BILL ANALYSIS �
AB 331
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Date of Hearing: January 11, 2012
ASSEMBLY COMMITTEE ON EDUCATION
Julia Brownley, Chair
AB 331 (Brownley) - As Amended: January 4, 2012
SUBJECT : The Leroy F. Greene School Facilities Act of 1998
SUMMARY : Expresses the intent of the Legislature to enact
legislation that would create a Kindergarten-University Public
Education Facilities Bond Act and makes changes to the School
Facility Program (SFP). Specifically, this bill :
1)Expresses the intent of the Legislature to enact legislation
that would create the Kindergarten-University Public Education
Facilities Bond Act of 2012 to become operative only if
approved by the voters at the next statewide general election.
2)Specifies that the Director of General Services shall
administer the SFP at the direction of the State Allocation
Board (SAB) and pursuant to regulations adopted by the SAB.
3)Specifies that the provision under current law requiring a
school district to certify, in consultation with a district's
career technical education advisory committee, that it has
considered the need for vocational and career technical
facilities does not apply to elementary school construction
and modernization projects.
4)Specifies that a school district using an alternative
projection method shall calculate enrollment projections for
the fifth or the 10th year beyond the fiscal year in which the
application is made.
5)Specifies that the number of pupils for whom permanent
facilities were provided and that are counted as "being
housed" are those projects paid for completely with a local
funding source. Requires the pupil loading formula to include
the calculation of the number of pupils housed in portable
buildings.
6)Specifies that a district must show that it has entered into a
binding contract for professional services or for
construction, or both, in order for the SAB to release funds.
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7)Authorizes the SAB to appoint a legal counsel, who will report
directly to the SAB.
8)Makes technical, nonsubstantive changes.
EXISTING LAW establishes the Leroy F. Greene School Facilities
Act of 1998 (SB 50, Chapter 407, Statutes of 1998), also known
as the SFP, which governs the administration, allocation, and
use of state education bond funds.
FISCAL EFFECT : Unknown
COMMENTS : Background . The construction and rehabilitation of
public kindergarten through grade 12 (K-12) and higher education
facilities are funded by a combination of state and local
general obligation (G.O.) bonds, private funds, local
assessments, and in some instances, lease revenue bonds. Since
the inception of the SFP in 1998, voters have approved $35.4
billion in state G.O. bonds for K-12 schools.
The last education bond on the statewide ballot was Proposition
1D, which was passed by voters on the November 2006 ballot.
Proposition 1D provided $10.416 billion for K-12 and higher
education facilities and established new K-12 grant programs,
specified through the following allocations:
1)$7.329 billion for K-12 facilities as follows:
a) $1.9 billion for new construction projects (of which up
to $199.5 million can be set aside for seismic repairs);
b) $3.3 billion for modernization projects;
c) $1 billion for overcrowding relief grants through the
removal of portables;
d) $500 million for charter school facilities;
e) $500 million for career technical education facilities
and equipments;
f) $100 million for high performance (green) projects; and,
g) $29 million for joint-use projects.
2)$3.087 billion for higher education facilities.
Due to the state's budget crisis and poor credit ratings, the
Pool Money Investment Board (PMIB) halted the regular sale of
all G.O. bonds in December 2008 and slowed the disbursement of
funds. The SAB, comprised of ten members that include
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appointments by the Governor, the Speaker of the Assembly and
the Senate President pro Tem, is the body that allocates bond
funds and oversees the administration of the SFP staffed by the
Office of Public School Construction (OPSC), within the
Department of General Services (DGS). The SAB has been making
unfunded approvals since 2009 to enable districts to continue
their facilities planning. The unfunded approvals are converted
to apportionments when bonds are sold and funds become
available. The State Treasurer's office has made almost $6
billion in bond sales since 2009, but there remain almost $2
billion of projects waiting for funds.
Taking into consideration the unfunded approvals, as of December
2011, Proposition 1D allocations for new construction are almost
completely depleted ($26.5 million). With $165 million of new
construction authority remaining from Propositions 47 and 55, a
total of $191.5 million remains for new construction projects.
The SAB was able to increase the availability of new
construction dollars by transferring over $1 billion from the
Critically Overcrowded Schools (COS) program from Proposition 47
(2002) and Proposition 55 (2004) bonds to the new construction
program. Propositions 47 and 55 contained language that
authorized transfer of COS funds after a specified time period.
Current law requires home builders to pay 100% of the per pupil
grant amount required for school facilities construction when
the SAB is no longer approving apportionments for new
construction projects (Level III fees).
Approximately $1 billion is left in the remaining Proposition 1D
programs, the majority of which are modernization ($365 million)
and Overcrowded Relief Grant (ORG) ($410 million) program funds.
The ORG program was established to enable school districts to
replace portables with permanent school buildings based on the
density (crowded) at a school site. This program has enabled
overcrowded school districts that have had to rely on portable
buildings to accommodate their pupil populations to remove
portables and put students in permanent school buildings. A
2004 study of portable classrooms conducted by the California
Air Resources Board and the California Department of Health
Services found a number of environmental problems that occur in
both portable classrooms and permanent school buildings, but
reported finding problems more frequently in portable
classrooms. The Governor, in his 2012-13 budget, proposes to
transfer existing ORG funds to new construction in order to
delay the trigger of Level III fees.
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Despite declining enrollment in some districts, there is
anticipated future pupil enrollment growth in the state.
According to the Department of Finance Demographics Unit, the
state is projected to have an overall enrollment increase of
approximately 113,000 students within the next eight years.
Districts are in the process of relieving overcrowding and
building enough seats to enable every student to be on a
traditional school schedule while ending multi-track year round
schedules that reduce the number of school days for some kids.
