Governor Newsom Signs Assembly Bill 48 That Places a $15,000,000,000 State School Facilities Bond on the March 3, 2020 Ballot for Approval

10.07.2019

Today, Governor Gavin Newsom signed Assembly Bill 48 (O’Donnell and Glazer), the Public Preschool, K-12, and College Health and Safety Bond Act of 2020 (“AB48”), that will provide for $15,000,000,000 to construct and modernize educational facilities.  However, AB48 will only become effective if it is approved by a majority of the voters in the March 3, 2020, statewide primary election.  AB48 follows on the heels of Proposition 51, that was approved by the voters on November 8, 2016, which was the first statewide school facilities bond in over a decade.  The need for updated school facilities is so great that the Proposition 51 bond authority has already been exhausted.

When approved by the voters, AB48 will provide $9,000,000,000 in funding for K-12 school districts, $2,000,000,000 for California community college districts, $2,000,000,000 for California State University campuses, and $2,000,000,000 for the University of California campuses.  AB48 places an emphasis and gives priority to K-12 and higher education facility projects that address health and safety issues such as mold, asbestos, seismic safety, lead in water, and critical deferred maintenance issues. 

K-12 School Facilities Program

For K-12 school districts, AB48 further designates that the $9,000,000,000 would be broken down as follows:

• New Construction - $2,800,000,000
• Modernization - $5,200,000,000
  • Lead in water testing and remediation - $150,000,000
• Career Technical Education - $500,000,000
• Charter Schools - $500,000,000

The new construction grants and modernization grants may be increased, on a sliding scale basis, from 50% to 55%, and 60% to 65%, respectively, based on a school district’s ability to generate the local matching funds, and the percentages of low income, foster care, and English learner students within the school district.  AB48 would also allow for funding for preschools, kitchens, and facilities for counselors and nurses to increase student access to healthcare and mental health services, but specifically precludes the use of state funds for the purchase of portable electronic devices (i.e. laptop and tablet computers) with a useful life of less than three years.

AB48 establishes four separate annual cycles for the review of applications, giving priority to projects that are determined to pose a health or life safety hazard, that seek financial hardship assistance, that eliminate severe overcrowding, that rank highest from the priority point system, and that contain a project labor agreement.  A separate fund will be established to test and remediate lead in school drinking water outlets.  AB48 also provides immediate assistance to school districts that have been affected by natural disasters by providing for temporary facilities.

AB48 would create a process that would assist small school districts in applying for state bond funds and also expand the definitions for financial hardship that would allow for an increase of the number of school districts that could qualify for 100% of the state grants under the hardship program.

While AB48 would increase an elementary school district’s and a high school district’s overall bonding capacity from 1.25% to 2%, and a unified school district’s bonding capacity from 2.5% to 4%, a school district’s ability to assess certain developer fees may be affected.  Until January 1, 2026, multifamily housing developments within one-half mile of a major transit stop would receive a waiver of developer fees in an effort to address the housing crisis.  All other multifamily housing developments would receive a 20% reduction in developer fees.  Finally, Level 3 developer fees would be suspended from January 1, 2021, or whenever existing bond funds are expended, to January 1, 2028.

Finally, one major change to the School Facilities Program is that for any school district to participate in the program, it must first submit a five-year school facilities master plan, or an updated five-year facilities master plan that has been approved by the governing board of the school district.

Higher Education Projects

Similar to the K-12 school district projects, for higher education, priority in funding will be given to those projects that address issues related to fire and life safety, seismic deficiencies, and critical deferred maintenance.  As a condition for receiving funding, the California State University and the University of California must adopt a five-year affordable housing plan.

Independent Performance Audit

Any school district, county office of education, charter school, Community College District, California State University, and the University of California that funds a project from AB48 must ensure that an independent performance audit is performed to ensure that the funds have been spent in compliance with any applicable law, and the results of the audit must be posted on their webpage.  Further, prior to approving any project or projects that would be funded from AB48, any school district, county office of education, charter school, community college district, California State University, and the University of California must hold at least one public hearing to solicit input from members of the public  on the project or projects being considered.

While AB48 will provide a significant amount of funds for the construction and modernization of educational facilities, there are also some significant changes to the K-12 School Facilities Program that will be implemented with priority given to health and safety projects, provide assistance to small school districts, increase the number of schools eligible to participate in the financial hardship program, and changes to developer fees for multifamily housing developments.  Even though AB48 has been signed by Governor Newsom, AB48 does not become effective until it has been approved by the majority of the voters on March 3, 2020.

This AALRR alert is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR presentation/publication does not create an attorney-client relationship. The firm is not responsible for inadvertent errors that may occur in the publishing process.