CASH Legislative Update

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July 13, 2017

Friday, July 15 is the last day for policy committees to hear and refer bills to fiscal committees. This is a key deadline because bills that are held in policy committees are effectively dead for this year, and bills that are approved and move onto the fiscal committees can continue to move through the legislative process. Below are status updates on bills of concern to the organization that CASH advocates have been actively engaged on. Thematically, these bills reflect two issue areas that have dominated school facility legislation this year – local bond accountability and transparency, and the lead content of water in schools. CASH is pleased to have helped improve some bills and helped block others that could not be improved. The Legislature convenes summer recess on Friday, July 21 and returns on Monday, August 21  to finish its business for 2017.

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State Allocation Board Update

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June 28, 2017

On Wednesday, June 28, the State Allocation Board (SAB) met to hear issues related to actions taken at their meeting on June 5, 2017 (approval of “Option 1”).  Specifically, under Action Items, the agenda included “Regulatory Amendments for Increased Program Accountability” and “Regulatory Amendments for the Financial Hardship Program.” Under Informational Items, the agenda included “School Facility Program Application Processing.”  The following is a summary of each agenda item.

Regulatory Amendments for Increased Program Accountability

At its June 5th meeting, the SAB approved a grant agreement template and conforming regulatory amendments. Office of Public School Construction (OPSC) staff indicated that necessary changes would need to be presented to the SAB if the budget trailer bill was enacted (AB 99 was subsequently signed by the Governor). This item seeks SAB approval for the revised template grant agreement. The item was APPROVED with no discussion.

Regulatory Amendments for the Financial Hardship Program

These proposed regulatory amendments would allow districts seeking Financial Hardship assistance to submit a request for funding without a pre-approved Financial Hardship status. This would allow a Financial Hardship approval process by accepting the Form SAB 50-04 when districts are ready to submit, and conducting a Financial Hardship review at the time the application is processed, prior to placement on the Unfunded List. CASH has advocated for this improvement to the Financial Hardship Program for many years and fully supports this proposal. This item was APPROVED with no discussion.

School Facility Program Application Processing

At their June 5th meeting, the SAB directed OPSC staff to begin processing the Applications Received Beyond Bond Authority List, as well as newly submitted applications. In this item, OPSC staff presented information to the SAB on how they will process the projects previously on this list, as well as Approved Applications for new construction and modernization projects received on or after April 1, 2017, that are now on the OPSC workload list. Included in the approval of “Option 1” was the requirement that districts must recalculate their enrollment and SFP eligibility. CASH strongly objects to this action. CASH Vice Chair Julie Arthur (Palm Springs USD) testified that CASH believes that the provisions of “Option 1” are inconsistent with statute, and asked the SAB to revisit the issue. No request to revisit “Option 1” or action was taken on this item because it was not an Action item.

The next SAB meeting is scheduled for Wednesday, August 23, 2017.

~ CASH Staff

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Governor Signs Budget

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June 27, 2017

Today the Governor Signed AB 97, the budget bill for FY 2017-18, as well as the related trailer bills to enact policy changes in the budget. Below is an update on a number of key school facility policy issues that are addressed in budget trailer bills.

SB 96: Department of Industrial Relations

Makes changes to the Department of Industrial Relations (DIR) prevailing wage monitoring program, including:

  • Raises the threshold for the program’s applicability from $1,000 to $25,000 for construction projects and $15,000 for maintenance projects.
  • Increases penalties for contractors and subcontractors who fail to register correctly.
  • Creates new penalties for awarding bodies, including school districts, who would be subject to a fine of $100 per day, up to $10,000.
  • An awarding body determined to be a “willful violator” with two program violations within 12 months could lose state facility funding for one year.
  • Increases the annual contractor registration fee from $300 to $400 and permits a contractor to register for multiple years at a time.

The budget also includes $805,000 in 2017-18 and $759,000 in 2018-19 for positions to educate awarding bodies about their requirements under the law.

AB 111: DSA Filing Fee

Increases Division of the State Architect (DSA) project filing fees for construction or alteration of school buildings. The fee will increase from 0.7% to 1.25% for the first $1 million in construction costs, and from 0.6% to 1.0% for costs in excess of $1 million. If the balance in the Public School Planning, Design, and Construction Review Revolving Fund exceeds six months of expenditures, the fee will automatically decrease.

