1. (a) The district is financially unable to provide all necessary matching funds for an eligible project. To determine this, an analysis shall be made of the district's financial records by the OPSC including data and records maintained by the CDE and the County Office of Education. The analysis shall consist of a review of the district's latest Independent Audit regarding funds available from all capital facility accounts, including, but not limited to, developer fees, funds generated from capital facility certificates of participation, federal grants, redevelopment funds, sale proceeds from surplus property, the appraised value of facilities approved for replacement pursuant to Section 1859.82, bond funds either encumbered, unencumbered or authorized but unsold, and savings from other SFP projects. All funds thus identified that have not been expended or encumbered by a contractual agreement for a specific capital outlay purpose prior to the initial request for Financial Hardship status shall be deemed available as a matching contribution.

   1. (1) Approved interim housing expenditures.
   2. (2) Funding to pay for previously recognized multi-year encumbrances approved at the initial Financial Hardship approval.
   3. (3) Funding that is transferred into a Special Reserve Fund and is used for the express purpose of the Federal Renovation Program when the amount expended out of that fund does not exceed the maximum Federal Renovation Grant amount.
   4. (4) Funding that is transferred into a Special Reserve Fund and is used for the express purpose of the School Facilities Needs Assessment Grant Program or Emergency Repair Program when the amount expended out of that fund does not exceed the maximum grant amount apportioned.
   5. (5) Funding that is transferred into a Special Reserve Fund and is used for the express purpose of the Career Technical Education Facilities Program when the amount expended out of that fund does not exceed the applicant's share of the maximum grant amount apportioned.
   6. (6) Funding that is transferred into a Special Reserve Fund and used for the express purpose of the Overcrowding Relief Grant when the amount expended out of that fund does not exceed the amount of the site acquisition and design costs of the project and the district has submitted an approved Form SAB 50-11.
   7. (7) Funding that is used for the express purpose of reimbursing the State a proportionate share of Financial Hardship received when there has been a transfer of a special education program and title to the facility. In addition, the funding was used within five years of the title transfer.
   8. (8) Funding to pay for obtaining a structural report pursuant to Section 1859.82.2 for an approvable and funded seismic mitigation project.

   9. (9) All other capital facility funding for a period of three years when no subsequent Financial Hardship request is made during this period, with the exception of the funding identified in (6). The three-year period begins with the date of the most recent Financial Hardship new construction or modernization adjusted grant funding apportionment.

      When Overcrowding Relief Grant funding is set aside pursuant to (6) and the School District has not submitted, or the OPSC has not accepted, a Form SAB 50-04 for an Overcrowding Relief Grant within three years from the date of deposit into the Special Reserve Fund, or the School District has not met the requirements in Sections 1859.90 or 1859.105, remaining funds plus interest accrued at the Pooled Money Investment Board rate at that time period shall be deemed available as matching contribution on a subsequent Financial Hardship project or be captured through an audit adjustment pursuant to Section 1859.106.

      The Financial Hardship analysis is subject to approval by the Board.

   After the initial request for Financial Hardship status is granted, no further encumbrances will be approved by the OPSC and all prospective revenue made available to the district's capital facility accounts shall be deemed available as matching contribution on the subsequent Financial Hardship review, with the exception of:

2. (b) From the funds deemed available as a matching contribution, the district may retain $19,776 per classroom in each enrollment reporting period for the cost to provide interim housing for the currently unhoused pupils of the district. The amount shown shall be adjusted annually in the manner prescribed in Section 1859.71. The number of classrooms needed for interim housing for the currently unhoused pupils shall be the sum of the positive numbers determined in (b)(7) as follows:

   1. (1) Determine the current enrollment of the district by grade level as shown on the latest Form SAB 50-01.
   2. (2) Determine the New Construction Grants apportioned by grade level for all SFP projects and LPP funded under the provisions of Sections 1859.12 or 1859.13 where the district has submitted Form SAB 50-06 indicating that the project is 100 percent complete.
   3. (3) Subtract (b)(2) from (b)(1).
   4. (4) Determine the number of classrooms by grade level reported in Part I, Line 8 on Form SAB 50-02.
   5. (5) Multiply the classrooms determined in (b)(4) by 25 for K-6, 27 for 7-12, 13 for Non-Severe and 9 for Severe.
   6. (6) Subtract the product determined in (b)(5) from the difference determined in (b)(3) by grade level.

