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CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION
96
Introduced by Assembly Member McKinnor
(Coauthors: Assembly Members Addis, Ahrens, Bryan, Connolly, Elhawary, Gipson, Haney, Jackson, Kalra, Lee, Lowenthal, and Schultz)
December 2, 2024
An act to amend Section 83 of Chapter 48 of the Statutes of 2013, add Chapter 3.15 (commencing with Section 41475) to Part 24 of Division 3 of Title 2 of the Education Code, relating to education finance.
Vote: majority Appropriation: no Fiscal committee: yes Local program: yes
LEGISLATIVE COUNSEL’S DIGEST
Existing law authorizes the governing board of a school district that determines during a fiscal year that its revenues are less than the amount necessary to meet its current year expenditure obligations to request an emergency apportionment through the Superintendent of Public Instruction, subject to specified requirements. Existing law authorizes emergency apportionments to be provided through an interim loan from the General Fund and lease financing made available by the California Infrastructure and Economic Development Bank, which is authorized to issue bonds for purposes of the emergency apportionments and related costs, or as an alternative to lease financing, as an emergency apportionment from the General Fund. Existing law prescribes the financing conditions on emergency apportionments, including the calculation of the interest rate. Existing law also includes specific
requirements, including the calculation of the interest rate, for the outstanding emergency apportionment made to Inglewood Unified School District.
Existing law, notwithstanding any other law, authorizes the Inglewood Unified School District, through the State Department of Education, to request cashflow loans from the General Fund for a total of up to $55,000,000 for emergency operational purposes, as provided. Existing law requires the interest on these loans to be charged at the annual rate of return of the Pooled Money Investment Account, plus an additional 2%.
This bill, notwithstanding any other law, and once the Inglewood Unified School District has successfully repaid at least 10 years of a General Fund cashflow loan made pursuant to those provisions, would authorize the school district to seek, and would require the Department of Finance to grant, a waiver of interest on that loan for the next succeeding fiscal year if specified conditions are met, including, among other conditions, that the Los Angeles County Superintendent of Schools, in consultation with the County Office Fiscal Crisis and Management Assistance Team, determines that the school district is making substantial progress towards fiscal solvency and that a waiver of interest would help the school district to exit receivership, as provided. In each subsequent fiscal year, the bill would authorize the school district to seek, and would require the Department of Finance to grant, a subsequent waiver of interest for the applicable fiscal year if the school district again meets those same requirements. To the extent the bill would impose additional duties on the Los Angeles County Superintendent of Schools, the bill would impose a state-mandated local program.
This bill would make legislative findings and declarations as to the necessity of a special statute for the Inglewood Unified School District.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.
The people of the State of California do enact as follows:
SECTION 1.
Chapter 3.15 (commencing with Section 41475) is added to Part 24 of Division 3 of Title 2 of the Education Code, to read:
Chapter 3.15. General Fund Cashflow Loan Repayment for Inglewood Unified School District
41475.
(a) Notwithstanding any other law, once the Inglewood Unified School District has successfully repaid at least 10 years of a General Fund cashflow loan made pursuant to Section 83 of Chapter 48 of the Statutes of 2013, as amended by Section 57 of Chapter 357 of the Statutes of 2013, the school district may seek, and the Department of Finance shall grant, a waiver of interest on that loan for the next succeeding fiscal year if both of the following conditions are met:
(1) In conjunction with the filing of the school district’s second interim financial report pursuant to Section 42130, the Inglewood Unified School District notifies the Los Angeles County Superintendent of Schools and the County Office Fiscal Crisis and Management Assistance Team of their intent to seek a waiver of interest for the next succeeding fiscal year. A copy of the notification shall also be sent, consistent with Section 9795 of the Government Code, to the Assembly Committee on Education, the Senate Committee on Education, the Assembly Committee on Budget, the Senate Committee on Budget and Fiscal Review, and the Department of Finance.