AB 99: School Facility Program Audits

Includes the School Facility Program (SFP) audit changes, adding state-funded school facility project scope to the local annual K-12 audit. CASH successfully lobbied for amendments to the bill to provide school districts with the flexibility to use capital funds or operational dollars to repay any expenditures deemed ineligible. The original proposal from the Administration would have required automatic payback of audit exceptions using a withholding from the next Proposition 98 apportionment. The new audit provisions apply to SFP projects funded on and after April 1, 2017.

AB 99 & AB 125: Proposition 39 – Encumbrance Date and Program Extension

Includes provisions related to the Proposition 39 energy efficiency program. The bill extends the encumbrance date for projects by 12 months to June 30, 2019. The Legislature is now considering an additional trailer bill that includes the provisions of SB 518 (De Leon) to extend the Proposition 39 program indefinitely. Identical language is reflected in both AB 125 and SB 110, and either bill could move forward. These bills extend the sunset on the Proposition 39 program indefinitely, though future funding is subject to an appropriation in the annual budget process. The bills would establish a new competitive grant framework for allocation of the dollars. The bills would also sweep remaining unallocated funds from the first five years of the program for projects that have not submitted an Energy Expenditure Plan (EEP) by March 1, 2018. These funds would be dispersed as follows:

  • $75 million for a school bus retrofit and replacement program to be administered by the California Energy Commission.
  • $100 million for low- and no-interest Energy Conservation Assistance Act (ECAA) loans.
  • The remainder would be used for competitive grants for K-12 schools in designated tiers.

Passage of AB 125 or SB 110 would make SB 518 obsolete. Budget trailer bills are urgency statutes that are effective immediately upon signature and require only a majority vote to pass, in contrast to a typical urgency bill, which requires a two-thirds vote. Trailer bills are not subject to the June 15 budget bill deadline. Senate President Pro Tem Kevin De Leon, the author of SB 518, appears very interested in moving this issue through the legislative process via trailer bill.

~ CASH Staff

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CASH Budget Update: Legislature Approves State Budget & Trailer Bills

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June 15, 2017

Today, the Legislature passed AB 97, the budget bill for FY 2017-18, meeting the constitutional deadline to pass an on-time budget by June 15, 2017. The Legislature also passed a number of accompanying trailer bills to implement policy changes in the budget. The budget includes $125.1 billion in General Fund spending, including $9.9 billion in total reserves. This is the largest budget reserve in California’s history and is consistent with the Governor’s priority of preparing for the next economic downturn. The budget will now go to the Governor for his signature, or line item veto, if any.

School Finance Budget Trailer Bill – AB 99

School Facility Audit Language – This bill includes new school facility audit language (commencing with changes to Education Code Section 41024) that requires local auditors to include state funded facility projects in the annual school district audit. The audit language includes references to the new fund release grant agreement adopted at the June 5, 2017 State Allocation Board (SAB) meeting. The audit language also includes language on the use of project savings and the process for repaying state funds audit exceptions.

One-Time Discretionary Funding – This bill includes $876.6 million (one-time Proposition 98) for any purpose, including deferred maintenance and capital outlay. This is approximately $145 per average daily attendance.

Emergency Repair Program – This bill includes language that any unencumbered funds in the School Facilities Emergency Repair Account revert to the Proposition 98 Reversion Account. AB 99 extends this encumbrance.

Budget Trailer Bills AB 111 and SB 96 (Anticipate Approval at the Time of Posting)

Proposition 39 – The date for local encumbrance of these funds increases from June 30, 2018 to June 30, 2019.

DSA Filing Fee – The Legislature passed budget trailer bill AB 111, which increases Division of the State Architect (DSA) project filing fees for construction or alteration of school buildings. The fee will increase from 0.7% to 1.25% for the first $1 million in construction costs, and from 0.6% to 1.0% for costs in excess of $1 million. If the balance in the Public School Planning, Design, and Construction Review Revolving Fund exceeds six months of expenditures, the fee will automatically decrease.

Department of Industrial Relations – The Legislature passed budget trailer bill SB 96, which makes changes to the Department of Industrial Relations (DIR) prevailing wage monitoring program, including:

Raises the threshold for the program’s applicability from $1,000 to $25,000 for construction projects and $15,000 for maintenance projects.

  • Increases penalties for contractors and subcontractors who fail to register correctly.
  • Creates new penalties for awarding bodies, including school districts, which would be subject to a fine of up to $100 per day, up to $10,000.
  • An awarding body determined to be a “willful violator” with two program violations within 12 months could lose state facility funding for one year.
  • Increases the annual contractor registration fee from $300 to $400 and permits a contractor to register for multiple years at a time.

