AB 745

AB745:v94#DOCUMENT

Bill Start

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Assembly Bill

No. 745

An act to amend Section 748.5 of the Public Utilities Code, relating to electricity. An act to amend Sections 35560 and 35753 of, and to add Section 35555.5 to, the Education Code, and to add Section 50079.4 to the Government Code, relating to school district reorganization.

LEGISLATIVE COUNSEL'S DIGEST

AB 745, as amended, Irwin. Electricity: climate credits. School districts: reorganization: state board approval: qualified special taxes.

(1) Upon receipt of a petition or resolution seeking reorganization of a school district, existing law requires a county committee on school district reorganization to hold one or more public hearings on the petition or resolution and, following the hearing or hearings, to grant or deny the petition. If the county committee grants the petition, existing law requires it to adopt a tentative recommendation and hold one or more further public hearings in the area proposed for reorganization. Following the last public hearing, existing law authorizes the county committee to adopt a final recommendation and requires the county committee to (A) transmit that recommendation with the petition or resolution to the State Board of Education for hearing, (B) transmit the petition to the state board and order the reorganization granted, or (C) transmit the petition to the state board and order that an election be held. Existing law authorizes an action of the county committee under (B) or (C) to be appealed to the state board, as specified.Existing law authorizes the state board to approve proposals for the reorganization of school districts if the state board determines that certain conditions are substantially met, and also authorizes the state board to approve a proposal for the reorganization of school districts if the state board determines that it is not practical or possible to apply the specified criteria literally, and that the circumstances with respect to the proposal provide an exceptional situation sufficient to justify approval of the proposal. If the state board approves the plans and recommendations for the unification or other reorganization of the school districts in any area, existing law requires the county superintendent of schools, within 35 days after being notified of that approval, to call an election in the territory of the districts as determined by the state board, as specified.This bill, notwithstanding any other law, and until January 1, 2030, would authorize the state board to approve a proposal for the reorganization of school districts if the governing board of a school district that is an excess tax entity, as specified, with an enrollment of fewer than 10,000 pupils and the governing board or body of a city, county, special district, or local agency formation commission with a population of more than 10,000 residents that adopted a resolution seeking reorganization of the original school district, have executed one or more legally binding and enforceable written agreements intended to effectuate the reorganization, and the state board determines that the agreements satisfactorily address the specified criteria and provide an exceptional situation sufficient to justify approval of the proposed reorganization.(2) Existing law prohibits the reorganization of a school district or districts from affecting the classification of certificated employees already employed by a school district affected by the reorganization and from affecting the rights of persons employed in positions not requiring certification qualifications to retain the salary, leaves, and other benefits that they would have had if the reorganization had not occurred. Existing law requires that persons employed in positions not requiring certification qualifications in a school district whose territory is included in a unification of districts continue as employees of the unified school district for not less than 2 years and prohibits those persons from being deprived, by reason of the unification, of any benefit that they would have had if the unification had not taken place.When a school district is reorganized as described in this bill, the bill would (A) require, in addition to the above-prescribed prohibitions, both permanent and probationary certificated and noncertificated employees who elect to remain employees of reorganized portion of the divided district to have the same rights as persons employed in positions not requiring certification qualifications in a school district whose territory is included in a unification of districts, including, but not limited to, continuing as employees of the reorganized portion of the divided district for not less than 2 years and (B) require, notwithstanding any other law, any collective bargaining agreement in effect immediately before the effective date of reorganization to remain in full force and effect until the expiration or renewal of the agreement, as specified.(3) When a school district is reorganized and the allocation of funds, property, and obligations are not fixed by terms, conditions, or recommendations as provided by law, existing law requires the funds, property, and obligations of a former district to be allocated in a specified manner. Existing law authorizes a school district to impose qualified special taxes, as defined, subject to specified constitutional and statutory provisions.When a school district is reorganized as described in this bill, the bill would authorize the reorganized portion of the divided school district and the remaining portion of the divided school district, as defined, to continue to impose within their respective geographical boundaries any qualified special taxes imposed in the boundaries of the original school district, as defined, before it was divided.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The California Global Warming Solutions Act of 2006 authorizes the state board to include the use of market-based compliance mechanisms in regulating those emissions. The implementing regulations adopted by the state board provide for the direct allocation of greenhouse gas allowances to electrical corporations pursuant to a market-based compliance mechanism.

