BILL ANALYSIS
AB 220
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Date of Hearing: January 13, 2010
ASSEMBLY COMMITTEE ON EDUCATION
Julia Brownley, Chair
AB 220 (Brownley) - As Amended: April 14, 2009
SUBJECT : Public Education Facilities
SUMMARY : Expresses the intent of the Legislature to enact
legislation that would create a Kindergarten-University Public
Education Facilities Bond Act and makes changes to the School
Facility Program (SFP). Specifically, this bill :
1)Expresses the intent of the Legislature to enact legislation
that would create a Kindergarten-University Public Education
Facilities Bond Act to become operative only if approved by
the voters at the next statewide general election.
2)Defines "cost of project" as the cost of all real estate
property rights and easements acquired; the cost of developing
the site, streets, and utilities immediately adjacent to the
site; the cost of other offsite development not immediately
adjacent to the site required by the project as consistent
with the environmental impact report adopted by the governing
board; the cost of construction, reconstruction, or
modernization of buildings and the furnishing and equipping,
including the purchase of educational technology hardware, of
those buildings; the supporting wiring and cabling, and the
technological modernization of existing buildings to support
that hardware; the cost of plans, specifications, surveys, and
estimates of costs; and other expenses that are necessary or
incidental to the financing of the project. Specifies that
"educational technology hardware" includes, but is not limited
to, computers, telephones, televisions, and video cassette
recorders.
3)Specifies that the full and final provision means
certification that the funds provided are sufficient to
complete the classrooms in the school construction project.
4)Specifies that a school district using an alternative
projection method shall calculate enrollment projections for
the fifth or the 10th year beyond the fiscal year in which the
application is made.
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5)Specifies that the number of pupils for whom permanent
facilities were provided and that are counted as "being
housed" are those projects paid for completely with a local
funding source. Requires the pupil loading formula to include
the calculation of the number of pupils housed in portable
buildings.
6)Specifies that a district must show that it has entered into a
binding contract for professional services or for
construction, or both, in order for the State Allocation Board
(SAB) to release funds.
7)Authorizes the SAB to extend the 18 month requirement for a
district to show that it is making substantial progress.
8)Makes technical, nonsubstantive changes.
EXISTING LAW establishes the Leroy F. Greene School Facilities
Act of 1998 (SB 50, Chapter 407, Statutes of 1998), also known
as the SFP, which governs the administration, allocation, and
use of state education bond funds.
FISCAL EFFECT : Unknown
COMMENTS : Background . The construction and rehabilitation of
public kindergarten through grade 12 (K-12) and higher education
facilities are funded by a combination of state and local
general obligation (G.O.) bonds, private funds, local
assessments, and in some instances, lease revenue bonds. Since
the inception of the SFP in 1998, voters have approved $35.4
billion in state G.O. bonds for K-12 schools.
The last education bond on the statewide ballot was Proposition
1D, which was passed by voters on the November 2006 ballot.
Proposition 1D provided $10.416 billion for K-12 and higher
education facilities and established new K-12 grant programs,
specified through the following allocations:
1)$7.329 billion for K-12 facilities as follows:
a) $1.9 billion for new construction projects (of which up
to $199.5 million can be set aside for seismic repairs);
b) $3.3 billion for modernization projects;
c) $1 billion for overcrowding relief grants through the
removal of portables;
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d) $500 million for charter school facilities;
e) $500 million for career technical education facilities
and equipments;
f) $100 million for high performance (green) projects; and,
g) $29 million for joint-use projects.
2)$3.087 billion for higher education facilities.
Proposition 1D funds were anticipated to be depleted by 2010.
However, due to the state's budget crisis and poor credit
ratings, the Pool Money Investment Board (PMIB) halted the sale
of all G.O. bonds in December 2008 and slowed the disbursement
of funds. The SAB, comprised of ten members that include
appointments by the Governor, the Speaker of the Assembly and
the Senate President pro Tem, is the body that allocates bond
funds and oversees the administration of the SFP staffed by the
Office of Public School Construction (OPSC). The SAB has been
making unfunded approvals since 2009 to enable districts to
continue their facilities planning. The unfunded approvals are
converted to apportionments when bonds are sold and funds become
available. The PMIB was able to make some bond sales in 2009,
but there remain a number of projects that are awaiting official
apportionments.