The budget also includes $805,000 in 2017-18 and $759,000 in 2018-19 for positions to educate awarding bodies about their requirements under the law.

Additional OPSC Staffing and Bond Sales – We thank Senator Bates for her comments on lack of Proposition 51 progress; however, the budget agreement does not include any additional staff for the Office of Public School Construction (OPSC) nor any proposed increase in the January budget proposal for Proposition 51 state school bond sales.

~ CASH Staff

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Proposition 39 Update

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June 9, 2017

I am pleased to provide this update to CASH members on state legislative actions with regard to the Proposition 39 program.  We are active on two pathways – legislative and through the budget process – for an extension of the program’s encumbrance deadline date so that local education agencies (LEAs) may fully use their allocations knowing what the fifth year of allocation will be. There is also state action on a program extension beyond the five years that California’s voters approved in November 2012.

Legislation – SB 518 (de Leon)

The Leader of the Senate, President Pro Tem Kevin De Leon is the author of legislation to extend the Proposition 39 program and directs any funding remaining in the fund by a date certain to be used for clean energy buses in needy communities with bad air quality as determined by the Air Resources Board.

After the bus allocation of $75 million, another $100 million is to be added for low and no-interest loans to schools under the Energy Conservation and Assistance Act (ECAA).  Funds remaining after the two uses above will be available to K-12 school districts, charters, county offices of education and charter schools by application within four tier levels based on average daily attendance (ADA) data.

The bill also:

  • Sets encumbrance date for the Proposition 39 Program’s five years of funding at 3/31/19 and sweeps unused funding on 3/1/18 for the purposes outlined above.
  • Removes the Proposition 39 Program’s sunset going forward – to be allocated in the annual budget process.

We have held productive conversations about the timelines in SB 518, as we have concerns that the “sweeping” date would leave schools with no additional time beyond the current August 1, 2017 CEC deadline for submission of final energy expenditure plans (EEP).

If they are planning to use their fifth-year allocations, LEAs should be moving forward to submit plans to the CEC by that date (see more info on the EEP deadline below). 

Senate Pro Tem de Leon’s Proposition 39 legislation is progressing and has moved off Suspense and was approved on the floor of the Senate.  SB 518 is now moving to Assembly for assignment to a policy committee.

State Budget and Proposition 39 Program

We testified at and communicated with State Budget Subcommittee hearings in both the Assembly and the Senate on Proposition 39 and both Houses have included a Prop 39 extension in their Budget proposals that are now being discussed in Budget Conference Committee.

The Assembly has recommended an extension to June 30, 2019 – a full year extension – if this were to occur, we believe that the CEC will set their EEP final deadline date more in line with what LEAs originally anticipated for the full years – at or around June 30, 2018.

The Senate’s budget proposal aligns with the SB 518, the Senate Pro Tem’s legislation, and includes the March 1, 2018 sweeping date for use by K-12 schools, clean buses, loans and the extension of the program indefinitely – and the March 31, 2019 encumbrance date.

A CASH letter has been sent to the members of the Legislative Budget Conference Committee asking for the Assembly deadline date and the extension of the program as proposed in Senate.  Stay Tuned.

CEC Advice for Schools

At School Energy Coalition (SEC) Forums held last month, the CEC shared some advice with us about those final EEPs – LEAs should include all school sites that may be potentially considered for projects in your plan – even if you are unsure of the funding that may be available – because the system the agency uses won’t allow amendments to add sites later.

They also shared that there are about one million dollars remaining in CEC’s Bright Schools and technical assistance; low and no-interest loans for energy efficiency projects funded under the ECAA.

CASH/SEC Zero-Net Energy Workshop: June 27 and 29

SEC is pleased to be co-sponsoring the June Workshop with CASH on moving schools to zero-net energy.  The Workshops will be held on June 27th in Sacramento and June 29th in Ontario.  Click here to register online.

We will be sharing information on how to get to ZNE on a school site or district – from the planning and decision-making process, ZNE and CHPS, financing and case studies from schools that are making the move now to generate savings and provide healthy classrooms for teachers and students that improve academic performance, teacher retention along with utility bill savings.

Please contact me with comments or questions on energy, water, or Prop 39!  aferrera@m-w-h.com

~ Anna Ferrera

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