Existing law vests the Public Utilities Commission with regulatory jurisdiction over public utilities, including electrical corporations. Existing law, except as provided, requires revenues received by an electrical corporation as a result of the direct allocation of greenhouse gas allowances to be credited directly to residential, small business, and emissions-intensive trade-exposed retail customers of the electrical corporation, commonly known as the California Climate Credit.

This bill would require the credit provided to residential customers of an electrical corporation to be provided on the bills of those customers for the months of July, August, and September of each year, or as otherwise directed by the commission to address extreme, unforeseen, and temporary circumstances. The bill would require the credit to be volumetric, rather than independent of consumption.

Under existing law, a violation of the Public Utilities Act, or of an order, decision, rule, direction, demand, or requirement of the commission, is a crime.

Because the provisions of this bill would be part of the Public Utilities Act, and a violation of a commission action implementing its requirements would be a crime, the bill would impose a state-mandated local program.

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 no reimbursement is required by this act for a specified reason.

Digest Key

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YESNO

Bill Text

The people of the State of California do enact as follows:

SECTION 1. The Legislature finds and declares both of the following:(a) The criteria set forth in Section 35753 of the Education Code are intended to ensure sound fiscal management, equitable division of assets and liabilities, protection of educational programs, avoidance of discrimination, and orderly governance transition in school district reorganizations.(b) Legally binding and enforceable agreements between affected public entities provide concrete and reliable mechanisms to address, resolve, or mitigate deficiencies identified under those criteria.

SEC. 2.

Section 35555.5 is added to the Education Code, to read:

35555.5. In addition to the protections specified in Sections 35555 and 35556, both of the following shall apply to a reorganization approved by the state board pursuant to subdivision (c) of Section 35753:(a) Both permanent and probationary certificated and noncertificated employees who elect to remain employees of reorganized portion of the divided district shall have the same rights as described in Section 45121, including, but not limited to, continuing as employees of the reorganized portion of the divided district for not less than two years.(b) (1) Notwithstanding any other law, any collective bargaining agreement in effect immediately before the effective date of reorganization shall remain in full force and effect until the expiration or renewal of that agreement.(2) A collective bargaining agreement described in paragraph (1) shall be binding on both the remaining portion of the divided district and the reorganized portion of the divided district and shall apply to all employees who elect to stay with remaining portion of the divided district or who are transferred to or become employees of the reorganized portion of the divided district, to the same extent and under the same terms and conditions as if the reorganization had not occurred.(3) If a reorganization results in the fragmentation or combination of bargaining units, the Public Employment Relations Board shall have jurisdiction to determine appropriate bargaining units, but any determination by the Public Employment Relations Board shall not impair the continued validity and enforceability of an existing collective bargaining agreement under this section.

SEC. 3.

Section 35560 of the Education Code is amended to read:

35560.

When a school district is reorganized, both of the following shall apply:

(a) When the allocation of funds, property, and obligations is not fixed by terms, conditions, or recommendations as provided by law, the funds, property, and obligations of a former district, except for bonded indebtedness, shall be allocated as follows:

(1) The real property and personal property and fixtures normally situated thereat shall be the property of the district in which the real property is located.

(2) All other property, funds, and obligations, except bonded indebtedness, shall be divided pro rata among the districts in which the territory of the former district is included. The basis for the division and allocation shall be the assessed valuation of the part of the former district which that is included within each of the districts.

(b) Any qualified special taxes may continue to be imposed pursuant to Section Sections 50079.2 and 50079.4 of the Government Code.

SEC. 4.

Section 35753 of the Education Code is amended to read:

35753.

(a) The state board may approve proposals for the reorganization of school districts, districts if the state board has determined, with respect to the proposal and the resulting school districts, that all of the following conditions are substantially met:

(1) The reorganized school districts will be adequate in terms of number of pupils enrolled.

(2) The school districts are each organized on the basis of a substantial community identity.

(3) The proposal will result in an equitable division of property and facilities of the original school district or school districts.