   7. (7) Divide the difference by grade level determined in (b)(6) by 25 for K-6, 27 for 7-12, 13 for Non-Severe and 9 for Severe and round up to the nearest whole number.

      From the funds deemed available as a matching contribution, the district may also retain $19,776 per portable toilet unit in each reporting period for the cost to provide necessary interim toilet facilities for the currently unhoused pupils of the district. The amount shown shall be adjusted annually in the manner prescribed in Section 1859.71. The number of toilet facilities needed for interim housing shall be the sum of the positive numbers determined in (b)(7) divided by eight rounded up to the nearest whole number.

      From the funds deemed available as a matching contribution, the district may also retain $19,776 per classroom in each reporting period for the cost to provide necessary interim housing for the currently unhoused pupils displaced as a result of a Board approved seismic mitigation project pursuant to Section 1859.82.2. The amount shown shall be adjusted annually in the manner prescribed in Section 1859.71. The number of classrooms needed for interim housing shall be the quotient of the displaced pupils by 25 for K-6, 27 for 7-12, 13 for Non-Severe and 9 for Severe and round up to the nearest whole number.

      If the district's available funds, as determined by the OPSC analysis less costs for interim housing, is less than its matching share, the district will be deemed to have met the requirements of this Subsection.

3. (c) The district has made all reasonable efforts to fund its matching share of the project by demonstrating it is levying the developer fee justified under law or an alternative revenue source equal to or greater than the developer fee otherwise justified under law at the time of request for hardship and the district meets at least one of the following:

   1. (1) The current outstanding bonded indebtedness of the district issued for the purpose of constructing school facilities in accordance with Education Code Section 17072.35 or 17074.25 as appropriate, at the time of request for Financial Hardship status, is at least 60 percent of the district's total bonding capacity. Outstanding bonded indebtedness includes that part of general obligation bonds, Mello-Roos Bonds, School Facility Improvement District Bonds and certificates of participation which the district is paying a debt service that was issued for capital outlay school facility purposes.
   2. (2) The district had a successful registered voter bond election for at least the maximum amount allowed under Proposition 39 within the previous two years from the date of request for Financial Hardship status. The proceeds from the bond election that represent the maximum amount allowed under the provisions of Proposition 39 must be used to fund the district's matching share requirement for SFP project(s).
   3. (3) It is a County Superintendent of Schools.

   4. (4) (A) For applications received on or before October 30, 2024, the district's total bonding capacity at the time of the request for Financial Hardship status is $5 million or less.

      1. (B) For applications received on or after October 31, 2024, the district's total bonding capacity at the time of the request for Financial Hardship status is $15 million or less. Beginning July 1, 2026, the total bonding capacity amount shall be adjusted each fiscal year thereafter by the inflation adjustment computed pursuant to paragraph (2) of subdivision (d) of Education Code Section 42238.02.

   5. (5) Other evidence of reasonable effort as approved by the Board.

      1. (A) Determine the number of pupils by grade level that the district requested a New Construction Grant on the Form SAB 50-04 that were denied Financial Hardship status.
      2. (B) Divide the number by grade level determined in (c)(5)(A) by 25 for K-6, 27 for 7-12, 13 for Non-Severe and 9 for Severe and round up to the nearest whole number.

