BILL ANALYSIS �
SB 477
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Date of Hearing: June 27, 2012
ASSEMBLY COMMITTEE ON EDUCATION
Julia Brownley, Chair
SB 477 (Wright) - As Amended: June 20, 2012
SENATE VOTE : Not relevant to this version
SUBJECT : School district reorganization: bonded indebtedness:
Wiseburn Unified School District: Centinela Valley Union High
School District.
SUMMARY : Addresses issues of bonded indebtedness, debt
capacity, and the establishment of a revenue limit related to
the creation of the Wiseburn Unified School District.
Specifically, this bill :
1)Provides that any tax for repayment of bonds of the current
Wiseburn School District (Wiseburn Elementary) shall be levied
on all taxable property of the new Wiseburn Unified School
District (Wiseburn Unified).
2)Provides that any tax for repayment of bonds issued by
Wiseburn Unified, including bonds authorized by Wiseburn
Elementary, shall be levied on all taxable property of
Wiseburn Unified.
3)Provides that, when Wiseburn Unified is formed, any tax for
repayment of voter-approved bonds of the Centinela Valley
Union High School District (Centinela) approved on or before
January 1, 2012 shall be levied on both of the following:
a) All taxable property located within Centinela as the
district exists following the effective date of the
reorganization; and
b) All taxable property located within Wiseburn Unified
that was formerly part of the territory of Centinela.
4)Requires Centinela to transfer to Wiseburn Unified $4 million
from the proceeds of the sale of bonds approved by voters on
November 2, 2010 and issued after January 1, 2012 in
recognition of the authority for Centinela to continue levying
property taxes on taxable property located within Wiseburn
Unified.
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5)Requires Wiseburn Unified to expend the $4 million for
purposes consistent with the original voter authorization for
the bonds.
6)Provides that, for purposes of establishing the bonding limit,
the limit for Wiseburn Unified and Centinela shall each be
1.25% of the assessed value of all non-residential property
located in Wiseburn Unified.
7)Provides that the bonding limit applicable to bonds payable
from ad valorem property taxes of a joint powers authority
(JPA) created by Wiseburn Unified and Centinela shall be equal
to the limit of the two districts.
8)Authorizes a JPA created by Wiseburn Unified and Centinela to
hold facilities bond elections and provides that debt service
of the JPA shall be allocated to each district in proportion
to its assessed value of taxable property.
9)Provides that this bill does not prohibit either district from
seeking a waiver of bonding limits established by this bill or
any other statutory bonding limit.
10)Establishes a formula for calculating a revenue limit for the
new Wiseburn Unified district as follows:
a) Multiply the Wiseburn Elementary revenue limit per ADA
in 2012-13 by nine (for the nine grade levels in the K-8
district).
b) Multiply the Centinela revenue limit per ADA in 2012-13
by four (for the four grade levels in the 9-12 district).
c) Add the amount in a) and b).
d) Divide the amount in c) by 13.
11)Provides that, for purposes of making the revenue limit
adjustment based on salaries and benefits of certificated and
classified employees, the ADA of Centinela shall be deemed to
make up 25% of the ADA of Wiseburn Unified.
12)Provides that a high school pupil who resides in Wiseburn
Unified may attend a school in Centinela without an
interdistrict attendance agreement if Centinela accepts that
pupil for attendance.
13)Provides that the election of approve the unification of
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Wiseburn Unified shall be conducted within the territory of
the Wiseburn Elementary.
EXISTING LAW allows funds from the sale of previously issued
school bonds to be used for the acquisition, construction, or
improvement of school property that was a part of a former
district or to discharge bonded indebtedness in the former
district. However, if the new district accepts and assumes the
former district's bonded indebtedness, the funds may be used
anywhere in the new district for the purposes for which the
bonds were originally voted.
Existing law also establishes a method for calculating a revenue
limit for the new district. First a blended base revenue limit
is computed based on the weighted average revenue limit for the
districts involved in the reorganization. Second, an adjustment
is calculated based on classified and certificated employee
salary and benefit differentials among the districts involved in
the reorganization. The purpose of this second adjustment is to
raise the base revenue limit to a level necessary to support the
level of average salaries and benefits provided by the district
with the highest average cost per full time equivalent employee.
However, only those districts with at least 25% of the total
ADA of the new district may be considered as having the highest
average compensation cost for this purpose.
