BILL NUMBER: AB 535 CHAPTERED 06/30/93 BILL TEXT CHAPTER 57 FILED WITH SECRETARY OF STATE JUNE 30, 1993 APPROVED BY GOVERNOR JUNE 30, 1993 PASSED THE ASSEMBLY JUNE 28, 1993 PASSED THE SENATE JUNE 24, 1993 AMENDED IN SENATE JUNE 21, 1993 AMENDED IN SENATE JUNE 20, 1993 INTRODUCED BY Assembly Member Bates (Coauthor: Senator Petris) FEBRUARY 18, 1993 An act to add Sections 17717.1 and 35001.1 to, and Chapter 3.1 (commencing with Section 41470) to Part 24 of, the Education Code, relating to school funding, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST AB 535, Bates. Richmond Unified School District: loan repayment. (1) Existing law provides for an emergency apportionment of $9,525,000 to the Richmond Unified School District, and for a loan of $19,000,000 to that school district pursuant to an order of the Superior Court of Contra Costa County. Existing law also provides for the disposition of excess property by a school district, as specified. This bill would make the Richmond Unified School District, renamed as the West Contra Costa Unified School District, ineligible for any state school facilities funding, except as specified, for a period of 5 years from the time of enactment of this legislation, or until the final payment on its entire debt to the state is paid, whichever is later. This bill would authorize the West Contra Costa Unified School District to lease, rent, sell, or otherwise utilize, excess school district real properties and facilities, the proceeds of which would be used for the exclusive purpose of repaying specified loans from the General Fund. The bill would consolidate the school district's outstanding debts into one loan obligation, and would set forth a loan payment schedule, thereby imposing a state-mandated local program. This bill would waive all provisions of statute that impose a condition on the sale, use, or transfer of public agency lands and properties, as specified. (2) This bill would make a legislative finding and declaration of unique circumstances. (3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. (4) This bill would declare that it is to take effect immediately as an urgency statute. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. The Legislature finds and declares the following: (a) The Richmond Unified School District has had significant financial difficulties during the past several years, causing it to seek financial assistance in the form of two loans, which the school district is obligated to repay to the State of California over the next several years. (b) Since the November 1991 governing board election, the governing board of the Richmond Unified School District has been comprised primarily of new school board members. (c) The Richmond Unified School District has selected a new superintendent who has a significant number of years of experience in public education and a track record of guiding a large urban elementary school district through severe economic times while maintaining that school district's solvency. (d) Through significant fiscal austerity measures, the Richmond Unified School District has restructured its operating cost bases, and a financial recovery plan has been adopted, resulting in a 1992-93 fiscal year district budget being balanced with a 2-percent reserve. (e) Although the district is able to meet its current financial obligations due to the budget reductions, the repayment of the state loans from the general funds of the district would cause severe financial hardship and would expose the district to potential bankruptcy. (f) It is, therefore, the Legislature's intent that the Richmond Unified School District, renamed the West Contra Costa Unified School District, be authorized to use any proceeds derived from the lease, rent, sale, or other utilization of, district real properties and facilities as one means to repay specified loans from the General Fund. SEC. 2. Section 17717.1 is added to the Education Code, to read: 17717.1. (a) The West Contra Costa Unified School District shall be ineligible for any state school facilities funding for a period of five years from the date of enactment of this legislation, or until the date of the final payment on its entire debt to the state, including both principal and interest, whichever is later. Notwithstanding the above, the school district may continue to receive funding for deferred maintenance activities and for those purposes specified in subdivision (b). (b) The State Allocation Board shall approve funding for only those Richmond Unified School District State School Building Lease-Purchase Program projects which were approved for Phase II apportionments on or before April 1, 1993. All West Contra Costa Unified School District projects may be considered for funding by the State Allocation Board either in five years or after the complete repayment of the loan established under Section 41471, whichever is later. (c) In the event that the State Allocation Board approves the replacement of the existing Belding Elementary School with funds currently allocated for the modernization of the Harry Ells Middle School and the Samuel Gompers Middle School, that approval shall be considered allowable exemption under subdivision (b). Authority for this exemption is repealed on November 1, 1993, if approval of Phase III construction apportionment for the replacement of the existing Belding Elementary School has not occurred. In allowing for the possibility of this exemption, it is not the intent of the Legislature to interfere in any way with the decisionmaking authority and process of the State Allocation Board. It is the intent of the Legislature that a proposal to replace the existing Belding Elementary School with funds currently allocated to the modernization of the Harry Ells Middle School and the Samuel Gompers Middle School be submitted to the State Allocation Board under its existing procedures and policies. The State Allocation Board's decision shall be based on the merits of the proposal, not this exemption authority. Specifically, this subdivision may