BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 111


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          Date of Hearing:  July 1, 2015


                           ASSEMBLY COMMITTEE ON EDUCATION


                              Patrick O'Donnell, Chair


          SB  
          111 (Fuller) - As Amended June 2, 2015


          SENATE VOTE:  40-0


          SUBJECT:  School facilities: military installations.


          SUMMARY:  Expresses the intent of the Legislature that  
          assistance be provided to school districts in the 2015-16 fiscal  
          year to meet the matching share requirement of a school  
          construction grant made by the Office of Economic Adjustment of  
          the federal Department of Defense (DoD) to construct, renovate,  
          repair, or expand elementary and secondary public schools  
          located on military installations.  Requires the Department of  
          Finance (DOF) to explore options on how best to assist school  
          districts in meeting the matching share requirement of the  
          federal school construction grant.  Requires the options to  
          include, but not necessarily be limited to, making low-interest  
          loans available to school districts through the California  
          Infrastructure and Economic Development Bank (IBank). 


          EXISTING LAW:   


          1)Establishes the Leroy F. Greene School Facilities Act of 1998  
            (SB 50, Chapter 407, Statutes of 1998), also known as the  








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            School Facility Program (SFP), which governs the  
            administration, allocation, and use of state school facilities  
            bond funds.  

          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  
            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.

          4)Requires a 50% local match for new construction projects and  
            40% local match for modernization projects.



          5)Establishes the IBank within the Governor's Office of Business  
            and Economic Development to finance public infrastructure and  
            private development that promote a healthy climate for jobs,  
            contribute to a strong economy and improve the quality of life  
            in California communities. 




          6)Provides that the IBank has broad authority to issue  
            tax-exempt and taxable revenue bonds, provide financing to  








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            public agencies, provide credit enhancements, acquire or lease  
            facilities, and leverage State and Federal funds. 

          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, unknown cost pressure to implement the option  
          identified by the DOF.  Costs for the DOF to explore options are  
          minor and absorbable.  


          COMMENTS:  DoD Public Schools on Military Installations (PSMI)  
          Grant Program.  Congress has allocated a total of $945 million -  
          $250 million in 2011, $250 million in 2012, $270 million in  
          2013, and $175 million in 2015 - for the construction,  
          renovation, repair or expansion of public schools on military  
          installations.  In 2010, the DoD conducted an assessment of the  
          almost 160 schools on military installations across the nation  
          and established a priority list based on schools with the  
          greatest need.  California has 11 schools located in six school  
          districts in the top 33 of the "Public Schools on Military  
          Installations Priority" list, eligible for a total of $242.2  
          million in federal funds.  


          The schools are required to provide a 20% match.  The match can  
          come from local funds or state funds.  The amount of funds  
          needed to meet the 20% match for the 11 schools is estimated at  
          $60.5 million.  According to the author's office, the DoD has  
          given the DoD Office of Economic Adjustment the authority to  
          drop schools on the priority list if local educational agencies  
          or the states the schools are located in are unable to provide  
          the match.  If the match is not produced, funds for all  
          California schools are in jeopardy.  Of all the projects, one  
          project may have local matching funds from local bonds.  Four  
          projects have eligibility for state bond funds, but only one  
          project has enough eligibility to cover most of its match.   
          California's state bond program, however, has been out of New  
          Construction and Modernization funds since 2012.  Even if funds  
          are available, the SFP does not authorize funding to provide a  
          match.  