(2) The Los Angeles County Superintendent of Schools, in consultation with the County Office Fiscal Crisis and Management Assistance Team, determines that the school district is making substantial progress towards fiscal solvency and a waiver of interest would help the school district to exit receivership, based on the successful completion of all of the following:
(A) Meeting the requirements for qualified or positive certification for the school district’s second interim report pursuant to Article 3 (commencing with Section 42130) of Chapter 6.
(B) Completing comprehensive operational reviews that compare the needs of the school district with similar school districts and provide data and recommendations regarding changes the school district can make to achieve fiscal sustainability.
(C) Undergoing an annual independent audit pursuant to Section 41020 and submitting a fiscal recovery plan to the Los Angeles County Superintendent of Schools detailing the steps taken to address any material weaknesses or internal control deficiencies.
(b) For each subsequent fiscal year after the initial waiver of interest, the Inglewood Unified School District may seek, and the Department of Finance shall grant, a subsequent waiver of interest for the applicable fiscal year if the school district again meets the requirements of paragraphs (1) and (2) of subdivision (a) for each waiver.
SEC. 2.
The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique circumstances relating to the fiscal emergency in the Inglewood Unified School District.
SEC. 3.
If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.
Section 83 of Chapter 48 of the Statutes of 2013, as amended by Section 57 of Chapter 357 of the Statutes of 2013, is amended to read:
Sec. 83.
(a) Notwithstanding any other law, the Inglewood Unified School District, through the State Department of Education, may request cashflow loans from the General Fund for a total of up to fifty-five million dollars ($55,000,000) for emergency operational purposes.
(b) Unless otherwise specified in this section, the terms and conditions of any General Fund cashflow loan provided pursuant to this section shall be subject to approval by the Director of Finance and shall be consistent with the terms and conditions of the General Fund emergency apportionment issued pursuant to Chapter 325 of the Statutes of 2012. The terms and conditions of the General Fund cashflow loan shall include authorization for the payment of costs incurred before June 15, 2013, by the California Infrastructure and Economic Development Bank to implement Section 10 of Chapter 325 of the Statutes of 2012. Notwithstanding the interest rates specified in the terms and conditions of the General Fund loan issued pursuant to Chapter 325 of the Statutes of 2012, the interest on these loans shall be charged at the annual rate of return of the Pooled Money Investment Account, plus an additional 2 percent until December 31, 2025, and commencing January 1, 2026, the interest rate shall be 0 percent.
(c) Once a General Fund cashflow loan is approved pursuant to this section, and upon the order of the Director of Finance, the Controller shall draw warrants against General Fund cash to the Inglewood Unified School District to provide a cashflow loan.
(d) Upon approval of a General Fund cashflow loan pursuant to this section, a repayment schedule shall be determined by the Department of Finance. If a required payment is not made within 60 days after a scheduled date, upon order of the Department of Finance, the Controller shall pay the defaulted General Fund cashflow loan repayment by withholding that amount from the next available payment that would otherwise be made to the county treasurer on behalf of the school district pursuant to Section 14041 of the Education Code.
(e) The Department of Finance shall notify the Legislature within 15 days of authorizing a General Fund cashflow loan pursuant to this section.
(f) A cashflow loan from the General Fund authorized by this section does not constitute budgetary expenditures. A cashflow loan, and the repayment of a cashflow loan, made under this section shall not affect the General Fund reserve.
(g) Issuance of a General Fund cashflow loan authorized pursuant to this section shall require the Inglewood Unified School District to abide by all provisions associated with the issuance of the emergency loan specified in Chapter 325 of the Statutes of 2012, including those cited in Article 2 (commencing with Section 41320) and Article 2.5 (commencing with Section 41325) of Chapter 3 of Part 24 of Division 3 of Title 2 of the Education Code.
(h) As a condition of requesting a General Fund cashflow loan pursuant to this section, the Inglewood Unified School District shall repay the twenty-nine million dollar ($29,000,000) General Fund loan issued pursuant to Chapter 325 of the Statutes of 2012 from the proceeds of the school district’s initial request for a General Fund cashflow loan.