November 2, 2017
The CASH Facility Planners Meeting Update for November 2017 is now available and includes information regarding:
- Proposition 51 Update
- Legislative Update
- Upcoming CASH Events
Click here to download the Update
~ CASH Staff
November 2, 2017
The CASH Facility Planners Meeting Update for November 2017 is now available and includes information regarding:
Click here to download the Update
~ CASH Staff
The State Allocation Board (SAB) meeting originally scheduled for Wednesday, October 25, 2017 has been cancelled, and the next SAB meeting will be Wednesday, December 6, 2017 at 2:00 p.m. The next Priority Funding filing period (Round 14) opens Wednesday, November 8, 2017 and any requests to participate are due by Thursday, December 7, 2017. Requests must be signed by an authorized District Representative and received by the Office of Public School Construction by 5:00 p.m. December 7, 2017. Priority Funding requests submitted during Round 14 are eligible for an Apportionment from January 1, 2018 to June 30, 2018.
In order to participate in the Priority Funding round, projects must have already received an Unfunded Approval from the SAB. Projects that receive an Unfunded Approval at the December 6 meeting are eligible to participate in Round 14 but must meet the December 7, 2017 submittal deadline.
Projects that receive an Unfunded Approval on December 6, 2017, will also be subject to nonparticipation regulations.
~ Rebekah Cearley, CASH Legislative Advocate
Today, September 6, 2017, the State Allocation Board (SAB) met to take action on School Facility Program (SFP) funding apportionments. The Board approved this item which provides approximately $443.6 million in SFP apportionments for 135 projects from 70 school districts. These are projects on the Unfunded List (Lack of AB 55 Loans) that have submitted priority funding requests and were eligible for apportionment.
CASH submitted a letter to the Board which raises an objection to the Office of Public School Construction (OPSC) using 2012 grant amounts for the projects being apportioned in September 2017. CASH believes that the traditional SAB policy of using the grant amounts at the time of apportionment should be retained, which ensures that hardship districts and districts that could not move projects forward and are awaiting state matching funds, will not face fiscal difficulties from construction cost escalation between the date of their application and the date of apportionment. The SAB chose to use the 2012 grant amounts, and CASH believes that school districts with projects on the September 6, 2017 SAB agenda should have the opportunity to appeal to the SAB if they believe they are being harmed. This appeal process should be similar to the “do-no-harm” appeal policy adopted by the SAB when the Board adopted Option 1 at the June 5, 2017 Board meeting.
~ CASH Staff
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. Continue reading
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:
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:
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
June 22, 2017
The following is being shared as a courtesy to our members from the California Debt & Investment Advisory Commission (CDIAC).
In compliance with federal and state legislation, California public agencies are expected to establish and maintain internal control systems to account for and report on the expenditure of funds. There is an abundance of resources available to administrators that provide guidance on the development of internal control systems.  When applied consistently and correctly these controls can provide both the agency and the public an assurance that the funds are being properly managed and accounted for.
That being said, not all agencies apply the same system of controls they may have developed to manage general governmental funds to their bond funds. Even if they do, the system of controls used to account for and report on bond expenditures may not be fully integrated into the agency’s administrative structure even though doing so may ensure it is consistently applied.
This article is designed to provide readers a framework to understand internal control systems as they apply to bond funds and then, more importantly, present ways to bridge the gaps that often exist between a preexisting control system and the ongoing administration of bond funds.
Fundamentals of an Internal Control System
In December 2015 the Task Force on Bond Accountability released its Final Report summarizing its efforts to develop best practice guidelines on the fiduciary care and use of state and local bond proceeds.  The guideline adhered to the COSO framework for internal controls provided in the U.S. Government Accountability Office, Green Book. This consists of five elements:
Control Environment–An agency’s control environment represents the formal structures, goals, and objectives that form an internal control system. This includes the personnel–elected or appointed, the policies and procedures directing their activities in support of the control system, and the authority provided to those with oversight roles, including external bond oversight committees.
Risk Assessment–Within the context of a bond program, risk assessment is the process of identifying objectives and assessing the likelihood that risk events will occur and unfavorably affect the agency’s achievement of those objectives. The assessment of risk provides the basis for developing appropriate measures to manage risk.
Control Activities–Control activities are the actions the public agency takes through policies, procedures, and the delegation of duties to achieve its objectives and mitigate risk. The system of internal controls may vary, depending on the size, nature, and organizational complexity of the agency, but it must address the identified risks.
Information and Communications–As guardians of public funds, public agencies have a fiduciary responsibility to adopt a system of internal controls that provides a reasonable assurance that the agency is properly receiving, managing, and disbursing bond funds. Information and communication facilitates accountability and performance tracking.
Monitoring–The effectiveness of any set of internal controls is a function of its ability to mitigate risk. Since risks and program activities change over time, the internal control system must be dynamic, able to respond to changing requirements, staffing, and agency objectives. By monitoring the effectiveness of the control system, agencies can more readily adjust to these changing conditions.