Taking into consideration the unfunded approvals, as of October
2009, Proposition 1D allocations for new construction are almost
completely depleted ($186 million remain). Current law requires
home builders to pay 100% of the per pupil grant amount (that
is, both the state and local matching share) required for school
facilities construction when the SAB is no longer approving
apportionments for new construction projects. As an interim
solution, the SAB was able to increase the availability of new
construction dollars by transferring $1 billion from the
Critically Overcrowded Schools program from Proposition 47
(2002) and Proposition 55 (2004) bonds to the new construction
program.
Approximately $2.5 billion is left in the remaining Proposition
1D programs, the majority of which are modernization funds.
Despite declining enrollment in some districts, there is
anticipated future pupil enrollment growth in the state.
According to the Department of Finance Demographics Unit, the
state is projected to have an overall enrollment increase of
more than 200,000 students between 2008-09 and 2018-19.
Districts are in the process of relieving overcrowding and
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building enough seats to enable every student to be on a
traditional school schedule while ending multi-track year round
schedules that reduce the number of school days for some kids.
These efforts require sufficient facilities. Districts are also
seeking to upgrade their facilities to be more energy efficient
or green, which will result in local general fund savings.
Historical trends show demand of almost $200 million per month
for new construction funds and $65 per month for modernization
funds. Even with the increase of $1 billion from the transfer
of Propositions 47 and 55 bond funds, the state is likely to run
out of new construction funds in a few months time.
Proposition 1D provided $3.087 billion for the University of
California, California State University (CSU), and the
California Community Colleges (CCC) facilities. Based on
capital facility plans prepared by each higher education
segment, bond funds are allocated for specific projects through
the budget process. All Proposition 1D higher education
facilities funds have been apportioned. The CSU and the CCC
project an annual need of over $1.64 billion and $1 billion,
respectively.
This bill currently contains intent language to place a bond on
the next statewide general election. Given the budget climate,
the state may need to identify other or additional alternatives
for funding the construction and rehabilitation of school
facilities. Staff recommends continuing the discussions and
research on school facilities financing but striking this
provision of the bill at this time.
SFP . This bill also contains technical amendments to the SFP,
which establishes the parameters for bond allocations and the
use of funds. According to the author, who is a member of the
SAB, the proposed amendments are based on issues that have been
arisen at SAB meetings.
This bill establishes a definition for "cost of project" based
on existing costs necessary for the acquisition and construction
of a school. According to the Coalition for Adequate School
Housing, school construction projects have evolved and have
become more complex. The increasing complexity of projects is
due largely to increased standards and requirements relating to
building systems, educational program requirements, as well as
environmental considerations. This bill aligns statute with
real costs incurred.
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The SFP requires a match of 50% for new construction projects
and 40% for modernization projects and specifies that the total
funding provided shall constitute the state's full and final
contribution to the project. As a condition of receiving an
apportionment from the SAB, districts are required to certify
that the state grant amount, combined with local funds, is
adequate to complete the project. Districts argue that due to
insufficient state funding, they have had to identify additional
local funds or reduce the scope of projects. Supporters argue
that requiring a district to certify that the grant amount and
the local contribution is sufficient to complete the number of
classrooms within the project, rather than the entire project,
more accurately reflects the current state of certification.
Committee staff notes that this provision may be premature as
the SAB is currently deliberating the issue of grant adequacy.
Staff recommends deleting this provision to give the SAB the
opportunity to complete its findings.
AB 1014 (Bass), Chapter 691, Statutes of 2007 provided
supplemental mechanisms to project student enrollment for
purposes of determining eligibility for SFP participation. One
of the supplemental mechanisms was the ability to project
student enrollment either on a 5-year or 10-year basis. Due to
the statutory construct and last-minute amendments to the bill,
the authorization to project student enrollment on a 10-year
basis was interpreted as limited to those districts that bases
enrollment on a high school attendance area. This bill is a
technical cleanup to achieve the intent of AB 1014 and the use
of a 10-year student enrollment projection.
