Existing federal law provides for construction funding assistance for elementary and secondary public schools that are located on United States military installations and that meet specified criteria.

This bill would express the intent of the Legislature that assistance be provided to school districts in the 201516 fiscal year to meet the matching share requirement of a school construction grant made by the Office of Economic Adjustment of the federal Department of Defense to construct, renovate, repair, or expand elementary and secondary public schools located on military installations. The bill would require the Department of Finance to explore options, including, but not necessarily limited to, making low-interest loans available to school districts through the California Infrastructure and Economic Development Bank, on how best to assist school districts in meeting the matching share requirement of the federal school construction grant referenced in the bill.

Existing federal law provides for construction funding assistance for elementary and secondary public schools that are located on United States military installations and that meet specified criteria.

This bill would express the intent of the Legislature that assistance be provided to school districts in the 201516 fiscal year to meet the matching share requirement of a school construction grant made by the Office of Economic Adjustment of the federal Department of Defense to construct, renovate, repair, or expand elementary and secondary public schools located on military installations. The bill would require the Department of Finance to explore options, including, but not necessarily limited to, making low-interest loans available to school districts through the California Infrastructure and Economic Development Bank, on how best to assist school districts in meeting the matching share requirement of the federal school construction grant referenced in the bill.

Existing federal law provides for construction funding assistance for elementary and secondary public schools that are located on United States military installations and that meet specified criteria.

This bill would appropriate $61,000,000 from the General Fund to the State Department of Education for express the intent of the Legislature that assistance be provided to school districts in the 201516 fiscal year for apportionment to school districts to meet the matching share requirement of a school construction grant made by the Office of Economic Adjustment of the federal Department of Defense to construct, renovate, repair, or expand elementary and secondary public schools located on military installations. The bill would require the Department of Finance to explore options, including, but not necessarily limited to, making low-interest loans available to school districts through the California Infrastructure and Economic Development Bank, on how best to assist school districts in meeting the matching share requirement of the federal school construction grant referenced in the bill.

Existing federal law provides for construction funding assistance for elementary and secondary public schools that are located on United States military installations and that meet specified criteria.

This bill would appropriate $61,000,000 from the General Fund to the State Allocation Board Department of Education for the 201516 fiscal year for apportionment to school districts to meet the matching share requirement of a school construction grant made by the Office of Economic Adjustment of the federal Department of Defense pursuant to federal funding made available to construct, renovate, repair, or expand elementary and secondary public schools located on military installations.

Existing federal law provides for construction funding assistance for elementary and secondary public schools that are located on United States military installations and that meet specified criteria.

This bill would appropriate $61,000,000 from the General Fund to the State Allocation Board for the 201516 fiscal year for apportionment to school districts to meet the matching share requirement of a school construction grant made by the Office of Economic Adjustment of the federal Department of Defense pursuant to federal funding made available to construct, renovate, repair, or expand elementary and secondary public schools located on military installations.

SENATE THIRD READING

STR Bill Id:SB 111

Author:(Fuller)

As Amended Ver:June 2, 2015

Majority vote

SENATE VOTE: 40-0

SUMMARY: Expresses the intent of the Legislature that assistance be provided to school districts in the 2015-16 Fiscal Year to meet the matching share requirement of a school construction grant made by the Office of Economic Adjustment of the federal Department of Defense (DoD) to construct, renovate, repair, or expand elementary and secondary public schools located on military installations. Requires the Department of Finance (DOF) to explore options on how best to assist school districts in meeting the matching share requirement of the federal school construction grant. Requires the options to include, but not necessarily be limited to, making low-interest loans available to school districts through the California Infrastructure and Economic Development Bank (IBank).

FISCAL EFFECT: According to the Assembly Appropriations Committee:

1. General Fund cost pressure of up to $60.5 million to provide the full 20% state/local match for approximately $240 million in federal funds that would be available for construction grants to 11 schools on military installations in California.

2. Minor/absorbable costs to the DOF to explore options for matching funds.

COMMENTS: DoD Public Schools on Military Installations (PSMI) Grant Program. Congress has allocated a total of $945 million – $250 million in 2011, $250 million in 2012, $270 million in 2013, and $175 million in 2015 – for the construction, renovation, repair or expansion of public schools on military installations. In 2010, the DoD conducted an assessment of the almost 160 schools on military installations across the nation and established a priority list based on schools with the greatest need. California has 11 schools located in six school districts in the top 33 of the "Public Schools on Military Installations Priority" list, eligible for a total of $242.2 million in federal funds.