      If the district's request for Financial Hardship status is denied by the Board, the district may be deemed eligible for rental payments of $2,000 per year per classroom under the Emergency School Classroom Law of 1979 for a two year period when relocatable classroom buildings are available and the district provides financial documentation that it is unable to afford the full rental amount and any other information satisfactory to the Board that the rental reduction is necessary. The number of classrooms eligible for the $2,000 rental payments shall be the sum of the numbers determined in (c)(5)(B) as follows:

4. (d) The district has not signed a contract for acquisition or construction of classrooms that replace existing facility(ies), which were included in the determination of the district's new construction eligibility pursuant to Education Code Section 17071.75, in a locally funded project during the five-year period immediately preceding the district's application for Financial Hardship assistance. This restriction may be lifted if the Board finds that unforeseen and extenuating circumstances existed that required the district to use local funds to replace the facility(ies).

5. (e) If the district meets the Financial Hardship requirements in this Section, the amount of Financial Hardship is equal to the district's matching share less funds deemed available in (a).

   1. (1) Once a district has been notified by OPSC that it meets the requirements of Financial Hardship in this Section, the district may file Form SAB 50-04 under the provisions of Financial Hardship anytime within a period of 180 calendar days from the date of the OPSC notification.
   2. (2) If the district does not submit Form SAB 50-04 under the provisions of Financial Hardship within 180 calendar days of the OPSC notification of approval of Financial Hardship status, the district must re-qualify for Financial Hardship status under the provisions of this Section by submittal of a new request for Financial Hardship status.

   3. (3) If the project(s) has been included on an unfunded list for more than 180 calendar days, a review of the district's funds pursuant to (a) will be made to determine if additional district funds are available to fund the district's matching share of the project(s).

      Financial Hardship approval status by the OPSC for a separate design and/or site apportionment does not apply to any subsequent funding for the project(s).

6. (f) If the district submits Form SAB 50-04 within 180 calendar days of the OPSC notification of approval of Financial Hardship and the project(s) has been included on the “Unfunded List (Lack of AB 55 Loans)” for more than 180 calendar days as a result of the State of California's inability to provide interim financing from the Pooled Money Investment Account (AB 55 loans), the Board may suspend the unfunded review requirement as defined in Regulation Section 1859.81(e). Projects added to any other unfunded list shall be subject to the review detailed in Regulation Section 1859.81(e). Regulation Section 1859.81(f) shall become inoperative July 1, 2011.
7. (g) A project added to an unfunded list on or after July 1, 2011 will be subject to the review detailed in section (e)(3). For projects added to an unfunded list between February 25, 2009 and June 30, 2011, only the district's financial records on or after July 1, 2011 will be considered in calculating any adjustment to the district's matching share.

8. (h) On or after September 22, 2017, a district may submit a request for funding in advance of obtaining a determination of Financial Hardship.

   1. (1) To be considered for Financial Hardship, the district must check the box on the Form SAB 50-04 requesting Financial Hardship pursuant to this subsection when submitting a request for funding.

   2. (2) Prior to processing an application OPSC will notify the district in writing to submit the necessary documentation for a Financial Hardship analysis pursuant to (a), (b), (c) and (d). OPSC will not accept any documents for a Financial Hardship analysis in advance of the notification. Failure to submit the requested documentation within 60 calendar days of OPSC's notification will result in either a. or b.:

      1. a. District may amend their Form SAB 50-04 to exclude the request for Financial Hardship determination.
      2. b. OPSC will return the request for funding and related materials to the district.
   3. (3) Upon notification of Financial Hardship approval, any Form SAB 50-04 processed within 180 calendar days of the approval date will be included in the approval.
   4. (4) For any Form SAB 50-04 processed more than 180 calendar days after the date of the Financial Hardship approval the district shall re-qualify for Financial Hardship status.

9. (i) Any project expenditures made prior to a district requesting Financial Hardship status is considered contribution due to expenditure and will reduce the Financial Hardship apportionment amount received on the project, with the exception of: A district may begin making expenditures on a project while seeking Financial Hardship consideration only if the district uses bridge financing and/or interfund borrowing that meets the following criteria:

   1. (1) The district must contact the OPSC in writing with their request to seek bridge financing prior to making any project expenditures.
   2. (2) The request must specifically list the SFP project(s), and SFP application number(s) (if known) that will be funded with the bridge financing.
   3. (3) The district's bridge financing instrument must either be a certificate of participation, lease-purchase agreement, or other lease financing arrangement entered into with a party other than the applicant district for the purpose of financing eligible SFP project costs authorized in the Education Code.

