BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
220 (Brownley)
Hearing Date: 08/12/2010 Amended: 06/23/2010
Consultant: Dan Troy Policy Vote: ED 6-1
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BILL SUMMARY: AB 220, an urgency measure, would authorize the
Kindergarten-University Public Education Facilities Bond Act of
2010 and provide for the issuance of $6.1 billion in general
obligation bonds for the construction and modernization of
public education facilities, subject to approval of the voters
in November of 2010.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Bond authorization $6,100,000*Bond
*Principal and interest totaling $12.591 billion over 30 years.
Assuming a bond interest rate of 5.5%, average annual payments
would be $419.7 million, though early repayments may be higher.
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STAFF COMMENTS: SUSPENSE FILE.
AB 127 (Nunez and Perata), the Kindergarten-University Public
Education Facilities Bond Act of 2006, authorized a statewide
general obligation bond proposal for $10.4 billion (Proposition
D). Of the amount approved by voters through Proposition 1D,
$3.087 billion was provided for higher education facilities. Of
this amount, $1.5 billion was provided for Community College
facilities, $890 million was provided for the University of
California and $690 million was provided for the California
State University. Bond funds are allocated through the budget
process in accordance with 5-year capital facility plans.
If approved by the voters on the November ballot, this bill
would authorize the issuance of $6.1 billion in general
obligation bonds for education facilities. Of that amount, $4.6
billion would be allocated to K-12 education as follows:
$2.5 billion for new construction.
$1 billion for modernization.
$500 million for incentive grants to promote the use of
designs and materials that include high performance
attributes.
$250 million for charter school projects.
$250 million for career technical education projects.
$50 million for joint-use projects.
$50 for preschool facilities located on K-12 school
sites.
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AB 220 (Brownley)
The remaining $1.5 billion would be dedicated to higher
education facilities and would allocate $800 million to the
California Community Colleges and $350 million each for
University of California and the California State University.
For purposes of this analysis, staff assumes a 30-year repayment
period and a bond interest rate of 5.5%. Under these
conditions, the total principal and interest would be $12.591
billion with an average annual repayment of $419.7 million. The
ultimate repayment figures will depend on the rate on the
date(s) sold and the length of the repayment period.
Staff notes that California voters have authorized $121.8
billion in general obligation bonds since 1970 and two-thirds of
that amount has been authorized since 2002. According to
estimates prepared by the Legislative Analyst's Office, the
state's General Fund debt-service costs are expected to rise to
$7.5 billion in 2014-15. If ultimately approved by the voters,
this measure would increase those costs.
SB 271 (Ducheny, 2010) would authorize the issuance of $8.6
billion in bonds for higher education facilities, subject to
voter approval. This bill was held in committee.