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          Prior efforts.  Since 2012, varying legislative efforts have  
          been undertaken in an attempt to secure funds for the local  
          match.  The State Allocation Board (SAB), the body that oversees  
          the allocation of state bond funds, formed a subcommittee in  
          April 2012 to explore funding options to assist five school  
          districts serving seven schools on military bases eligible for  
          funding in the first two federal funding cycles.  The  
          subcommittee considered reserving bond authority, transferring  
          bond authority, providing loans, waiving local matches, and  
          facility hardship funding for districts with health and safety  
          problems.  Legal counsel advised the SAB that the SFP does not  
          offer flexibility to accommodate the federal match under the  
          options explored by the subcommittee.  The subcommittee's  
          recommendation was to recommend to the Legislature that future  
          bond funds be made available specifically for DoD schools.   
          There are two bond bills pending in the Legislature currently  
          and neither contains set asides for this purpose, although it is  
          unclear when a state bond initiative will be before voters and  
          whether it will take place soon enough to meet the federal match  
          timeline.


          Last year, the author of this bill introduced SB 1421, which  
          would have prioritized state bond funds for applications  
          submitted by the school districts eligible for federal DoD  
          funds.  The bill was held on the Assembly Appropriations  
          Committee suspense file.


          What does this bill do?  Prior versions of this bill would have  
          appropriated $61 million from the General Fund to provide the  
          match.  The current version of the bill, amended in the Senate  
          Appropriations Committee, requires the DOF to explore options on  
          how best to assist these schools, including, but not limited to,  
          making low-interest loans available to school districts through  
          the IBank.  The Governor's May Revise indicates that the  
          Administration is exploring funding options, including loans  








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          through the IBank.  According to the DOF, DOF is working with  
          the school districts to see if there is interest in  
          participating in the Ibank's Infrastructure State Revolving Fund  
          low-interest loan program to help fund the local match.  The  
          Ibank has provided local match funding for other federal  
          programs and these types of school construction and renovation  
          projects would be eligible.  Although this bill is uncodified,  
          the Committee may wish to consider whether this bill is  
          necessary.


                  





           ------------------------------------------------------------------- 
          |INSTALLATION|DISTRICT   |NAME OF  |TOTAL     |FEDERAL    |LOCAL    |
          |            |           |SCHOOL   |PROJECT   |ELIGIBILITY|MATCH    |
          |            |           |         |COST      |           |         |
          |            |           |         |          |           |         |
          |            |           |         |          |           |         |
          |------------+-----------+---------+----------+-----------+---------|
          |Naval Air   |Sierra     |Murray   |$39.5     |$31.6      |$7.9     |
          |Weapons     |Sands      |Middle   |million   |million    |million  |
          |Station     |Unified    |         |          |           |         |
          |China Lake  |           |         |          |           |         |
          |            |           |         |          |           |         |
          |            |           |         |          |           |         |
          |------------+-----------+---------+----------+-----------+---------|
          |Edwards Air |Muroc      |Branch   |$27.3     |$21.8      |$5.5     |
          |Force Base  |Joint      |Elementar|million   |million    |million  |
          |            |Unified    |y        |          |           |         |
          |            |           |         |          |           |         |
          |            |           |         |          |           |         |
          |------------+-----------+---------+----------+-----------+---------|
          |Naval Air   |Sierra     |Burroughs|$31.9     |$25.5      |$6.4     |
          |Weapons     |Sands      | High    |million   |million    |million  |








