BILL ANALYSIS �
AB 2235
Page 1
ASSEMBLY THIRD READING
AB 2235 (Buchanan and Hagman)
As Amended May 23, 2014
2/3 vote. Urgency
EDUCATION 7-0 HIGHER EDUCATION 13-0
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|Ayes:|Buchanan, Olsen, Ch�vez, |Ayes:|Williams, Ch�vez, Bloom, |
| |Gonzalez, Nazarian, | |Fong, Fox, Jones-Sawyer, |
| |Weber, Williams | |Levine, Achadjian, |
| | | |Medina, Olsen, |
| | | |Quirk-Silva, Weber, Wilk |
|-----+--------------------------+-----+--------------------------|
| | | | |
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APPROPRIATIONS 16-0
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|Ayes:|Gatto, Bigelow, | | |
| |Bocanegra, Bradford, Ian | | |
| |Calderon, Campos, Eggman, | | |
| |Gomez, Holden, Jones, | | |
| |Linder, Pan, Quirk, | | |
| |Ridley-Thomas, Wagner, | | |
| |Weber | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Enacts the Kindergarten-University Public Education
Facilities Bond Act of 2014, to be operative only if approved by
voters at the November 4, 2014, statewide general election. Makes
changes to the School Facility Program (SFP). Specifically, this
bill :
1)Establishes the 2014 State School Facilities Fund and authorizes
the State Allocation Board (SAB) to apportion funds to school
districts from funds transferred to the 2014, State School
Facilities Fund from any source for the purposes specified in the
SFP.
2)Authorizes $9 billion in general obligation (G.O.) school
facilities bond to be placed on the November 4, 2014, statewide
general election and specifies the funds to be allocated as
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follows:
a) $6 billion for kindergarten through grade 12 (K-12)
allocated to the following programs:
i) $2.25 billion for New Construction.
ii) $3.25 billion for Modernization.
iii) $500 million for the Charter School Facilities Program.
b) $3 billion for higher education facilities allocated to the
following:
i) $2 billion for the California Community Colleges (CCC).
ii) $500 million for the University of California (UC) and
the Hastings College of Law.
iii) $500 million for the California State University (CSU).
3)Establishes the 2014 CCC Capital Outlay Bond Fund and authorizes
the deposit of funds from the proceeds of bonds issued and sold
pursuant to this bill to be deposited into the fund for the
purposes of construction; renovation and reconstruction of CCC
facilities; site acquisition; the equipping of new, renovated or
reconstructed facilities; and to provide funds for the payment of
preconstruction costs, including, but not limited to, preliminary
plans and working drawings for CCC facilities.
4)Establishes the 2014 University Capital Outlay Bond Fund and
authorizes the deposit of funds from the proceeds of bonds issued
and sold pursuant to this bill to be deposited into the fund for
the purposes of construction; renovation and reconstruction of
facilities; site acquisition; the equipping of new, renovated or
reconstructed facilities; and to provide funds for the payment of
preconstruction costs, including, but not limited to, preliminary
plans and working drawings for facilities of the UC, CSU, and
Hastings College of Law.
5)Makes the following changes to the SFP:
a) Strikes an obsolete provision requiring the SAB to conduct
an evaluation on the costs of new construction and
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modernization of small high schools.
b) Authorizes the SAB to require each school district that
elects to participate in the new construction program funded by
the proceeds of any bond approved by voters after November 1,
2014, to reestablish eligibility pursuant to regulations
adopted by the SAB.
c) Requires the Office of Public School Construction (OPSC), in
consultation with the California Department of Education to
recommend to the SAB regulations that will provide school
districts with flexibility in designing instructional
facilities.
d) Authorizes the SAB to require each school district that
elects to participate in the modernization program funded by
the proceeds of any bond approved by voters after November 1,
2014, to reestablish baseline eligibility for each schoolsite
pursuant to regulations adopted by the SAB.
e) Repeals the provisions that do the following:
i) Requires, for the purpose of determining existing school
building capacity, the calculation to be adjusted for first
priority status as that calculation would have been made
under the policies of the SAB in effected immediately
preceding September 1, 1998.
ii) Requires the maximum school building capacity for each
applicant district be increased by the number of pupils
reported by the Superintendent of Public Instruction (SPI) as
excess capacity as a result of participation in the
Year-Round School Grant Program. Repeals the requirement
that the adjustment be calculated on the basis, at the
district's option, of either the district as a whole or the
appropriate attendance area.
iii) Requires each school on a multitrack year-round calendar
that has a density of 200 or more pupils enrolled per acre
that is located in a school district with 40% of its pupils
attending multitrack year-round schools be exempted from the
increase in school building capacity required by Education
Code (EC) Section 17071.35.
