BILL ANALYSIS
SENATE COMMITTEE ON EDUCATION
John Vasconcellos, Chair
2003-2004 Regular Session
BILL NO: AB 264
AUTHOR: Mullin
AMENDED: June 2, 2003
FISCAL COMM: Yes HEARING DATE: July 9, 2003
URGENCY: No CONSULTANT:James Wilson
SUBJECT : Sale of School Property: Use of Proceeds
SUMMARY
This bill allows a school district that meets specified
criteria to use 25% of the proceeds from the sale of
surplus school property for "one-time" expenditures without
losing eligibility for state facilities funding.
BACKGROUND
Current law requires that school districts that receive
state funding for construction and modernization of school
facilities establish a restricted account within the school
district's general fund and to deposit an amount equal to
3% of the school district's general fund into the fund for
maintenance of school facilities.
Current law also requires school districts to use the funds
derived from the sale of surplus property for capital
outlay or maintenance of school district property, and
requires school districts to match state funding for
deferred maintenance by setting aside one local dollar for
every state dollar allocated to the district for deferred
maintenance.
ANALYSIS
This bill:
1) Authorizes a school district that meets the below
criteria to deposit up to 25% of proceeds from the
sale of surplus school property, as defined, to the
district's general fund and use those funds for any
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one-time expenditure including costs of temporary
employees. To be eligible, a district must:
a) Have enrollment of fewer than 11,000 pupils.
b) Have experienced declining enrollment for
each school year from 1999-2000 to 2002-03.
c) Use proceeds from the sale of property that
occurred between July 1, 1997, and June 30, 2000.
2) Provides that use of sale proceeds as described above
does not disqualify a school district from
participating in the state school building program
that distributes state bond funding.
3) Defines "sale" to include lease of surplus property
with an option to purchase.
4) Provides that the bill self-repeals on January 1,
2005.
5) Requires the State Allocation Board to reduce
apportionments for hardship assistance for five years
and by an amount equal to the proceeds from the sale
of surplus property used for the one-time expenditures
of school districts.
STAFF COMMENTS
Related legislation. SB 588 (Johnson) would allow a school
district to deposit the funds derived from the sale of
surplus property in the general fund of the district for
any general fund purpose. SB 588 is being heard July 9 in
the Assembly Education Committee.
SB 39 (Perata) allows the Oakland Unified School District,
for a limited time to use the proceeds of sale of property
owned by the district to reduce or retire the emergency
loan that was also provided in that bill. SB 39 has been
signed.
SUPPORT
California Teachers Association
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OPPOSITION
None received on this version of the bill.
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ATTACHMENT
Education Code Section 17462. The funds derived from the
sale of surplus property shall be used for capital outlay
or for costs of maintenance of school district property
that the governing board of the school district determines
will not recur within a five-year period. Proceeds from a
lease of school district property with an option to
purchase may be deposited into a restricted fund for the
routine repair of district facilities, as defined by the
State Allocation Board, for up to a five-year period. In
addition, the proceeds may be deposited in the general fund
of the district for any general fund purpose if the school
district governing board and the State Allocation Board
have determined that the district has no anticipated need
for additional sites or building construction for the
five-year period following the sale or lease, and the
district has no major deferred maintenance requirements. A
school district that sold or leased real property pursuant
to Section 17455 and that deposited the interest earned on
those proceeds in the general fund of the school district
in the 1986-87 or the 1987-88 fiscal years, may continue to
deposit the interest into the general fund for operating
expenses through June 30, 1991. In the 1991-92 fiscal
year, and each fiscal year thereafter for five fiscal
years, the school district shall reduce the deposit of
interest by 20 percent and shall use the reduction in
interest for capital outlay or for costs of deferred
maintenance of school district property. The State
Allocation Board may grant a school district permission to
change the five-year and 20 percent requirement to 10 years
and 10 percent, if the State Allocation Board determines
that the individual circumstances of the district warrants
the change.
The proceeds may also be deposited into a special
reserve fund for capital outlay, for costs of maintenance
of school district property that the governing board
determines will not recur within a five-year period, or for
the future maintenance and renovation of schoolsites if the
district governing board and the State Allocation Board
have determined that the district has no anticipated need
for schoolsites or building construction or major deferred
maintenance projects for a five-year period following the
sale or lease. Proceeds deposited in the special reserve
fund shall not be available for general operating expenses
as provided in Section 42842.
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