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AB-2771 Education finance: Higher Education Facilities Bond Act of 2018.(2017-2018)



Current Version: 08/17/18 - Amended Senate        


AB2771:v95#DOCUMENT

Amended  IN  Senate  August 17, 2018
Amended  IN  Senate  July 05, 2018
Amended  IN  Assembly  April 26, 2018
Amended  IN  Assembly  March 23, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 2771


Introduced by Assembly Members Eggman, Grayson, and Weber
(Coauthor: Assembly Member Lackey)

February 16, 2018


An act to add Part 70.5 (commencing with Section 101300) to Division 14 of Title 3 of the Education Code, relating to education finance, and declaring the urgency thereof, to take effect immediately. by providing the funds necessary therefor through an election for the issuance and sale of bonds of the State of California and for the handling and disposition of those funds.


LEGISLATIVE COUNSEL'S DIGEST


AB 2771, as amended, Eggman. Education finance: Higher Education Facilities Bond Act of 2018.
(1) Under the Higher Education Facilities Bond Act of 1986, the Higher Education Facilities Bond Act of 1988, and the Higher Education Facilities Bond Act of June 1992, the issuance, pursuant to the State General Obligation Bond Law, of bonds in an amount not to exceed $400,000,000, $600,000,000, and $900,000,000, respectively, and the expenditure of the revenues therefrom, were authorized for the purpose of aid to the University of California and the California State University for, among other things, the construction and equipping of educational facilities, as specified. Existing law establishes the Higher Education Facilities Finance Committee to administer those acts, and to authorize the issuance and sale of bonds to the extent necessary to fund the education facilities construction apportionments expressly authorized by the Legislature in the annual Budget Act.
More recently, the Class Size Reduction Kindergarten-University Public Education Facilities Bond Act of 1998, the Kindergarten-University Public Education Facilities Bond Act of 2002, the Kindergarten-University Public Education Facilities Bond Act of 2004, and the Kindergarten-University Public Education Facilities Bond Act of 2006 authorized the issuance of bonds and the expenditure of revenues therefrom for the University of California and the California State University, as well as for public elementary and secondary schools.
Article XVI of the California Constitution requires measures authorizing general obligation bonds to specify the single object or work to be funded by the bonds and further requires a bond act to be approved by a 2/3 vote of each house of the Legislature and a majority of the voters.
This bill would enact the Higher Education Facilities Bond Act of 2018 which, upon approval by the state electorate, would authorize the issuance of state general obligation bonds in the total amount of $7,000,000,000. The proceeds of the bonds issued and sold under the bill would be available for the construction, reconstruction, and remodeling of existing or new facilities, as specified, at the University of California, the Hastings College of the Law, and the California State University.
(2) This bill would provide for the submission of the Higher Education Facilities Bond Act of 2018 to the voters at the November 6, 2018, 3, 2020, statewide general election.

(3)This bill would declare that it is to take effect immediately as an urgency statute.

Vote: 2/3   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Part 70.5 (commencing with Section 101300) is added to Division 14 of Title 3 of the Education Code, to read:

PART 70.5. HIGHER EDUCATION FACILITIES BOND ACT OF 2018

CHAPTER  1. General Provisions

101300.
 This part shall be known and may be cited as the Higher Education Facilities Bond Act of 2018.

101301.
 The incorporation of, or reference to, any provisions of California statutory law in this part includes all acts amendatory thereof and supplementary thereto.

101302.
 The Legislature finds and declares all of the following:
(a) California’s economic and social prosperity relies on a higher education system that keeps pace with California’s growth.
(b) By 2030, California is estimated to fall short of demand in the job market by 1,100,000 college graduates.
(c) Despite the need for more college graduates, California is turning away tens of thousands of qualified residents for admission to its four-year universities.
(d) Thousands of potential students are place-bound without adequate access to a four-year public university.
(e) There is an acute need for increased student housing, and the inadequate availability of such housing serves as an obstacle to the ability of students to pursue and complete their degrees.
(f) The purposes of this part include assisting in meeting the capital outlay financing needs of California’s public higher education system.

101303.
 The 2018 Higher Education Facilities Bond Act Finance Committee is hereby created. The committee shall consist of the Governor, the Controller, the Treasurer, the Director of Finance, the President of the University of California, and the Chancellor of the California State University, or their designees. The Treasurer shall serve as chairperson of the committee, a majority of the membership of which shall constitute a quorum.