   4. (4) Interfund borrowing that conforms to Education Code Section 42603 requirements may also be utilized to allow a district to move forward with their SFP Financial Hardship project(s). The district must provide detailed General Ledger (GL) transactions that clearly indicate the following:

      1. a. The transfer out of the fund the district is borrowing from and,
      2. b. The transfer into the fund the monies were deposited in.
   5. (5) The total amount of net bridge financing and interfund borrowing shall not exceed the sum of the Modernization Adjusted Grant or New Construction Adjusted Grant, including Financial Hardship funding.

   6. (6) The district must have a school board resolution which details the bridge financing instrument or interfund transfer that will be used to make any project expenditures that will occur prior to receiving state funding. The school board resolution must include the following:

      1. a. Name the specific project(s) that will be moved forward.
      2. b. List the specific debt instrument or interfund borrowing that will be used to move the project(s) forward.
      3. c. List the maximum amount of funding that will be borrowed or transferred.
      4. d. Statement that once any state funding is released for the SFP project(s), the district must utilize the grant funding to retire the bridge financing debt and/or repay the interfund transfer within 60 calendar days of receiving the state funding.
      5. e. If using debt financing, acknowledgement that the district is entering into the debt financing at their own risk and that there is no guarantee of future state funding.
      6. f. Acknowledgement that any expenditures made prior to the school board resolution will be considered as the district's required matching contribution due to expenditures.
   7. (7) Once any state funding is released for the SFP project(s), the district must utilize the grant funding to retire the bridge financing debt and/or repay the interfund transfer within 60 calendar days of receiving the state funding.

   8. (8) Within 30 days of retiring the debt service, the district must submit to OPSC documentation demonstrating that the debt has been retired. This documentation shall include the following:

      1. a. A detailed general ledger which documents the transaction; and
      2. b. School board resolution or school board minutes authorizing the debt retirement.
   9. (9) After state funds are released, the state will treat the debt as retired, and the bridge financing related debt will not be included in the district's bonded indebtedness calculation for the purpose of a future Financial Hardship review.
   10. (10) Any bridge financing debt not retired after state funding is received will be considered as available contribution for the project and result in a reduction of the Financial Hardship funding on the project.

Except for Joint-Use Projects and Career Technical Education Facilities Projects, a district is eligible for Financial Hardship to fund all or a portion of its matching share requirement after demonstrating the requirements of (a), (c), and (d) below:

Note: Authority cited: Sections 17070.35, 17075.15, 17078.72 and 17592.73, Education Code. Reference: Sections 17071.75, 17075.10, 17075.15 and 17079.20, Education Code.

History

1. New section filed 12-3-98 as an emergency; operative 12-3-98 (Register 98, No. 49). A Certificate of Compliance must be transmitted to OAL by 4-2-99 or emergency language will be repealed by operation of law on the following day.

2. New section refiled 3-31-99 as an emergency; operative 3-31-99 (Register 99, No. 14). A Certificate of Compliance must be transmitted to OAL by 7-29-99 or emergency language will be repealed by operation of law on the following day.

3. New section refiled 7-29-99 as an emergency; operative 7-29-99 (Register 99, No. 31). A Certificate of Compliance must be transmitted to OAL by 11-26-99 or emergency language will be repealed by operation of law on the following day.

4. Certificate of Compliance as to 7-29-99 order, including amendment of section, transmitted to OAL 8-26-99 and filed 10-8-99 (Register 99, No. 41).

5. Amendment of subsection (b)(5) filed 6-26-2000; operative 6-26-2000 pursuant to Government Code section 11343.4(d) (Register 2000, No. 26).