The schools are required to provide a 20% match. The match can come from local funds or state funds. The amount of funds needed to meet the 20% match for the 11 schools is estimated at $60.5 million. According to the author's office, the DoD has given the DoD Office of Economic Adjustment the authority to drop schools on the priority list if local educational agencies or the states the schools are located in are unable to provide the match. If the match is not produced, funds for all California schools are in jeopardy. Of all the projects, one project may have local matching funds from local bonds. Four projects have eligibility for state bond funds, but only one project has enough eligibility to cover most of its match. California's state bond program, the School Facility Program (SFP), however, has been out of New Construction and Modernization funds since 2012. Even if funds are available, the SFP does not authorize funding to provide a match.

Prior efforts. Since 2012, varying legislative efforts have been undertaken in an attempt to secure funds for the local match. The State Allocation Board (SAB), the body that oversees the allocation of state bond funds, formed a subcommittee in April 2012 to explore funding options to assist five school districts serving seven schools on military bases eligible for funding in the first two federal funding cycles. The subcommittee considered reserving bond authority, transferring bond authority, providing loans, waiving local matches, and facility hardship funding for districts with health and safety problems. Legal counsel advised the SAB that the SFP does not offer flexibility to accommodate the federal match under the options explored by the subcommittee. The subcommittee's recommendation was to recommend to the Legislature that future bond funds be made available specifically for DoD schools. There are two bond bills pending in the Legislature currently and neither contains set asides for this purpose, although it is unclear when a state bond initiative will be before voters and whether it will take place soon enough to meet the federal match timeline.

Last year, the author of this bill introduced SB 1421 (Fuller) of 2014, which would have prioritized state bond funds for applications submitted by the school districts eligible for federal DoD funds. The bill was held on the Assembly Appropriations Committee suspense file.

What does this bill do? Prior versions of this bill would have appropriated $61 million from the General Fund to provide the match. The current version of the bill, amended in the Senate Appropriations Committee, requires the DOF to explore options on how best to assist these schools, including, but not limited to, making low-interest loans available to school districts through the IBank. The Governor's May Revise indicates that the Administration is exploring funding options, including loans through the IBank. According to the DOF, DOF is working with the school districts to see if there is interest in participating in the Ibank’s Infrastructure State Revolving Fund low-interest loan program to help fund the local match. The Ibank has provided local match funding for other federal programs and these types of school construction and renovation projects would be eligible.

IBank. According to the IBank's Internet Web site, "The Infrastructure State Revolving Fund (ISRF) Program provides financing to public agencies and non-profit corporations for a wide variety of infrastructure and economic development projects. ISRF Program funding is available in amounts ranging from $50,000 to $25,000,000, with loan terms of up to 30 years. Eligible project categories include, but are not limited to, city streets, county highways, state highways, drainage, water supply and flood control, educational facilities, environmental mitigation measures, parks and recreational facilities, port facilities, public transit, sewage collection and treatment, solid waste collection and disposal, water treatment and distribution, defense conversion, public safety facilities, and power and communications facilities."

The author states, "The majority of the PSMI eligible school districts in California cannot raise the required 20% match through bond elections due to the fact that property owners outside the base are not willing to tax themselves for base schools and in many areas there is low assessed valuation. All other school projects [in other states] have come up with required match funds from local/state sources. In every case, states have provided match funds when local funds were unavailable; in some cases state funding exceeded 20%. These schools serve our nation's military families and warriors, those sacrificing overseas for protection of our freedom."

Analysis Prepared by: Sophia Kwong Kim / ED. / (916) 319-2087 FN: 0001636

Date of Hearing: July 1, 2015

ASSEMBLY COMMITTEE ON EDUCATION

Patrick O'Donnell, Chair

SBPCA Bill Id:SB 111

Author:(Fuller) – As Amended Ver:June 2, 2015

SENATE VOTE: 40-0

SUBJECT: School facilities: military installations.

SUMMARY: Expresses the intent of the Legislature that assistance be provided to school districts in the 2015–16 fiscal year to meet the matching share requirement of a school construction grant made by the Office of Economic Adjustment of the federal Department of Defense (DoD) to construct, renovate, repair, or expand elementary and secondary public schools located on military installations. Requires the Department of Finance (DOF) to explore options on how best to assist school districts in meeting the matching share requirement of the federal school construction grant. Requires the options to include, but not necessarily be limited to, making low-interest loans available to school districts through the California Infrastructure and Economic Development Bank (IBank).

EXISTING LAW:

1. Establishes the Leroy F. Greene School Facilities Act of 1998 (SB 50, Chapter 407, Statutes of 1998), also known as the School Facility Program (SFP), which governs the administration, allocation, and use of state school facilities bond funds.

2. Provides that a school district's ongoing eligibility for new construction funding is determined by making calculations related to certain factors, including, but not limited to, enrollment projections by utilizing a cohort survival enrollment projection system, the number of students that may be adequately housed in the existing school building capacity of the district, and increases or decreases in enrollment resulting from receipt of funding from the Year-Round School Grant Program.