CHAPTER  2. Fiscal Provisions

101310.
 (a) Bonds in the total amount of seven billion dollars ($7,000,000,000), not including the amount of any refunding bonds issued in accordance with Section 101320, or so much thereof as is necessary, may be issued and sold for the purposes expressed in this part and to reimburse the General Obligation Bond Expense Revolving Fund pursuant to Section 16724.5 of the Government Code. The bonds, when sold, issued, and delivered, shall be and constitute a valid and binding obligation of the State of California, and the full faith and credit of the State of California is hereby pledged for the punctual payment of the principal of, and interest on, the bonds as the principal and interest become due and payable.
(b) Pursuant to this section, the Treasurer shall sell the bonds authorized by the 2018 Higher Education Facilities Bond Act Finance Committee at any different times necessary to service expenditures required by the apportionments.
(c) The proceeds of bonds, exclusive of refunding bonds issued in accordance with Section 101320, issued and sold pursuant to this part shall be deposited in the 2018 Higher Education Capital Outlay Bond Fund, which is hereby created in the State Treasury.

101311.
 (a) The 2018 Higher Education Facilities Bond Act Finance Committee established pursuant to Section 101303 is hereby authorized to create a debt or debts, liability or liabilities, of the State of California pursuant to this part for the purpose of providing funds to aid the University of California, the Hastings College of the Law, and the California State University.
(b) The inclusion of the Hastings College of the Law in this section is not intended to mark a change from the funding authorizations made by Section 67354, as contained in the Higher Education Facilities Bond Act of 1986, or by Section 67334, as contained in the Higher Education Facilities Bond Act of 1988, but is intended to state more clearly what was intended by the Legislature in those sections as well.

101312.
 (a) The bonds authorized by this part shall be prepared, executed, issued, sold, paid, and redeemed as provided in the State General Obligation Bond Law (Chapter 4 (commencing with Section 16720) of Part 3 of Division 4 of Title 2 of the Government Code), as amended from time to time, and all of the provisions of that law, except subdivisions (a) and (b) of Section 16727 of the Government Code, apply to the bonds and to this part and are hereby incorporated in this part as though set forth in full in this part.
(b) For the purposes of the State General Obligation Bond Law, each state agency administering an appropriation of the 2018 Higher Education Capital Outlay Bond Fund is designated as the “board” for projects funded pursuant to this part.
(c) The proceeds of the bonds issued and sold pursuant to this part shall be available for the construction, reconstruction, and remodeling of existing or new facilities, including the construction of buildings and the acquisition of related fixtures; the equipping of new, renovated, or reconstructed facilities; funding for the payment of preconstruction costs, including, but not necessarily limited to, preliminary plans and working drawings; renovation and reconstruction of facilities; and the construction or improvement of off-campus facilities of the California State University approved by the Trustees of the California State University on or before July 1, 2014, including the acquisition of sites upon which these facilities are to be constructed.

101313.
 The 2018 Higher Education Facilities Bond Act Finance Committee established pursuant to Section 101303 shall authorize the issuance of bonds under this part only to the extent necessary to fund the appropriations for the purposes described in this part that are expressly authorized by the Legislature in the annual Budget Act. Pursuant to that legislative direction, the committee shall determine whether or not it is necessary or desirable to issue bonds authorized pursuant to this part in order to carry out the purposes described in this part and, if so, the amount of bonds to be issued and sold. Successive issues of bonds may be authorized and sold to carry out those actions progressively, and it is not necessary that all of the bonds authorized to be issued be sold at any one time.

101314.
 There shall be collected each year and in the same manner and at the same time as other state revenue is collected, in addition to the ordinary revenues of the state, a sum in an amount required to pay the principal of, and interest on, the bonds each year. It is the duty of all officers charged by law with any duty in regard to the collection of the revenue to do and perform each and every act which is necessary to collect that additional sum.

101315.
 Notwithstanding Section 13340 of the Government Code, there is hereby appropriated from the General Fund in the State Treasury, for the purposes of this part, an amount that will equal the total of the following:
(a) The sum annually necessary to pay the principal of, and interest on, bonds issued and sold pursuant to this part, as the principal and interest become due and payable.
(b) The sum necessary to carry out subdivision (a) of Section 101318, appropriated without regard to fiscal years.

