BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 111 (Fuller) - School facilities:  military installations
          
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          |Version: March 4, 2015          |Policy Vote: ED. 6 - 0          |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: May 28, 2015      |Consultant: Mark                |
          |                                |McKenzie/Jillian Kissee         |
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          SUSPENSE FILE. AS AMENDED.


          

          Bill  
          Summary:  SB 111 would include Legislative intent to provide  
          assistance to school districts to meet the matching share  
          requirement of a school construction grant made by the Office of  
          Economic Adjustment of the federal Department of Defense for  
          public schools located on military installations.  This bill  
          requires the Department of Finance to explore options on how to  
          assist school districts, including making low interest loans  
          available to school districts through the California  
          Infrastructure and Economic Development Bank. 


          Fiscal Impact (as approved on May 28,  
          2015):  Unknown cost pressure to implement the option identified  
          by the Department of Finance.  Staff estimates that costs for  
          the Department of Finance to explore options are minor and  
          absorbable.







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          Background:  Current law establishes the School Facility Program (SFP)  
          under which the state provides general obligation bond funding  
          for various school construction projects. Proposition 1D, the  
          Kindergarten-University Public Education Facilities Bond Act of  
          2006, was approved by the voters in November of 200 and  
          authorized the sale of $10.4 billion in general obligation  
          bonds, including $7.3 billion for K-12 education facilities.   
          Proposition 1D allocated specified amounts from the sale of  
          these bonds for modernization, new construction, charter  
          schools, career technical education facilities, joint use  
          projects, new construction on severely overcrowded school sites,  
          and high performance incentive grants to promote energy  
          efficient design and materials.  In addition, portions of the  
          amounts allocated for new construction and modernization were  
          authorized for purposes of funding smaller learning communities  
          and small high schools and for seismic retrofit projects. 

          In 2010, the United States Department of Defense evaluated and  
          reviewed the physical condition of the 160 public schools on  
          military installations in the United States.  Based on the  
          findings of this assessment, the DOD developed a "Priority List"  
          of public schools on military installations with the most  
          serious condition and/or capacity deficiencies.  The federal  
          Office of Economic Adjustment (OEA) was tasked with  
          administering the Public Schools on Military Installations  
          (PSMI) program to provide construction, renovation, and repair  
          funding to address these deficiencies.

          Congress has provided $945 million in federal funds to the OEA  
          for the program since 2011, including a recent $175 million  
          increase in funding provided in House Resolution 83 in 2015.   
          That measure also established a 20 percent non-federal matching  
          requirement from the state and local education authority (LEA)  
          as a condition of federal funding.   If a local match is not  
          provided, the OEA may skip eligible school projects on the  
          Priority List if the match is not provided.  According to the  
          OEA, once a project on the list has been skipped it will no  
          longer be considered for funding.

          The OEA indicates that there is approximately $464 million  
          remaining in the PSMI, and estimates that as many as 33 schools  
          on the list could be assisted.  California has 11 schools in six  








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          districts that are within the top 33 on the Priority List.


          Proposed Law:  
            This bill appropriates $61 million from the General Fund to  
          the CDE for the 2015-16 fiscal year for apportionment to school  
          districts to meet the matching share requirements of the PSMI  
          program to construct, renovate, repair, or expand elementary and  
          secondary public schools located on military installations.


          Related  
          Legislation:  SB 121 (Fuller) requires that school construction  
          projects on military installations that are eligible for  
          specified federal grants be given priority for funding under the  
          state SFP.  That bill has been referred to the Education  
          Committee, but has not been heard.


          Staff  
          Comments:  This bill is intended to provide the full 20 percent  
          state/local match for approximately $240 million in federal  
          funds that would be available for construction grants to 11  
          schools on military installations in California.  State bond  
          authority for new construction and modernizations programs has  
          essentially been depleted since 2012.
          Since 2009, the State Allocation Board (SAB) has been making  
          "unfunded approvals" for approved projects waiting to convert to  
          funding apportionments when bonds are sold and cash becomes  
          available.  In addition, since November 1, 2012, the SAB has  
          maintained an "Applications Received Beyond Bond Authority"  
          list.  According to the Office of Public School Construction,  
          one of the 11 schools that this bill seeks to assist has an  
          unfunded application pending under the School Facility Program.   
          In addition, four of the schools have modernization eligibility  
          but have not applied for state funding, and six of the schools  
          previously applied for, and received modernization funding  
          through the School Facilities Program.  SB 111 would provide a  
          direct General Fund appropriation for these projects on the  
          basis of their eligibility for federal funds.  The Committee may  
          wish to consider whether it is appropriate to provide General  
          Funds for these 11 schools, when there are numerous other  
          schools awaiting state funding that may have a greater need  
          based on state priorities, or whether there are other priorities  








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          for limited General Funds.


          In 2012, the SAB established a subcommittee to explore  
          alternatives for assisting districts with providing the required  
          20 percent local match for projects on the DOD Priority List.   
          The subcommittee considered a number of options, including  
          reservation of bond authority, transfer of bond authority, loans  
          for the matching share, waiver of the local matching share  
          requirement, and facility hardship funding, but none of these  
          options were determined to be viable.  Ultimately, the SAB  
          recommended that the Legislature provide funding for military  
          base schools in California in the next bond proposal in order to  
          cover the total need for these types of projects.

          The CDE indicates that costs to administer the distribution of  
          funds to affected school districts would be minor.  Staff notes  
          that the funds appropriated by this bill would count towards the  
          Proposition 98 minimum guarantee of funding for K-14 education.

          Committee amendments (as adopted on May 28, 2015):  Amendments:  
          (1) delete the appropriation and include Legislative intent to  
          provide assistance to school districts in the 2015-16 fiscal  
          year in meeting the matching share requirement, and (2) require  
          the Department of Finance to explore options on how to assist  
          school districts, including making low interest loans available  
          to school districts through the California Infrastructure and  
          Economic Development Bank.



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