3. Provides that a school district is eligible to receive an apportionment for the modernization of a permanent school building that is more than 25 years old or a portable classroom that is at least 20 years old. A school district is eligible to receive an additional apportionment for modernization of a permanent school building every 25 years after the date of the previous apportionment or a portable classroom every 20 years after the previous apportionment.

4. Requires a 50% local match for new construction projects and 40% local match for modernization projects.

5. Establishes the IBank within the Governor’s Office of Business and Economic Development to finance public infrastructure and private development that promote a healthy climate for jobs, contribute to a strong economy and improve the quality of life in California communities.

6. Provides that the IBank has broad authority to issue tax-exempt and taxable revenue bonds, provide financing to public agencies, provide credit enhancements, acquire or lease facilities, and leverage State and Federal funds.

FISCAL EFFECT: According to the Senate Appropriations Committee, unknown cost pressure to implement the option identified by the DOF. Costs for the DOF to explore options are minor and absorbable.

COMMENTS: DoD Public Schools on Military Installations (PSMI) Grant Program. Congress has allocated a total of $945 million – $250 million in 2011, $250 million in 2012, $270 million in 2013, and $175 million in 2015 – for the construction, renovation, repair or expansion of public schools on military installations. In 2010, the DoD conducted an assessment of the almost 160 schools on military installations across the nation and established a priority list based on schools with the greatest need. California has 11 schools located in six school districts in the top 33 of the "Public Schools on Military Installations Priority" list, eligible for a total of $242.2 million in federal funds.

The schools are required to provide a 20% match. The match can come from local funds or state funds. The amount of funds needed to meet the 20% match for the 11 schools is estimated at $60.5 million. According to the author's office, the DoD has given the DoD Office of Economic Adjustment the authority to drop schools on the priority list if local educational agencies or the states the schools are located in are unable to provide the match. If the match is not produced, funds for all California schools are in jeopardy. Of all the projects, one project may have local matching funds from local bonds. Four projects have eligibility for state bond funds, but only one project has enough eligibility to cover most of its match. California's state bond program, however, has been out of New Construction and Modernization funds since 2012. Even if funds are available, the SFP does not authorize funding to provide a match.

Prior efforts. Since 2012, varying legislative efforts have been undertaken in an attempt to secure funds for the local match. The State Allocation Board (SAB), the body that oversees the allocation of state bond funds, formed a subcommittee in April 2012 to explore funding options to assist five school districts serving seven schools on military bases eligible for funding in the first two federal funding cycles. The subcommittee considered reserving bond authority, transferring bond authority, providing loans, waiving local matches, and facility hardship funding for districts with health and safety problems. Legal counsel advised the SAB that the SFP does not offer flexibility to accommodate the federal match under the options explored by the subcommittee. The subcommittee's recommendation was to recommend to the Legislature that future bond funds be made available specifically for DoD schools. There are two bond bills pending in the Legislature currently and neither contains set asides for this purpose, although it is unclear when a state bond initiative will be before voters and whether it will take place soon enough to meet the federal match timeline.

Last year, the author of this bill introduced SB 1421, which would have prioritized state bond funds for applications submitted by the school districts eligible for federal DoD funds. The bill was held on the Assembly Appropriations Committee suspense file.

What does this bill do? Prior versions of this bill would have appropriated $61 million from the General Fund to provide the match. The current version of the bill, amended in the Senate Appropriations Committee, requires the DOF to explore options on how best to assist these schools, including, but not limited to, making low-interest loans available to school districts through the IBank. The Governor's May Revise indicates that the Administration is exploring funding options, including loans through the IBank. According to the DOF, DOF is working with the school districts to see if there is interest in participating in the Ibank’s Infrastructure State Revolving Fund low-interest loan program to help fund the local match.  The Ibank has provided local match funding for other federal programs and these types of school construction and renovation projects would be eligible. Although this bill is uncodified, the Committee may wish to consider whether this bill is necessary.

IBank. According to the IBank's Internet Web site, "The Infrastructure State Revolving Fund (ISRF) Program provides financing to public agencies and non-profit corporations for a wide variety of infrastructure and economic development projects. ISRF Program funding is available in amounts ranging from $50,000 to $25,000,000, with loan terms of up to 30 years. Eligible project categories include, but are not limited to, city streets, county highways, state highways, drainage, water supply and flood control, educational facilities, environmental mitigation measures, parks and recreational facilities, port facilities, public transit, sewage collection and treatment, solid waste collection and disposal, water treatment and distribution, defense conversion, public safety facilities, and power and communications facilities."

The author states, "The majority of the PSMI eligible school districts in California cannot raise the required 20% match through bond elections due to the fact that property owners outside the base are not willing to tax themselves for base schools and in many areas there is low assessed valuation. All other school projects [in other states] have come up with required match funds from local/state sources. In every case, states have provided match funds when local funds were unavailable; in some cases state funding exceeded 20%. These schools serve our nation's military families and warriors, those sacrificing overseas for protection of our freedom."

