SAB Approves “Option 1” New Construction Eligibility Regulations and Seismic Mitigation Program Amendments

January 25, 2018

Today the State Allocation Board (Board) met to take action on a number of items, including the annual adjustment to School Facility Program (SFP) grants, the index adjustment for Level I developer fees, approval of $243 million in Charter School Facilities Program Unfunded Preliminary Apportionments, and adoption of a package of various School Facility Program regulation changes.  The regulations package included an item to formalize changes to the new construction funding application process, which Coalition for Adequate School Housing (CASH) strongly opposes.

Seismic Mitigation Program and Other Technical Conforming Regulatory Amendments
The Board approved, on an emergency basis, a package of School Facility Program regulation amendments pertaining to the following issues:

  • How to proceed with applications for Seismic Mitigation Program (SMP) funding now that bond funds specifically reserved for that purpose have been exhausted.
  • Requiring new construction projects to submit eligibility updates for the enrollment year in which the Office of Public School Construction (OPSC) processes the application.
  • Allowing small school districts to request a three-year lock using enrollment figures from the year in which the eligibility application is submitted, if the district makes the request prior to OPSC’s notification that it will soon begin to process the funding application.

On June 5, 2017, the Board radically altered the School Facility Program by adopting the new construction eligibility justification policy (known as “Option 1”), which abandoned the use of eligibility in place at the time of application submittal in favor of requiring eligibility updates for the year in which OPSC processes the application.  CASH believes this policy is contrary to the Proposition 51 statute approved by voters and opposed the change when it was first approved by the Board.  CASH challenged the Board’s action by filing an underground regulation petition with the Office of Administrative Law (OAL), which declined to take up CASH’s petition but did not opine on the petition’s merits.

The regulation adopted today codifies the Board’s June 5, 2017, policy and applies to projects submitted to OPSC after that date.  OPSC has indicated they do not need a regulation to implement the new construction eligibility update requirements for projects that were submitted to OPSC on or before June 5, 2017.  The adopted regulation requires districts to submit an updated Enrollment Certification/Projection (Form SAB 50-01) within 90 days of OPSC notification that it will begin processing the district’s application for funding.

CASH did not oppose the Seismic Mitigation Program regulations, which allow the Board to fund SMP projects out of Proposition 51 as standard new construction Facility Hardship projects.  Proposition 51 did not provide a specific reservation of bond funds for SMP projects.  OPSC has received a number of projects exceeding SMP bond authority.

There was robust discussion by the Board regarding this item and their policy action from June 5, 2017.  Assembly Member O’Donnell made an unsuccessful motion to bifurcate the discussion and separate the SMP and new construction eligibility issues into two items.  Numerous school district representatives provided public comment opposing the new construction eligibility regulations, including CASH Vice Chair Julie Arthur (Palm Springs Unified), who questioned the “emergency” designation and cited the Education Code section that CASH believes is violated by the Board’s June 5, 2017 action. 

Annual Adjustment to School Facility Program Grants
The Board approved an increase of 4.17 percent for the 2018 SFP grants based on the RS Means Construction Cost Index.  This increase is based on the statewide cost index for Class B construction.

Index Adjustment on the Assessment for Development
The Board approved an increase for the 2018 maximum Level I assessment for development in the amount of 8.78 percent using the RS Means Index, effective immediately.  This maximum assessment for development is adjusted every two years by the change in the Class B construction cost index.

Charter School Facilities Program Unfunded Preliminary Apportionments
The Board approved 25 Preliminary Charter School Apportionments worth $243,013,928 for the Charter School Facilities Program (CSFP).  Proposition 51 provided $500 million for the CSFP.  These preliminary apportionments are a reservation of CSFP bond authority for the projects.  Successful applicants must obtain the necessary plan and site approvals and convert from a preliminary to final apportionment within four years, with the option for a one-time one-year extension.  Applicants receiving a preliminary apportionment may request an advance fund release for design costs or site acquisition.  OPSC received a total of 191 applications requesting approximately $3.5 billion in this filing round.  OPSC anticipates bringing a subsequent item to the next available Board meeting to award additional preliminary CSFP apportionments up to the amount of available CSFP bond authority.

School Facility Program Workload List
The workload list dated December 31, 2017 contains projects worth the following:

New Construction:         $2,072,595,189
Modernization:               $1,210,083,595
Total:                               $3,282,678,784

The next State Allocation Board meeting is scheduled for February 28, 2018.

~ Rebekah Cearley, Legislative Advocate