FISCAL EFFECT : Unknown
COMMENTS : This bill reflects an agreement between the Wiseburn
School District, which is currently a K-8 school district, and
Centinela to reorganize Wiseburn as a unified district, serving
K-12. Currently, the territory of Centinela includes four
elementary school districts, one of which is Wiseburn. The
other districts are Hawthorne School District, Lawndale
Elementary School District, and Lennox School District. This
bill reflects an agreement among all five districts that
addresses the following issues:
Protecting the tax rates of all five school districts for
approved but unissued bonds by Centinela . This is achieved by
allowing the Wiseburn Unified taxpayers to continue to pay debt
service on authorized but unissued bonds passed for Centinela.
Absent this provision, tax rates in the remaining four districts
would go up. The transfer of $4 million of bond revenue from
Centinela to Wiseburn Unified ensures that Wiseburn Unified
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taxpayers receive a benefit for the taxes they are paying for
the bonds.
Ensuring that the unification of Wiseburn Elementary does not
cause tax rates for future bond authorizations for Centinela to
be substantially higher and that Centinela will have a larger
assessed valuation and bond capacity after Wiseburn unification
than it would have under existing law . This is achieved by
allowing Centinela and Wiseburn Unified to share a portion of
Wiseburn's tax base-specifically, an area of non-residential
property-for bonding purposes. Existing law establishes a debt
limit of 2.5% of assessed valuation for unified school
districts. When an elementary school district and a high school
district share the same territory, the debt limit is 1.25% of
assessed valuation for each district. This bill treats an area
of non-residential property in Washburn Unified in the same
manner, with Centinela and Washburn Unified each applying 1.25%
of the assessed valuation toward its debt limit and applying
revenues from that property to debt service on future bonds, if
any. This bill authorizes this arrangement to be administered
by a JPA. Under existing law, a JPA has the powers of each of
its component members. Therefore, through the JPA, Centinela
would be able to use the non-residential property in Washburn
Unified for bonding purposes.
Creating a revenue limit for the new unified district . When
school districts are reorganized, existing law specifies a
two-step method for establishing a new revenue limit. The first
step is to calculate a blended revenue limit, which is based on
the weighted average revenue limit of each of the districts
involved in the reorganization. The second step is to calculate
an adjustment based on the salary and benefits differentials for
classified and certificated employees in each of the affected
districts. This step "levels up" the new salary schedule to
that of the highest district. However, only a district who's
ADA will comprise at least 25% of the ADA of the new district
can be considered as having the highest salary schedule.
This bill establishes a methodology for computing a blended
revenue limit for Wiseburn Unified that results in a base
revenue limit of $6,600.26 according to the author's office. By
comparison, the statewide average revenue limit for unified
school districts in 2011-12 is $6,536.
This bill also provides that, for purposes of making the salary
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and benefits adjustment, 25% of the ADA of Wiseburn Unified
shall be deemed to be from Centinela. The reason, according to
the author's office, is that most of the high school students
who live in Wiseburn Elementary are attending charter schools in
the area of Wiseburn Elementary instead of Centinela schools.
Wiseburn Elementary has authorized two charter schools that have
a combined enrollment of 1,077. If they were not attending
charter schools, these pupils would likely be attending a high
school in Centinela and would attend Wiseburn Unified after
unification. Under existing law, however, charter school
enrollment does not count toward the 25% threshold. If all of
the pupils currently enrolled in the charter schools were to
transfer to Wiseburn Unified, they would comprise approximately
25.3% of the district's enrollment.
The salary and benefit adjustment is intended to be used when
two are more districts and involved in the reorganization. It
removes a potential disincentive for reorganization by ensuring
that no district employees would see their compensation reduced
as a result. It can also provide an incentive to reorganize by
leveling up the compensation of some employees to the level of
the highest component district.
In this case, however, only one district is involved-Washburn
Unified-and no other district employees would be part of the
unification. Therefore, there are no salary or benefit
differentials to be adjusted. Accordingly, staff recommends
that the bill be amended to strike the methodology and
requirement to make a salary and benefit adjustment to Washburn
Unified's base revenue limit.
REGISTERED SUPPORT / OPPOSITION :
Support
California Teachers Association
Inglewood Teachers Association
Wiseburn School District
Opposition
None on file
Analysis Prepared by : Rick Pratt / ED. / (916) 319-2087
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