Making the Control System part of the Agency’s DNA
An agency’s control system is effective only if it is consistently and universally employed. Agencies can ensure that this happens by operationalizing the control system in: 1) the agency’s plans, policies, and procedures; 2) the controlling bond documents; and 3) staff training.
Plan, Policies, and Procedures—Public agencies are guided by a number of plans, policies, and procedures when issuing and administering debt. These include a debt policy, investment policy, disclosure policy, as well as a capital improvement or facility management plan. These may be used to express elements of the control system to increase the likelihood that they will be carried out. Debt policies that call out the uses of debt, the types and terms of a debt issue, the responsibilities of the agency and staff for ongoing reporting and disclosure, the administration of debt-related payments, the uses to which the proceeds may be spent, can drive specific control activities.
Administrative policies and procedures often spell out the separation of duties between staff as well as procedures, timelines, and schedules to process specific actions. With regard to the disbursement of bond funds, for example, the agency’s policies and procedures may identify nonconforming transactions or exceptions that warrant immediate action, such as errors and discrepancies or changes in the payee name designation.
As funds are disbursed, policies and procedures may require staff to review expenditure plans, to seek legal review of contracts and agreements, to conduct site visits, and to maintain records of assets or portions of assets being financed. They may additionally set forth the content and timing of reports provided to any oversight committee or community interest groups.
Controlling Bond Documents—To strengthen compliance with policies and procedures, public agencies should integrate elements of the control system into bond documents. These include, among others, the indenture, the trust agreement, the tax certificate, the continuing disclosure agreement, and any agreements with insurers or other credit providers. The process must begin during the pre-issuance phase, during which the agency should account for all documents that will direct the roles and activities governing the investment and administration of bond funds and ongoing reporting and compliance.
Elements of the control system correspond to the specific content of most indentures, making linking the two fairly straightforward. For example, the typical indenture addresses the structure of accounts used to receive bond funds, the “waterfall” of revenues and payments, covenant restrictions, reserve maintenance and security, requirements for the disbursement of construction funds, and the terms for the trustee to safeguard and release funds. Each of these fits nicely into one or more control activities. Likewise, the trustee agreement contains terms that address financial and administrative management. Seeing that it contains language the clarifies the trustee’s role as a fiduciary when holding and investing bond funds, guaranteeing reserve requirements, monitoring bond covenants, and maintaining current balances on bond funds increases the likelihood that the agency’s control system is active and not reactive.
Agencies can use the tax certificate to establish and test control procedures to validate expenditures, including requirements for the use of proceeds, the timing of disbursement, requirements and limitations on the use of construction funds, private use restrictions, and, of course, the timing of arbitrage and yield restriction filings.
Finally, the continuing disclosure agreement provides the framework for ongoing reporting to investors and regulatory agencies and, in so doing, establishes measures to assess compliance and avoid problems. The agreement, in most cases, addresses filing requirements, the materials to be included, and the dates of submission.
Ongoing Staff Training—Public agencies can better ensure that their control system are active and employed by staff by providing training and communicating plans, policies, and procedures. Training should be provided to members of the governing body and oversight committees as well as service providers, such as auditors, who may need insights into the agency’s control system in order to perform their duties. Some agencies may need more frequent training on one or more elements of the control system. For example, agencies that use a conduit financing structure, may decide to train staff on control activities addressing expenditures and to review and update the training program to reflect improvements or changes in the control system.
Issuers enhance the expectation that they will timely and fully meet their repayment obligations through the development and application of a well-designed internal control system that tracks, monitors, and reports on the use of bond funds. Once adopted, however, issuers must take steps to institutionalize these control measures. If the agencies control system is integrated into and supported by its plans, policies, and procedures and expressed in controlling bond documents it is more likely to be applied. Furthermore, education and communication are the cornerstones of effective administrative processes. Agencies that undertake the work to articulate their control system in this manner and to train staff will undoubtedly derive material benefits in the form of better financing terms.
CDIAC has an upcoming seminar on ongoing bond administration on September 6th in Sacramento. Registration is available on CDIAC website: www.treasurer.ca.gov/cdiac.
 For information on establishing and implementing internal controls, see Standards for Internal Control in the Federal Government, U.S. Government Accountability Office (GAO), Sept. 2014, available at http://www.gao.gov/assets/670/665712.pdf, hereafter GAO Standards for Internal Control (“Green Book”); see also Gauthier, Stephen J., An Elected Official’s Guide: Internal Control, Government Finance Officers Association (GFOA), 2015, and Internal Control – Integrated Framework (2013), Committee of Sponsoring Organizations of the Treadway Commission (COSO), May 14, 2013.
