BILL ANALYSIS
SB 675
Page 1
Date of Hearing: August 4, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 675 (Steinberg) - As Amended: April 2, 2010
Policy Committee: Education Vote:7-1
Natural Resources 6-3
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill establishes the Clean Technology and Renewable Energy
Job Training, Career Technical Education (CTE), and Dropout
Prevention Fund Act (the Act), which awards grants for
construction and enhancement projects associated with educating
and training individuals for jobs in clean technology
industries. This measure further establishes the funding source
for this Act as the proceeds from the sale of bonds (in an
unspecified amount). Specifically, this bill:
1)Defines "eligible entity" as a public school serving grades
7-12 inclusive; a California Community College (CCC); a public
entity that provides CTE (i.e., county office of education or
school joint powers authority); a publicly owned or
investor-owned utility; a nonprofit organization; a labor
organization; a business entity; a state-approved
apprenticeship program; a regional collaborative consisting of
local education agencies (LEAs), higher education
institutions; business and labor organizations; the California
Conservation Corp; a public postsecondary institution; or any
other entity approved by the Council.
2)Creates the Renewable Energy, Climate Change, CTE, and Clean
Technology Job Creation Council (the Council), comprised of
the Resources Secretary, the Labor and Workforce Development
Secretary, the CalEPA Secretary, the Superintendent of Public
Instruction, the CCC Chancellor, two members appointed by the
Senate Committee on Rules; and two members appointed by the
Speaker of the Assembly to develop criteria to evaluate the
fund.
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3)Authorizes the Council to incur indebtedness and issue and
renew negotiable bonds, notes, debentures, or other
securities. This measure requires all indebtedness to be paid
solely from moneys from the Public Interest Research,
Development and Demonstration (PIER) fund.
FISCAL EFFECT
1)This measure does not authorize a specific amount of bond
debt. Instead, the Council is authorized to issue bonds,
notes, debentures, or other securities (bonds) "form time to
time." Assuming the Council issues a lease revenue bond of
$500 million to be repaid over 25 years at an interest rate of
five percent, there would be a special fund reallocation, of
$36 million, from the PIER fund to secure debt issued for the
purposes of implementing this Act. Total principal and
interest repaid on a bond of this size would be $900 million.
The governor's proposed 2010-11 budget provides $75.4 milion
for the PIER fund.
2)GF administrative costs, of approximately $800,000, to the
Office of Public School Construction (OPSC). This costs
assumes nine positions to administer a $500 million grant
program. This bill does not specifify a grant amount. OPSC,
however, reports that for every $200 million in grant funding
provided, it would need one position at a cost of $80,000 GF.
This measure specifies not more than five percent of funds
allocated for this Act may be used for administrative puprose.
It is not known how much the Council would need to develop
grant criteria, as specified.
SUMMARY CONTINUED :
4)Allocates competitive grants to qualifying entities for the
purpose of constructing new facilities or reconfiguring
existing facilities, including purchasing equipment, in order
to provide individuals with skills to obtain careers directly
related to clean technology, renewable energy, or energy
efficiency, as specified.
5)Requires new construction grants not to exceed $3 million per
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project and modernization grants not to exceed $1.5 million
per project. This bill also requires the grants to be
supplemental to grant amounts allocated pursuant to the State
School Facilities Program (SSFP) and requires entities to
provide an unspecified local match, as specified.
6)Requires the SAB to administer the grant program pursuant to
this Act.
7)Applicants are required to do one of the following: (a) enter
into agreements with entities to support integrated academic
and technical learning to prepare pupils for college and
career; (b) enter into agreements with entities to provide
high school dropouts or high school graduates with job skills
necessary for employment; or (c) enter into agreements with
entities to provide individuals under 22 who are on probation
or parole with job training, as specified.
COMMENTS
1)Purpose . According to the author, "California suffers from
too many high school dropouts, too little meaningful CTE at
the middle and high school levels, and the lack of a skilled
workforce to fuel the emerging green economy. California must
lead the world in addressing both the problems of its youth
and the opportunities created by the new green economy. [This
bill] offers solutions at the intersection of these two state
priorities. Investment in these emerging careers and
industries will drive the next phase of California's economic
growth in a way that helps us meet the challenge of climate
change. This investment in reducing the dropout rate,
expanding workforce opportunities, and targeting climate
change will create major economic stimulus for clean energy
and technology jobs in California that will jumpstart our
economy and improve our quality of life."