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          |Station     |Unified    |         |          |           |         |
          |China Lake  |           |         |          |           |         |
          |            |           |         |          |           |         |
          |            |           |         |          |           |         |
          |------------+-----------+---------+----------+-----------+---------|
          |Camp        |Fallbrook  |Mary     |$47       |$37.6      |$9.4     |
          |Pendleton   |Union      |Faye     |million   |million    |million  |
          |            |           |Pendleton|          |           |         |
          |            |           |         |          |           |         |
          |            |           |         |          |           |         |
          |            |           |         |          |           |         |
          |------------+-----------+---------+----------+-----------+---------|
          |Camp        |Fallbrook  |San      |$43       |$34.5      |$8.6     |
          |Pendleton   |Union      |Onofre   |million   |million    |million  |
          |            |           |         |          |           |         |
          |            |           |         |          |           |         |
          |------------+-----------+---------+----------+-----------+---------|
          |Naval Base  |San Diego  |Miller   |$20       |$16        |$4       |
          |San Diego   |Unified    |Elementar|million   |million    |million  |
          |            |           |y        |          |           |         |
          |            |           |         |          |           |         |
          |            |           |         |          |           |         |
          |------------+-----------+---------+----------+-----------+---------|
          |Travis Air  |Travis     |Scandia  |$13.6     |$10.9      |$2.7     |
          |Force Base  |Unified    |Elementar|million   |million    |million  |
          |            |School     |y        |          |           |         |
          |            |District   |         |          |           |         |
          |            |           |         |          |           |         |
          |            |           |         |          |           |         |
          |------------+-----------+---------+----------+-----------+---------|
          |Naval Air   |Central    |Akers    |$21       |$16.9      |$4.2     |
          |Station     |Union      |         |million   |million    |million  |
          |Lemoore     |           |         |          |           |         |
          |            |           |         |          |           |         |
          |            |           |         |          |           |         |
          |------------+-----------+---------+----------+-----------+---------|
          |Naval Base  |San Diego  |Hancock  |$24       |$19.2      |$4.8     |
          |San Diego   |Unified    |Elementar|million   |million    |million  |
          |            |           |y        |          |           |         |








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          |            |           |         |          |           |         |
          |            |           |         |          |           |         |
          |------------+-----------+---------+----------+-----------+---------|
          |Edwards Air |Muroc      |Desert   |$35.2     |$28.2      |$7       |
          |Force Base  |Joint      |Junior - |million   |million    |million  |
          |            |Unified    |Senior   |          |           |         |
          |            |           |High (2  |          |           |         |
          |            |           |schools) |          |           |         |
          |            |           |         |          |           |         |
          |            |           |         |          |           |         |
          |------------+-----------+---------+----------+-----------+---------|
          |Total       |           |         |$302.5    |$242.2     |$60.5    |
          |            |           |         |million   |million    |million  |
          |            |           |         |          |           |         |
          |            |           |         |          |           |         |
           ------------------------------------------------------------------- 

          


          IBank.  According to the IBank's Internet Web site, "The  
          Infrastructure State Revolving Fund (ISRF) Program provides  
          financing to public agencies and non-profit corporations for a  
          wide variety of infrastructure and economic development  
          projects. ISRF Program funding is available in amounts ranging  
          from $50,000 to $25,000,000, with loan terms of up to 30 years.   
          Eligible project categories include, but are not limited to,  
          city streets, county highways, state highways, drainage, water  
          supply and flood control, educational facilities, environmental  
          mitigation measures, parks and recreational facilities, port  
          facilities, public transit, sewage collection and treatment,  
          solid waste collection and disposal, water treatment and  
          distribution, defense conversion, public safety facilities, and  
          power and communications facilities."

          The author states, "The majority of the PSMI eligible school  
          districts in California cannot raise the required 20% match  
          through bond elections due to the fact that property owners  
          outside the base are not willing to tax themselves for base  








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          schools and in many areas there is low assessed valuation.  All  
          other school projects [in other states] have come up with  
          required match funds from local/state sources.  In every case,  
          states have provided match funds when local funds were  
          unavailable; in some cases state funding exceeded 20%.  These  
          schools serve our nation's military families and warriors, those  
          sacrificing overseas for protection of our freedom."  


          REGISTERED SUPPORT / OPPOSITION:




          Support


          Brigadier General Edward Banta, Commanding General of Marine 


                 Corps Installations West-Marine Corps Base Camp Pendleton


          California Teachers Association


          Central Union School District


          P.J. Lorge, Rear Admiral, U.S. Navy Commander


          Solano County Board of Supervisors


          Travis Unified School District


          Several individuals








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          Opposition


          None on file




          Analysis Prepared by:Sophia Kwong Kim / ED. / (916)  
          319-2087