AB247 was amended on June 29, 2024 and was heard by the Senate Education Committee on Monday, July 1. The amendment makes minor changes to the point structure proposed in AB247, sets $10 billion as the bond amount ($8.5 billion for K-12 and $1.5 billion for community colleges), adds a requirement that applicant districts have a 5-year facilities master plan, and clarifies provisions around funding for TK facilities and climate resilience efforts.

Overall, our previous analysis of AB247 still holds: the bill does not meaningfully address the serious equity concerns that we and others have raised about the distribution of state funds. Figure 3 from our May 2024 analysis demonstrates this:

We were hopeful that the advocacy and research around facilities equity would lead to a bill that included meaningful changes in the state matching formula to support low-wealth school districts. AB247 will likely increase the share of funding to small school districts (defined as fewer than 2,501 students in the law), but that will include many high-wealth districts who already have access to a disproportionate share of state aid.

We are relieved that there is a school facilities bond being put forward at this late hour. $8.5 billion is still not enough to address the backlog of TK-12 facilities needs in California, but it's a vital investment that California students desperately need. That said, we want to emphasize that the 60-65% sliding scale proposed in AB247, as we have analyzed extensively, does not address the equity concerns raised by many advocates over the years. The additional 1-5% in state match funding for some districts is simply not large enough to make a difference in the fact that districts with low property wealth are disadvantaged by their inability to raise sufficient local funds. Under these rules, California will continue to be out of step with the progressive structure other states use to support local district facilities.

Sliding scale

To recap: the current program requires local districts to provide 40% of the funding for a project, usually raised by local bond measures. The state then provides a flat 60% match. The original version of AB247 sliding scale formula provides 1-4 points based on bonding capacity per student, 2-8 points based on unduplicated pupil percentage, and 1 point for districts of 200 students or fewer.

The relationship between points and local/state share is as follows:

Points	Modernization local contribution	New construction local contribution
11-13 points	35%	45%
9-10 points	37%	47%
8 points	38%	48%
6-7 points	39%	49%
< 6 points	40% (no change)	50% (no change)

The points structure, as pointed out in previous analysis, has two shortcomings:

1. It doesn’t adequately tie the state match to district property wealth, which is the most important driver of disparities in state facility funding. The other ways to get points make bonding capacity per student less important. 
2. The 60-65% scale simply does not reflect the vast differences in property wealth and capacity. Other states use scales from 0-100%, 20-80%, 30-80%, etc. Our modeling shows that 60-65% would make only a tiny difference in the amount of state funding received per student for low-wealth districts. 

The amendment makes two changes to the previous structure:

• Changes the points for districts of 200 or fewer students to 2 points instead of 1.
• Adds a criteria of Project Labor Agreement for an additional 2 points. (This change will primarily boost large urban districts. Only about a quarter of school construction projects are built under PLAs, and most of those are in LAUSD.)

Neither of these changes are targeted to direct more state aid to low-wealth, low-income districts. But it’s important to emphasize that the points structure itself matters less than the fact that the 1-5% increase for districts with higher numbers of points will not make any substantial difference in the distribution of state aid by district wealth.

Helping small school districts:

• The bill requires that 10% of funds be set aside for small school districts (enrollment below 2,501). (Note that the median district size in California is 2,009 students, so this 10% is set aside for the majority of districts.) The median size of districts that received SFP funding in our dataset is 2,578. The 10% set-aside will likely increase funding going to small districts: 377,966 of students are in small districts; 6% of total state enrollment. Small districts received less than 7.5% of SFP modernization funding from 1998-2023. More small districts will also qualify for financial hardship funding under the new $15 million in bonding capacity threshold. 
• Very small districts of 200 or fewer students get 2 points toward their sliding scale; note however that all but 12 of those districts would also qualify for financial hardship under the criteria of $15,000,000 bonding capacity or less. While it is reasonable to assume that very small districts have fewer administrative staff and face more hurdles applying for SFP funds, it is not the case that they are disproportionately low-wealth.

One of our recommendations was to expand the financial hardship program, which over the past 25 years constituted barely 3% of awarded funding. 

• There is still no set-aside for financial hardship.
• The staff analysis in the agenda packet states that the bill simplifies the financial hardship process, but the bill does not make that clear and there was no clarification of this during the hearing.
• Increasing the financial hardship threshold from $5 million to $15 million of overall bonding capacity, as we demonstrated before, does not help low-wealth districts or high-need students, although it does help small districts.
• [Post-hearing update]: During the hearing, financial hardship was repeatedly raised as a solution for districts with low bonding capacity. The history of the SFP program and the language of AB247, however, does not support this claim. Only a tiny percentage of SFP funding from 1998-2023 went to the financial hardship program. Districts with very low wealth and high need per student do not automatically quality for financial hardship unless they are also very small. Our analysis in May 2024 illustrates this point: districts with bonding capacity above $15 million total but with very low bonding capacity per student have a median unduplicated pupil percentage of 87%. These are the districts that most need state support, but they are not included in the expanded criteria for financial hardship program.

We also pointed out that the first-come first-served makes it easier for better-resourced districts to access funds, rather than prioritizing funds for the highest-need and highest-priority facility projects. A couple of amendments in AB247 relate to this:

• There is a small amount of $5 million in technical assistance available to districts, which is intended to address the shortcomings of a first-come first-serve model, which tends to privilege districts with facilities staff. This amount will likely be exhausted quickly, and still allows well-resource districts to line up for funds quickly.
• The amended bill adds language requiring districts to have 5-year facility master plans in order to apply for SFP funding. Facility master plans are important and a helpful source of the information we believe is needed to better understand the facilities needs across the state, but this requirement may present another hurdle for districts without large facilities departments or the ability to pay consultants to develop such plans.