as there is no statewide inventory or
mechanism to collect projected need information from LEAs and
charter schools. Eligibility for New Construction is done using
the cohort survival projection method, which, generally, is
based on projected need after accounting for existing capacity
(or seats). LEAs established their baseline eligibility in
1999, and update the eligibility as needed, usually prior to
submitting an application for funding. At the informational
hearing this Committee held on February 11, 2015, the assistance
Executive Officer of the State Allocation Board estimated a need
of $3.54 billion for New Construction over the next eight years.
LEAs are eligible for Modernization funds based on the age of a
building - 25 years for permanent buildings and 20 years for
portable buildings - and enrollment at the schoolsites. Based
on the number of schoolsites that have established eligibility,
OPSC estimates a need of $4.4 billion for Modernization.
However, OPSC cautions that this estimate is based only on 36%
of schoolsites that have established eligibility. The $4.4
billion estimate may be low.
Another factor to take into consideration is the amount in
funding requests submitted to the OPSC despite lack of funds for
New Construction or Modernization. Since 1998, voters have
authorized $17.6 billion for New Construction and $11.23 billion
for Modernization projects. Bond authority for the New
Construction program has been depleted since July, 2012 and
Modernization since May, 2012. According to the OPSC, the
annual average funding approved by the SAB annual is $1.237.5
billion for New Construction and $788 million for Modernization.
Applications received since 2012 were initially placed on an
Unfunded "Lack of Authority" list. Since November 1, 2012, the
SAB established an "Applications Received Past Existing
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Authority" list. A total of $1.3 billion have been submitted
between the "Lack of Authority" and the "Past Existing
Authority" lists. There are likely many districts not
submitting applications because no funding is available and it
is unclear whether applications on either list will receive
funding.
SFP changes. State bond funds are allocated pursuant to the
SFP, also called the Leroy Greene School Facilities Act of 1998,
and administered by the SAB. In 2012, the SAB formed a Program
Review Subcommittee that spent more than a year meeting monthly
to review various aspects of the SFP. In January, 2014, the
Subcommittee, chaired by former Assemblymember Joan Buchanan
(D-Alamo), submitted recommendations to the SAB, including the
following regarding a new bond: "There is demand for new
construction and modernization funding. The Subcommittee
recognizes that the State has appropriately been a partner in
building new schools and modernizing aging facilities. To date,
the School Facility Program has successfully provided $33.93
billion for 11,106 projects and should be continued." The
Subcommittee also made a number of recommendations relating to
New Construction, Modernization, financial hardship, special
programs, portable buildings, facility maintenance, statewide
school facilities inventory, and county offices of education.
This bill incorporates several of the recommendations made by
the Subcommittee as well as additional provisions in response to
the Governor's concerns, as follows:
1)New Construction. As mentioned previously, the baseline
eligibility was established in 1999, after the enactment of
the SFP in 1998. School districts update the baseline
eligibility on an ongoing basis, or when they are applying for
funding. The Subcommittee members acknowledged that the
reported eligibility may be inaccurate. School districts that
have not applied for funding have not updated their
eligibility. School districts may have constructed facilities
using local funds that affect their eligibility for state
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funding. New developments that may have been captured in the
eligibility calculation may have changed due to the housing
downturn. This bill:
a) Gives the SAB the authority to require school districts
interested in seeking future bond funds (any bond passed
after January 1, 2016) to reestablish eligibility.
b) Authorizes the SAB to require school districts to submit
data on existing school buildings in the district in order
to establish an inventory.
c) Authorizes New Construction funds to be used to
incorporate CTE, joint use, and preschool facilities
operating on a schoolsite.
2)Modernization. LEAs submit modernization eligibility for
specific schoolsites prior to or when seeking bond funding.
As mentioned previously, eligibility is based on the age of
the building and enrollment at the site. The Subcommittee had
similar concerns that modernization eligibility may not be
updated. This bill:
a) Gives the SAB authority to require LEAs seeking
modernization funds from any bonds passed by voters after
January 1, 2016 to reestablish modernization eligibility.
The bill does not include authorizing the SAB to require
school districts to submit data for the purposes of the
inventory. Staff recommends an amendment to apply the
requirement on districts seeking modernization funds.
b) Authorizes Modernization funds to be used to
rehabilitate facilities for CTE and seismic retrofits and
to rehabilitate existing facilities for use by a preschool
located at a schoolsite.
c) Directs OPSC to provide a recommendation to the SAB on
the value of allowing school districts to replace existing
facilities on existing schoolsites. This is to address
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school districts' concern that many of the existing
facilities are very old, and it may make more fiscal sense
to provide funding that will enable school district to
demolish and replace an existing building.
3)Instructional facilities flexibility. Based on regulations
adopted by the CDE, the SFP generally funds classrooms that
are 960 square foot spaces. Teaching and learning have
changed over time. Teachers do not stand in front of a
classroom with a blackboard six hours a day anymore. Today,
teachers may utilize more project based learning, with
students working in small groups, which require larger common
areas with movable furniture. The Subcommittee recommends
aligning the SFP regulations with the CDE regulation to give
LEAs more flexibility. This bill:
a) Directs the OPSC to make recommendations to the SAB that
will provide school districts with flexibility in designing
instructional facilities.
Governor's Budget. The Governor has indicated concerns
regarding the use of bonds to fund school facilities and
questions whether the State should have any role in student
housing. The Governor has also highlighted problems he sees
with the SFP, including the processes for plan approvals and
funding. To address this concern, the bill includes a
provision requiring the SAB to form a workgroup that includes
state agencies, such as the DSA and CDE, the DOF, and
stakeholders to develop recommendations on how the process
for constructing and modernizing schools can be streamlined
and shortened. The bill directs the workgroup to consider
requirements that can be done through self-certification.