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FISCAL EFFECT : According to the Assembly Appropriations Committee:
1)Assuming a 5% interest rate with a 30-year repayment period, the
state would pay approximately $585 million annually in principal
and interest costs for a $9 billion bond.
2)One-time General Fund costs to the Secretary of State of about
$200,000 for preparation of a statewide ballot pamphlet, assuming
four pages.
COMMENTS : The construction and rehabilitation of public K-12
facilities are funded by a combination of state and local G.O.
bonds, developer's fees and local assessments such as Mello-Roos
community facilities districts. The New Construction program
requires a 50% match from local educational agencies (LEAs), unless
the LEA qualifies for financial hardship, which pays up to 100% of
project costs. Modernization funds are awarded at 60% with a 40%
match. Since the inception of the SFP in 1998, voters have approved
$35.4 billion in state G.O. bonds for K-12 schools.
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| Ballot | Measure | Amount | % Passage |
|-------------+-------------+------------------------+------------|
|November |Proposition |$9.2 billion | 62.5 |
|1998 |1A | ($6.7 billion K-12 + | |
| | | $2.5 billion Higher | |
| | |Education) | |
|-------------+-------------+------------------------+------------|
|November |Proposition |$13.05 billion | 59.1 |
|2002 |47 | ($11.4 billion K-12 + | |
| | | | |
| | | $1.65 billion Higher | |
| | |Education) | |
|-------------+-------------+------------------------+------------|
|March 2004 |Proposition |$12.3 billion | 50.9 |
| |55 | ($10 billion K-12 + | |
| | | | |
| | | $2.3 billion Higher | |
| | |Education) | |
|-------------+-------------+------------------------+------------|
|November |Proposition |$10.416 billion |56.9 |
|2006 |1D | ($7.329 K-12 + | |
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| | | $3.087 billion Higher | |
| | |Education) | |
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The last education bond on the statewide ballot was Proposition 1D,
which was passed by voters on the November 2006 ballot. Proposition
1D provided $10.416 billion for K-12 and higher education facilities
and established new K-12 grant programs, specified through the
following allocations:
1)$7.329 billion for K-12 facilities as follows:
a) $1.9 billion for new construction projects (of which up to
$199.5 million can be set aside for seismic repairs).
b) $3.3 billion for modernization projects.
c) $1 billion for overcrowding relief grants through the
removal of portables.
d) $500 million for charter school facilities.
e) $500 million for career technical education (CTE) facilities
and equipment.
f) $100 million for high performance (green) projects.
g) $29 million for joint-use projects.
2)$3.087 billion for higher education facilities as follows:
a) $1.507 billion for CCC.
b) $890 million for UC, of which $200 million was available for
medical education programs.
c) $690 million for CSU.
This bill will place a $9 billion K-12 and higher education school
facilities bond on the November 4, 2014, statewide ballot.
K-12 programs: Contrary to the three prior bonds, this bill
proposes to fund three basic programs: New Construction,
Modernization and the Charter School Facilities Program.
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The amount of funding needed for K-12 school facilities is hard to
calculate, as there is no statewide inventory or mechanism to
collect projected need information from LEAs and charter schools.
Eligibility for New Construction is done using the cohort survival
projection method, which, generally, is based on projected need
after accounting for existing capacity (or seats). LEAs established
their baseline eligibility in 1999, and update the eligibility as
needed, usually prior to submitting an application for funding. The
OPSC conducted an analysis of remaining eligibility and estimates a
need to $12.6 billion. However, OPSC cautions that the eligibility
numbers may not be updated.
