BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1979|
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CONSENT
Bill No: AB 1979
Author: Nazarian (D)
Amended: 7/1/14 in Senate
Vote: 21
SENATE EDUCATION COMMITTEE : 7-0, 6/11/14
AYES: Liu, Wyland, Block, Correa, Hancock, Huff, Monning
SENATE GOVERNANCE & FINANCE COMMITTEE : 6-0, 6/25/14
AYES: Wolk, Knight, Beall, DeSaulnier, Hernandez, Walters
NO VOTE RECORDED: Liu
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 73-0, 5/8/14 (Consent) - See last page for vote
SUBJECT : School facilities: California School Finance
Authority
SOURCE : State Treasurer, Bill Lockyer
DIGEST : This bill expands the definition of project, for
purposes of the California School Finance Authority Act (Act),
to include reimbursement of specified educational facility costs
to be financed or refinanced, expands the authority to use the
intercept repayment method beyond payments for debt service to
include other bond-related costs, and consolidates the caps on
the total amount of revenue bonds that may be issued and
outstanding at any time under the Act.
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ANALYSIS : Existing law establishes the California School
Finance Authority (CSFA) to oversee the statewide system for the
sale of revenue bonds to reconstruct, remodel or replace
existing school buildings, acquire new school sites and
buildings to be made available to public school districts
(K-12), charter schools, and California Community College (CCC)
districts, and to assist school and CCC districts by providing
access to financing for working capital and capital
improvements.
Existing law defines a "project" for purposes of the Act to mean
the acquisition, construction, expansion, remodeling,
renovation, improvement, furnishing, or equipping of an
educational facility to be financed or refinanced.
Existing law authorizes a school district, charter school,
county office of education, or CCC district, to guarantee or
provide for payment of bonds and related obligations under the
Act through an intercept repayment mechanism, under specified
conditions. These include requirements that notice of such
action be provided to the State Controller, and that a trustee
(appointed by the school district, charter school, county office
of education, or CCC district, or by the CSFA) to interface
between the party and the Controller for purposes of repayment
through the interception of revenue limit, or charter school
block grant apportionments.
Existing law caps the total amount of revenue bonds which may be
issued and outstanding under the Act, at $400 million, other
than those revenue bonds issued for purposes of guaranteeing or
providing for repayment of bonds and related obligations on
behalf of local educational agencies, charter schools, and CCC
districts. Current law caps the total amount that may be
outstanding at any time under the Act for this purpose at $4
billion.
This bill:
1.Expands the definition of "project," under the Act, to include
the use of revenue bonds issued by the CSFA to reimburse for
specified costs related to the financing or refinancing of
educational facilities under the Act.
2.Repeals provisions that authorize a public credit provider
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(defined as financial institutions which include a public
retirement system) to require a school district, charter
school, CCC district, or county office of education to use a
specified process for repayment through the interception of
revenue limit apportionments, CCC general apportionments, or
charter school block grant apportionments.
3.Modifies provisions that outline conditions to be met by a
school district, charter school, county office of education,
or CCC district electing to guarantee or provide for payment
of bonds and related obligations through the intercept
repayment mechanism under the Act. More specifically it:
A. Expands the costs which may be covered via the intercept
repayment method to include payment on authority bonds,
payments under credit enhancement or liquidity support
agreements and amounts pledged or assigned under these
agreements, payments to fund reserves for these items, fees
and charges, and any other costs necessary or incidental to
financing or refinancing activity under the Act.
B. Modifies the process to be followed by a borrower in
order to initiate the intercept repayment method to reflect
current practice.
C. Establishes the rules by which the Controller shall
conduct the intercept and provides that the Controller may
rely on the requests for intercept made by investors,
bondholders, trustees, borrowers, and credit providers
without liability if these requests are made in compliance
with the bill's provisions.
D. Establishes the following new authorities for the CSFA:
1) Authorizes the CSFA to require participation in the
intercept repayment under the terms of
financing/refinancing under the Act.
2) Authorizes the CSFA to impose limits on new
participation in the intercept repayment process.
3) Authorizes the CSFA to require school districts,
county offices of education, charter schools, and CCC
districts to apply to CSFA in order to participate in the
intercept repayment process.
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A. Declares that these provisions do not obligate the State
of California to provide additional appropriations to fund
debt service obligations beyond those specifically
designated for apportionment to the participating school
district, charter school, county office of education, or
CCC district.
1.Eliminates the distinction in the cap between revenue bonds
issued and outstanding under the Act and the cap on the total
amount outstanding for purposes of the intercept repayment
mechanism, and consolidates these caps into a single total
amount of revenue bonds that may be issued and outstanding at
any time under the Act. Specifically it:
A. Eliminates the $4 billion cap on the amount of bonds
outstanding for purpose of the intercept repayment
mechanism.
B. Eliminates the $400 million cap on the total amount of
revenue bonds that may be issued and outstanding at any
time for any purpose under the Act.
C. Caps the total amount of revenue bonds that may be
issued and outstanding under the Act at $4.4 billion.
1.Requires the Controller to the extent funds available for an
apportionment are insufficient to pay the amount set forth in
a schedule in any period, if and as requested in the notice,
reschedule the payment of all or a portion of the deficiency
to a subsequent period.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 7/30/14)
State Treasurer, Bill Lockyer (source)
California Charter Schools Association Advocates
ARGUMENTS IN SUPPORT : According to the author's office, the
CSFA Authority was created in 1985 to finance educational
facilities and working capital for school and community college
districts. Since 2002, its primary focus has been on assisting
charter schools to meet their facility and working capital
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needs. According to the Treasurer's Office, this bill makes
several statutory changes in order to facilitate charter school
access to financing and working capital for school facility
construction projects. These changes include the authorization
to reimburse for project costs incurred prior to bond issuance,
the expansion of bond related costs which may be repaid through
the intercept process, and the consolidation of caps on the
allowable amount of revenue bonds outstanding for the CSFA.
ASSEMBLY FLOOR : 73-0, 05/08/14
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Ch�vez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Grove, Hagman, Harkey, Roger Hern�ndez, Holden, Jones,
Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,
Medina, Melendez, Mullin, Muratsuchi, Nazarian, Nestande,
Olsen, Pan, Patterson, Perea, Quirk, Quirk-Silva, Rendon,
Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner,
Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A.
P�rez
NO VOTE RECORDED: Eggman, Gorell, Gray, Hall, Mansoor, V. Manuel
P�rez, Vacancy
PQ:nl 8/4/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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