Proposition 39 Implementation Coming With or Without Required Regulations

The California Department of Education and the California Energy Commission today issued a press release informing all Local Educational Agencies (“LEAs”) with Average Daily Attendance (“ADA”) of less than 1,000 that they have until August 1, 2013 to apply for Proposition 39 funding comprising a combined funding allocation for the current and following year to be received in a lump sum allocation in the current year.  This notice comes ahead of completion of the regulatory drafting, public input and adoption process required under the California Administrative Procedures Act.  Nonetheless, small LEAs should go through the online application process and then start planning to use those funds, while anticipating what the rules are going to look like.

While several bills, each with markedly different provisions were swirling through both the Senate and Assembly, the bill that ultimately passed into law implementing Prop 39 was SB 73, a budget trailer bill, which added several new sections to the Public Resources Code. Those sections allocate the funds among K-14 educational agencies, and authorize and direct the California Energy Commission (“CEC”) to promulgate new regulations, in consultation with the California Department of Education (“CDE”) for K-12 agencies and County Offices of Education and with the California Community College Chancellor’s Office (“CCCCO”) relative to Community Colleges. While SB 73 outlines what CEC is supposed to issue rules and regulations on, those regulations and rules are yet to come.

We have been told by the School Energy Coalition that they have heard the goal among CEC and CDE is to have draft guidelines out around a September timeframe, in hope of finalizing regulations perhaps in December.  However, that would be at breakneck speed and there are going to be important issues at stake.

Under Public Resources Code section 26235, the CEC, in consultation with the CDE, CCCCO, and the Public Utilities Commission, is required to establish guidelines for:

(1) Standard methods for estimating energy benefits;

(2) Contractor qualifications, licensing, and certifications appropriate for the work to be performed;

(3) Project evaluation;

(4) Ensuring that adequate energy audit, measurement, and verification procedures are employed;

(5) Achievement of the maximum feasible energy efficiency or clean energy benefits, as well as job creation benefits for Californians; and,

(6) Where applicable, ensuring LEAs assist classified school employees with training and information to further energy savings from Prop 39 projects.

Those rules are likely to impact whether the money can be spent on a particular project, and on what aspects of the project – energy auditing, project design, project implementation – the funds may be used.  However, in the meantime, if you are a small LEA, with ADA less than 1,000, you should go to the CDE online application portal to apply to get your two-year lump sum allocation, which may enable a small LEA to do a much more substantial and beneficial project than only one year’s worth of allocation.

At this point, CEC is not asking for project details and is urging LEAs not to make any commitments (enter into any binding agreements) dependent on Prop 39 funds.  Among various issues that may yet be impacted by the coming regulations is whether Prop 39 funds can be used for the energy audits that will be required under coming CEC guidelines.  Nonetheless, for small LEAs, the time to make your initial funding application is now, ahead of the August 1, 2013 deadline.

Atkinson, Andelson, Loya, Ruud & Romo has been serving local educational agencies around the state for over 30 years, bringing expertise to the issues these agencies face.  We are the leader in public works and energy conservation contracting for local educational agencies, tracking the law in these areas as it develops and keeping public agencies informed. We will continue to track these and other issues and update you as key developments happen.

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