BILL ANALYSIS �
AB 1622
Page 1
Date of Hearing: May 9, 2012
ASSEMBLY COMMITTEE ON EDUCATION
Julia Brownley, Chair
AB 1622 (Eng) - As Introduced: February 8, 2012
SUBJECT : School property: San Marino Unified School District
SUMMARY : Authorizes the San Marino Unified School District
(SMUSD) to sell the site of the former Stoneman Elementary
School to the City of San Marino and use the proceeds from the
sale for its education programs. Makes findings and
declarations regarding the site and the SMUSD's interest in
selling the property to the City of San Marino for $1 million.
EXISTING LAW :
1)Requires funds from the sale of surplus property to be used
for capital outlay or for costs of maintenance of school
district property that the local governing board determines
will not recur within a five-year period. Provides that
proceeds from the sale or lease with the option to purchase
may be deposited in the general fund if the school district
governing board and the State Allocation Board (SAB) have
determined that the district has no anticipated need for
additional sites or building construction for the ten-year
period following the sale or lease with option to purchase,
and the district has no major deferred maintenance
requirements. Authorizes proceeds from the sale or lease with
option to purchase of school district property to be used for
one-time expenditures, and may not be used for ongoing
expenditures including, but not limited to, salaries and other
general operating expenses. (Education Code (EC) Section
17462)
2)Authorizes the governing board of a school district to sell
any real property or lease a property for no more than 99
years under specified conditions and requires the financing
proceeds to be expended solely for capital outlay purposes.
(EC Section 17456)
3)Authorizes proceeds from the lease of a school district
property with an option to purchase to be deposited into a
restricted fund for the routine repair of district facilities
for up to five-years. (EC Section 17464)
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4)Requires the SAB to reduce an apportionment of hardship
assistance awarded to a school district by an amount equal to
the amount of any proceeds from the sale of surplus property
used for a one-time expenditure of the school district for
five years following the expenditure. (EC Section 17462.7)
5)Authorizes, until January 1, 2014, the authority to use
proceeds from the sale of surplus property for any one-time
general fund purposes without prohibition from applying for
state bond funds. (EC Section 17463.7)
FISCAL EFFECT : This bill is keyed non-fiscal by the Legislative
Counsel.
COMMENTS : Background . Existing law requires districts to
establish routine facilities accounts and deferred maintenance
accounts, and requires proceeds from the sale of surplus
property to stay in capital facilities or maintenance funds to
ensure that districts protect and maintain their facilities, and
to ensure that districts are not relying on one-time funds for
ongoing expenditures. Until 2006, a handful of districts were
given district-only authorizations to sell surplus property and
use the proceeds for any one-time general fund purposes, with
three exceptions. Two districts, Oakland Unified School
District and Vallejo City Unified School District, were given
the authority to sell surplus property so that they can repay
emergency loans from the state. The Dixon Unified School
District was authorized to sell specified surplus property and
to deposit the proceeds into the general fund of the school
district in order to reestablish a 3% reserve.
SB 1415 (Scott), Chapter 810, Statutes of 2006, provides a
general authorization to any district interested in using the
proceeds from the sale of surplus property for any one-time
general fund expenditures and prohibits the use for ongoing
expenditures. As a condition for using funds for one-time
general fund purposes, a district must show that it has no need
for additional sites or building construction for a ten-year
period following the sale of the property and may not apply for
state bond funds during the ten-year period. The district may
apply for funds after five years if the SAB determines that the
district demonstrates enrollment growth or a need for additional
sites it could not have anticipated. Regulations for the
implementation of SB 1415 (Title 2, Section 1700) adopted by the
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SAB, the body that administers state education bond funds and
the School Facility Program, established the following
definitions:
1)"One-time Expenditures" means costs paid by the general funds
of a school district that are nonrecurring in nature and do
not commit the school district to incur costs in the future,
and are exclusive of Ongoing Expenditures.
