BILL ANALYSIS
SENATE COMMITTEE ON EDUCATION
Gloria Romero, Chair
2009-2010 Regular Session
BILL NO: SB 1193
AUTHOR: Lowenthal
AMENDED: April 5, 2010
FISCAL COMM: Yes HEARING DATE: April 14, 2010
URGENCY: No CONSULTANT:Kathleen Chavira
SUBJECT : Modernization Project Funding
POLICY ISSUE
Should the provisions of the High Performance Incentive
Grant Program be statutorily modified for modernization
projects? What elements would create incentives for
participation while ensuring that modernization projects
take meaningful steps toward the creation of high
performance schools?
SUMMARY
This bill increases the amount of a modernization grant by
$250,000 per schoolsite if the project incorporates the use
of high performance design and materials and can
demonstrate that it meets one of a number of specified
objectives.
BACKGROUND
The Kindergarten-University Public Education Facilities
Bond Act of 2006, authorized Proposition 1D a statewide
general obligation bond proposal for $10.4 billion.
Proposition 1D, approved by the voters in November 2006,
provided $7.3 billion for K-12 education facilities. Among
other things, Proposition 1D provided $100 million for high
performance incentive grants to promote the use of designs
and materials in school facility new construction and
modernization projects that include the attributes of high
performance schools, pursuant to regulations adopted by the
State Allocation Board. (Education Code 101012)
Current law defines high performance attributes as
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including the use of designs and materials that promote
energy and water efficiency, maximize the use of natural
lighting, improve indoor air quality, utilize recycled
materials and materials that emit a minimum of toxic
substances, and employ acoustics that are conducive to
teaching and learning. (EC 17070.96)
ANALYSIS
This bill :
1) Increases the amount of a modernization grant by
$250,000 per schoolsite if the project incorporates
the use of high performance design and materials and
can demonstrate that it meets one of the following
objectives:
a) Achieves 20 points for meeting high
performance criteria as determined by the SAB and
certified by the Division of the State Architect.
b) Obtains Collaborative for High Performance
Schools (CHPS) "verified" status in accordance
with the California Edition of the CHPS criteria.
c) Obtains certification status in accordance
with the Leadership in Energy and Environmental
Design for Schools (LEEDS).
2) Requires the State Allocation Board to provide
additional funding for modernization projects that
exceed the criteria outlined in #1 above.
3) Requires the SAB to adopt emergency regulations to
administer these provisons within 14 calendar days and
the Office of Administrative Law to process the
emergency regulations within 14 calendar days of their
adoption.
4) Prohibits school districts from being required to
provide matching funds for any funds received under
these provisions.
5) Declares that these funds do not constitute a
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modernization apportionment and do not reduce
modernization eligibility authorized under the Leroy
Greene Act.
6) Requires that the energy efficiency and renewable
energy savings realized, as specified, be retained by
the school district and prohibits the reduction of
state funding on the basis of these savings.
7) Requires that these funds be made available for
reimbursement and grants for contracts signed on or
after April 1, 2010.
STAFF COMMENTS
1) Need for the bill . According to the author, the High
Performance Schools program has been stalled by a
well-intentioned but onerous process for awarding the
grants. The existing process awarded points to
various environmental and energy-related features of
school construction projects. According to the
author, while the number of points determine the
amount of funding a district would receive, the points
have no relationship to the actual cost of the desired
features. Some districts found that the costs
associated with the required certification of these
features to earn the points were almost as high as the
percentage grant increase they would receive as part
of the program. This bill, by establishing a base
grant of $250,000 per school site when a district
modernizes buildings and meets high performance
criteria will provide districts with a real incentive
to create green schools.
2) Current program features . The SAB adopted regulations
for the implementation of the High Performance
Incentive (HPI) grant program on October 1, 2007.
Under these regulations, applications are scored and
receive points using established criteria in five
categories (Sustainable Sites, Energy, Water,
Materials, Indoor Environmental Quality) to determine
the high performance attributes in a project. These
criteria were modeled after the rating criteria
identified in the Collaborative of High Performance
Schools (CHPS) standards, but modified to assure that
funds allocated from this program focus on facility
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attributes. Grants are provided on a first-come,
first-serve basis and augment base project grants.
The minimum point threshold for new construction
projects to qualify for the additional grant is 27
points, while the minimum point threshold for
modernization projects is 20 points. The final score
is verified by the Division of the State Architect.
The increase to the base grant is determined by the
number of points the project receives multiplied by a
graduated percentage factor with the potential to
increase the grant amount by two to approximately10
percent.
3) How has it worked ? The first HPI grants were
apportioned at the February 2008 SAB meeting. Since
then, the Office of Public School Construction (OPSC)
reports that about $18.5 million in HPI grants for 76
projects have been awarded. Nearly all these funds
went toward new construction projects with only one of
the grants being approved for a modernization project.
OPSC is currently processing 34 HPI grant requests
for about $6.7 million, of which seven are
modernization projects. Almost three-fourths of the
$100 million available since 2007 has gone
undistributed.
School districts have anecdotally reported that the
current program is too complex and funding amounts are
not adequate, particularly within the modernization
program. They have also cited the lack of a link
between the number of points obtained for
incorporating high performance attributes and the cost
of those elements within a project. Whereas the size
of a new construction project allows some ability to
absorb these costs, the smaller scope of many
modernization projects makes it especially difficult
to absorb these costs within those projects.