REGISTERED SUPPORT / OPPOSITION:

Support

Brigadier General Edward Banta, Commanding General of Marine

Corps Installations West-Marine Corps Base Camp Pendleton

California Teachers Association

Central Union School District

P.J. Lorge, Rear Admiral, U.S. Navy Commander

Solano County Board of Supervisors

Travis Unified School District

Several individuals

Opposition

None on file

Analysis Prepared by: Sophia Kwong Kim / ED. / (916) 319-2087

Date of Hearing: July 8, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

SBPCA Bill Id:SB 111

Author:(Fuller) – As Amended Ver:June 2, 2015

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill declares Legislative intent that assistance be provided to school districts in the 2015–16 fiscal year to meet the matching share requirement of a school construction grant made by the Office of Economic Adjustment of the federal Department of Defense to construct, renovate, repair, or expand elementary and secondary public schools located on military installations. Further, this bill requires the Department of Finance to explore options on how best to assist school districts in meeting the matching share requirement of the federal school construction grant and requires the options include, but not necessarily be limited to, making low-interest loans available to school districts through the California Infrastructure and Economic Development Bank (I-Bank).

FISCAL EFFECT:

1. General Fund cost pressure of up to $60.5 million to provide the full 20 percent state/local match for approximately $240 million in federal funds that would be available for construction grants to 11 schools on military installations in California.

2. Minor/absorbable costs to the Department of Finance to explore options for matching funds.

COMMENTS:

1. Purpose. In 2010, the Department of Defense (DoD) conducted an assessment of 160 schools on military installations across the nation and established a priority list based on schools with the greatest need. California has 11 schools eligible for a total of $242.2 million in federal funds that can be used for the construction, renovation, repair or expansion of public schools on military installations.

In order to leverage these federal funds, the qualifying schools are required to provide a 20% match. The match can come from local funds or state funds. The amount of funds needed to meet the 20% match for the 11 schools is estimated at $60.5 million. This bill states the intent of the Legislature "that assistance be provided to school districts in the 2015-16 fiscal year to meet the matching share requirement". The bill does not specify whether "assistance" will be in the form of local funds or state general funds. The Department of Finance indicates they are currently working with the school districts to see if there is interest in participating in the I-Bank’s Infrastructure State Revolving Fund low-interest loan program to help fund the local match.  The I-Bank has provided local match funding for other federal programs and these types of school construction and renovation projects would be eligible. Legislation is not necessary for districts to utilize this funding option.

2. Prior related legislation. SB 1421 (Fuller) of 2014 proposed to authorize the State Allocation Board (SAB), if requested by an applicant, to give priority on its "Unfunded Approval – Lack of Authority" list, to schools located on military installations that are eligible for United States Department of Defense (DoD) Office of Economic Adjustment school construction grants for which priority cannot be granted above hardship applications. This bill was held on the Suspense file in this committee.

Analysis Prepared by: Misty Feusahrens / APPR. / (916) 319-2081

 THIRD READING  

Bill No: SB 111

Author: Fuller (R), et al.

Amended: 6/2/15

Vote: 21

SENATE EDUCATION COMMITTEE: 6-0, 3/11/15

AYES: Huff, Block, Leyva, Mendoza, Pan, Vidak

NO VOTE RECORDED: Liu, Hancock

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15

AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen

SUBJECT: School facilities: military installations

SOURCE: Author

DIGEST: This bill declares the Legislature’s intent to meet the matching share requirements of a specified federal school construction grant program in 2015-16 and directs the Department of Finance (DOF) to explore options for this purpose, including low interest loans, as specified.

ANALYSIS:

Existing law:

1. Establishes the California Infrastructure and Economic Development Bank (IBank) within the Governor’s Office of Business and Economic Development to finance public infrastructure and private development that promote a healthy climate for jobs, contribute to a strong economy and improve the quality of life in California communities. The IBank is governed by a five-member Board of Directors which includes:

1. The Director of DOF or his or her designee.

2. The Treasurer or his or her designee.

3. The Director of the Governor’s Office of Business and Economic Development or his or her designee, who shall serve as chair of the board.

4. An appointee of the Governor.

5. The Secretary of Transportation or his or her designee.

2. Provides that the IBank has broad authority to issue tax-exempt and taxable revenue bonds, provide financing to public agencies, provide credit enhancements, acquire or lease facilities, and leverage State and Federal funds. (Government Code Sections § 63000 et. seq.)

