BILL ANALYSIS
AB 1022
Page 1
ASSEMBLY THIRD READING
AB 1022 (Nava)
As Amended April 29, 2009
Majority vote
EDUCATION 10-0 APPROPRIATIONS 17-0
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|Ayes:|Brownley, Nestande, |Ayes:|De Leon, Nielsen, Ammiano, |
| |Ammiano, Arambula, | | |
| |Carter, Eng, Garrick, | |Charles Calderon, Davis, |
| |Miller, Solorio, | |Duvall, Fuentes, Hall, |
| |Torlakson | |Harkey, Miller, |
| | | |John A. Perez, Price, |
| | | |Skinner, Solorio, Audra |
| | | |Strickland, Torlakson, |
| | | |Krekorian |
|-----+--------------------------+-----+---------------------------|
| | | | |
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SUMMARY : Authorizes the Ventura Unified School District (VUSD)
to deposit $10 million of the proceeds from the sale of surplus
real property, together with any personal property located on
that property, purchased entirely with local funds and sold
before January 1, 2005, into the general fund of the school
district and use the proceeds from the sale for any one-time
general fund purpose. Specifically, this bill :
1)Specifies that if the purchase of property was made using the
proceeds of a local general obligation bond act or revenue
derived from developer fees, the amount of the proceeds of
that sale that may be deposited into the general fund of the
school district shall not exceed the percentage computed by
the absolute difference between the purchase price of the
property and the proceeds from the transaction, divided by the
proceeds of the transaction. For the purposes of this section,
"proceeds of the transaction" means either of the following,
as appropriate:
a) For a cash sale, the amount realized from the sale of
property after reasonable expenses related to the sale; or,
b) For a sale that did not result in a lump-sum cash
payment, the amount realized from the sale of the property
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after reasonable expenses that is the sum of all cash
received and the net present value of the future cashflow
generated by the transaction.
2)Requires the State Allocation Board (SAB) to reduce the amount
of hardship assistance awarded to the VUSD, if the district
exercises the authority granted by this bill, by the proceeds
of the sale of surplus real property used for general fund
purposes.
3)Specifies that if the VUSD exercises the authority granted
pursuant to this bill, the district is ineligible for hardship
funding from the State School Deferred Maintenance Fund for
five years after enactment of this bill.
4)Provides that the deposit of proceeds in the school district
general fund pursuant to this bill does not disqualify the
school district from eligibility for state funding for any
school facilities program authorized by the state.
5)Specifies that before the district exercises the authority
granted pursuant to this bill, the governing board of the
school district shall first submit to the SAB documents
certifying all of the following:
a) The school district has no major deferred maintenance
requirements not covered by existing capital outlay
resources; and,
b) The sale of real property does not violate any
provisions of a local bond act.
1)Requires that before the district exercises the authority
granted pursuant to this bill, the governing board of the
school district shall, at a regularly scheduled public
meeting, present a plan for expending the proceeds. Requires
the plan to identify the source and use of the funds.
2)Provides that the provisions of this bill shall remain in
effect only until October 31, 2013, and shall be repealed as
of January 1, 2014, unless a later enacted statute deletes or
extends that date.
3)Provides that the Legislature finds and declares that a
special law is necessary due to the unique circumstances
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concerning the VUSD.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, potential state and local bond cost pressure in the
tens to hundreds of thousands of dollars to offset the loss of
proceeds from the sale of surplus property, which are primarily
used for capital outlay purposes.
COMMENTS : Existing law requires districts to establish routine
facilities accounts and deferred maintenance accounts, and
requires proceeds from the sale of surplus property to stay in
capital facilities or maintenance funds to ensure that districts
protect and maintain their facilities. SB 1415 (Scott), Chapter
810, Statutes of 2006, authorizes the proceeds from the sale of
surplus property to be deposited into the general fund for
one-time expenditures and prohibits the use for ongoing
expenditures. As a condition for using funds for one-time
general fund purposes, a district must show that it has no need
for additional sites or building construction for a ten-year
period following the sale of the property and may not apply for
state bond funds during the ten-year period. The district may
apply for funds after five years if the SAB determines that the
district demonstrates enrollment growth or a need for additional
sites it could not have anticipated.
Existing law authorizes, on a district by district basis, the
authority to sell surplus property purchased with local funds to
be used for one-time purposes that does not result in a ban from
applying for state bond funds. Such authorities are limited to
specified time periods and conditions. Two districts, Oakland
Unified School District and Vallejo City Unified School
District, are given the authority to sell surplus property so
that they can repay emergency loans from the state. All of the
authorizations were given prior to the enactment of SB 1415.
This bill authorizes VUSD to use $10 million of the proceeds
from property sold prior to January 1, 2005 for any one-time
general fund purposes. The VUSD states that through expertise
and business acumen, the district bought and sold property to
maximize its return, resulting in $30 million in proceeds from
the sale of property. The district is seeking authority to use
$10 million of the funds over three years time for any one-time
general fund purposes.
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The VUSD states, "Existing law does not provide us the
flexibility to utilize this source of funds as our students
suffer from the recent devastating cutbacks to our budget?The 27
school sites in VUSD have been maintained and will continue to
be with existing resources. The VUSD district office is located
in the former corporate business campus of Kinkos and is one of
the most professional district offices in the State. While VUSD
understands the importance of building and maintaining excellent
facilities in which to teach our children, this must not be at
the expense of our primary mission. Our primary mission being
student achievement through programs and the allocation of
resources that actually increase student achievement such as the
resources in our classrooms, low class size, academic and social
intervention, technology, summer school, music programs,
extra-curricular programs, transportation, and our recently
hired innovative teachers in our classrooms. In short, our
programmatic needs are far greater and more critical to our
students than our facility needs."
The Ventura Unified School District Parent Advisory Committee
states, "While we understand the State's rationale for limiting
the use of these funds, our programs and services are a much
greater need right now. Our facilities department has done an
excellent job maintaining all our sites; furthermore, the PAC
organization gets a regular update on maintenance completed and
projected, and we are encouraged to discuss site needs. We are
confident in this proposal to use approximately 10 million
dollars over a few years, and that our facilities will not
suffer."
The Coalition of Adequate School Housing opposed the prior
version of this bill because the bill eliminates the traditional
firewall between capital and operational funding and
expenditures.
There have been a number of related prior bills, including AB
1908 (Wolk), Chapter 634, Statutes of 2008; AB 1934 (Ma),
introduced in 2008; SB 1447 (Yee), vetoed by the Governor in
2008; SB 1415 (Scott), Chapter 810, Statutes of 2006; AB 1895
(Coto), Chapter 269, Statutes of 2006; SB 1488 (Hollingsworth),
Chapter 661, Statutes of 2006; SB 177 (Hollingsworth), Chapter
839, Statutes of 2004; SB 1906 (Sher), Chapter 838, Statutes of
2004; SB 1129 (Johnson), introduced in 2004; and AB 264
(Mullin), Chapter 891, Statutes of 2003.
AB 1022
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Analysis Prepared by : Sophia Kwong Kim / ED. / (916) 319-2087
FN: 0001144