(4) The reorganization of the school districts will preserve each affected district’s ability to educate pupils in an integrated environment and will not promote racial or ethnic discrimination or segregation.

(5) Any increase in costs to the state as a result of the proposed reorganization will be insignificant and otherwise incidental to the reorganization.

(6) The proposed reorganization will continue to promote sound education performance and will not significantly disrupt the educational programs in the affected school districts.

(7) Any increase in school facilities costs as a result of the proposed reorganization will be insignificant and otherwise incidental to the reorganization.

(8) The proposed reorganization is primarily designed for purposes other than to significantly increase property values.

(9) The proposed reorganization will continue to promote sound fiscal management and not cause a substantial negative effect on the fiscal status of the affected school district.

(10) Any other criteria that the state board may, by regulation, prescribe.

(b) The state board may approve a proposal for the reorganization of school districts if the state board determines that it is not practical or possible to apply the criteria of this section literally, and that the circumstances with respect to the proposals provide an exceptional situation sufficient to justify approval of the proposals.

(c) (1) Notwithstanding any other law, the state board may approve a proposal for the reorganization of school districts if the governing board of the original school district and the governing board or body of the petitioner pursuant to subdivision (c) of Section 35721 have executed one or more legally binding and enforceable written agreements intended to effectuate the reorganization and the state board determines that the agreements satisfactorily address the criteria specified in subdivision (a) and provide an exceptional situation sufficient to justify approval of the proposed reorganization. Notwithstanding the agreements, the state board shall have final authority to approve the proposal for reorganization.(2) Paragraph (1) shall apply only to an original school district that is an excess tax entity pursuant to subdivision (o) of Section 42238.02 with an enrollment of fewer than 10,000 pupils and a petitioner pursuant to subdivision (c) of Section 35721 whose population is greater than 10,000 residents.(3) This subdivision shall become inoperative on January 1, 2030.(d) The inoperability of subdivision (c) as of January 1, 2030, does not invalidate, modify, or otherwise affect the reorganization of school districts approved by the state board pursuant to subdivision (c) before January 1, 2030.

SEC. 5.

Section 50079.4 is added to the Government Code, to read:

50079.4. Notwithstanding any other law, when a school district is reorganized to divide a school district pursuant to subdivision (c) of Section 35753 of the Education Code, the reorganized portion of the divided district and the remaining portion of the divided district, as defined in Section 35514 of the Education Code, may continue to impose within their respective geographical boundaries any qualified special taxes imposed in the boundaries of the original district, as defined in Section 35514 of the Education Code, before it was divided.

SECTION 1.Section 748.5 of the Public Utilities Code is amended to read:

748.5.

(a)(1)Except as provided in subdivision (c), the commission shall require revenues, including any accrued interest, received by an electrical corporation as a result of the direct allocation of greenhouse gas allowances to electric utilities pursuant to subdivision (b) of Section 95890 of Title 17 of the California Code of Regulations to be credited directly to the residential, small business, and emissions-intensive trade-exposed retail customers of the electrical corporation.

(2)The credits provided to residential customers of an electrical corporation shall be provided on the bills of those customers for the months of July, August, and September of each year, or as otherwise directed by the commission to address extreme, unforeseen, and temporary circumstances.

(3)The credit provided to residential customers of an electrical corporation shall be volumetric, rather than independent of consumption.

(b)Not later than January 1, 2013, the commission shall require the adoption and implementation of a customer outreach plan for each electrical corporation, including, but not limited to, such measures as notices in bills and through media outlets, for purposes of obtaining the maximum feasible public awareness of the crediting of greenhouse gas allowance revenues. Costs associated with the implementation of this plan are subject to recovery in rates pursuant to Section 454.

(c)The commission may allocate up to 15 percent of the revenues, including any accrued interest, received by an electrical corporation as a result of the direct allocation of greenhouse gas allowances to electrical distribution utilities pursuant to subdivision (b) of Section 95890 of Title 17 of the California Code of Regulations, for clean energy and energy efficiency projects established pursuant to statute that are administered by the electrical corporation, or a qualified third-party administrator as approved by the commission, and that are not otherwise funded by another funding source.

SEC. 2.

No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.