3. Establishes the School Facility Program under which the state provides general obligation bond funding for various school construction projects. AB 127 (Nunez and Perata), the Kindergarten-University Public Education Facilities Bond Act of 2006, authorized Proposition 1D a statewide general obligation bond proposal for $10.4 billion. Proposition 1D, approved, by the voters in November 2006, provided $7.3 billion for K-12 education facilities and allocated specified amounts from the sale of these bonds for modernization, new construction, charter schools, Career Technical Education Facilities, joint use projects, new construction on severely overcrowded school sites, and high performance incentive grants to promote energy efficient design and materials. In addition, portions of the amounts allocated for new construction and modernization were authorized for purposes of funding smaller learning communities and small high schools and for seismic retrofit projects. (Education Code § 17078.70-17078.72)

This bill:

1. Declares the Legislature’s intent to meet the matching share requirements of the United States Department of Defense (DOD), Office of Economic Adjustment school construction grant program in 2015-16 in order to meet the construction needs of public school facilities located on military installations.

2. Directs the DOF to explore options for this purpose, including low interest loans through the IBank.

Comments

1. Need for the bill. According to the author, California has 11 schools in six districts that are on a priority list for funds from the federal government to address the "serious condition or capacity deficiencies” of public schools on military installations. These schools are eligible to receive funds for this purpose through the Public Schools on Military Installations (PSMI ) Program. The program requires a 20 percent non-federal match in order to receive federal funding.

According to the author, about $61 million is necessary to cover the 20 percent match for the 11 California schools on the list. The 20 percent match would leverage approximately $240 million in federal funds for the renovation, repair, or reconstruction of these schools.

2. PSMI Program. According to the Office of Economic Adjustment (OEA), in 2010 the DOD evaluated and reviewed the physical condition of the 160 public schools on military installations in the United States. Based on the findings of this assessment, the DOD developed a “Priority List” of public schools on military installations with the most serious condition and/or capacity deficiencies. The OEA was tasked with administering the PSMI program to provide funds to these schools to address these deficiencies.

Between 2011 and 2015, Congress has provided $945 million to the OEA for the purposes of the PSMI. The last increase in funding for the PSMI ($175 million) was provided in 2015 by House Resolution 83 (H.R. 83 Section 8017). In addition to the funding increase, H.R. 83 established the 20 percent match as a congressionally mandated requirement and stipulated that the non-federal match was the responsibility of the local education authority (LEA) and the State. The DOD has interpreted the new language to mean that the matching share must be provided by the LEA and or the State in which the school is located and that the OEA may skip eligible school projects on the Priority List if the match is not provided. According to the OEA, once a project on the list has been skipped it will no longer be considered for funding.

According to the OEA, there is approximately $464 million remaining in the PSMI. The OEA estimates that as many as 33 schools on the list could be assisted.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee, there may be unknown cost pressure to implement the option identified by the DOF. Staff estimates that costs for the DOF to explore options are minor and absorbable.

SUPPORT: (Verified 3/11/15) (reflects prior version of bill--unable to reverify)

Antelope Valley Board of Trade

Brigadier General, Marine Corps Base Camp Pendleton

Central Union School District

Muroc Joint Unified School District

Sierra Sands Unified School District

Travis Unified School District

Numerous individual letters

OPPOSITION: (Verified 3/11/15) (reflects prior version of bill--unable to reverify)

None received

Prepared by: Kathleen Chavira / ED. / (916) 651-4105

6/2/15 21:53:10

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 111 (Fuller) - School facilities: military installations

SUSPENSE FILE. AS AMENDED.

Bill Summary:

SB 111 would include Legislative intent to provide assistance to school districts to meet the matching share requirement of a school construction grant made by the Office of Economic Adjustment of the federal Department of Defense for public schools located on military installations. This bill requires the Department of Finance to explore options on how to assist school districts, including making low interest loans available to school districts through the California Infrastructure and Economic Development Bank.

Fiscal Impact (as approved on May 28, 2015):

Unknown cost pressure to implement the option identified by the Department of Finance. Staff estimates that costs for the Department of Finance to explore options are minor and absorbable.

Background:

Current law establishes the School Facility Program (SFP) under which the state provides general obligation bond funding for various school construction projects. Proposition 1D, the Kindergarten-University Public Education Facilities Bond Act of 2006, was approved by the voters in November of 200 and authorized the sale of $10.4 billion in general obligation bonds, including $7.3 billion for K-12 education facilities. Proposition 1D allocated specified amounts from the sale of these bonds for modernization, new construction, charter schools, career technical education facilities, joint use projects, new construction on severely overcrowded school sites, and high performance incentive grants to promote energy efficient design and materials. In addition, portions of the amounts allocated for new construction and modernization were authorized for purposes of funding smaller learning communities and small high schools and for seismic retrofit projects.

In 2010, the United States Department of Defense evaluated and reviewed the physical condition of the 160 public schools on military installations in the United States. Based on the findings of this assessment, the DOD developed a “Priority List” of public schools on military installations with the most serious condition and/or capacity deficiencies. The federal Office of Economic Adjustment (OEA) was tasked with administering the Public Schools on Military Installations (PSMI) program to provide construction, renovation, and repair funding to address these deficiencies.

