BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 2164 (Dickinson) - Community College Facilities.
Amended: June 21, 2012 Policy Vote: Education 8-0
Urgency: No Mandate: No
Hearing Date: August 16, 2012
Consultant: Jacqueline Wong-Hernandez
SUSPENSE FILE.
Bill Summary: AB 2164 authorizes the reimbursement of amounts
incurred for capital outlay projects approved by the Board of
Governors of the California Community Colleges (CCC), after
approval of preliminary plans by the Department of Finance (DOF)
and the State Public Works Board (PWB), and after an
appropriation by the Legislature, in the annual Budget Act or
related legislation, of funds for one or more of the following
project phases: preliminary plans, working drawings,
construction, and equipment.
Fiscal Impact: This bill creates cost pressure to pass a new CCC
facilities bond and, in the absence of a new bond, increases the
risk that CCCs will seek state appropriations for capital outlay
projects begun pursuant to this bill.
Background: Existing law prohibits the expenditure of funds
appropriated for capital outlay by any state agency, including
the University of California (UC), California State University
(CSU), and the CCC, until the DOF and the PWB have approved
preliminary plans for the project to be funded from a capital
outlay appropriation. (Government Code � 13332.11)
Proposed Law: AB 2164 authorizes the reimbursement of amounts
incurred by a community college district (CCD) for capital
outlay projects through the expenditure of local funds before
funds are available from a voter approved general obligation
bond, if the project has: a) been granted final project approval
by the Board of Governors (BOG); b) received approval of
preliminary plans for the project by the DOF and the PWB; and c)
received an appropriation for the project by the Legislature in
the Annual Budget Act or related legislation.
AB 2164 (Dickinson)
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This bill provides that the amount of reimbursement is subject
to the Legislature's determination of the appropriate scope and
cost of the project. It also establishes the following
requirements in order to apply to receive reimbursement:
1) Prior to incurring amounts, the CCD must demonstrate to
the CCC Chancellor's Office that sufficient local funds are
available to fully pay for the project without
reimbursement and without causing fiscal hardship to the
district.
2) A CCD must comply with all state and federal laws,
including labor compliance program requirements, governing
the use of state bond funds for facility construction
projects.
3) Expenditures made by a CCD must be eligible for
reimbursement in accordance with applicable state and
federal laws and procedures.
4) Reimbursement of amounts only occurs pursuant to a state
general obligation bond being approved by voters on or
before December 31, 2014.
This bill's provisions sunset on January 1, 2016.
Staff Comments: Under existing law and practice, CCDs with an
expectation of state funding for facilities projects have their
projects reviewed, approved, and prioritized by the CCC
Chancellor's office. The list of proposed projects is forwarded
to the BOG for approval and submission to the DOF and the
Legislature annually. The approved list is then forwarded to the
DOF for consideration of funding in the annual Budget Act and
the Legislature reviews and appropriates the funds for those
projects which the budget committees determine meet the
Legislature's priorities. Once funds are appropriated, DOF and
the PWB may review and approve preliminary plans and working
drawings. Once these are approved, projects can begin with an
assurance that they will receive state funds.
This bill would allow CCDs to, subject to a similar project
approval process and after certifying that sufficient local
funds are available to pay for the entire projects, begin
capital outlay projects with local money that would be eligible
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for state reimbursement if a new bond were passed in 2014.
According to the CCC Chancellor's office there are currently 88
facility projects anticipating state general obligation bond
funds, totaling approximately $447 million in project costs.
While this bill requires the CCC Chancellor's office to notify
CCDs that there is no guarantee of reimbursement and that the
CCD will assume the financial risks associated with projects,
this bill is likely to have fiscal consequences. Most directly,
it creates cost pressure to pass a new facilities construction
bond, on which the state pays debt service, by December 2014. If
a bond is not passed, this bill creates cost pressure for the
state to fund individual projects, especially to the extent that
CCDs were actually counting on bond reimbursements and later
find themselves in tough fiscal situations when the bonds do not
materialize. This bill allows CCDs to spend money with the hope
that they will be reimbursed, instead of waiting until state
funding is actually available.