BILL ANALYSIS
SB 1161
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Date of Hearing: August 4, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1161 (Lowenthal) - As Amended: April 20, 2010
Policy Committee: Education Vote:9-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill removes the statutory definition of material
inaccuracy for the purposes of state school bond funds and
instead, requires the Office of Public School Construction
(OPSC) to notify the State Allocation Board (SAB), if certified
eligibility or funding application information is found to
contain a material inaccuracy. Specifically, this bill:
1)Authorizes the SAB to prohibit a school district from
self-certifying certain project information for any subsequent
applications for state bond funding for a period of up to five
years following the date of the finding of a material
inaccuracy. This measure further requires the SAB to
establish reasons for its decision regarding both the
prohibition of self-certification and the term of the
prohibition (if applicable), in a regularly scheduled meeting.
2)Deletes the SAB's authority to impose a self-certification
penalty, if no state bond funding apportionment has been made
to school districts.
FISCAL EFFECT
By deleting the statutory definition of material inaccuracy and
making this determination at the discretion of the SAB, this
measure may allow school districts to receive state school
construction bond funds under false pretenses. According to
OPSC, the amount attributed to material inaccuracies has ranged
between $50,000 and $11 million in state school facility bond
funds. OPSC also reports there have only been seven material
inaccuracy findings since 1998.
SB 1161
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COMMENTS
1)Background . Existing law defines a "material inaccuracy" for
the purposes of the state school construction bond program as
information found to have been "falsely certified by school
districts, architects, or design professionals." Statute
further requires OPSC to notify the SAB in the event a
district submits information that is materially inaccurate.
Current law also requires the SAB, if an apportionment or a
fund release has been made based upon a material inaccuracy,
to impose the following penalties on school districts:
a) Require the school district to repay to the SAB an
amount proportionate to the additional funding received
owing to the material inaccuracy with interest, pursuant to
a maximum five year repayment schedule approved by the SAB.
b) Prohibit the school district from self-certifying
certain project information for any subsequent applications
for a period of up to five years or until full repayment is
made.
c) Establish an alternative process for state or
independent certification of compliance that includes
procedures for payment by the school district of any
increased costs associated with the alternative
certification process.
2)Purpose . According to the author, "Eligibility and funding
applications contain dozens of complex and detailed documents.
It is not uncommon for these self-certified documents to
contain errors. Most errors are found and rectified during
the state application review process. Some errors may not be
found until a detailed audit occurs. These errors are not
SB 1161
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necessarily material to the state. Unfortunately, current law
does not distinguish between errors that are material to the
state and errors that have no state impact."
This measure deletes the definition of material inaccuracy and
leaves this determination at the discretion of the SAB, as
specified.
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081