Eligibility for state bond funds is based generally on projected
need after accounting for existing capacity (or seats). AB 695
(Mazzoni), Chapter 858, Statutes of 1999, was a SFP cleanup bill
that dealt with, among other things, how to account for
facilities built under the Class Size Reduction (CSR) Program or
built entirely from local funds in a district's existing
capacity. The bill sought to fully capture as added capacity or
existing seats in a district Prop. 1A (1998) CSR classrooms and
entirely locally-funded classrooms. Appeals by districts over
interpretation and application of the statute by the OPSC in
2009 raised questions regarding the intent of AB 695. Committee
staff has reviewed AB 695 material and documents and agree that
a statutory clarification is needed to fully carry out the
intent of AB 695. This bill clarifies that facilities built
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from proceeds from any state source or permanent facilities
built entirely from local funds are to be captured in a
district's capacity.
SB 50 contemplated equity issues between and among school
districts and recognized that while some school districts would
be able to afford permanent construction, there would be others
with more limited resources that would invest significantly in
less costly portable classrooms. As a result, the SFP was
designed to level the funding field between the "haves" and the
"have-nots" through a program eligibility determination that did
not consider portable classrooms as chargeable space for
districts whose baseline capacity included 25% or more of their
classrooms as portable classrooms. Therefore, if such districts
acquired additional portable classrooms, those classrooms would
not be charged against their eligibility giving the districts
the opportunity to build off of their dependency on portable
classrooms. Supporters argue that the statute has not been
interpreted accurately, which has resulted in districts'
inability to replace portables with permanent buildings.
Referencing the portable exemption statute will guide the
necessary clarification in the governing regulations pertaining
to ongoing eligibility determination.
Under current law, school districts are eligible to request a
fund release when certain conditions are met, including the
condition that the district has entered into a binding contract
for the completion of that project. Current law does not
specify the types of contracts that are required to be in place.
The implementing regulations, however, specify that the binding
contract is a contract for construction for at least 50% of the
construction costs. Other types of contracts (e.g., contracts
for architects, construction managers, engineers) show just as
much commitment to the project as a contract for the
construction of the school. In addition, if a project is not
ultimately completed, the district is required to return the
funds with interest. This bill clarifies that the binding
contract can be for either professional services or for
construction, or both as such contracts represent a legal
obligation and commitment by the district to move forward with a
project.
Current law requires the SAB to rescind an apportionment if a
school district has not made substantial progress on the project
within 18 months of the apportionment. This provision restricts
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the SAB's authority to consider extraordinary circumstances,
such as the PMIB's inability to sell bonds, that inhibit a
district from making substantial progress (e.g., entering a
construction contract for at least 50% of the project). Last
year, the SAB adopted emergency regulations to suspend specific
time requirements. This bill provides the SAB the discretion to
extend the 18-month substantial progress requirement in order to
deal with extraordinary circumstances.
This bill also makes minor technical amendments to sections that
identify incorrect section references.
Arguments in Support . State Superintendent Jack O'Connell
states, "A state school bond would play a strong role in
stimulating the economy by creating jobs and enabling school
districts to construct energy efficient, high performing "green"
schools designed for the 21st century learning environment.
This will help the state to continue its efforts to meet the
educational facilities needs of California and develop
educational environments to better address the pernicious
academic achievement gap.
"In November 2008, voters showed overwhelming support for school
facilities bonds: 75 of 85 measures were successful. A new
state bond will provide access to additional funds these schools
need to build, renovate and repair school buildings."
Several organizations, including the Advancement Project,
Children Now, Fight Crime: Invest in Kids, and the Child
Development Policy Institute, support the bill and request
inclusion of funds for preschool/child care facilities. These
organizations argue that early education is critical to
improving student achievement and ensuring that children start
kindergarten with the ability to learn and succeed.
The San Francisco Unified School District requests an increase
in grant levels to meet costs required to comply with the
federal American with Disabilities Act.
Committee amendments : Strike Sections 1 and 3 of the bill.
REGISTERED SUPPORT / OPPOSITION :
Support
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Advancement Project
Association of California Construction Managers
California Association of School Business Officials
California Child Development Administrators Association
California Federation of Teachers
California Postsecondary Education Commission
California School Boards Association
California School Employees Association
California State University
Child Development Policy Institute
Children Now
Coalition for Adequate School Housing
Fight Crime: Invest in Kids
Low Income Investment Fund
Rancho Santiago Community College District
San Bernardino Community College District
San Francisco Unified School District
State Center Community College District
State Superintendent of Public Instruction, Jack O'Connell
Opposition
None on file
Analysis Prepared by : Sophia Kwong Kim / ED. / (916) 319-2087