The 2015-16 budget suggests increasing local contribution
while minimizing state participation. Specifically, the
Governor proposes to provide limited state support for
districts that may not be able to generate local bond dollars
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due to low assessed valuations. The proposal does not
specify the threshold for eligibility, level of funding or
source of funding (presumably General Fund). The bill
expresses the intent of the Legislature to adjust the local
match (currently 50% for New Construction and 40% for
Modernization) based on a school district's ability to
generate local funds.
The Governor also proposes to lift Proposition 39 rate caps
to increase funds generated through local bonds (assuming
voter approval), adjust developer fees, and authorize
districts to use funds set aside for maintenance of
facilities for construction and modernization.
Impact of school facilities on student learning. Studies have
found a positive relationship between condition of school
facilities and student achievement. According to the CDE,
facility condition, design and utilization affect student and
staff attendance, retention of teachers, student disruptions,
time teachers and students spend on instruction/learning
activities, curriculum offerings, teacher and student time in
school (school calendar), participation by staff and students in
extra-curricular activities, parent visits, and extent of local
school program innovations. Students cannot focus on learning
if they are too cold or too hot in a classroom. They cannot
learn if poor air quality affects their health. Students also
cannot focus on learning when classrooms are so overcrowded that
they do not have their own desks. According to the CDE, a 2007
report indicates that half of school funding equity lawsuits
nationally have included or focused on conditions of school
facilities.
Arguments in support. The author states, "I appreciate the
Governor's concerns regarding bonded indebtedness. However,
from the overwhelming support for last year's bond bill authored
by the former chair of this Committee, AB 2235, and the support
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expressed by Members at the Assembly Education Committee at the
Committee's informational hearing in February, there is strong
sentiment in the Legislature that bond funding is an appropriate
tool for ensuring that our students have facilities that are
safe and conducive to learning. With local matching funds and
developer's fees, state bond funds have the added benefit of
creating thousands of jobs and helping our economy."
When should the bond be placed on the ballot? While there is a
need to replenish school facilities funding through a bond as
soon as possible, there are other factors to take into
consideration. The author may wish to consider placing the bond
on the 2018 statewide general election.
Related legislation. AB 148 (Holden), also scheduled for the
April 29th hearing, places the K-14 School Investment Bond Act
of 2016 with unspecified dollar amounts on the November 8, 2016
statewide ballot. The bill is substantially similar to the
introduced version of SB 114 (Liu), pending in the Senate
Appropriations Committee.
AB 1433 (Gray), pending in the Assembly Higher Education
Committee, places the Recommitment to Higher Education Bond Act
of 2016 with unspecified amounts for higher education facilities
on the November 8, 2016 statewide general election.
SB 114 (Liu), pending in the Senate Appropriations Committee,
would place the Kindergarten Through Grade 12 Public Education
Facilities Bond Act of 2016 with unspecified dollar amounts on
the November 8, 2016 ballot.
Prior legislation. AB 2235 (Buchanan), would have authorized
the Kindergarten-University Public Education Facilities Bond Act
of 2014 to provide for the issuance of $4.3 billion in G.O.
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bonds for construction and modernization of school facilities,
to become effective only if approved by voters at the November
4, 2014, statewide general election. The bill also made changes
to the SFP. The bill was held on the Senate Floor by the
author.
AB 41 (Buchanan), introduced in 2013, expresses the
Legislature's intent to place a Kindergarten-University
facilities bond on the 2014 ballot. The bill was held by the
author in the Assembly Education Committee.
SB 45 (Corbett), introduced in 2013, expresses the Legislature's
intent to place a Kindergarten-University facilities bond on the
next statewide general election. The bill was held by the
author in the Senate Rules Committee.
SB 301 (Liu), introduced in 2013, expresses the Legislature's
intent to place a Kindergarten-University facilities bond on the
2014 ballot. The bill was held by the author in the Senate
Rules Committee.
AB 331 (Brownley), introduced in 2011, expressed the
Legislature's intent to place a Kindergarten-University
facilities bond on the 2012 ballot. The bill was held in the
Assembly Appropriations Committee in 2012.
AB 822 (Block), introduced in 2011, would have placed a higher
education facilities bond on the November 2012 ballot. The bill
was held in the Assembly Appropriations Committee in 2012.
AB 220 (Brownley), introduced in 2009, would have placed a $6.1
billion Kindergarten-University facilities bond on the November
2010 ballot. The bill was held in the Senate Appropriations
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Committee.
SB 271 (Ducheny), introduced in 2009, would have placed an $8.6
billion higher education facilities bond on the November 2010
ballot. The bill was held in the Senate Appropriations
Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
Association of California School Administrators
California Association of Suburban School Districts
California Association of School Business Officials
California Community Colleges Board of Governors
California School Boards Association
Community College Facility Coalition
County School Facilities Consortium
Kern Community College District
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Los Angeles Community College District
Los Angeles Unified School District
Los Rios Community College District
Mt. San Jacinto Community College District
Pasadena Community College District
Peralta Community College District
Rio Hondo Community College District
San Bernardino Community College District
San Diego Community College District
San Francisco Community College District
South Orange County Community College District
State Building and Construction Trades Council
University of California
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West Kern Community College District
Yuba Community College District
Opposition
None on file
Analysis Prepared by:Sophia Kwong Kim / ED. / (916) 319-2087