6. Amendment of last paragraph filed 7-17-2000 as an emergency; operative 7-17-2000 (Register 2000, No. 29). A Certificate of Compliance must be transmitted to OAL by 11-14-2000 or emergency language will be repealed by operation of law on the following day.

7. Certificate of Compliance as to 7-17-2000 order transmitted to OAL 11-9-2000 and filed 12-27-2000 (Register 2000, No. 52).

8. Amendment of last paragraph filed 1-2-2001 as an emergency; operative 1-2-2001 (Register 2001, No. 1). A Certificate of Compliance must be transmitted to OAL by 5-2-2001 or emergency language will be repealed by operation of law on the following day.

9. Certificate of Compliance as to 1-2-2001 order transmitted to OAL 5-1-2001 and filed 6-13-2001 (Register 2001, No. 24).

10. Amendment of last paragraph filed 7-25-2001; operative 7-25-2001 pursuant to Government Code section 11343.4 (Register 2001, No. 30).

11. Amendment of last paragraph filed 8-13-2001; operative 8-13-2001 pursuant to Government Code section 11343.4 (Register 2001, No. 33).

12. Amendment filed 12-21-2001; operative 12-21-2001 pursuant to Government Code section 11343.4 (Register 2001, No. 51).

13. Amendment of subsections (a)(1), (a)(4) and (b)(5)(A)-(B) filed 4-10-2002; operative 4-10-2002 pursuant to Government Code section 11343.4 (Register 2002, No. 15).

14. Amendment of subsection (b)(5)(A)-(B) filed 5-2-2002; operative 6-1-2002 (Register 2002, No. 18).

15. Amendment of subsection (b)(5)(A) and second, third and fourth from last paragraphs filed 8-12-2002 as an emergency; operative 8-12-2002 (Register 2002, No. 33). A Certificate of Compliance must be transmitted to OAL by 12-10-2002 or emergency language will be repealed by operation of law on the following day.

16. Amendment filed 10-4-2002; operative 10-4-2002 pursuant to Government Code section 11343.4 (Register 2002, No. 40).

17. Amendment of section and Note filed 11-4-2002 as an emergency; operative 11-4-2002 (Register 2002, No. 45). Pursuant to Education Code section 17070.35 a Certificate of Compliance must be transmitted to OAL by 11-4-2003 or emergency language will be repealed by operation of law on the following day.

18. Certificate of Compliance as to 8-12-2002 order transmitted to OAL 12-3-2002 and filed 1-16-2003 (Register 2003, No. 3).

19. Certificate of Compliance as to 11-4-2002 order transmitted to OAL 11-4-2003 and filed 12-19-2003 (Register 2003, No. 51).

20. Amendment of first paragraph filed 5-21-2004 as an emergency; operative 5-21-2004 (Register 2004, No. 21). A Certificate of Compliance must be transmitted to OAL by 9-20-2004 or emergency language will be repealed by operation of law on the following day.

21. Certificate of Compliance as to 5-21-2004 order transmitted to OAL 9-20-2004 and filed 11-2-2004 (Register 2004, No. 45).

22. Amendment of subsection (c)(1) filed 2-15-2005; operative 2-15-2005 pursuant to Government Code section 11343.4 (Register 2005, No. 7).

23. New subsection (a)(4), subsection renumbering and amendment of Note filed 5-26-2005 as an emergency; operative 5-26-2005 (Register 2005, No. 21). A Certificate of Compliance must be transmitted to OAL by 9-23-2005 or emergency language will be repealed by operation of law on the following day.

24. Certificate of Compliance as to 5-26-2005 order transmitted to OAL 9-19-2005 and filed 10-31-2005 (Register 2005, No. 44).

25. Amendment of first paragraph, new subsection (a)(5), subsection renumbering and amendment of Note filed 7-13-2007 as an emergency; operative 7-13-2007 (Register 2007, No. 28). Pursuant to Education Code section 17078.72(k) a Certificate of Compliance must be transmitted to OAL by 7-14-2008 or emergency language will be repealed by operation of law on the following day.