not be used as justification for approval of a project to replace the Belding Elementary School. (d) Any properties or facilities designated by the school district to be used for other than school purposes to generate capital to repay the outstanding debt shall be ineligible for deferred maintenance funding. Should any facilities receive funding for those purposes after the enactment of this legislation, and later be declared available for purposes intended to repay the debt, the value of state funding received for deferred maintenance at that facility shall be deducted from ongoing or future deferred maintenance projects in the district. If no projects are available for offset of apportionments, the value of the deferred maintenance performed will be added to the outstanding loan balance. SEC. 3. Section 35001.1 is added to the Education Code, to read: 35001.1. Notwithstanding Section 35001, the Richmond Unified School District is hereby renamed and shall be known as the "West Contra Costa Unified School District." SEC. 4. Chapter 3.1 (commencing with Section 41470) is added to Part 24 of the Education Code, to read: CHAPTER 3.1. EMERGENCY APPORTIONMENT REPAYMENT FOR WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT Article 1. Repayment of Loan Obligations 41470. Notwithstanding any other provision of law, the West Contra Costa Unified School District is authorized to lease, rent, sell, or otherwise utilize, excess school district real properties and facilities, the proceeds of which shall be used for the exclusive and sole purpose of repaying specified loans from the General Fund. Those properties may include the properties identified by prior resolution of the Richmond Unified School District. No real properties upon which state funds have been expended for acquisition or construction of new, or renovation of existing, structures for which an encumbrance to the state is currently in effect, may be used for this purpose. Any proposed utilization of school district properties or facilities shall be specified in a general district plan that is part of the financial recovery plan developed by the district pursuant to Section 41327. 41471. (a) The loan obligations to which this chapter applies are as follows: (1) The loan of nine million five hundred twenty-five thousand dollars ($9,525,000) made to the Richmond Unified School District from the General Fund as an emergency apportionment pursuant to Chapter 171 of the Statutes of 1990, less any principal payments made prior to enactment of this bill. (2) The loan of nineteen million dollars ($19,000,000) to the Richmond Unified School District, made pursuant to the May 2, 1991, order of the Superior Court of Contra Costa County. (3) Interest charges through January 31, 1993, at the rates established by the initial loan agreements or legislation, as reflected in the repayment schedule specified in paragraph (b) of Section 41472. Interest charges beginning February 1, 1993, apply at a rate equal to the daily investment rate of the Pooled Money Investment Account on January 1, 1993. (b) The loans specified in paragraphs (1) and (2) of subdivision (a) are hereby consolidated into one outstanding debt in the amount of twenty-eight million five hundred twenty-five thousand dollars ($28,525,000), less any principal payments made prior to enactment of this bill. 41472. (a) The school district may prepay its loan obligation without incurring any prepayment penalties. (b) The minimum payment on the consolidated debt shall be determined according to the following payment schedule: Payment Due Date Amount 2/1/93 $ 0 2/1/94 0 2/1/95 5,570,443 2/1/96 1,870,443 2/1/97 1,870,443 2/1/98 5,570,443 2/1/99 1,870,443 2/1/00 1,870,443 2/1/01 5,570,443 2/1/02 1,870,443 2/1/03 1,870,443 2/1/04 5,570,443 2/1/05 1,870,443 2/1/06 1,870,443 2/1/07 5,267,705 ___________ $42,513,021 (c) If payment is not made within 60 days after the scheduled date, the Controller shall pay the defaulted loan payment of principal and interest by withholding that amount from the next available payment that would otherwise be made to the county treasurer on behalf of the district pursuant to Section 14041 of the Education Code. However, subject to the approval of the Department of Finance, the amount withheld may be in monthly amounts as determined by an agreement between the West Contra Costa Unified School District and the Controller during the period beginning with the next available apportionment through the month preceding the next scheduled payment. 41473. Any and all provisions of statute that impose a condition on the sale, use, or transfer of public agency lands and properties as they would apply to the actions of the West Contra Costa Unified School District, including, but not limited to, Sections 17732 and 39363, pertaining to the use of schoolsite sale proceeds, and Section 39363.5 and Section 54222 of the Government Code pertaining to priority offerings of public lands for public purposes, are hereby waived until the loans identified in this article are repaid. This waiver authority does not extend to any real properties upon which state funds have been expended for acquisition or construction of new, or renovation of existing, structures for which an encumbrance to the state is currently in effect. SEC. 5. Due to the unique circumstances concerning the West Contra Costa Unified School District and the Contra Costa County Office of Education, the Legislature finds and declares that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution. SEC. 6. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because this act is in accordance with the request of a local agency or school district which desired legislative authority to carry out the program specified in this act. SEC. 7. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: In order that the Richmond Unified School District may continue to operate within its austere budgetary constraints and to begin repayment to the state of outstanding fiscal obligations, it is necessary that this act take effect immediately.