BILL ANALYSIS Ó SB 111 Page 1 SENATE THIRD READING SB 111 (Fuller) As Amended June 2, 2015 Majority vote SENATE VOTE: 40-0 ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+----------------------+--------------------| |Education |6-0 |O'Donnell, Chávez, | | | | |Kim, McCarty, | | | | |Santiago, Thurmond | | | | | | | |----------------+-----+----------------------+--------------------| |Appropriations |17-0 |Gomez, Bigelow, | | | | |Bloom, Bonta, | | | | |Calderon, Chang, | | | | |Nazarian, Eggman, | | | | |Gallagher, Eduardo | | | | |Garcia, Holden, | | | | |Jones, Quirk, Rendon, | | | | |Wagner, Weber, Wood | | | | | | | ------------------------------------------------------------------ SB 111 Page 2 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). FISCAL EFFECT: According to the Assembly Appropriations Committee: 1)General Fund cost pressure of up to $60.5 million to provide the full 20% 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. 2)Minor/absorbable costs to the DOF to explore options for matching funds. 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 SB 111 Page 3 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, the School Facility Program (SFP), 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. 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 SB 111 Page 4 whether it will take place soon enough to meet the federal match timeline. Last year, the author of this bill introduced SB 1421 (Fuller) of 2014, 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 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. ------------------------------------------------------------------- |INSTALLATION|DISTRICT |NAME OF |TOTAL |FEDERAL |LOCAL | | | |SCHOOL |PROJECT |ELIGIBILITY|MATCH | | | | |COST | | | | | | | | | | | | | | | | | |------------+-----------+---------+----------+-----------+---------| |Naval Air |Sierra |Murray |$39.5 |$31.6 |$7.9 | SB 111 Page 5 |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 | |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 | SB 111 Page 6 | |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 | | | | | | | | | | | | | | | | | | |------------+-----------+---------+----------+-----------+---------| |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 SB 111 Page 7 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 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." Analysis Prepared by: Sophia Kwong Kim / ED. / (916) 319-2087 FN: 0001636 SB 111 Page 8