26. Amendment of first paragraph and new subsection (d) filed 7-18-2007; operative 7-18-2007 pursuant to Government Code section 11343.4 (Register 2007, No. 29).

27. New subsection (a)(6), subsection renumbering, amendment of and new paragraph following newly designated subsection (a)(7) and amendment of Note filed 8-31-2007; operative 8-31-2007 pursuant to Government Code section 11343.4 (Register 2007, No. 35).

28. Editorial correction of History 25 (Register 2007, No. 52).

29. New subsection (a)(7), subsection renumbering and amendment of Note filed 1-7-2008; operative 2-6-2008 (Register 2008, No. 2).

30. Certificate of Compliance as to 7-13-2007 order transmitted to OAL 3-18-2008 and filed 4-29-2008 (Register 2008, No. 18).

31. New subsection (a)(8), subsection relettering, amendment of subsections (b)(7), (c)(5) and (d) filed 4-30-2008; operative 4-30-2008 pursuant to Government Code section 11343.4 (Register 2008, No. 18).

32. Redesignation of last five paragraphs of section as new subsection (e) and new subsection (f) filed 10-4-2010 as an emergency; operative 10-4-2010 (Register 2010, No. 41). A Certificate of Compliance must be transmitted to OAL by 4-4-2011 or emergency language will be repealed by operation of law on the following day.

33. Redesignation of last five paragraphs of section as new subsection (e) and new subsection (f) refiled 4-5-2011 as an emergency, including further amendment of subsection (f); operative 4-5-2011 (Register 2011, No. 14). A Certificate of Compliance must be transmitted to OAL by 7-5-2011 or emergency language will be repealed by operation of law on the following day.

34. Certificate of Compliance as to 4-5-2011 order transmitted to OAL 6-10-2011 and filed 7-6-2011 (Register 2011, No. 27).

35. Designation of paragraphs following subsection (e) as new subsections (e)(1)-(3) and new subsection (g) filed 7-27-2011 as an emergency; operative 7-27-2011 (Register 2011, No. 30). A Certificate of Compliance must be transmitted to OAL by 1-23-2012 or emergency language will be repealed by operation of law on the following day.

36. Certificate of Compliance as to 7-27-2011 order transmitted to OAL 11-10-2011 and filed 12-21-2011 (Register 2011, No. 51).

37. Amendment of subsections (e)(1) and (e)(3) and new subsections (h)-(h)(4) filed 9-22-2017 as an emergency; operative 9-22-2017 (Register 2017, No. 38). A Certificate of Compliance must be transmitted to OAL by 3-21-2018 or emergency language will be repealed by operation of law on the following day.

38. Certificate of Compliance as to 9-22-2017 order transmitted to OAL 3-16-2018 and filed 4-12-2018 (Register 2018, No. 15).

39. Amendment of subsections (a)(8) and (b) filed 8-31-2020 as an emergency; operative 8-31-2020 (Register 2020, No. 36). Emergency expiration extended 60 days (Executive Order N-40-20) plus an additional 60 days (Executive Order N-66-20). A Certificate of Compliance must be transmitted to OAL by 6-29-2021 or emergency language will be repealed by operation of law on the following day.

40. Certificate of Compliance as to 8-30-2020 order transmitted to OAL 5-5-2021 and filed 6-16-2021 (Register 2021, No. 25).

41. Amendment filed 6-20-2025 as an emergency; operative 6-20-2025 (Register 2025, No. 25). A Certificate of Compliance must be transmitted to OAL by 12-17-2025 or emergency language will be repealed by operation of law on the following day.

42. Certificate of Compliance as to 6-20-2025 order, including amendment of first paragraph and subsection (b)(7), transmitted to OAL 10-13-2025 and filed 11-25-2025; amendments effective 11-25-2025 pursuant to Government Code section 11343.4(b)(3) (Register 2025, No. 48).