BILL ANALYSIS
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CONSENT
Bill No: AB 1874
Author: Evans (D)
Amended: 4/6/10 in Assembly
Vote: 21
SENATE EDUCATION COMMITTEE : 6-0, 6/16/10
AYES: Romero, Huff, Emmerson, Hancock, Liu, Price
NO VOTE RECORDED: Alquist, Simitian, Wyland
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 74-0, 4/22/10 - See last page for vote
SUBJECT : Education finance: Vallejo City Unified School
District
Sale of property
SOURCE : State Superintendent of Public Instruction
DIGEST : This bill extends the time period Vallejo City
Unified School District is authorized to sell property and
use the proceeds to reduce or retire its emergency loan
from the state.
ANALYSIS : SB 1190 (Chesbro), Chapter 53, Statutes of
2004, appropriated $60 million for an emergency loan to the
Vallejo City Unified School District (VCUSD). The bill
required the state Superintendent of Public Instruction
(SPI) to assume all the legal rights, duties and powers of
the Governing Board of the VCUSD and to appoint, in
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consultation with the Solano County Superintendent of
Schools, an administrator to act on his behalf in
exercising authority over the school district.
Furthermore, SB 1190 authorized the school district,
between June 1, 2004 and July 30, 2007, to sell any
properties owned by the district and to use the proceeds
from the sale to reduce or retire the emergency loan. The
bill also prohibited the district from being eligible for
financial hardship assistance under the state's School
Facility Program from June 2004 through June 2006. These
timeline provisions were extended by AB 1948 (Evans),
Chapter 636, Statutes of 2008.
Current law requires that emergency loans to districts in
fiscal crisis be provided by legislative appropriation.
Requires, upon a district's acceptance of a loan exceeding
200 percent of a district's recommended reserve, that the
SPI assumes all the legal rights, duties and powers of the
district governing board, authorizes the SPI to appoint an
administrator to act on his or her behalf, and requires
that the district governing board become advisory to the
administrator. The authority of the SPI and the
state-appointed administer shall continue until the loan
has been repaid, the district has adequate fiscal systems
and controls in place, and the SPI has determined that the
district's future compliance with the fiscal plan approved
for the district is probable.
There are five school districts (excluding VCUSD) that have
an outstanding emergency loan balance with the state: Emery
Unified School District ($960,000), Kings City Joint Union
High School District ($5 million), Oakland Unified School
District ($78.3 million), West Fresno Unified School
District ($681,039), and West Contra Costa ($11.9 million).
This bill extends the time period from June 30, 2010, to
June 30, 2015, for VCUSD to sell property and use the
proceeds to reduce or retire its emergency loan.
In addition, the bill extends the ineligibility period from
January 1, 2011, to June 30, 2015, for VCUSD to participate
in the financial hardship assistance program under the
School Facility Program.
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Prior/Related Legislation
AB 1948 (Evans), Chapter 636, Statutes of 2008, extended
VCUSD's authority to sell property owned by the district
and to use the proceeds from the sale to reduce or retire
the emergency loan through July 1, 2010. Passed the Senate
Floor with a vote of 39-0 on 8/14/10.
SB 1190 (Chesbro), Chapter 53, Statutes of 2004,
appropriates $60 million for an emergency loan to VCUSD,
requires the Superintendent of Public Instruction to assume
all the rights, duties, and powers of the governing board
of the district and to appoint an administrator to serve
during the term of the loan. Passed the Senate Floor with
a vote of 30-8 on 6/17/04.
AB 1554 (Keene), Chapter 263, Statutes of 2004, requires
that existing emergency loans for the West Contra Costa
Unified School District (WCCUSD), Oakland Unified School
District (OUSD) and VUSD, be refinanced through I-Bank,
with any difference between interest paid on the existing
loans and the costs of refinancing those loans paid by the
state. Passed the Senate Floor with a vote of 31-1 on
7/29/04.
AB 1303 (Daucher), Chapter 97, Statutes of 2005, revises
statutes and terms pertaining to the lease financing that
the state is using to replace General Fund financing of
school district emergency loans. Passed the Senate Floor
with a vote of 29-4 on 7/11/05.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Assembly Appropriations Committee, VCUSD's
emergency loan balance is $48.3 million. In 2003, the
school district chose to utilize only $50 million of the
original $60 million appropriation. However, in May 2007,
VCUSD drew down the remaining $10 million. To date, the
district has paid $15.2 million on its loan, with an annual
payment of approximately $3 million.
VCUSD received a "negative" certification of its financial
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status at the 2009-10 First Interim Report (January 15)
issued by the State Department of Education (SDE). This
"negative" certification is given to a local education
agency that will not meet its financial obligations in the
2009-10 or 2009-10 fiscal years, as determined by the
Fiscal Crisis Management and Assistance Team (based on
current revenue projections). The second interim report is
due to SDE by April 15 of each year; however, additional
time is needed for SDE to certify the report.
SUPPORT : (Verified 6/29/10)
State Superintendent of Public Instruction (source)
Vallejo City Unified School District
ARGUMENTS IN SUPPORT : According to the author's office,
allowing the VCUSD additional time to sell property allows
the district to maximize the potential revenue from any
possible sale. Using property sale proceeds to pay down
the loan will free up local funds that the district could
use to balance its budget or improve programs.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Bass, Beall,
Bill Berryhill, Tom Berryhill, Blakeslee, Block,
Bradford, Brownley, Buchanan, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Emmerson, Eng, Evans, Feuer, Fletcher, Fong,
Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick,
Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill,
Jeffries, Jones, Knight, Lieu, Logue, Bonnie Lowenthal,
Ma, Mendoza, Miller, Monning, Nava, Nestande, Niello,
Nielsen, V. Manuel Perez, Portantino, Ruskin, Salas,
Saldana, Silva, Skinner, Smyth, Solorio, Audra
Strickland, Swanson, Torlakson, Torres, Torrico, Tran,
Villines, Yamada, John A. Perez
NO VOTE RECORDED: Blumenfield, Caballero, Huber, Huffman,
Norby, Vacancy
PQ:do 6/29/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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