BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 1161|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: SB 1161
Author: Lowenthal (D)
Amended: 4/20/10
Vote: 21
SENATE EDUCATION COMMITTEE : 7-0, 4/14/10
AYES: Romero, Huff, Alquist, Hancock, Liu, Simitian,
Wyland
NO VOTE RECORDED: Maldonado, Price
SENATE APPROPRIATIONS COMMITTEE : 9-0, 5/3/10
AYES: Kehoe, Cox, Corbett, Denham, Leno, Price, Walters,
Wolk, Yee
NO VOTE RECORDED: Alquist, Wyland
SUBJECT : Education: school finance
SOURCE : Author
DIGEST : This bill (1) deletes the current statutory
definition of a material inaccuracy, (2) authorizes, rather
than requires, the State Allocation Board (SAB) to prohibit
a school district from self-certifying certain project
information as a consequence of a determination that an
apportionment or fund release of school construction bonds
was made based upon materially inaccurate information, (3)
requires the SAB to set forth the reasons for its decision
on the prohibition on self-certification and the term of
prohibition, if applicable, in a regularly scheduled public
meeting, and (4) deletes the authority of the SAB to impose
CONTINUED
SB 1161
Page
2
a self-certification penalty where no funding apportionment
or fund release has been made.
ANALYSIS : Current law requires the Office of Public
School Construction (OPSC) to notify the SAB in the event
of a material inaccuracy, referenced in statute as
information found to have been falsely certified by school
districts, architects or design professionals. Regulations
further define a material inaccuracy as a falsely certified
eligibility or funding application related information
submitted by school districts, architects or other design
professionals that allowed the school district an advantage
in the funding process.
If an apportionment or fund release has been made based
upon information or materials that constitute a material
inaccuracy, the SAB is required to impose the following
penalties:
1. Require the school district to repay to the SAB an
amount proportionate to the additional funding received
as a result of the material inaccuracy including
interest at the rate paid on monies in the Pooled Money
Investment Account or at the highest rate of interest
for the most recent issue of state general obligation
bonds, whichever is greater, pursuant to a maximum
five-year repayment schedule as approved by the SAB.
2. Prohibit the school district from self-certifying
certain project information for any subsequent
applications for project funding for a period of up to
five years following the date of the finding of a
material inaccuracy or until the district's repayment of
the entire amount owned. However, the SAB may not
prohibit the school district from applying for state
funding under the School Facility Program.
3. Establish an alternative process for state or
independent certification of compliance that includes,
but is not limited to, procedures for payment by the
school district of any increased costs associated with
the alternative certification process.
If a funding apportionment has occurred, but no fund
SB 1161
Page
3
release has been made, the SAB is required to reduce the
apportionment to the district as necessary to reflect the
actual nature of the project and to disregard the
inaccurate information or material. In addition, the
district is subject to the loss of self-certification
penalty delineated in #2 above.
If no funding apportionment or fund release has been made,
the inaccurate information or materials are not to be
considered and the district is subject to the loss of
self-certification penalty delineated in #2 above. The
project may continue if the application, minus the
inaccurate materials, is still complete.
This bill:
1.Deletes the current statutory reference to a "material
inaccuracy" as information which has been falsely
certified by school districts, architects or design
professionals.
2.Deletes the requirement, and instead authorizes, the SAB
to prohibit a school district form self-certifying
project information for any subsequent applications for
project funding for a period of up to five years
following the date of the finding of the material
inaccuracy.
3.Requires the SAB to set forth the reasons for its
decision regarding both the prohibition on
self-certification and the term of the prohibition, if
applicable, in a regularly scheduled public meeting.
4.Deletes the authority of the SAB to impose a
self-certification penalty if no funding apportionment or
fund release has been made.
5.Makes other conforming and clarifying changes.
Comments
How Does it Currently Work ? The SAB adopted regulations
that define "Material Inaccuracy" as any falsely certified
eligibility or funding application related information
SB 1161
Page
4
submitted by school districts, architects or other design
professionals that allowed the school district an advantage
in the funding process. Staff presents research, analysis,
and recommendations to the SAB for material inaccuracy
consideration. According to the Office of Public School
Construction (OPSC), it is not necessary for the SAB to
determine that the certification was knowingly false. No
finding of any intent or specific knowledge on the part of
a district is necessary.
According to the OPSC, the most common form of material
inaccuracy is a premature fund release certification, where
the district receives a funding advantage through the false
certification of documents necessary to have apportioned
funds released to the district. Under current regulations,
the OPSC will release state funds apportioned to the
district once the district certifies it has entered into a
binding contract for at least 50 percent of the
construction included in the plans applicable to the state
funded project.
Current law requires that a district that has received an
apportionment must meet the criteria for fund release
within a period established by the SAB, but not to exceed
18 months. If the 18 months has elapsed ad the district
does not secure a fund release, the apportionment is
rescinded and becomes available for other state School
Facility Program projects.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12
2012-13 Fund
Self-certification -- Minor
impact -- Bond
SUPPORT : (Verified 5/4/10)
California Coalition for Adequate School Housing
County Schools Facilities Consortium
SB 1161
Page
5
Los Angeles Unified School District
San Francisco Unified School District
ARGUMENTS IN SUPPORT : According to the author's office,
eligibility and funding applications contain dozens of
complex and detailed documents and it is not uncommon for
these self-certified documents to contain errors.
Currently, the author's office asserts, all false
certifications are deemed material inaccuracies regardless
of the significance of the error to the state. The
author's office contends that striking "false
certification" from current law will allow the ability to
distinguish between material inaccuracies that unfairly
provide funding to school districts and simple errors that
have no material impact to the state. In addition, the
author's office believes that the bill will provide
consistency between the law and SAB regulations and will
result in savings to districts and the state via the
elimination of unnecessary reviews, reports, and appeals,
when there is no benefit to the state.
CPM:cm 5/4/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****