Congress has provided $945 million in federal funds to the OEA for the program since 2011, including a recent $175 million increase in funding provided in House Resolution 83 in 2015. That measure also established a 20 percent non-federal matching requirement from the state and local education authority (LEA) as a condition of federal funding. If a local match is not provided, the OEA may skip eligible school projects on the Priority List if the match is not provided. According to the OEA, once a project on the list has been skipped it will no longer be considered for funding.

The OEA indicates that there is approximately $464 million remaining in the PSMI, and estimates that as many as 33 schools on the list could be assisted. California has 11 schools in six districts that are within the top 33 on the Priority List.

Proposed Law:

This bill appropriates $61 million from the General Fund to the CDE for the 2015-16 fiscal year for apportionment to school districts to meet the matching share requirements of the PSMI program to construct, renovate, repair, or expand elementary and secondary public schools located on military installations.

Related Legislation:

SB 121 (Fuller) requires that school construction projects on military installations that are eligible for specified federal grants be given priority for funding under the state SFP. That bill has been referred to the Education Committee, but has not been heard.

Staff Comments:

This bill is intended to provide the full 20 percent state/local match for approximately $240 million in federal funds that would be available for construction grants to 11 schools on military installations in California. State bond authority for new construction and modernizations programs has essentially been depleted since 2012.

Since 2009, the State Allocation Board (SAB) has been making “unfunded approvals” for approved projects waiting to convert to funding apportionments when bonds are sold and cash becomes available. In addition, since November 1, 2012, the SAB has maintained an “Applications Received Beyond Bond Authority” list. According to the Office of Public School Construction, one of the 11 schools that this bill seeks to assist has an unfunded application pending under the School Facility Program. In addition, four of the schools have modernization eligibility but have not applied for state funding, and six of the schools previously applied for, and received modernization funding through the School Facilities Program. SB 111 would provide a direct General Fund appropriation for these projects on the basis of their eligibility for federal funds. The Committee may wish to consider whether it is appropriate to provide General Funds for these 11 schools, when there are numerous other schools awaiting state funding that may have a greater need based on state priorities, or whether there are other priorities for limited General Funds.

In 2012, the SAB established a subcommittee to explore alternatives for assisting districts with providing the required 20 percent local match for projects on the DOD Priority List. The subcommittee considered a number of options, including reservation of bond authority, transfer of bond authority, loans for the matching share, waiver of the local matching share requirement, and facility hardship funding, but none of these options were determined to be viable. Ultimately, the SAB recommended that the Legislature provide funding for military base schools in California in the next bond proposal in order to cover the total need for these types of projects.

The CDE indicates that costs to administer the distribution of funds to affected school districts would be minor. Staff notes that the funds appropriated by this bill would count towards the Proposition 98 minimum guarantee of funding for K-14 education.

Committee amendments (as adopted on May 28, 2015): Amendments: (1) delete the appropriation and include Legislative intent to provide assistance to school districts in the 2015-16 fiscal year in meeting the matching share requirement, and (2) require the Department of Finance to explore options on how to assist school districts, including making low interest loans available to school districts through the California Infrastructure and Economic Development Bank.

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 111 (Fuller) - School facilities: military installations

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

SB 111 would appropriate $61 million from the General Fund to the California Department of Education (CDE) for school construction grants to school districts with public schools located on military installations. The funds would be used to meet the state/local matching share requirements for specified federal grants.

Fiscal Impact:

One-time General Fund appropriation of $61 million in 2015-16 to meet the state/local matching requirement for specified federal school construction grants. This appropriation would allow the state to draw down $240 million in federal funds for construction grants to public schools on military installations.

Background:

Current law establishes the School Facility Program (SFP) under which the state provides general obligation bond funding for various school construction projects. Proposition 1D, the Kindergarten-University Public Education Facilities Bond Act of 2006, was approved by the voters in November of 200 and authorized the sale of $10.4 billion in general obligation bonds, including $7.3 billion for K-12 education facilities. Proposition 1D allocated specified amounts from the sale of these bonds for modernization, new construction, charter schools, career technical education facilities, joint use projects, new construction on severely overcrowded school sites, and high performance incentive grants to promote energy efficient design and materials. In addition, portions of the amounts allocated for new construction and modernization were authorized for purposes of funding smaller learning communities and small high schools and for seismic retrofit projects.

In 2010, the United States Department of Defense evaluated and reviewed the physical condition of the 160 public schools on military installations in the United States. Based on the findings of this assessment, the DOD developed a “Priority List” of public schools on military installations with the most serious condition and/or capacity deficiencies. The federal Office of Economic Adjustment (OEA) was tasked with administering the Public Schools on Military Installations (PSMI) program to provide construction, renovation, and repair funding to address these deficiencies.