LEAs are eligible for Modernization funds based on the age of a
building - 25 years for permanent buildings and 20 years for
portable buildings - and enrollment at the schoolsites. Based on
the number of schoolsites that have established eligibility, OPSC
estimates a need of $4.4 billion for Modernization. However, OPSC
cautions that this estimate is based only on 36% of schoolsites that
have established eligibility. The $4.4 billion estimate may be low.
Another factor to take into consideration is the amount in funding
requests submitted to the OPSC despite lack of funds for New
Construction or Modernization. Since 1998, voters have authorized
$17.6 billion for New Construction and $11.23 billion for
Modernization projects. Bond authority for the New Construction
program has been depleted since July, 2012 and Modernization since
May, 2012. According to the OPSC, the annual average funding
approved by the SAB annual is $1.237.5 billion for New Construction
and $788 million for Modernization. Applications received since
2012 were initially placed on an Unfunded "Lack of Authority" list.
Since November 1, 2012, the SAB established an "Application Received
Beyond Bond Authority" list. More than $800 million have been
submitted between the "Lack of Authority" and the "Beyond Bond
Authority" lists. There are likely many districts not submitting
applications because no funding is available and it is unclear
whether applications on either list will receive funding.
In 2012, the SAB formed a Program Review Subcommittee (Subcommittee)
that spent more than a year meeting monthly to review various
aspects of the SFP. In January, 2014, the Subcommittee, of which
Assembly Member Buchanan was the chair and Assembly Member Hagman a
member, submitted recommendations to the SAB, including the
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following regarding a new bond, "There is demand for new
construction and modernization funding. The Subcommittee recognizes
that the State has appropriately been a partner in building new
schools and modernizing aging facilities. To date, the School
Facility Program has successfully provided $33.93 billion for 11,106
projects and should be continued." The Subcommittee also made a
number of recommendations relating to New Construction,
Modernization, financial hardship, special programs, portable
buildings, facility maintenance, statewide school facilities
inventory, and county offices of education. This bill incorporates
several of the recommendations made by the Subcommittee.
The author states, "The state is an important partner with school
districts and the developer community in ensuring that students have
adequate and safe school facilities. Voters understand this and
have consistently shown support for school bonds, and voters pass
local bonds with the expectation of receiving state matching funds.
This has been an extremely successful program. The $35 billion in
K-12 bonds passed since 1998 has been matched by over $70 billion in
local bonds and developer fees. These bonds also give a boost to
our state economy by creating thousands of jobs. State bond funds
are depleted for New Construction and Modernization, and almost
depleted for the other programs. Rarely do the Chamber of Commerce,
building industry, construction contractors, labor - both union and
non-union - and the education community agree on a bill. They all
agree that it's time to put another school facilities bond on the
ballot."
Higher education bonds: Proposition 1D bond funds for higher
education institutions are also depleted. Bond allocations are
based on a 5-year Capital Outlay proposal to the Department of
Finance (DOF). After the DOF approves their proposals, the segments
then prioritize which projects they will submit for funding to the
Higher Education Facilities Finance Committee. The segments report
the following capital needs:
1)UC: Has identified four year needs of approximately $550 million
per year. This breaks down to approximately $450 million per year
for campuses and $100 million for medical centers.
2)CSU: Has identified a five year total need of $7 billion for
renovation and/or replacement of existing infrastructure and for
new buildings to provide growth to increase lecture and laboratory
seating capacity. This breaks down to approximately $400 to $500
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million per year.
To note: 48% of their buildings are 40 years old and 34% are over
50 years old; and, a backlog of their deferred maintenance funding
is nearly at $1.8 billion.
3)CCC: Has identified a need of approximately $35 billion over the
next 10 years for construction and modernization of facilities.
To note: Of the $35 billion needed, the CCC Office of the
Chancellor estimates that $19.1 billion of local bond funds remain
available, leaving over $15.9 billion in unmet need. This breaks
down to approximately $3.2 billion needed from a state bond every
two years.
Analysis Prepared by : Sophia Kwong Kim / ED. / (916) 319-2087
FN: 0003827