BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 2235 (Buchanan) - Education Facilities Bond
Amended: June 23, 2014 Policy Vote: Education 5-0, Gov.
& Fin. 6-0
Urgency: Yes Mandate: No
Hearing Date: August 11, 2014
Consultant: Jacqueline Wong-Hernandez
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 2235 makes changes to the existing School
Facility Program and authorizes the Kindergarten-University
Public Education Facilities Bond Act of 2014 to provide for the
issuance of an unspecified amount in general obligation (GO)
bonds for construction and modernization of education facilities
(to become effective only if approved by voters), and requires
its submission to voters at the November 4, 2014, statewide
general election. This bill is an urgency measure.
Fiscal Impact:
Bonds: Unspecified state GO bond obligations, likely in the
billions of dollars. Substantial state costs, likely in the
high hundreds of millions to low billions of dollars, in
bond interest over 30 years (General Fund).
Administration: Substantial new workload for the California
Department of Education (CDE) and the Department of General
Services (DGS). The level of new work would differ in degree
depending on whether the current acknowledged projects
remain on the funding list or would have to be reviewed
again, the size of the bond, and whether the bond
administration program mirrors that of Proposition 1D. The
CDE estimates that it could need up to 4 additional PYs. The
DGS estimates that its Office of Public School Construction
(OPSC) would require 16 additional PYs in 2014-15 and 87 PYs
in 2015-16, and its Division of the State Architect would
need up to 10 PYs. All of these positions would likely be
bond-funded.
Ballot costs: Likely $275,000 - $660,000 (General Fund) in
one-time costs to the Secretary of State. Placing a measure
on a statewide ballot costs $55,000 - $66,000 per page;
ballot measures range in length, but average 10 pages in
AB 2235 (Buchanan)
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length. However, if the measure must be included in a
supplemental ballot pamphlet (because of timing), costs will
likely be $1.6 million - $2 million for a 16-page
supplemental ballot. That cost could potentially be reduced
if other measures are included in the supplemental ballot.
Background: The last statewide GO bond, Proposition 1D, was
approved by voters in November 2006. AB 127 (Nunez and Perata),
the Kindergarten-University Public Education Facilities Bond Act
of 2006, authorized the $10.4 billion bond proposal, which
provided $7.3 billion for K-12 education facilities and $3.087
billion for higher education facilities.
Of the $7.3 billion provided for K-12 education facilities,
specified amounts from the sale of these bonds were allocated
for modernization, new construction, charter schools, career
technical education facilities, joint use, projects for new
construction on severely overcrowded schoolsites, and high
performance incentive grants to promote energy efficient designs
and materials. In addition, portions of the amounts allocated
for new construction and modernization were authorized for
purposes of funding smaller learning communities and high
schools and for seismic retrofit projects.
Of the amount provided for higher education facilities, $1.5
billion was provided for California Community College (CCC)
facilities, $890 million was provided for the University of
California (UC), including $200 million for medical education
projects, and $690 million was provided for the California State
University (CSU).
Proposed Law: This bill establishes the Kindergarten-University
Public Education Facilities Bond Act of 2014 to provide for the
issuance of an unspecified amount of GO bonds for construction
and modernization of education facilities, to take effect only
if approved by voters, and requires submission of the Act to
voters at the November 4, 2014, statewide general election.
This bill authorizes the State Allocation Board (SAB) to require
a school district that elects to participate in the new
construction or modernization program funded by the proceeds of
the bond established by the provisions of this bill to
reestablish eligibility pursuant to SAB adopted regulations.
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This bill requires the OPSC, in consultation with the CDE, to
recommend regulations to the SAB that provide school districts
with flexibility in designing instructional facilities.
Staff Comments: This bill will result in direct state General
Fund costs of up to $2 million, to place a new Public Education
Facilities Bond Act on the November 2016 statewide ballot. If
enacted by voters, this measure will result in substantial
additional state costs.
As currently written, this bill asks voters to approve the
issuance (and repayment) of an unspecified amount of state GO
bonds, but the amount decided upon is likely to be in the
billions of dollars. Until the amounts are specified, the fiscal
impact of this bill is unknown. However, presumably this bond
will be in low billions of dollars. Staff notes for reference,
that assuming an interest rate of 5% and the issuance of 30-year
bonds, for each billion dollars of bonds issued, annual debt
service would be approximately $60.5 million (General Fund).