Congress has provided $945 million in federal funds to the OEA for the program since 2011, including a recent $175 million increase in funding provided in House Resolution 83 in 2015. That measure also established a 20 percent non-federal matching requirement from the state and local education authority (LEA) as a condition of federal funding. If a local match is not provided, the OEA may skip eligible school projects on the Priority List if the match is not provided. According to the OEA, once a project on the list has been skipped it will no longer be considered for funding.

The OEA indicates that there is approximately $464 million remaining in the PSMI, and estimates that as many as 33 schools on the list could be assisted. California has 11 schools in six districts that are within the top 33 on the Priority List.

Proposed Law:

This bill appropriates $61 million from the General Fund to the CDE for the 2015-16 fiscal year for apportionment to school districts to meet the matching share requirements of the PSMI program to construct, renovate, repair, or expand elementary and secondary public schools located on military installations.

Related Legislation:

SB 121 (Fuller) requires that school construction projects on military installations that are eligible for specified federal grants be given priority for funding under the state SFP. That bill has been referred to the Education Committee, but has not been heard.

Staff Comments:

This bill is intended to provide the full 20 percent state/local match for approximately $240 million in federal funds that would be available for construction grants to 11 schools on military installations in California. State bond authority for new construction and modernizations programs has essentially been depleted since 2012.

Since 2009, the State Allocation Board (SAB) has been making “unfunded approvals” for approved projects waiting to convert to funding apportionments when bonds are sold and cash becomes available. In addition, since November 1, 2012, the SAB has maintained an “Applications Received Beyond Bond Authority” list. According to the Office of Public School Construction, one of the 11 schools that this bill seeks to assist has an unfunded application pending under the School Facility Program. In addition, four of the schools have modernization eligibility but have not applied for state funding, and six of the schools previously applied for, and received modernization funding through the School Facilities Program. SB 111 would provide a direct General Fund appropriation for these projects on the basis of their eligibility for federal funds. The Committee may wish to consider whether it is appropriate to provide General Funds for these 11 schools, when there are numerous other schools awaiting state funding that may have a greater need based on state priorities, or whether there are other priorities for limited General Funds.

In 2012, the SAB established a subcommittee to explore alternatives for assisting districts with providing the required 20 percent local match for projects on the DOD Priority List. The subcommittee considered a number of options, including reservation of bond authority, transfer of bond authority, loans for the matching share, waiver of the local matching share requirement, and facility hardship funding, but none of these options were determined to be viable. Ultimately, the SAB recommended that the Legislature provide funding for military base schools in California in the next bond proposal in order to cover the total need for these types of projects.

The CDE indicates that costs to administer the distribution of funds to affected school districts would be minor. Staff notes that the funds appropriated by this bill would count towards the Proposition 98 minimum guarantee of funding for K-14 education.

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SENATE COMMITTEE ON EDUCATION

Senator Liu, Chair

2015 - 2016 Regular

Bill No: SB 111

Subject: School facilities: military installations

SUMMARY

This bill appropriates $61 million from the General Fund (GF) to the California Department of Education (CDE) for apportionment to school districts to meet the matching share requirements of a specified federal school construction grant program.

BACKGROUND

Current law establishes the School Facility Program (SFP) under which the state provides general obligation bond funding for various school construction projects. AB 127 (Nunez and Perata), the Kindergarten-University Public Education Facilities Bond Act of 2006, authorized Proposition 1D a statewide general obligation bond proposal for $10.4 billion. Proposition 1D, approved, by the voters in November 2006, provided $7.3 billion for K-12 education facilities and allocated specified amounts from the sale of these bonds for modernization, new construction, charter schools, Career Technical Education Facilities, joint use projects, new construction on severely overcrowded school sites, and high performance incentive grants to promote energy efficient design and materials. In addition, portions of the amounts allocated for new construction and modernization were authorized for purposes of funding smaller learning communities and small high schools and for seismic retrofit projects.

(Education Code § 17078.70-17078.72)

ANALYSIS

This bill appropriates $61 million from the General Fund (GF) to the CDE for apportionment to school districts to meet the matching share requirements of the United States Department of Defense, Office of Economic Adjustment school construction grant program.

STAFF COMMENTS

1. Need for the bill. According to the author, California has 11 schools in six districts that are on a priority list for funds from the federal government to address the "serious condition or capacity deficiencies” of public schools on military installations. These schools are eligible to receive funds for this purpose

through the Public Schools on Military Installations Program (PSMI). The program requires a 20 percent non-federal match in order to receive federal funding.

According to the author, about $61 million is necessary to cover the 20 percent match for the 11 California schools on the list. This bill would appropriate these funds to the California Department of Education for apportionment to the affected school districts and leverage approximately $240 million in federal funds for the renovation, repair, or reconstruction of these schools.

2. Public Schools on Military Installations Program (PSMI). According to the Office of Economic Adjustment (OEA), in 2010 the Department of Defense (DOD) evaluated and reviewed the physical condition of the 160 public schools on military installations in the United States. Based on the findings of this assessment, the DOD developed a “Priority List” of public schools on military installations with the most serious condition and/or capacity deficiencies. The OEA was tasked with administering the PSMI program to provide funds to these schools to address these deficiencies.

