SAB Chair, Cynthia Bryant, welcomed Acting Director of DGS Ron Diedrich and the new gubernatorial appointee to the SAB, Lynn Greene to their first meeting. The SAB approved the revised minutes of the January 27, 2010 meeting. Executive Officer Statement Acting Executive Officer Lisa Silverman made the following statements: The SAB is preparing to make apportionments at this meeting – the first time since December 2008. The OPSC is forming a workgroup of stakeholders to make bring recommendations on how to improve participation in the High Performance Incentive Grant Program. The goal is to bring a discussion item to the April Implementation Committee meeting. The Implementation Committee will be discussing the Seismic Mitigation Program relative to the “imminent threat” criteria at its March 4 meeting. The State Treasurer’s Office will be presenting a bond market update to the SAB later in the meeting. The OPSC has organized an outreach effort to school districts about the SFP Audit. On February 17 the OPSC conducted a workshop at the Santa Clara County Office of Education and are planning the following workshops: March 5: Butte County Office of Education March 12: Merced County Office of Education March 19: Orange County Department of Education Regulations Modernization Excessive Cost Hardship Grant for Accessibility The Board considered the following options for amending regulations for the Modernization Excessive Cost Hardship Grant for Accessibility: Option 1: Retain the 3% option for like-kind replacement projects and adopt the 60% option for all other projects. Projects that receive the augmentation based on the 3% calculation would not be required to complete and submit the DSA checklist. Option 2: Repeal the 3% option. Option 3: Take no action. Public comment was provided by representatives from the Los Angeles USD, Santee SD, San Diego COE, and Aspen Street Architects. Comment was primarily made requesting that the SAB consider maintaining flexibility in the regulations for districts to choose between the 3% or 60% calculation options, depending on the project needs. Senator Hancock asked if there is a problem with giving districts a choice. Assembly Member Buchanan stated that the question that needs to be asked is what the base grants should be – if the 3% supplemental grant for ADA costs should be included as part of the base grant. She stated that if the DSA worksheet is an unnecessary form then it should be eliminated as part of an overall effort to streamline processes and improve efficiency. Assembly Member Brownley moved to approve Option 3 (retain current regulations) and directed staff to bring back the issue of the DSA worksheet, along with the 60% option for like-kind replacement projects. The SAB approved the motion. Implementation of SB 592 The SAB approved regulations to implement SB 592 (Romero), which authorizes a local public entity other than a school district to hold title to a facility that receives funds from the Charter Schools Facility Program. Reports High Performance Program Report The SAB accepted a report from staff about the status of the High Performance Incentive Grant (HPIG) Program. The report focused primarily on the lack of HPS grants for modernization projects. Staff reports that currently there are seven modernization projects being reviewed that include a request for HPIG funds. The OPSC is forming a workgroup of stakeholders to evaluate the HPIG program and develop proposed regulatory changes. Senator Hancock put forward a proposal to change the incentive funding structure, which OPSC stated they would share with the workgroup. Senator Lowenthal requested that SAB staff be a part of the workgroup. Bill Orr, Executive Director of CHPS, spoke in support of Senator Hancock’s proposal. Bill Savidge, C.A.S.H. Chair, testified about the difficulties of incorporating HPI into modernization projects because of the inadequacy of the base grant and insufficiency of the incentive grant. State Treasurer’s Office Bond Market Update Blake Fowler of the State Treasurer’s Office provided the SAB with an overview of state debt, California’s credit rating, and breakdown of infrastructure sectors that received funds from the proceeds of the 2009 bond sales as follows: $5.6 billion – Interim Financing $4.5 – Education (K-University) $4.3 – Transportation $3.4 – Environmental/Housing Mr. Fowler reported that the Treasurer was preparing to go to market next week for another bond sale, but the sale has been deferred. Assembly Member Brownley asked how the Department of Finance determines which bonds to sell. Senator Huff asked how the Treasurer determines how much to sell. Mr. Fowler deferred to the Department of Finance on Ms. Brownley’s question and stated that the Treasurer considers, among other variables, the State budget, project needs as reported by the Department of Finance, and market conditions/appetite when he determines how much to sell. Chris Ferguson, representing the Department of Finance, in response to Ms. Brownley’s questions stated without further detail that the department takes many factors into consideration when determining which bonds to sell for purposes of funding infrastructure projects. Kathleen Moore reported that the she and members of Assembly Member Torlakson’s staff met with Director Matosantos to discuss the needs of the SFP and ways in which the state could plan financing school projects so that districts can continue to plan with some framework of funding. She reported that the issue of unclaimed funds