Proposition 39: Investments in Energy Efficiency for Schools Capitol Advisors Group, LLC CASBO Annual Conference

1. Kevin Gordon, President – Capitol Advisors Brad Chapman, Climatec, Inc. Bill McGuire, Superintendent St. Helena Unified School District Proposition 39: Investments in Energy Efficiency for Schools Capitol Advisors Group, LLC CASBO Annual Conference

2. An Overview • Prop 39 on the Ballot – What Voters Approved • The Governor’s Proposal • The Legislative Analyst’s Perspective • SB 39 – Senator Kevin DeLeon • AB 39 – Assembly Member Nancy Skinner • The Education Community Response • Outlook for the May Revision & Beyond www.capitoladvisors.org

3. Prop 39 – As Approved by Voters • Passed by voters last November • Raises more than $1 billion annually in Corporate income tax revenue by moving to single sales tax factor for most businesses. • For first five years, half the revenue required to fund Clean Energy Job Creation Fund • An estimated $450 the first year and $550 for each of the next four years is dedicated for this purpose. • Improve energy efficiency and expand alt energy. • K-14 Public Schools, CSU and UC and other “public buildings” • Public-Private partnerships and workforce raining related to energy • Appropriate only to agencies with expertise in managing energy projects and programs • Coordinated with CEC and CPUC to avoid duplication and leverage existing energy efficiency and alternative energy efforts. www.capitoladvisors.org

4. Existing Programs • More than a dozen existing programs managed by multiple agencies including CEC, CPUC, and by public and Investor-owned utilities. • California has spent almost $15 billion over the past 10-15 years on these efforts. www.capitoladvisors.org

5. The Governor’s Proposal • Significantly departs from ballot measure in implementation approach • Counts all revenue from Prop 39 toward Prop 98 minimum guarantee, including funds spent on energy projects • Focus energy funding exclusively on K-14 schools. • $400.5 Million for K-12 schools • $49.5 Million for Community Colleges www.capitoladvisors.org

6. The Governor’s Proposal • Funding administered through CDE for K-12 and Chancellor’s Office for CCs. • These agencies would issue guidelines for prioritizing the use of funds by LEAs. • CDE and Chancellor’s Office required to “consult” with CEC and CPUC on guidelines. • Budget provides a permanent full time position at CDE for coordination. • Allocates funding on an ADA basis • $67 for K-12 • $45 for Community Colleges • Report due to CDE and Chancellor on expenditures. www.capitoladvisors.org

7. The Governor’s Proposal • Funds may be used for uses consistent with the state’s loading order policies, including: • Construction or modernization of buildings in a manner that uses less energy • Purchasing energy efficient equipment • Undertaking renewable energy projects such as installation of solar panels and geothermal heat pumps www.capitoladvisors.org

8. The Legislative Analyst’s View • Questions Treatment of Proposition 39 Revenues • Varies from LAOs longstanding view of Proposition 98. • Assert potential for greater manipulation of the minimum guarantee. • Questions Allocation Method - Limited Benefit • Excludes many eligible projects. • Fails to account for energy consumption differences. • Allocates funding inefficiently. • May not guarantee return on investment. • Does not account for significant past investments in K–14 facilities. • Fails to sufficiently leverage existing programs and experience. www.capitoladvisors.org

9. The Senate Bill - SB 39 • Senator Kevin DeLeon & Senate President Pro- Tem Darrell Steinberg • “Clean Energy Employment and Student Advancement Act” • Follows emphasis on education but allows funds for both K-12 and higher ed. institutions • Vests the Office of Public School Construction and State Allocation Board with administrative role • They shall “consult” with Energy Commission and PUC • Competitive grant-based, and need-based approaches www.capitoladvisors.org

10. The Assembly Version - AB 39 • Assembly Member Skinner and Assembly Speaker John Perez • “California Clean Energy Jobs Act” • K-12, Higher Ed, “Other public buildings,” Public-Private Partnerships, Job creation and workforce development agencies • Vests the Energy Commission with administrative authority • “In consultation with Superintendent of Public Instruction” • Grant, loan based approaches www.capitoladvisors.org

11. The Education Community Perspective • Governor’s approach preferable • Per ADA funding with fewest strings possible • Grant writing expertise not required • As little bureaucracy as possible • Keeps Energy Commission and PUC in consultative roles only. • Job related provisions should be linked to the energy work directly, not a fund to simply be directed to workforce development generally. • All proposals have end of project reporting and bill language related to Citizens Oversight Board. www.capitoladvisors.org

12. Outlook for the May Revision • Governor’s influence never stronger • Education focus is politically defensible • Per ADA approach is unfortunately vulnerable • Both bills & LAO reject this approach • Small school districts argument is double edged • Almost every district can use these funds for some form of energy efficiency. • Local control versus biggest possible projects www.capitoladvisors.org

13. Energy Efficiency Efforts That Likely Fit • Reducing overall energy load first • Real state-of-the-art energy efficient infrastructure • Education on efficiency measures everyone can take • Renewable focus comes next • Solar projects – What helps and what doesn’t • Leveraging every resource • Public Utilities • Investor Owned Utilities (IOUs) • Bond Augmentation • Data proven results for accountability process www.capitoladvisors.org