Between 2011 and 2015, Congress has provided $945 million to the OEA for the purposes of the PSMI. The last increase in funding for the PSMI ($175 million) was provided in 2015 by House Resolution 83 (H.R. 83 Section 8017). In addition to the funding increase, H.R. 83 established the 20 percent match as a congressionally mandated requirement and stipulated that the non-federal match was the responsibility of the local education authority (LEA) and the State. The DOD has interpreted the new language to mean that the matching share must be provided by the local education authority (LEA) and or the State in which the school is located and that the OEA may skip eligible school projects on the Priority List if the match is not provided. According to the OEA, once a project on the list has been skipped it will no longer be considered for funding.

According to the OEA, there is approximately $464 million remaining in the PSMI. The OEA estimates that as many as 33 schools on the list could be assisted.

3. Which school districts? According to information provided by the OEA, California has 11 schools in six districts that are within the top 33 on the Priority List. These include:

1. Murray Middle School at China Lake Naval Air Weapons Station, Sierra Sands Unified School District.

2. Forbes Elementary (Currently Branch Elementary) at Edwards Air Force Base, Muroc Joint Unified School District.

3. Sherman E. Burroughs High School at China Lake Naval Air Weapons Station, Sierra Sands Unified School District.

4. Mary Fay Pendleton Elementary at Marine Corp Base Camp Pendleton, Fallbrook Union Elementary School District.

5. San Onofre Elementary School at Marine Corp Base Camp Pendleton, Fallbrook Union Elementary School District.

6. Miller Elementary School at Naval Base San Diego, San Diego Unified School District.

7. Scandia Elementary at Travis Air Force Base, Travis School District.

8. Akers Elementary School at Naval Air Station Lemoore, Central Union High School.

9. Hancock Elementary School at Naval Base San Diego, San Diego Unified School District.

10. Desert Junior-Senior High School at Edwards Air Force Base, Muroc Joint Unified School District.

11. Irving L. Branch Elementary School at Edwards Air Force Base, Muroc Joint Unified School District.

4. Should GF monies be used for construction/modernization of school facilities? Since about 1978, after the passage of Proposition 13, the state has assisted school districts with their school facility projects through the issuance of voter approved state general obligation bonds. This bill proposes the use of General Fund dollars for the purpose of having the California Department of Education (CDE) apportion funds to meet the facilities needs of a subset of schools.

The committee may wish consider:

1. Does the committee support a policy to shift the source of state funding for facilities needs from general obligation bonds to the general fund?

2. Is the use of GF dollars for the purpose of meeting the facilities needs of this subset of schools a priority for the use of GF monies in the 2015-16 budget?

5. Related Governor’s budget activity. In his 2015-16 Budget Summary, the Governor notes concerns about the complexity and structure of the current School Facility Program and the state's increasing debt service obligations. The Governor has proposed significant changes to the way school facilities are funded with the intent that districts be better able to meet their facilities needs at the local level. The Governor proposes to expand local revenue generation tools by increasing caps on local bond indebtedness, restructuring developer fees, and expanding the allowable uses of Routine Restricted Maintenance Funding. The Governor has also indicated interest in a future state program focused on districts with the greatest need, including communities with low property values and few borrowing options, as well as overcrowded schools.

6. Related State Allocation Board activity. After an April 2012 briefing on this topic, the SAB took action to establish the Department of Defense Sub-Committee, convened in June 2012, to explore alternatives for assisting districts with providing the required 20 percent local match for projects on the DOD Priority List.

Among other things, the sub-committee found that:

1. Program funding from the federal government is based on a cost estimate of the actual work, whereas the School Facility Program (SFP) provides funding in the form of per pupil grants, with some supplemental grants.

2. Based on the method of calculation, the 20 percent required is based upon a higher amount than the SFP calculations.

Options considered by the sub-committee included reservation of bond authority, transfer of bond authority, loans for the matching share, waiver of the local matching share requirement, and facility hardship funding. Each of these were determined not to be viable.

In August 2012, the State Allocation Board (SAB) considered the recommendations of the sub-committee. The SAB elected to recommend to the Legislature that funding be provided for military base schools in California in the next bond proposal in order to cover the total need for these types of projects.

7. Related/Prior Legislation. SB 121 (Fuller) also on the committee’s agenda today, requires that school construction projects on military installations that are eligible for specified federal grants be given priority for funding under the State School Facility program.

SUPPORT

Antelope Valley Board of Trade

Brigadier General, Marine Corps Base Camp Pendleton

Central Union School District

Muroc Joint Unified School District

Sierra Sands Unified School District

Travis Unified School District

Numerous individual letters

OPPOSITION

None received.

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