BILL NUMBER: AB 2778 CHAPTERED 09/20/00 CHAPTER 548 FILED WITH SECRETARY OF STATE SEPTEMBER 20, 2000 APPROVED BY GOVERNOR SEPTEMBER 18, 2000 PASSED THE ASSEMBLY AUGUST 29, 2000 PASSED THE SENATE AUGUST 28, 2000 AMENDED IN SENATE AUGUST 7, 2000 AMENDED IN SENATE JUNE 22, 2000 AMENDED IN ASSEMBLY MAY 3, 2000 AMENDED IN ASSEMBLY APRIL 10, 2000 INTRODUCED BY Assembly Member Jackson FEBRUARY 25, 2000 An act to add Sections 8290, 8290.1, and 8290.2 to the Education Code, relating to child care facilities. LEGISLATIVE COUNSEL'S DIGEST AB 2778, Jackson. Child care facilities. Existing law creates the State Child Care Capital Outlay Fund that is administered by the State Allocation Board. The board may authorize the expenditure of any moneys in the fund for capital outlay projects, including the lease of relocatable facilities. Existing law establishes the Child Care and Development Facilities Loan Guaranty Fund for the purpose of guaranteeing private sector loans for the purchase, development, construction, expansion, or improvement of licensed child care and development facilities and for the purpose of administering the guarantees of these loans. Existing law establishes the Child Care and Development Facilities Direct Loan Fund for the purpose of making subordinated loans directly or through a public or private entity approved by the State Department of Education for the purchase, development, construction, expansion, or improvement of licensed child care and development facilities and for the purpose of administering these loans. This bill would require the Superintendent of Public Instruction to contract with a nonprofit organization that has staff with expertise in financing and capital expansion, are knowledgeable about the child care field, and have the ability to develop and implement a plan to increase the availability of financing to renovate, expand, and construct child day care facilities. The nonprofit organization would serve as a financial intermediary to perform certain functions relating to the development of child care facilities. The intermediary would be required to report to the superintendent by August 31, 2001. The superintendent would be required to submit the report and any comments or recommendations by the State Department of Education to the policy and fiscal committees of the Legislature and to the Governor by September 30, 2001. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 8290 is added to the Education Code, to read: 8290. The Legislature finds and declares the following: (a) There is a serious shortage of quality child day care facilities throughout the state. (b) It is in the interest of the state's children and families, and the state's economic growth, to encourage the expansion of existing child day care facilities by assisting communities and interested government and private entities to finance child day care facilities. (c) In addition to regional resource centers described in Provision 7(d) of Item 6110-196-0001 of the Budget Act of 1999, which focus on developing child care capacity in underserved areas of the state, there is a need to access capital for facilities on a systematic basis, especially to use limited public sector funds to leverage a greater private sector role in financing child day care facilities. The Legislature finds and declares that a financial intermediary could fill this role and support the regional resource centers and other local entities that work with potential providers by functioning as a centralized repository of training, best practices, and expertise on facilities financing. SEC. 2. Section 8290.1 is added to the Education Code, to read: 8290.1. (a) The Superintendent of Public Instruction shall contract with a nonprofit organization to serve as a financial intermediary. The nonprofit organization shall have staff who have expertise in financing and capital expansion, are knowledgeable about the child care field, and have the ability to develop and implement a plan to increase the availability of financing to renovate, expand, and construct child day care facilities, both in day care centers and family day care homes. (b) The financial intermediary selected by the Superintendent of Public Instruction shall undertake activities designed to increase funds available from the private and public sectors for the financing of child day care facilities. These activities shall include, but are not limited to, all of the following: (1) Soliciting capital grants and program-related investments from foundations and corporations. (2) Building partnerships with foundations and corporations. (3) Developing lending commitments, linked deposits, and other financing programs with conventional financial institutions. (4) Coordinating private sources of capital with existing public sector sources of financing for child day care facilities, including, but not limited to, the Department of Housing and Community Development and the California Infrastructure and Economic Development Bank. (5) Coordinating financing efforts with the technical assistance provided by the regional resource centers described in Provision 7(d) of Item 6110-196-0001 of the Budget Act of 1999, and other local entities that work with potential providers. (c) This section shall only be implemented to the extent that funds are appropriated for this purpose in the annual Budget Act. SEC. 3. Section 8290.2 is added to the Education Code, to read: 8290.2. (a) Pursuant to funding made available in subdivision (d) of Provision 7 of Item 6110-196-001 of the Budget Act of 2000, the Superintendent of Public Instruction shall contract for a financial intermediary, pursuant to Section 8290.1, by January 1, 2001. (b) The financial intermediary, during its first six months of operation, shall do all of the following: (1) Create and publicize an 800 technical assistance telephone service number. (2) Provide financial development training for agencies at the local level including, but not limited to, Regional Resource Centers, Resource and Referral Agencies, and local child care planning councils that are assisting existing and potential providers renovate, expand, build or purchase facilities. (3) Determine the financing barriers and impediments to the development of child care facilities, especially in underserved areas of the state. (4) Identify funding sources that may be leveraged by the state, and partnerships with the philanthropic and corporate sectors that may be established, with the goal of increasing funding available for child care facilities for California's CalWORKs and low-income families. (c) The financial intermediary shall prepare a report with recommendations on the above for the Superintendent of Public Instruction by August 31, 2001. The Superintendent of Public Instruction shall submit the report, along with any State Department of Education comments or recommendations to the policy and fiscal committees of the Legislature and to the Governor by September 30, 2001.