BILL ANALYSIS �
AB 1622
Page 1
Date of Hearing: May 25, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1622 (Eng) - As Amended: May 16, 2012
Policy Committee: Education
Vote:10-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill 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 of this
sale for one-time GF purposes. Specifically, this bill:
1)Prohibits the amount of proceeds deposited in the GF from
exceeding the percentage difference between the purchase price
of property and the proceeds of the transaction, if the
property was originally purchased using a local general
obligation bond or developer fee revenue, as specified.
2)Requires the State Allocation Board (SAB) to reduce an
apportionment of hardship assistance awarded to SMUSD by an
amount equal to the sale of the surplus property specified
above.
3)Prohibits SMUSD, if it sells its property, from being eligible
for Deferred Maintenance Funding for five years after the date
of the proceeds being deposited into the GF.
4)Requires SMUSD, prior to selling the property, to submit the
following documents to the SAB:
a) The school district has no major deferred maintenance
requirements not covered by existing capital outlay
resources.
b) The sale of property does not violate the provisions of
a local bond act.
c) The property is not suitable to meet projected school
construction needs for the next 10 years.
AB 1622
Page 2
5)Requires SMUSD's governing board, prior to the sale of the
property, to present a plan for expending the one-time
resources. Further requires the plan to identify the
source/use of funds and describe the reasons why the
expenditure will not result in on-going fiscal obligations for
the district.
FISCAL EFFECT
Potential state and local school bond cost pressure, potentially
in the hundreds of thousands of dollars, to offset the loss of
proceeds from the sale of surplus property, which are primarily
used for capital outlay purposes.
COMMENTS
1)Background . Duet to the state's severe budget crisis and its
effect on K-12 school funding, the Legislature, with approval
from Governor Schwarzenegger, enacted several provisions
designed to provide flexibility to school districts to
mitigate their loss of funding, including allowing districts
to utilize the sale of surplus property for one-time GF
purposes. Specifically, AB 2 X4 (Evans), Chapter 2, Fourth
Extraordinary Session, Statutes of 2009, authorized school
districts to deposit the proceeds from the sale of surplus
property into the GF of the district and authorized the
district to use the proceeds for any one-time GF purpose.
Chapter 2 established this authorization until January 1,
2012. SB 70 (Committee on Budget and Fiscal Review), Chapter
7, Statutes of 2011, extended this authorization until January
1, 2014.
According to the Office of Public School Construction (OPSC),
eight school districts have exercised this authority between
August 2010 and March 2012 to purchase a variety of things for
schools, including instructional materials, IT equipment,
school supplies, and staff development. OPSC reports a large
portion of districts have used these proceeds for
postemployment benefits other than pensions.
Prior to the enactment of Chapter 2 in 2009, school districts
were restricted in their use of proceeds from the sale of
surplus property. Specifically, a district could use the
proceeds for one-time GF purposes, but it had to demonstrate
AB 1622
Page 3
it had no need for additional schoolsites or construction for
a 10-year period following the sale of the property. In
addition, the school district could not apply for state bond
funds for at least five years.
Once Chapter 2 sunsets in 2014, prior statute requiring them
to forgo the application of bond funds for five years will
become effective again.
2)Purpose . According to information provided by the author, the
City of San Marino entered into a 99-year lease agreement with
SMUSD for the site at the former Stoneman Elementary School.
The city is utilizing this site for recreation and child care
programs. The author contends an estimated 12,000 people
(almost equivalent to the population of the city) participate
in activities at this site.
Under the lease agreement, the City of San Marino is required
to pay the school district approximately $5 million in lease
payments. The agreement further states that, conditioned on
SMUSD being able to convey title to the city and obtain
legislative authority to use funds for one-time GF purposes,
SMUSD will receive an additional $1 million. According to the
author, "The city would have the assurance of title which
would enable it to move forward in the future with additional
use and development of the property for critical community
services. Conveyance of title would create the opportunity
for long term development of the site into a community center
and pool complex."
This bill authorizes the SMUSD to sell the site of the former
Stoneman Elementary School to the City of San Marino and use
the proceeds of this sale for one-time GF purposes.
3)Need ? As referenced above, AB 2 X4 (Evans), Chapter 2, Fourth
Extraordinary Session, Statutes of 2009, authorized school
districts to deposit the proceeds from the sale of surplus
property into the GF of the district and authorized the
district to use the proceeds for any one-time GF purpose.
Chapter 2 established this authorization until the January 1,
2012. SB 70 (Committee on Budget and Fiscal Review), Chapter
7, Statutes of 2011, extended this authorization until January
1, 2014.
As a result of the current flexibility, SMUSD is eligible
AB 1622
Page 4
under current law to sell the Stoneman Elementary School site
to the City of San Marino. It is unclear why SMUSD needs
separate statutory authorization via this measure.
4)Related legislation . AB 2434 (Block), pending in this
committee, extends the sunset of provisions authorizing a
school district to deposit the proceeds from the sale of
surplus property into its GF for any one-time GF purpose from
January 1, 2014 to January 1, 2016.
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081