California utilities to reclaim unused money from school air conditioning program

Lawmakers and the governor on Monday failed to extend a state grant program that helped schools upgrade their air conditioner systems, a decision that will allow utilities that funded the program to claw back funds for their ratepayers. 

The California Schools Healthy Air, Plumbing, and Efficiency program — CalSHAPE for short — set aside nearly $1 billion in utility funds to help schools assess and upgrade aging HVAC and plumbing systems. But the California Energy Commission abruptly closed applications in 2024, leaving $191 million unused —  money that must now be returned to utilities by law.  

After last-minute negotiations, lawmakers passed a budget trailer bill giving schools that had already received funding an additional three years to finish projects before the state claws back the money. But they dropped a separate measure that would have re-opened applications for schools to make upgrades because it did not have support from Gov. Gavin Newsom, according to sources familiar with the negotiations.   

“I don’t understand why (Newsom) doesn’t have the backs of everyday people in California, and why he doesn’t think that children deserve a safe place to learn with air conditioning,” said Leah Stokes, a political science associate professor at UC Santa Barbara who has advocated for the program. “This is all on him.”

Diana Crofts-Pelayo, a spokesperson for the governor, declined to comment on the matter.

‘A disillusioning conclusion’ 

School administrators have praised CalSHAPE, saying the program offered schools the chance to improve class environments for students.

The program helped more than 4,500 schools assess the status of their HVAC systems. Of those, 172 schools made significant upgrades with program funds. 

But the program’s future has been in question since 2024, when the California Energy Commission abruptly stopped accepting applications. Much of the controversy centered on whether ratepayers should be responsible for funding a school grant program. 

Consumer advocates said the program doesn’t directly benefit ratepayers, while school advocates questioned why the state would pull back money already designated for schools. 

In its June 2024 notice pausing the program, the commission cited budget constraints. Later that year, the governor signed an executive order directing the commission to examine ratepayer-supported programs “whose funding might more appropriately come from a source other than ratepayers.”

In a letter opposing the budget measure to extend CalSHAPE, San Diego Gas & Electric Senior Vice President Mitch Mitchell said its customers contributed about $189.6 million to the program. 

The company stands to get back $100 million — the most of any participating utility — which would amount to about $24 per customer, divided into $2 monthly payments over a year, according to a legislative analysis. Utility officials said they are committed to returning all unspent funds to customers through bill relief.  

“Policymakers cannot credibly elevate affordability while simultaneously redirecting unused customer dollars away from bill relief,” Mitchell said in the letter. “If affordability is truly a legislative priority, then these funds should be returned to customers as intended under existing law.”

School advocates questioned whether returning the money would make any meaningful impact for ratepayers. SoCal Edison ratepayers would receive $1.25 per month for a year and Pacific Gas & Electric customers would receive 20 cents per month for a year, according to the legislative analysis.  

Meanwhile, the CalSHAPE-funded assessments revealed HVAC systems in California schools are aging and in disrepair.   

“Extending CalSHAPE deadlines so existing funds could go to repair or replace broken school HVAC systems should have been an easy win,” said JuNelle Harris, founder of Clean Air Allies, a nonprofit that advocates for healthy air in schools. “Instead, this campaign has been a multiyear saga that’s come to a disillusioning conclusion.”

Schools cope with heat 

The most recent heat wave left classrooms sweltering as many students returned for their first weeks back to school. School districts throughout the state reported having to adjust school times or cancel classes altogether.

In Los Angeles, where students endured temperatures above 90 degrees for 12 consecutive days, the Los Angeles Unified School District limited outdoor time for some students. The district received $27 million to assess their air conditioning systems from CalSHAPE but no funds for upgrades. 

In San Diego, average temperatures stayed in the mid to high 80s, far above the average for the coastal city. The Coronado Unified School District shut down classes for all students.  

Cody Peterson, a trustee on the board of the San Diego Unified School District, said he’s disappointed the governor would rather see CalSHAPE funds returned to ratepayers, when there is so much need for air conditioning in schools. He also criticized the CalSHAPE process, saying it limited schools from completing projects on time and disincentivized applications.  

“No child should be in a classroom that is overheating because they cannot learn, they cannot achieve, they cannot grow,” he said. Petterson added that he’d prefer the state fund HVAC upgrades as categorical investments, rather than through a grant program.  

San Diego Unified received $12 million to assess school air conditioning systems, but no funds to upgrade them. 

Advocates said they were confused about the governor’s lack of support, but will continue to advocate for school HVAC investments from the state.  

“It’s deeply disappointing that lawmakers, starting and ending with the Governor, have chosen to treat our children’s and teachers’ interests as secondary to those of big utility companies,” Harris said. “As our outdoor environment is transformed by more extreme weather events and wildfires, safe classrooms where children can learn and grow have never been more important.” 

Stokes said Newsom “sat on it as an executive for years,” while disadvantaged communities went without air conditioning. “Why would he do that? Seems very Trumpian to me.”

California schools won’t be able to access more funds for upgrades, but hundreds of schools could have more time to complete projects in the works. According to the energy commission, 216 out of 719 school districts that were awarded a grant have pending projects.