BILL ANALYSIS �
AB 1576
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ASSEMBLY THIRD READING
AB 1576 (Huber)
As Amended May 25, 2012
Majority vote
EDUCATION 7-2 APPROPRIATIONS 17-0
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|Ayes:|Brownley, Norby, Butler, |Ayes:|Fuentes, Harkey, |
| |Carter, Halderman, | |Blumenfield, Bradford, |
| |Wagner, Williams | |Charles Calderon, Campos, |
| | | |Davis, Donnelly, Gatto, |
| | | |Ammiano, Hill, Lara, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Ammiano, Buchanan | | |
| | | | |
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SUMMARY : Authorizes county boards of education to extend short
term loans to charter schools. Specifically, this bill :
1)Authorizes, subject to specified conditions, county boards of
education to loan moneys to charter schools to meet cash
shortfalls caused by apportionment deferrals.
2)Requires, as a condition of making a loan to charter schools,
the county board of education to report to the California
Department of Education (CDE) by September 15 each year
specified information regarding loans made to charter schools
in the prior year.
3)States that this authorization shall sunset on July 1, 2017.
4)Authorizes county boards of education to do the following:
a) Adopt rules and regulations governing the administration
of the office of the county superintendent of schools;
b) Review the county superintendent of schools' annual
estimate of anticipated revenue and expenditures and make
revisions, reductions, or additions it deems advisable and
proper;
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c) Acquire, lease, lease-purchase, hold, and convey real
property to house the offices of the county superintendent
of schools, subject to specified conditions;
d) Contract with and employ persons to provide services and
advice in financial, economic, accounting, engineering,
legal or administrative matters; and,
e) Fill by appointment any vacancy that occurs during the
term of office of the county superintendent of schools.
5)Provides that the authority specified in 4) shall become
operative on July 1, 2017.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)To the extent this measure leads to short-term loans issued to
charter schools by county boards of education, there is a
potential for charter schools to default on these loans. This
default could lead to General Fund (Proposition 98) cost
pressure, potentially in excess of $150,000.
2)Potential General Fund (Proposition 98) cash savings, likely
in excess of $150,000, to the state due to investment earnings
and/or savings from not exempting charter schools from
deferral payments.
COMMENTS : This bill authorizes a board of education, with the
concurrence of the county superintendent of schools, to extend a
loan to any charter school in the state. Loans can be made only
to address cash shortfalls caused by the deferral of
apportionments. Prior to making the loan, the county
superintendent of schools must notify and allow input from the
charter school's authorizer and the county offices of education
(COE) in which the charter school is located regarding the
advisability of the loan. He or she must also solicit a
recommendation from any bond counsel regarding the advisability
of the loan. As a condition of making loans to charter schools,
the county board of education must provide to the CDE specified
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information on loans made in the prior year.
According to the sponsor, Dr. Vicki Barber, El Dorado County
Superintendent of Schools, this bill is needed to level the
playing field for charter schools by giving them an alternative
to the private market for their borrowing needs. The sponsor
argues that counties need the authority to extend loans to
charter schools not within their jurisdiction, because other
counties may be unable or unwilling to do so.
Background . With the increased use of inter- and intra-year
deferrals, charter schools-like school districts and COEs-have a
heightened need to borrow funds on a short term basis to manage
their cash flow. School districts can use internal borrowing,
borrowing from the county treasury, or Tax and Revenue
Anticipation Notes (TRANs) to meet their cash needs. Charter
schools typically have smaller cash reserves and cannot issue
TRANs on their own. This causes many of them to go to the
higher cost private market for their loans.
Related legislation. The Governor has proposed budget trailer
bill language to help charter schools meet their cash flow
needs. Specifically, the proposed language:
1)Authorizes charter schools to apply directly for a waiver from
deferrals, instead of applying through the chartering
authority.
2)Authorizes county boards of supervisors to order county
treasurers to make temporary transfers to charter schools that
do not have sufficient funds to meet current expenses.
(Current law requires such transfers to school districts.)
3)Authorizes county superintendents of schools, with the
approval of the county board of education, to make temporary
transfers to charter schools that do not have sufficient funds
to meet current expenses. (Current law authorizes such
transfers to school districts.)
Analysis Prepared by : Rick Pratt / ED. / (916) 319-2087 FN:
0003948
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