BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
271 (Ducheny)
Hearing Date: 05/28/2009 Amended: 05/06/2009
Consultant: Dan Troy Policy Vote: ED 7-0
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BILL SUMMARY: SB 271 would enact the Higher Education
Facilities Bond Act of 2010 for the purpose of issuing
$8,630,000,000 in general obligation bonds for the support of
constructing and modernizing education facilities at the
California Community Colleges (CCC), the University of
California (UC), the Hastings College of Law, and the California
State University (CSU). The act would only become operative if
approved by the voters at November 2, 2010 statewide general
election.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Bond authorization $8,630,000*Bond
*Principal and interest totaling $16.842 billion over 30 years.
Assuming a bond interest rate of 5.0%, average annual payments
would be $561.4 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. All
Proposition 1D higher education funds have been apportioned.
This Higher Education Facilities Bond Act of 2010 would
authorize the issuance of $8,630,000,000 in general obligation
education facility bonds at the next statewide general election
for the purpose of constructing and modernizing public higher
education facilities.
The bill specifies that of the amounts authorized in the act,
$2.2 billion would be for CSU, $2.6 billion would be for CCC,
$2.2 billion would be for UC, and $30 million would be made
available to the Hastings College of Law. Of the amount
provided for UC, $400 million is to be used for capital
improvements for medical education programs, with an emphasis on
telemedicine (a similar provision was included in Prop 1D).
Additionally, $100 million would be 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 UC.
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SB 271 (Ducheny)
This act would authorize 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.
The act would states 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 Legislature.
For purposes of this analysis, staff assumes a 30-year repayment
period and a bond interest rate of 5.0%. Under these
conditions, the total principal and interest would be $16.842
billion with an average annual repayment of $561.4 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.