These efforts require sufficient facilities. Districts are also
seeking to upgrade their facilities to be more energy efficient
or green, which will result in local general fund savings.
At an informational hearing on financing options for K-12 school
facilities held by the Assembly Education and Senate Education
Subcommittee on Sustainable School Facilities in November 2011,
the OPSC projected that bond funds for new construction projects
will be exhausted by May 2012 and bond funds for modernization
projects exhausted by August 2012. The Coalition for Adequate
School Housing estimates that new construction project
applications submitted to the OPSC through February and
modernization project applications submitted to the OPSC through
May will get funding. Bond authority will likely be exhausted
for applications submitted after those dates.
Proposition 1D provided $3.087 billion for the University of
California, California State University (CSU), and the
California Community Colleges (CCC) facilities. Based on
capital facility plans prepared by each higher education
segment, bond funds are allocated for specific projects through
the budget process. All Proposition 1D higher education
facilities funds have been apportioned. Last year, the CSU and
the CCC projected an annual need of over $1.64 billion and $1
billion, respectively.
This bill currently contains intent language to place a bond on
the next statewide general election. The author states, "The
condition of the learning environment affects student success.
Local communities are passing local bonds with the expectation
of getting state matching funds. Voters should get a chance to
decide whether school facilities funding continues to be a
priority. This bill is simply a mechanism to continue those
discussions."
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SFP . This bill also contains technical and clarification
amendments to the SFP, which establishes the parameters for bond
allocations and the use of funds. According to the author, who
is a member of the SAB, the proposed amendments are based on
issues that have been arisen at SAB meetings.
This bill clarifies that the SFP is administered by the DGS
under the direction of the SAB and the regulations adopted by
the SAB. This bill also clarifies that an application for an
elementary school project is not required to contain a
certification that the district has consulted with the local
career technical education advisory committee that is has
considered the need for vocational and career technical
facilities. Career technical education is integral to middle
and high school curriculum and not relevant to elementary school
facilities.
AB 1014 (Bass), Chapter 691, Statutes of 2007 provided
supplemental mechanisms to project student enrollment for
purposes of determining eligibility for SFP participation. One
of the supplemental mechanisms was the ability to project
student enrollment either on a 5-year or 10-year basis. Due to
the statutory construct and last-minute amendments to the bill,
the authorization to project student enrollment on a 10-year
basis was interpreted as limited to those districts that bases
enrollment on a high school attendance area. This bill is a
technical cleanup to achieve the intent of AB 1014 and the use
of a 10-year student enrollment projection.
Eligibility for state bond funds is based generally on projected
need after accounting for existing capacity (or seats). AB 695
(Mazzoni), Chapter 858, Statutes of 1999, was a SFP cleanup bill
that dealt with, among other things, how to account for
facilities built under the Class Size Reduction (CSR) Program or
built entirely from local funds in a district's existing
capacity. The bill sought to fully capture as added capacity or
existing seats in a district Prop. 1A (1998) CSR classrooms and
entirely locally-funded classrooms. Appeals by districts over
interpretation and application of the statute by the OPSC in
2009 raised questions regarding the intent of AB 695. Committee
staff has reviewed AB 695 material and documents and agree that
a statutory clarification is needed to fully carry out the
intent of AB 695. This bill clarifies that facilities built
from proceeds from any state source or permanent facilities
built entirely from local funds are to be captured in a
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district's capacity.
Under current law, school districts are eligible to request a
fund release when certain conditions are met, including the
condition that the district has entered into a binding contract
for the completion of that project. Current law does not
specify the types of contracts that are required to be in place.
The implementing regulations, however, specify that the binding
contract is a contract for construction for at least 50% of the
construction costs. Other types of contracts (e.g., contracts
for architects, construction managers, engineers) show just as
much commitment to the project as a contract for the
construction of the school. In addition, if a project is not
ultimately completed, the district is required to return the
funds with interest. This bill clarifies that the binding
contract can be for either professional services or for
construction, or both as such contracts represent a legal
obligation and commitment by the district to move forward with a
project.
Currently, the DGS assigns an attorney, funded by state bond
funds, to provide legal counsel to the SAB. This bill gives the
SAB the option of appointing its own legal counsel, similar to
the appointment of the Assistant Executive Officer.
This bill also makes minor technical amendments to sections that
identify incorrect section references.
Arguments in Support . The Coalition for Adequate School Housing
states, "While we believe that the original intent and
conceptual framework of the SFP has been eroded over the past
decade, C.A.S.H. believes that AB 331 provides minimal, yet
prudent changes to the SFP making it more efficient to
successfully serve the housing needs of California's students.
Second, C.A.S.H. strongly supports AB 331 because it would
provide vitally needed funding for New Construction and
Modernization projects."
Arguments in Opposition . EdVoice opposes the bill unless the
bond measure contains resources for charter schools.
Related legislation . AB 822 (Block), pending in the Assembly
Higher Education Committee, enacts the Kindergarten-University
Public Education Facilities Bond Act of 2012 and proposes to
allocate unspecified sums for the construction and modernization
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of higher education facilities, if approved by voters at the
November 2012 election.
REGISTERED SUPPORT / OPPOSITION :
Support
Association of California Construction Managers
California School Boards Association
Coalition for Adequate School Housing
County School Facilities Consortium
Los Angeles Unified School District
Riverside School Superintendents' Association
Small School Districts' Association
State Superintendent of Public Instruction Tom Torlakson
Opposition
EdVoice (unless amended)
Analysis Prepared by : Sophia Kwong Kim / ED. / (916) 319-2087