BILL ANALYSIS
SENATE COMMITTEE ON EDUCATION
Gloria Romero, Chair
2009-2010 Regular Session
BILL NO: SB 271
AUTHOR: Ducheny
AMENDED: April 22, 2009
FISCAL COMM: Yes HEARING DATE: April 29, 2009
URGENCY: No CONSULTANT:Kathleen Chavira
SUBJECT : Higher Education Facilities Bond Act of 2010
SUMMARY
This bill enacts the Higher Education Facilities Bond Act
of 2010 to issue and sell an unspecified amount of general
obligation bonds and to be operative only if approved by
voters at the next statewide general election.
BACKGROUND
AB 127 (Nunez and Perata), the Kindergarten-University
Public Education Facilities Bond Act of 2006, authorized
Proposition 1D a statewide general obligation bond proposal
for $10.4 billion. Proposition 1D, approved by the voters
in November 2006, provided $7.3 billion for K-12 education
facilities and $3.087 billion was provided for higher
education facilities. Of the amount provided for higher
education facilities, $1.5 billion was provided for
Community College facilities, $890 million was provided for
the University of California (of which $200 million was
provided for capital improvements for medical education
programs, with an emphasis on telemedicine) and $690
million was provided for the California State University.
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.
ANALYSIS
This bill enacts the Higher Education Facilities Bond Act
of 2010. Specifically it:
1) Authorizes a statewide general obligation (G.O.)
SB 271
Page 2
education bond election at the next statewide general
election for an unspecified amount and specifies that
these bond proceeds are to be used to construct higher
education facilities.
2) Specifies the following distribution of the proceeds
from bond sales:
a) $2.2 billion for the University of
California (UC) and provides that, of this
amount:
i) $400 million is to be
used for capital improvements for medical
education programs, with an emphasis on
telemedicine.
ii) An unspecified amount is to be
made available to the Hastings College of
Law.
b) $2.2 billion for the California
State University (CSU).
c) $2.6 billion for the California
Community Colleges (CCC).
d) $100 million for joint use
facility projects defined as a facility that is
used for school or higher education purposes by
two or more of the following: a school district,
a community college district, the CSU, or the UC.
3) Authorizes the use of up to 10 percent of the money
allocated for construction of higher education
facilities for mitigation of off-site infrastructure
impacts if the state or local public agency with
jurisdiction over the impacted infrastructure provides
an equal amount of matching funds for the mitigation.
4) Declares legislative intent that the UC, CSU and CCC
annually consider, as part of their capital outlay
planning process the inclusion of facilities that may
be used by more than one segment of higher education
and that, on or before May 15, the segments report
their findings to the budget committees of the
SB 271
Page 3
Legislature.
STAFF COMMENTS
1) Author's intent . Staff has been informed that it is
the author's intent to amend the bill to authorize a
higher education facilities bond proposal of $5.13
billion to be placed before the voters at the November
2010 statewide general election. Of this amount,
$2.2 billion is to be provided for the California
Community Colleges and $1.4 billion is to be provided
to the UC and CSU. The bond proposal would also
provide $100 million for joint use projects and $30
million for Hastings.
2) Related budget activity . The Governor's 2008-09 Budget
included $774 million in lease revenue bond funding
for eight projects at the UC and $325 million at the
CSU. The Governor's 2009-10 Budget also proposes
about $1 billion in new capital outlay funding. Most
of the proposed funding for UC and CSU in 2009-10
would come from lease-revenue bonds, since the general
obligation (G.O.) bonds authorized under prior bond
authorizations are essentially exhausted. Financing
with lease-revenue bonds is more costly than G.O.
bonds, and proceeds are limited to funding new
buildings, replacement buildings, additions, or
significant renovations. Seismic upgrades, minor
renovations, and equipment cannot be funded with
proceeds from lease revenue bonds. On May 7, 2009,
the Budget Subcommittee on Education is expected to
discuss the pros and cons of using Lease-Revenue Bonds
vs. General Obligation Bonds to fund higher education
capital outlay needs.
3) City of Marina v. CSU Board of Trustees . In 1994, the
CSU agreed to establish a Monterey campus on a portion
of the former Fort Ord military base as part of the
Fort Ord Reuse Authority (FORA) Act. In 1998, the CSU
certified a master plan for the new campus and an
accompanying Environmental Impact Report (EIR), which
identified significant environmental impacts to
various public resources. Although the CSU agreed to
mitigate those impacts that would occur on campus,
they determined that the mitigation of off-campus
impacts was not within their jurisdiction, but rather
SB 271
Page 4
within the jurisdiction of FORA. Accordingly, the CSU
declined to fund off-campus mitigation measures. In
response, FORA and the City of Marina challenged the
CSU decision to certify the EIR as a violation of
California Environmental Quality Act (CEQA).
In July 2006, the California Supreme Court ruled that
the CEQA does not restrict the CSU's obligation to
mitigate or void significant environmental effects
occurring only on the university's own property, and
that the CSU was required to mitigate a project's
off-campus environmental impacts. The Court also found
that if the CSU could not adequately mitigate
off-campus environmental impacts with actions on
campus, then a voluntary payment to a third party
(such as FORA) to perform the necessary acts is a
feasible form of mitigation and, as the lead agency,
CSU has the discretion to determine the appropriate
fair-share payment for off-campus infrastructure
improvements. In response to the Marina decision the
CSU has adopted new EIR language for its campus plan
in which it agrees to pay a fair share of costs
incurred by local agencies provided that the
Legislature appropriates money specifically for this
purpose.
This bill, for the first time, specifically provides
that a portion of education facilities G.O. bond funds
may be used for off-site mitigation expenses.
Currently, the UC, CCC and K-12 districts have
addressed these costs using nonstate and local funds
and through negotiation with local governments.
Should this committee advance legislation that would
authorize the UC and CCC to use state funds for these
purposes? What precedent would this set in regards to
K-12 districts? The bill also authorizes a state
agency to look to education bond dollars as a
potential source of funding for off-site mitigation
costs. What incentives does this create for local
governments and other state agencies to shift costs
they might previously have absorbed to the education
facilities construction programs?
4) Previous higher education facilities bond proposals .
Essentially, all of the higher education G.O. bond
initiatives from 1972-1994 were separate from K-12
SB 271
Page 5
bond initiatives. Since 1998, the state has combined
its K-12 and higher education facility bond proposals.
Staff notes that this bond proposal, unlike others in
the recent past, focuses exclusively on higher
education facilities and does not include a K-12
component, as summarized in the following chart:
SUPPORT
None received on this version.
OPPOSITION
None received.