BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 1163
                                                                  Page  1

          Date of Hearing:   May 4, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

               AB 1163 (Brownley) - As Introduced:  February 18, 2011 

          Policy Committee:                              Higher 
          EducationVote:8-0

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:               

           SUMMARY  

          This bill recasts the definition of "private college" to allow 
          the California Educational Facilities Authority (CEFA) to 
          facilitate tax-exempt bond programs for religious colleges, as 
          specified, in conformance with a California Supreme Court 
          decision.

           FISCAL EFFECT 

          Negligible fiscal impact.

           COMMENTS  

           Background and Purpose  . CEFA, which is housed in the State 
          Treasurer's Office, was established in 1973 for the purpose of 
          provided conduit financing, through the issuance of revenue 
          bonds, to assist private non-profit postsecondary education 
          institutions in the expansion and construction of educational 
          facilities.  Since CEFA is authorized to issue tax-exempt bonds, 
          it can often provide more favorable financing than private 
          institutions might otherwise be able to obtain.

          According to the sponsor, Treasurer Bill Lockyer, current law is 
          inconsistent with the California Supreme Court case, California 
          Statewide Communities Development v. All Persons interested in 
          the Matter of the Validity of a Purchase Agreement (2007) 40 
          Cal. 4th 788 (Communities Development case), in which the court 
          held that government financiers, such as CEFA, may facilitate 
          tax-exempt bond programs for religious colleges that limit entry 
          on religious grounds or require students gaining admission to 
          receive instructions in the tenets of faith so long as certain 








                                                                  AB 1163
                                                                  Page  2

          conditions are met.  

          The Treasurer argues that this inconsistency holds CEFA to a 
          more stringent standard than comparable financing authorities.  
          Without the statutory fix provided by AB 1163, CEFA is unable to 
          provide constitutionally permissible financing to religious 
          private schools that would expand educational opportunities 
          within California and provide state oversight of financing for 
          these programs.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081