4) Where do the funds come from ? It appears to be the
intent of the author to make provision for the use of
the $100 million provided by Proposition 1D for the
High Performance Incentive Grants. However, as
drafted, the bill increases the amount of a
modernization grant without specifying that the
funding authorized by the bill is to come from, and be
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provided only to the extent funds are available from,
the HPI program.
Staff recommends the bill be amended to link the
purposes outlined in the bill to the funding
authorized in Education Code section 101012(a)(8).
5) Too statutorily prescriptive ? This bill would
statutorily establish 20 points as the high
performance criteria threshold for eligibility for
funding under the HPI program. As noted in staff
comment #2, the program currently delineates several
categories of high performance attributes via
regulation, with 20 points being the current score
necessary to be eligible for an HPI modernization
grant. But what if new standards or goals for "high
performance" emerge? What if it is determined that the
existing score threshold is too high? Should the SAB's
flexibility in adjusting the criteria and scoring
thresholds through regulation be compromised?
Staff recommends the bill be amended to delete the
requirement that 20 points be achieved and instead
require that the project achieve the number of points
necessary for meeting high performance criteria as
determined by the SAB and certified by the DSA
pursuant to regulations.
6) Is $250,000 the right amount ? This bill establishes a
base grant of $250,000 for qualifying high performance
projects in an effort to address concerns about
funding inadequacy and to incent increased
participation in the HPI program. This amount appears
to be based upon grant programs operated under the
Integrated Waste Management Board and the California
Energy Commission. Staff was unable to determine
whether the features and requirements of these
programs were comparable to those of the HPI. In
addition the committee may wish to consider the
following:
What threshold of grant is necessary in
order to incent participation in the program?
Is it reasonable to award a base grant of
$250,000 if it exceeds the cost of the entire
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modernization project?
What are the real costs of incorporating
high performance attributes into the project?
Are they greater, less, or even close to the
proposed base grant amount?
1) CHPS and LEED . Leadership in Energy and Environmental
Design (LEED) is an internationally recognized green
building certification system developed by the U.S.
Green Building Council (USGBC), a non-profit
organization focused on the realization of
cost-efficient and energy-saving green buildings.
The Collaborative for High Performance Schools (CHPS)
is a national, non-profit organization, originally
created in California, which exists to facilitate the
design, construction and operation of "high
performance schools" which are energy and resource
efficient as well as healthy, comfortable, well lit,
and contain the amenities for a quality education.
Each of these entities offers third-party verification
that school construction projects have achieved a
"status" related to standards for design and
construction established by their respective
organizations.
2) Should a private entity be given the authority to
determine who receives state bond funds ? This bill
would award funds to school districts that demonstrate
that they have achieved CHPS or LEED status on the
basis of those entities granting the projects a
certification or verification status. Essentially,
state bond dollars would be awarded on the basis of a
private "third-party" certification that their own
standards had been met. While the current state
program is linked to some CHPS standards (which are
similar in nature to LEED standards), the state
developed HPI grant is based upon a funding model
developed to recognize CHPS criteria which are
specifically facilities related and consistent with
the HPI program goals. Should state bond funds be
distributed on the basis of non-state criteria,
developed and modified by private entities whose
objectives may or may not be aligned with the state
goals for funding high performance schools? What
potential conflicts of interest arise might arise from
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empowering private entities the power to determine who
receives limited state dollars?
3) Application of provisions based upon a contract date ?
Under the SFP, an application for funding under the
Modernization Program may be submitted for work to be
performed, or for reimbursement of work already
completed. Receipt of funding is not generally
contingent upon the date of the signing of a contract,
as is the case with new construction. This
accommodation exists in order to allow districts to
compile a number of smaller modernization projects and
submit their request for reimbursement of these
projects in a single application. This bill would
apply its provisions only to modernization projects
that have entered into contracts as of April 1, 2010
effectively excluding reimbursement projects which may
have been designed and constructed to meet the
existing high performance criteria but had not yet
been submitted for funding.
Staff recommends the bill be amended to delete
subdivision (g) and allow the funding to be available
for reimbursement and grants for any qualifying
modernization funding applications received after the
bill's effective date.
4) Administrative vs. statutory solutions . At its
February 2010 meeting, the SAB, cognizant of the
limited participation in the HPI, requested that OPSC
staff convene a workgroup to examine the HPI grant
program with an emphasis on the lack of modernization
requests. A workgroup was assembled, input is being
gathered from various stakeholders and staff is in the
process of preparing proposed regulatory changes to be
discussed and considered by the SAB at its April
meeting.
Staff notes that many of the questions raised in this
analysis are currently under consideration by the SAB,
the School Facility Program policy making body which
has the authority to modify regulations as necessary
to achieve program objectives. Regulations adopted by
this body generally undergo extensive review and
discussion by districts and other interested parties
prior to coming before the SAB. It appears that such
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a process has been initiated and that the changes
proposed by this bill are already under consideration
by the SAB.
SUPPORT
California Labor Federation
Small School Districts' Association
County School Facilities Consortium
California's Coalition for Adequate School Housing
California School Boards Association
OPPOSITION
None received.