The Office of Public School Construction (OPSC), under the authority of the  Department of General Services, is the administrative staff to the State Allocation Board (SAB). It implements and administers a $35 billion voter-approved school facilities construction program. The office also develops regulations, policies and procedures to carry out the board’s mandates as well as advising it on policy and legislative implementation. The board and office are technically separate, but so deeply intertwined that it is regularly suggested that the two be formally combined into a single entity. The office is transitioning, along with DGS, from the State and Consumer Services Agency to the new Government Operations Agency by July 1, 2013, as part of a larger government reorganization.

The State Allocation Board: Improving Transparency and Structure (Little Hoover Commission) (pdf)

Directory of Services (pdf)

Up until the mid-1900s, California school construction and modernization projects were funded almost entirely with local revenue. State involvement in the system emerged with the creation of the State Allocation Board in 1947, which was directed by the state Legislature to allocate state funds for school construction and renovation. 

Initially the board provided resources to the school districts through loan programs, which the districts repaid with money from property tax revenues. School districts also used money raised through local school bonds to finance construction projects. The board was assisted by the Local Allocation Division in the Department of Finance. In 1963, the division was transferred to the newly-created Department of General Services and renamed the Office of Local Assistance. (It would later be renamed, once again, as the Office of Public School Construction.)

Since then, school facility finance has evolved from a locally-financed system to a system best described as a partnership between local school districts and the state.

After passage of Proposition 13 in 1978, most of the spending decisions on construction for local school districts shifted to the state. Property tax revenues evaporated and local governments were hard-pressed to pay back their existing loans to the state, much less finance new construction costs. Thus began a shift to the grant-based construction programs that exist today.

California’s $3.8 billion surplus quickly shrank to $1 billion as state lawmakers established a $2.8 billion bailout program to prevent local loan defaults and began conjuring up new ways of getting school construction money to the local level.

A recession in the early 1980s, an increase in school enrollment and an aging infrastructure—about one-third of the state’s schools were more than 30 years old—forced the state to rethink its school construction system. The Office of Local Assistance designed a numerical ranking system to help set funding priorities and school districts were encouraged to adopt year-round schooling to reduce the need for new facilities.

Prop. 13 was amended in 1986 by Prop. 46 to allow local governments, including school districts, to issue their own general obligation bonds and levy a property tax to pay the debt service. It required a two-thirds vote of the electorate and many school districts fell short. By 1988, this shortfall in construction had grown to $4 billion as school districts competed with each other for dwindling dollars. 

A “three-legged stool” concept was ballyhooed as the funding answer for schools. State bond initiatives and local tax and bond efforts were to be joined by private developer fees on new housing. It never quite worked.

The Legislature created a series of new priority rating systems for doling out money throughout the 1990s as voters approved a series of bond initiatives.

In 1991, the Auditor General reported that the Office of Local Assistance had mismanaged state funds by not collecting on loans, overpaying districts on projects, dispersing funds without proper documentation and failing to conduct required close-out audits on projects.

The State Allocation Board and the office responded by developing new, strict internal audit and fiscal controls requiring far-more labor intensive project reviews. In 1994, the Office of Public School Construction received the name it goes by today.

Although K-thru-12 enrollment has held steady over the decade ending in 2010, population shifts from urban areas to the suburbs and inland counties continue to fuel the need for school construction. The state approved $29 billion in bonds during that period, with nearly 64% for new construction and about 31% for modernization. During the same period, voters have approved $61 billion in local general obligation bonds for school facilities.

Financing School Facilities in California (by Eric J. Brunner, Quinnipiac University) (pdf)

School Facility Financing: A History of the Role of the State Allocation Board and Options for the Distribution of Proposition 1A Funds (by Joel Cohen, California Research Bureau) (pdf)

A History of the Role of the State Allocation Board and Options for the Distribution of Proposition 1A Funds (by Joel Cohen, California Research Bureau) (pdf)

A Ten-Year Perspective: California Infrastructure Spending (Legislative Analyst’s Office)

The Office of Public School Construction, as staff for the State Allocation Board, administers the School Facility Program—an umbrella program consisting of multiple endeavors. The office also administers other programs for the board as well as helps school districts meet criteria for state funding.

OPSC’s responsibilities include: processing and funding school facility construction grant applications; assisting school districts throughout the life cycle of a school facilities construction project; auditing school facility construction project expenditures; providing accounting and reconciliation functions; providing administrative support for the board; and preparing regulations, policies and procedures in order to carry out the mandates of the board.

OPSC prepares agendas for the board meetings to keep record of all past and present board actions. Stakeholders use the agenda to track the progress of specific projects and/or availability of funds. The State Controller’s Office uses the agenda for the appropriate release of funds.

Its programs and services under the School Facility Program include: new-construction grants; modernization grants; funding for career technical education; funding for charter school facilities; special funding for critically overcrowded schools; deferred maintenance funds for major school repair or replacement; grants or reimbursement for emergency repairs; facility hardship grants for those that face an immediate health or safety threat, or have been impacted by a natural disaster; funding for districts with proven financial hardship; high performance incentive grants for projects that make use of special designs and materials (such as energy efficient materials); funds for projects that have a joint use beyond school facility; overcrowding relief grants to encourage a reduction in portable classrooms; financial encouragement for seismic mitigation of the “most vulnerable” facilities; and an unused site program requiring districts to pay a fee for properties not used for school purposes.