101316.
 The board, as defined in subdivision (b) of Section 101312, may request the Pooled Money Investment Board to make a loan from the Pooled Money Investment Account or any other approved form of interim financing, in accordance with Section 16312 of the Government Code, for the purpose of carrying out this part. The amount of the request shall not exceed the amount of the unsold bonds, exclusive of refunding bonds issued in accordance with Section 101320, less any amount loaned pursuant to this section and not yet repaid, and any amount loaned from the General Fund pursuant to Section 101318 and not yet returned to the General Fund, that the committee, by resolution, has authorized to be sold for the purpose of carrying out this part. The board, as defined in subdivision (b) of Section 101312, shall execute any documents required by the Pooled Money Investment Board to obtain and repay the loan. Any amounts loaned shall be deposited in the fund to be allocated by the board in accordance with this part.

101317.
 Notwithstanding any other provision of this part, or of the State General Obligation Bond Law, if the Treasurer sells bonds pursuant to this part that include a bond counsel opinion to the effect that the interest on the bonds is excluded from gross income for federal tax purposes, subject to designated conditions, the Treasurer may maintain separate accounts for the investment of bond proceeds and for the investment earnings on those proceeds. The Treasurer may use or direct the use of those proceeds or earnings to pay any rebate, penalty, or other payment required under federal law or take any other action with respect to the investment and use of those bond proceeds required or desirable under federal law to maintain the tax-exempt status of those bonds and to obtain any other advantage under federal law on behalf of the funds of this state.

101318.
 (a) For the purposes of carrying out this part, the Director of Finance may authorize the withdrawal from the General Fund of an amount not to exceed the amount of the unsold bonds, exclusive of refunding bonds issued in accordance with Section 101320, less any amount loaned pursuant to Section 101316 and not yet repaid and any amount loaned from the General Fund pursuant to this section and not yet returned to the General Fund, that have been authorized by the 2018 Higher Education Facilities Bond Act Finance Committee to be sold for the purpose of carrying out this part. Any amounts withdrawn shall be deposited in the 2018 Higher Education Capital Outlay Bond Fund consistent with this part. Any money made available under this section shall be returned to the General Fund, plus an amount equal to the interest that the money would have earned in the Pooled Money Investment Account, from proceeds received from the sale of bonds for the purpose of carrying out this part.
(b) Any request forwarded to the Legislature and the Department of Finance for funds from this bond issue for expenditure for the purposes described in this part by the University of California, the California State University, or the Hastings College of the Law shall be accompanied by the five-year capital outlay plan. Requests forwarded by a university or college shall include a schedule that prioritizes the seismic retrofitting needed to significantly reduce, by the 2022–23 fiscal year, in the judgment of the particular university or college, seismic hazards in buildings identified as high priority by the university or college.

101319.
 All money deposited in the 2018 Higher Education Capital Outlay Bond Fund that is derived from premium and accrued interest on bonds sold shall be reserved in the fund and shall be available for transfer to the General Fund as a credit to expenditures for bond interest, except that amounts derived from premium may be used to pay the cost of bond issuance.

101320.
 The bonds may be refunded in accordance with Article 6 (commencing with Section 16780) of Chapter 4 of Part 3 of Division 4 of Title 2 of the Government Code, which is a part of the State General Obligation Bond Law. Approval by the voters of the state for the issuance of the bonds described in this part includes the approval of the issuance of any bonds issued to refund any bonds originally issued under this part or any previously issued refunding bonds to refund bonds in accordance with this section.

101321.
 The Legislature hereby finds and declares that, inasmuch as the proceeds from the sale of bonds authorized by this part are not “proceeds of taxes” as that term is used in Article XIII B of the California Constitution, the disbursement of these proceeds is not subject to the limitations imposed by that article.

SEC. 2.

 Section 1 of this act shall take effect upon the adoption by the voters of the Higher Education Facilities Bond Act of 2018, as set forth in Section 1 of this act.

SEC. 3.

 Section 1 of this act shall be submitted to the voters at the November 6, 2018, 3, 2020, statewide general election.
SEC. 4.

This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:

In order for the Higher Education Facilities Bond Act of 2018 to be presented to the voters at the November 6, 2018, statewide general election, it is necessary that this act take effect immediately.