BILL ANALYSIS
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UNFINISHED BUSINESS
Bill No: SB 592
Author: Romero (D)
Amended: 8/24/09
Vote: 21
SENATE EDUCATION COMMITTEE : 9-0, 4/29/09
AYES: Romero, Huff, Alquist, Hancock, Liu, Maldonado,
Padilla, Simitian, Wyland
SENATE APPROPRIATIONS COMMITTEE : 10-0, 6/29/09
AYES: Kehoe, Cox, Corbett, Leno, Price, Runner, Walters,
Wolk, Wyland, Yee
NO VOTE RECORDED: Denham, Hancock, Oropeza
SENATE FLOOR : 34-0, 7/9/09 (Consent)
AYES: Aanestad, Alquist, Benoit, Cedillo, Cogdill, Correa,
Cox, Denham, DeSaulnier, Ducheny, Dutton, Florez,
Hancock, Hollingsworth, Huff, Kehoe, Leno, Liu,
Lowenthal, Maldonado, Negrete McLeod, Padilla, Pavley,
Price, Romero, Runner, Simitian, Steinberg, Strickland,
Walters, Wiggins, Wright, Wyland, Yee
NO VOTE RECORDED: Ashburn, Calderon, Corbett, Harman,
Oropeza, Wolk
ASSEMBLY FLOOR : 76-0, 9/2/09 (Consent) - See last page for
vote
SUBJECT : Charter Schools Facilities Program
SOURCE : Department of General Services
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DIGEST : This bill authorizes a local government entity,
including a county board of education, a city or a county,
and authorizes a charter school to hold title to a charter
school facility constructed with state bond funds. The
bill also authorizes charter school to request a district
currently holding title to such a facility to transfer
title to the charter school or other specified entity upon
mutual agreement.
Assembly Amendments made clarifying changes.
ANALYSIS : Current law establishes the School Facility
Program (SFP) under which the state provides general
obligation bond funding for various school new construction
and modernization projects. In 2002, Proposition 47
authorized $11.4 billion in general obligation bonds.
Among other things, it created the Charter Schools
Facilities Program (CSFP) and provided $100 million in
funding for this purpose. In 2004, Proposition 55
authorized $10 billion in general obligation bonds and
provided an additional $300 million for the new
construction of facilities for charter schools. Most
recently, Proposition 1D made several changes and further
expanded the CSFP, providing an additional $500 million for
charter school facilities.
Current law requires that a school district hold title, in
trust, for the benefit of the state public school system,
to any project facilities constructed with state bond
funds. Current law also provides for the continued use of
a charter school facility by another charter, or the school
district if the charter school funded under the CSFP ceases
to use the facility for a charter school purpose. If the
district declines to take possession of the facility or it
is no longer needed for public school purposes, the
district is authorized to dispose of the facility in a
manner applicable to the disposal of surplus public school
sites.
This bill:
1.Requires applicants, prior to the release of funds under
the CSFP, to provide the State Allocation Board (SAB)
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evidence that the school district (where the facility is
located) holds title or a local government entity or
charter school holds title of the school facility.
2.Requires both of the following conditions to be met, if a
local government entity or charter school holds title:
(a) the local government entity is prohibited from
exercising any control over the operation of the charter
school, and (b) the chain of the title is required to
include a restrictive covenant specifying that the
facility be used for purposes authorized in education
statute and a remainder interest to the district in which
the facility is located or the SAB, if the district
disclaims interest to the facility.
3.Requires a lien to be recorded if a charter school
requests to hold title of the school facility authorized
under the CSFP. This bill requires the lien to be in the
total amount of funds allocated under the CSFP and any
loan received from the Charter School Facilities
Financing Authority (CSFFA), as specified.
4.Authorizes a charter school to request that a school
district transfer title of a facility to a local
government entity or itself, if the district entered into
an agreement to hold title with the charter school prior
to January 1, 2010.
5.Requires the SAB to dispose of the facility in the same
manner as surplus property if the district declines to
dispose of the facility.
6.Specifies that any funds remaining from the proceeds form
the sale of the property, after any security interest has
been satisfied, shall be paid to the school district in
which the facility is located to be used for capital
improvements in the district.
7.Authorizes the SAB to adopt regulations to implement this
bill.
Currently, prior to the release of funds, among other
requirements, a school district and a charter school must
negotiate a use agreement. Some districts are reluctant to
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sign the use agreement due to liability concerns. Also,
some charter schools contend that districts place onerous
conditions on the school as part of the use agreement
negotiations. This bill is intended to address some of
these concerns.
Comments
In order to participate in the CSFP, the California School
Finance Authority (Authority) requires three agreements:
the Memorandum of Understanding (MOU), which outlines the
roles and responsibilities of all parties involved in the
CSFP project; the Funding Agreement, which sets forth the
repayment terms of the local matching share amount
(templates for these agreements were adopted by the SAB in
January 2007); and the Use Agreement, which is negotiated
and entered into by the school district and charter school.
As titleholders for facilities constructed under the CSFP,
school districts must sign both the MOU and the Use
Agreements. All three agreements must be executed prior to
any fund release. Charter schools contend that the time
involved in negotiating the use Agreements is excessive,
resulting in delays in initiating projects or acquiring
land. In addition, charters have expressed concern that
school districts have placed "onerous" conditions upon them
in these agreements and have extracted unreasonable
concessions such as rights for parking, use of rights for
adult school programs or other non-charter programs, and
that they have been required to waive all rights to request
any other property from the district for the term of the
lease. This bill attempts to address this issue by
authorizing both local government entities and charter
schools to be eligible to hold title to the facilities.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Assembly Appropriations Committee, minor
absorbable GF costs to the SAB to adopt regulations, as
specified. Since 2002, the voters have authorized $900
million in state education bonds for the CSFP (under
Propositions 47, 55 and 1D). According to the SAB, there
is approximately $50.1 million available for new projects
under this program.
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SUPPORT : (Verified 9/3/09)
Department of General Services (source)
California Charter Schools Association
Los Angeles Unified School District
ARGUMENTS IN SUPPORT : The California Charter Schools
Association states, "Title has been a conundrum for charter
schools and school districts because of the obligations
that flow from being a titleholder. For example, a school
district may not want to hold title to a facility that is
located in a neighborhood where the district does not need
a school facility. There are virtually no other options for
the charter school when a school district is reluctant to
hold title to the charter school facility."
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Caballero, Charles Calderon, Carter, Chesbro,
Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore,
Duvall, Emmerson, Eng, Evans, Feuer, Fletcher, Fong,
Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick,
Gilmore, Hagman, Harkey, Hayashi, Hernandez, Hill, Huber,
Huffman, Jeffries, Jones, Knight, Krekorian, Lieu, Logue,
Bonnie Lowenthal, Ma, Mendoza, Miller, Monning, Nava,
Niello, Nielsen, John A. Perez, V. Manuel Perez,
Portantino, Ruskin, Salas, Saldana, Silva, Skinner,
Smyth, Solorio, Audra Strickland, Swanson, Torlakson,
Torres, Torrico, Tran, Villines, Yamada, Bass
NO VOTE RECORDED: Buchanan, Hall, Nestande, Vacancy
DLW:cm 9/4/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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