2)"Ongoing Expenditures" means costs paid by the general or
special funds of a school district in support of employee
salaries, benefits and other costs that are associated with
ongoing and sustained operations and services except, if
approved by the State Allocation Board, a single and one-time
payment reducing a district's existing unfunded liability for
postemployment benefits other than pensions will be considered
a one-time expenditure and not an ongoing expenditure if the
following conditions are also met: (1) the unfunded liability
was incurred prior to January 1, 2007, (2) the unfunded
liability has been determined using actuarial measurement
methods as defined in Governmental Accounting Standards Board
Statement 45, and (3) the payment is consistent with any plan
made by the district according to Assembly Bill 1802, Chapter
79, Section 43(a)(6)(A), Statutes of 2006 (Committee on
Budget), as amended by Senate Bill 1131, Chapter 371, Statutes
of 2006 (Committee on Budget and Fiscal Review), or a similar
plan adopted by the district's governing board.
Budget flexibility provisions . The fiscal year 2009-10 budget
established a number of flexibility provisions to provide school
districts with tools to balance their budgets, including the
authority to use the funds for 39 categorical program funds for
any educational purpose, relaxing the penalties for violating
class size reduction student-to-teacher ratios and the authority
to use proceeds from the sale of surplus property for any
one-time general fund purposes (AB 2 (Evans), Chapter 2,
Statutes of 2009-10 Fourth Extraordinary Session). The
authorization was initially provided until January 1, 2012. SB
70, Chapter 7, Statutes of 2011, extended this authority along
with other flexibility provisions until January 1, 2014. This
authority does not prohibit school districts from applying for
state bond funds.
According to the Office of Public School Construction, as of
March 2012, eight districts have exercised the budget
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flexibility authority to use proceeds from the sale of surplus
property for one-time general fund purposes. Proceeds have been
used to purchase textbooks, IT equipment and upgrades, supplies,
and pay for professional consulting, staff development, and
postemployment benefits other than pensions. Some districts
have inquired whether "one-time" means just one use or any
one-time expenditures. The authorization is not limited to a
one-time use, but is intended for any one-time expenditures.
This bill authorizes the SMUSD to sell the site of the former
Stoneman Elementary School to the City of San Marino and allows
the proceeds to be used for the district's education programs.
According to the district, that site has not been used as a
school since 1983 and in March 2011, the district entered into a
99-year lease agreement with the City of San Marino that will
yield $5 million. The City currently uses the property to
operate recreation classes, preschool, and child care programs.
The district is interested in selling the property to the City
of San Marino for $1 million to enable the City to further
develop the property for recreational and community service.
According to the district, the agreement specifies that the $1
million shall be used for "general fund purposes." This bill
seeks to allow the proceeds to be used for the district's
"education programs," which, while unspecified, may include
"ongoing expenditures."
A bill is not necessary to approve a sale of property by a
district. The district can exercise existing authority to use
the proceeds from the sale of surplus property - if it agrees to
use the funds for one-time general fund expenditures - simply by
notifying the SAB that it has complied with the requirements
under EC Section 17463.7, which includes certification that the
property is not suitable for school needs, the district has no
major deferred maintenance needs, the sale does not violate any
local bond act, and the local governing board has presented a
plan for expending one-time resources at a regularly scheduled
meeting. One-time expenditures are general fund expenditures.
This bill may not be necessary unless the district does not
agree to use the funds for one-time expenditures.
SMUSD is a high-achieving small school district located in Los
Angeles County with an enrollment of 3,198 in the 2010-11 school
year. According to the Los Angeles County Office of Education,
SMUSD had a positive certification in the fiscal year 2011-12
second interim report and the three year financial projection
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looks stable. The district also has revenue generated by two
parcel taxes passed in 2007 and 2009 totaling about $5 million a
year that are used to pay salaries.
Committee amendment . Prior bills and current law limit the use
of funds from the sale of surplus property for one-time general
fund purposes. Earlier versions of AB 1022 (Nava), introduced
in 2009, was similar to this bill. The bill was ultimately used
by the author for another purpose, but prior to gutting and
amending the bill, the bill was amended to include the
"one-time" general fund provision. Staff recommends requiring
this bill to be consistent with prior bills and current law by
specifying that the proceeds can only be used for one-time
general fund expenditures and specifying that all other
requirements for exercising the authority to use proceeds from
the sale of surplus property for one-time general fund purposes
are applicable.
