BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 111


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          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   |                    |
          |                |     |                      |                    |
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          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  








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          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  








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          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     |








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          |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  |








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          |            |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  








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          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



















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