Programs and Services (Office of Public School Construction)

An Overview of State School Facility Programs (State Allocation Board and Office of Public School Construction) (pdf)

The Office of Public School Construction oversees a $35 billion voter-approved school facilities program.

Proposition 1D in 2006 authorized $10.4 billion in general obligation bonds, $7.3 billion of which was earmarked for K-thru-12. About 45% of that was for modernization, 26% was for new construction, 13.6% was for overcrowding relief, 6.8% was for charter schools and 6.8% was for vocational schools.

Proposition 55 in 2004 authorized $10 billion in general obligation bonds. About half was for new construction, 24.4% was for critically overcrowded schools and 22.5% was for modernization.

Proposition 47 in 2002 authorized $11.4 billion in bonds. About 55% was for new construction, 29% was for modernization and 14.9% was for critically overcrowded schools.

Proposition 1A in 1998 authorized $6.7 billion in bonds. About 43.3% was for new construction, 31.3% was for modernization, 14.9% was for hardship grants and 10.4% was for class-size reduction.

OPSC announced in December 2011 State Allocation Board-approved funding of $923.8 million for 377 school construction projects in 154 school districts statewide. 

3-Year Budget (pdf)

Bond Fund Oversight Criticized

The Department of Finance leveled sharp criticism at the Office of Public School Construction (OPSC) in July 2011 after reviewing its handling of more than $7 billion in bond money.

California voters passed Proposition 1D in November 2006, authorizing general obligation bonds totaling $10.4 billion for school construction and renovation. Of that, $7.3 billion was earmarked for K-12 projects.

The State Allocation Board authorized doling out the money and OPSC administered the funds. But when Department of Finance auditors took a look at the school projects, they didn’t like what they saw. Five of the 26 projects were approved without sufficient documentation and didn’t follow established appeals procedures.

The auditors also found that only 6% of 744 high-risk projects closed between September 2009 and August 2010 were audited, representing $4 billion in costs that didn’t get proper oversight. They also found that OPSC was not properly keeping track of its account receivables or pursuing those that were delinquent.  

OPSC was not enforcing state law requiring school districts to annually submit project spending data, nor verify the data when it was submitted. The auditors found $15.3 million that should have been collected, but wasn’t, and instances where money was awarded to schools although they hadn’t yet spent money previously given them.

Acting OPSC Director Lisa Silverman agreed with the findings had merit, but pointed out that the office was short-handed, with just 26 in-house auditors and 12 vacancies.

Auditors Criticize State Oversight of School Construction Bonds (by Corey G. Johnson, California Watch)

California Audit Finds Major Lapses in Oversight for School Bond Funds (by Randall Jensen, The Bond Buyer)

An Audit of Bond Funds (Department of Finance) (pdf)            

An “Irrational” Governing Structure

The Office of Public School Construction is the staff of the State Allocation Board, and together the two lie in a no-man’s land between the executive and legislative branches of government. The independent Little Hoover Commission found the arrangement so confusing that it had to request a formal opinion from the Office of Legislative Counsel that the State Allocation Board was actually in the executive branch before embarking upon a requested study of its structure and function.

The board was created in 1947 as the policy-level body in charge of school construction. It was run by seven members, four picked by the Legislature and two heads of executive branch agencies and the superintendent of public schools. It was chaired by the Department of Finance director. Staff assistance was originally provided by the Department of Finance, although those duties were eventually shifted to the Department of General Services and performed by what would become the Office of Public School Construction.

The Little Hoover Commission said the board had a “governance structure that could not be described by a normal organizational chart, and one exacerbated by changes made for political reasons, not with the goal of improving educational outcomes for California students.” It called the arrangement “irrational.”

The board and the office share an executive officer who is appointed by the governor but serves at the pleasure of the Department of General Services director. The State Allocation Board, now expanded to 10 members, has a majority of legislative appointees (six) and picks its own assistant executive officer.

In effect, the board has an executive branch function with a legislative majority that relies on a different executive agency for its staff. No other executive board or commission in California state government has a legislative majority. Each branch of government has its own executive vying for control of the board. The Little Hoover Commission found this arrangement in 2007 to be confusing and potentially ruinous if political struggles break out, although it found that, in general, the board had functioned well throughout its 60-year history.  

The commission recommended an 11-member board: the Department of Finance director, the Department of General Services director, the Superintendent of Public Instruction, four chosen by the governor and four by the Legislature. It also said the Office of Public School Construction staff and functions should be transferred from the Department of General Services to the State Allocation Board. The board should hire its own executive officer and the assistant executive officer should be eliminated.

The recommendations were not acted upon.

Governance Structure of the State Allocation Board (Little Hoover Commission) (pdf)

Rob Cook, 2007-2010

Lori L. Morgan, 2007 (acting)

Luisa M. Park, 1999-2006

Ted Dutton, 1996-1999

Oscar Wright, 1994-1996