BILL ANALYSIS �
AB 2434
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Date of Hearing: May 16, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2434 (Block) - As Amended: April 26, 2012
Policy Committee: Education
Vote:11-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill extends the sunset of provisions authorizing a school
district to deposit the proceeds from the sale of surplus
property into its general fund (GF) for any one-time GF purpose
from January 1, 2014 to January 1, 2016.
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 the January 1,
2012. SB 70 (Committee on Budget and Fiscal Review), Chapter
7, Statutes of 2011, extended this authorization until January
1, 2014.
AB 2434
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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
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 . San Diego Unified School District (SDUSD), the
sponsor of this measure, reports it is in the process of
reviewing several property sites to determine if they are
surplus and can be sold. SDUSD reports it has sold and is
expected to close escrow on another property in June 2012.
These two sales have generated $6 million for the district,
which is being used to backfill cuts in the classroom. The
school district is in the process of determining whether to
sell additional properties. SDUSD argues it takes time to
sell property of this magnitude and extending the
authorization to use the proceeds from the sale of its surplus
property for one-time GF purposes until 2016 will ensure the
district will be able to take advantage of this flexibility.
According to the author, "As noted in the February 2012
economic report by the Legislative Analyst's Office, the real
estate market is generally weak and a variety of factors have
kept it from improving significantly. If the current
flexibility provision is expected to sunset at the start of
2014 then school districts will be pressured to sell property
in this market environment - or risk losing this opportunity
to stabilize funding for valuable classroom programs such as
arts and music. AB 2434 extends the existing flexibility
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provisions on school district surplus property proceeds."
3)Related legislation . AB 1622 (Eng), pending in this
committee, authorizes San Marino Unified School District to
sell a specific schoolsite to the City of San Marino and use
the proceeds from the sale for its education programs,
including on-going GF expenditures.
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081