Previous legislation . AB 2 (Evans), Chapter 2, Statutes of the
Fourth Extraordinary Session, authorizes school districts to use
the proceeds from the sale of surplus school property for any
one-time general fund purposes, among many other provisions.
SB 70 (Committee on Budget and Fiscal Review), Chapter 7,
Statutes of 2011, extended the authority to use proceeds from
the sale of surplus school property for one-time general fund
purposes by two years, to January 1, 2014, among many other
provisions.
AB 1022 (Nava), authorizes the Ventura Unified School District
to deposit $10 million of the proceeds from the sale of surplus
real property, together with any personal property located on
that property, purchased entirely with local funds and sold
before January 1, 2005, into the general fund of the school
district and use the proceeds from the sale for any one-time
general fund purpose. The bill was gutted and amended into a
different bill in 2010.
AB 1908 (Wolk), Chapter 634, Statutes of 2008, authorizes the
Dixon Unified School District to sell specified surplus property
and to deposit the proceeds into the general fund of the school
district in order to reestablish a 3% reserve.
AB 1934 (Ma), introduced in 2008, authorizes the San Francisco
Unified School District to use proceeds from the sale of surplus
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property for any one-time general fund purposes. The author
held the bill in the Senate Education Committee.
AB 1948 (Evans), Chapter 636, Statutes of 2008, which, among
other provisions, extends, until July 1, 2010, the authority of
the Vallejo City Unified School District to sell surplus
property and use the proceeds to reduce or retire an emergency
loan from the state.
SB 1447 (Yee), vetoed by the Governor in 2008, authorizes the
San Bruno Park School District to expend up to $1.4 million of
the proceeds from the sale of the Carl Sandburg Elementary
School for any one-time general fund purpose and requires the
district to repay the capital outlay account within 10 years,
with interest calculated at the rate received by the Pooled
Money Investment Account.
SB 1415 (Scott), Chapter 810, Statutes of 2006, prohibits the
use of proceeds from the sale or lease with option to purchase
of school district property for ongoing expenditures, including,
but not limited to, salaries and other general operating
expenses, and increases from five to ten years the time period
for which the district must demonstrate that it has no
anticipated need for additional sites or building construction.
AB 1895 (Coto), Chapter 269, Statutes of 2006, authorizes the
Oak Grove Elementary School District, until January 1, 2010, to
deposit proceeds from the sale of surplus real property and any
personal property located thereon, purchased entirely with local
funds, into the general fund of the school district or county
office of education (COE) and to use the proceeds for any
one-time general fund purpose.
SB 1488 (Hollingsworth), Chapter 661, Statutes of 2006, extends
for three years, the authority of the Santee Elementary School
District, the Valley Center-Pauma Unified School District, and
the Capistrano Unified School District to sell surplus real
property and related personal property and deposit the net
proceeds into the local general fund to use for any one-time
general fund purpose.
SB 177 (Hollingsworth), Chapter 839, Statutes of 2004,
authorized the Santee School District and the Capistrano Unified
School District, until January 1, 2007, to sell surplus school
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and personal property, and deposit the net proceeds into the
local general fund to use for any one-time general fund purpose.
SB 1906 (Sher), Chapter 838, Statutes of 2004 authorized the
same for the Santa Clara Unified School District for two years.
SB 1129 (Johnson), introduced in 2004, authorized a school
district to sell, lease or leaseback certain surplus properties
and to deposit the proceeds into the general fund of the school
district and to use the proceeds for any one-time general fund
purpose. The author dropped the bill in the Assembly.
AB 264 (Mullin), Chapter 891, Statutes of 2003, allows certain
school districts to deposit up to 25% of the proceeds of the
sale of surplus school real property, excluding any interest
earned thereon, that occurred between July 1, 1997 and June 30,
2000, into the school district general fund for one-time
expenses, except for salaries and benefits. The provisions of
this bill repealed on January 1, 2005.
REGISTERED SUPPORT / OPPOSITION :
Support
City of San Marino
San Marino Unified School District
Opposition
None on file
Analysis Prepared by : Sophia Kwong Kim / ED. / (916) 319-2087