2)Is the PIER fund the appropriate source to secure the sale of
bonds for the purposes of this Act ? Current law establishes
the PIER fund, administered by the California Energy
Commission, for the purpose of making awards for public
interest energy, research, development, and demonstration
projects that are not adequately provided by competitive and
regulated markets. The goal of the PIER program is to bring
to market energy technologies that provide increased
environmental benefits, greater system reliability, lower
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system costs, and provide tangible benefits to electric
utility customers. Statute also restricts the expenditures of
proceeds in the fund for these purposes until 2012. The
revenue source for this fund is a surcharge on electrical and
natural gas utilities.
This bill proposes to repurpose these funds to secure bonds
sold by the Council to provide capital outlay grants for
construction and modernization projects associated with
educating and training individuals for jobs in clean
technology industries. The committee may wish to consider
whether PIER funds, paid by ratepayers, should be redirected
to establish a grant program for the purpose of constructing
facilities that provide CTE programs to pupils, as specified.
3)Existing law establishes the SSFP, administered by the SAB, to
provide funding primarily to LEAs to construct or modernize
education facilities. The SSFP receives funding from a
variety of sources, including the state GF and proceeds from
the sale of general obligation (G.O.) bonds. Programs under
the SSFP include new construction, modernization, and CTE
facilities.
AB 127 (Nunez), Chapter 35, Statutes of 2006, authorized
Proposition 1D: the Kindergarten-University Public Education
Facilities Bond Act of 2006 for $10.416 billion. The voters
passed Proposition 1D on November 7, 2006. Of the $10.416
billion, $7.329 billion was allocated for K-12 education
facilities, including $500 million for CTE facilities.
Chapter 35 also established the CTE school facilities (CTESF)
program for the purpose of allocating $500 million in bond
funds to construct or modernize CTE facilities, including, but
not limited to, purchasing equipment with an average life
expectancy of at least 10 years. Program grants are capped at
$3 million for new construction and $1.5 million for
modernization projects.
As of June 2010, approximately $91 million CTESF program funds
remain. Therefore, $409 million in CTE bond funds have been
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appropriated in the first and second funding cycles. LEAs
submitted approximately $231 million in project requests for
the third funding cycle. The SAB is anticipated to allocate
the remaining $91 million by the end of the year.
This bill establishes grant programs to fund capital outlay
projects related to green technology and career development
provided by schools, community colleges, and other entities
involved in public-private partnerships. The CTESF program
requires applicants to have a CTE plan; describe methods of
accountability for pupil outcomes; and evidence of
coordination with feeder schools, as specified. The current
program also authorizes LEAs to construct or modernize a
school facility with the purpose of establishing any CTE
program.
Unlike the CTESF program, this bill authorizes entities other
than LEAs to apply for capital outlay funds for the purpose of
establishing CTE programs. Applicants are required to
demonstrate their ability to meet more rigorous programmatic
requirements than required under the CTESF program, as
specified. Likewise, this measure limits the allocation of
capital outlay funding to programs providing instruction in
clean technology industries.
4)Previous legislation . SB 1672 (Steinberg), held on this
committee's suspense file in August 2008, is similar to this
measure in terms of its programmatic requirements and purpose
to award grants to for construction and enhancement projects
associated with educating and training individuals for jobs in
clean technology industries.
The main difference between the two measures is the fund
source. SB 1672 authorized the sale of a general obligation
bond to fund the Act. SB 675, however, specifies the source
of funding as an unspecified amount of bond debt issued by the
Council and secured by PIER funds, as specified.
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5)Related legislation . AB 220 (Brownley), pending in the Senate
Appropriations Committee, authorizes the
Kindergarten-University Public Education Facilities Bond Act
of 2010 for the issuance of $6.1 billion in G.O. bonds for
construction and modernization of education facilities.
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081