from the 2009 bond sales was a potential issue. Tom Duffy, representing C.A.S.H., addressed the SAB about the detailed breakdown of the projects that comprise the unclaimed funds, almost half of which are career technical education projects that are governed differently under the Board’s regulations. Mr. Duffy asked that the Department of Finance’s decision about which infrastructure sector and projects to fund with later bond sales not be prejudiced by the unclaimed funds issue. Status of ERP Funding Staff reported that the legal question concerning the transfer of $17 million in the Proposition 98 Reversion account for the 2007-2008 fiscal year has not yet been resolved. Status of Fund Releases Lisa Silverman reported that the Status of Fund Releases report does not show that $20.7 million was released last month. The report states that, as of February 1, 2010 the following Fund Releases from the March and April bond sales were reported by the OPSC: March – Proposition 1D Projects $548 million has been released, leaving a balance of $0.07 million in available bond proceeds, which is reserved for a CTE project. April Released Remaining Proceeds Proposition 1D $437.3 million $150.4 million Proposition 55 $395.5 million $33.0 million Proposition 47 $413.6 million $8.7 million $192.1 million Status of Funds The following fund balances account for Unfunded Approvals made at the February 24, 2010 SAB meeting, according to the OPSC Status of Funds Report: Prop. 1D Prop. 55 Prop. 47 New Construction: $154.6 million $325 million $11.4 million Modernization: $1.53 billion $5.5 million $2.1 million Consent Agenda The SAB approved the consent agenda with the exception of the Amended Unfunded Approvals and the Unfunded Approvals being presented for approval. Amended Unfunded Approvals The SAB approved deferring the Amended Unfunded Approvals and February Unfunded Approvals to seek legal clarification on the Board’s authority to reconsider its prior action. The SAB also approved separating the February Unfunded Approvals from additional projects that will be presented for SAB approval at the March meeting. Assembly Member Brownley asked that the Board’s decision on the Fee for Development be brought back for reconsideration at the March meeting. Unfunded Approvals for the ERP The SAB approved a total of $6,180,540 in ERP projects. Unfunded Approvals The SAB approved an additional $116,068,913 in Unfunded Approvals: $58,670,727 for New Construction $57,398,186 for Modernization According to the Status of Funds Report, the total of Unfunded Approvals approved by the Board, including February 24 items (amended Unfunded Approval and Unfunded Approvals) is approximately $2.41 billion. Consent Specials Dos Palos-Oro Loma Jt. USD The SAB approved the district’s request for a conceptual approval to rehabilitate toilet facilities. Fort Sage USD The SAB approved the district’s request for a conceptual approval to assist the district with a utility fee that will allow the district to obtain its water supply from a utility district. Specials/Appeals Activation of Unfunded Approvals The SAB approved apportionments for the Unfunded Approvals presented to the Board with the finding that the apportionments are not full and final until the SAB makes an adjustment pursuant to AB 127. Public comment was taken about the requirement to review district finances for Financial Hardship projects. The Board did not approve the staff recommendation to require a review of district finances for the Financial Hardship projects apportioned for purposes of determining if additional local funds are available. Additionally, the SAB directed the OPSC to bring back the item of review of district finances when a Financial Hardship project is on the Unfunded List for more than 180 days. SAB Audit Subcommittee Update Senator Lowenthal briefed the SAB about the two subcommittee hearings conducted last year and about the recent Attorney General opinion relative to SFP audits. He requested that the Board authorize the establishment of and audit workgroup that would work with the subcommittee staff, Lisa Kaplan, and would be modeled after the Department of Education’s Audit Review Panel. The workgroup would report back to the Board. Lisa Silverman spoke to the need for an auditing entity to maintain independence and cautioned that the establishment of a workgroup that consists of those who may be audited could impair the independence of the audit. She stated that the audit has not changed and that only the depth of the audit has changed (i.e., general ledger verification). Tom Patton of the Attorney General’s office addressed the Board about the recent opinion. Tom Duffy stated that C.A.S.H. supports establishing a workgroup and offered the assistance and expertise that of its members. The Board authorized establishing the workgroup. CDE requested that someone from the Departments Audit division be included in the workgroup. SAB Rules and Operating Procedures The SAB agreed to continue with the Rules and Operating Procedures Subcommittee. Cynthia Bryant would confirm that Senator Hancock will Chair the subcommittee. Subcommittee members are Assembly Member Brownley, Assembly Member Fuller, and Scott Harvey. In the meanwhile, the SAB approved a motion to operate under Robert's Rules of Order. Frequency of SAB Meetings and Impact of Furloughs The SAB agreed to meet monthly and give the Chair discretion to work with OPSC on setting the agenda to consider workload issues. The next meeting is scheduled for March 24, 2010.