June 9, 2017
The Division of the State Architect Access Compliance Team (DSA) and the University of California, Davis Extension Collaboration Center (UC Davis) are seeking your involvement in the design of a new consultative body, a diverse representative alliance created to provide feedback to DSA on proposed amendments to the California Building Code (CBC) regulations that affect individuals with disabilities. UC Davis will serve as a neutral facilitator to gather stakeholder input to help design the alliance. Once the alliance is formed, UC Davis will organize a kick-off workshop to provide training to support the effectiveness of the alliance in its role in DSA’s code development process.
At this time, UC Davis is soliciting information through an anonymous survey. Please take a few moments (5 – 10 minutes) to complete this survey, which can be accessed at: www.surveymonkey.com/r/DSAAccess.
Your response to the survey will be sent directly to UC Davis. Please return your survey response by June 19, 2017. Upon conclusion of the survey process, UC Davis will share a summary of the survey results and the next steps with DSA and the recipients of this email, in July 2017.
Should you have any difficulty accessing the survey, please contact email@example.com.
Thank you for your participation, as we take a big step forward in ushering in a new era of improved stakeholder collaboration in the code development process.
On Monday, June 5, 2017, the State Allocation Board (SAB) took action on two key policy issues that are critical to the implementation of Proposition 51: a) Regulatory Amendments for Increased Program Accountability (template for Upfront Grant Agreement); and, b) School Facility Program (SFP) Applications Received Beyond Bond Authority List (how to proceed with projects on the Acknowledged List). These proposals were originally scheduled to be adopted at the SAB meeting on April 24, 2017, but the action was deferred to a later date due to concerns with the draft prepared by the Office of Public School Construction (OPSC).
Fourteen CASH members testified during the hearing including Chair Don Ulrich (Clovis USD), Vice Chair Julie Arthur (Palm Springs USD), Immediate Past Chair Jenny Hannah (Kern HSD), and board members Rob Pierce (Elk Grove USD) and Alan Reising (Long Beach USD). The following is a summary of the actions that the SAB took on these agenda items:
Upfront Grant Agreement
The SAB voted to approve the Upfront Grant Agreement and conforming regulatory amendments, approved the projects on Attachment #5 for placement on the Unfunded List (Lack of AB 55 Loans), and exempted these projects from the Grant Agreement requirement. CASH and the education community had advocated for changes to the Grant Agreement, which were incorporated in this approval. These changes include:
The Grant Agreement as adopted includes a significant policy change by making educational technology, including computers and printers, an ineligible expenditure.
Beyond Bond Authority List
After extensive discussion and testimony from CASH board members and members of the education community, the SAB voted to approve “Option 1” which requires new construction projects on the Acknowledged List to re-justify their eligibility for the enrollment year in which the application was processed by OPSC, without losing their place in line. The biggest policy debate of the evening was whether schools should be required to update eligibility, or if projects would be processed with eligibility at the time of submittal. Projects that would no longer be eligible under updated eligibility have the right to submit an appeal to the SAB.
CASH would like to thank our members for their dedication and commitment to qualifying, approving, and now working to implement Proposition 51.
~ CASH Staff
May 26, 2017
On Monday, June 5, 2017, the State Allocation Board (SAB) will meet at 4:00 pm in Room 437 of the State Capitol to consider recommendations on the proposed Grant Agreement, True Unfunded List, and Acknowledged List. Click here to see the CASH letter addressing these proposals.
We encourage you to attend the SAB meeting and speak to your specific concerns about the proposals and how they will affect your school district or client district.
More information will be provided during the CASH Monthly Update Meeting also scheduled for Monday, June 5, 2017, at 11:00 am in the Lower Level Conference Room A at 1130 K Street, Sacramento, CA 95814.
We additionally would like to further encourage you to communicate your concerns directly to your State Senators and Assembly Members. The district draft letter found here, may be a resource in doing so.
~ Tom Duffy
May 26, 2017
AUGUST 23, 24, 25, 2017 | OAKLAND, CA | COST: $100 PUBLIC, $230 PRIVATE
This one-day workshop offered on three consecutive days uses Microsoft Excel to further participants’ understanding of key investment concepts. Participants will engage in interactive learning using their own laptops or tablets and spreadsheets to familiarize themselves with the relationship between yield, duration, and convexity. The workshop will conclude with an exercise on benchmarking. The class is limited to 20 participants per day. More information. Register.
SEPTEMBER 6, 2017 | SACRAMENTO, CA | COST: $150 PUBLIC, $250 PRIVATE
This seminar is designed to provide government officers with the knowledge needed to manage their responsibilities for continuing disclosure, compliance with federal arbitrage rules, and the investment of bond proceeds. Complying with both national and state-level reporting will be discussed. This seminar differs from CDIAC’s bond accountability and transparency program as this curriculum focuses on the larger practices of living with an issue over the life of the bond. More information. Register.
SEPTEMBER 25, 2017 | CARLSBAD, CA
More information coming soon.