BILL ANALYSIS �
AB 677
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ASSEMBLY THIRD READING
AB 677 (Skinner)
As Amended April 26, 2011
Majority vote
EDUCATION 10-0 APPROPRIATIONS 17-0
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|Ayes:|Brownley, Norby, Ammiano, |Ayes:|Fuentes, Harkey, |
| |Buchanan, Bonilla, | |Blumenfield, Bradford, |
| |Carter, Eng, Hagman, | |Charles Calderon, Campos, |
| |Halderman, Williams | |Davis, Donnelly, Gatto, |
| | | |Hall, Hill, Lara, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
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SUMMARY : Reestablishes and extends the time period within
which the Oakland Unified School District (OUSD) is authorized
to sell district owned property and use the proceeds to reduce
or retire its emergency loan from the state. Specifically, this
bill :
1)Reestablishes and extends the time period, through June 30,
2016, and with the same exemptions as historically provided,
within which OUSD is authorized to sell district owned
property and use the proceeds to reduce or retire its
emergency loan from the state.
2)Makes OUSD ineligible for financial hardship assistance
facilities funding, through June 30, 2016.
3)Exempts OUSD, through June 30, 2016, from the requirement that
the district governing board appoint an advisory committee to
advise on the development of district-wide policies and
procedures governing the use or disposition of school
property, prior to the sale any excess real property.
EXISTING LAW :
1)Requires that emergency apportionments (loans) requested by a
school district in fiscal crisis be provided by legislative
appropriation.
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2)Requires upon a district's acceptance of an emergency loan
exceeding 200% of a district's recommended reserve that the
Superintendent of Public Instruction (SPI) assumes all the
legal rights, duties and powers of the district governing
board, authorizes the SPI to appoint an administrator to act
on his or her behalf, and requires that the district governing
board become advisory to the administrator.
3)Authorizes a $100 million emergency loan, with specified
conditions, to OUSD; also triggers the SPI assumption of
powers and appointment of a state administrator, and
eventually a state trustee, in the district.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, the ability of the school district to repay the
state's emergency apportionment might be enhanced if the limit
on the use of proceeds from the sale of surplus property is
extended as proposed.
COMMENTS : This bill proposes to extend the time period within
which OUSD is authorized to sell district owned property and use
the proceeds to reduce or retire its emergency loan from the
state, and thus relax a condition that was placed on the
district as a part of OUSD's emergency loan from the state.
According to OUSD in 2003, district officials became aware of a
multi-million dollar negative general fund balance; at that
point the OUSD governing board requested an emergency loan from
the state. SB 39 (Perata), Chapter 14, Statutes of 2003,
appropriated $100 million for an emergency loan to OUSD, and
required the SPI to assume all the rights, duties, and powers of
the governing board of the district and to appoint an
administrator to act on behalf of the SPI in exercising
authority over the school district. As authorized in statute,
subsequent actions taken by the SPI have returned all
operational areas of control to the OUSD governing board, though
a state-appointed trustee will remain in the district as long as
the loan is outstanding. SB 39 (Perata) also authorized OUSD,
between June 1, 2003 and July 30, 2005, to sell surplus property
owned by the district and to use the proceeds from the sale to
reduce or retire the emergency loan; the bill also prohibited
the district from being eligible for financial hardship
assistance under the state's school facilities program over the
same time period. This bill proposes to re-establish these two
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provisions and extend them through the 2015-16 fiscal year.
There are legislative precedents for extending the authorization
on the sale of surplus property for districts with emergency
loans, in that this action has been taken in the past for OUSD
and other districts in the same circumstances.
According to OUSD, the district has no pending sales of district
property, but plans, in the context of continuing budget
reductions, to use the information developed through a recent
district/community-based property inventory and analysis process
to determine whether property sales would be a feasible tool to
use both to pay down the outstanding emergency loan balance and
to deal with future budget uncertainties.
OUSD was one of 97 local educational agencies in the state that
received a qualified certification of its financial status at
the 2010-11 First Interim Report provided by the California
Department of Education. A qualified certification is assigned
to a school district or county office of education when it is
determined that, based upon current projections, the school
district or county office of education may not meet its
financial obligations for current or two subsequent fiscal
years. Thirteen school districts received a negative
certification, which is assigned to a school district or county
office of education when it is determined that, based upon
current projections, the school district or county office of
education will not meet its financial obligations for the
current and/or next fiscal year. If OUSD sells district-owned
real property as a result of the authority provided in this
bill, then the current pressure on the district's budget might
be relieved and the state's emergency loan might be repaid more
quickly.
Analysis Prepared by : Gerald Shelton / ED. / (916) 319-2087
FN: 0000541
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