The California Schools Healthy Air, Plumbing, and Efficiency program, known as CalSHAPE, was created in 2020 to help schools assess the condition of their HVAC systems and then pay for needed repairs or replacements. But in 2024, the California Energy Commission halted the program early, citing budget pressures. The result: of more than 4,500 schools that completed assessments showing HVAC problems, only 172 actually received money to fix them.

A state audit released in 2025 found the commission’s own overly complicated application process was largely to blame, leaving districts at risk of missing deadlines tied to returning unspent ratepayer funds to utilities. Auditors recommended the commission either find a way to spend the remaining money or ask lawmakers to formally end the program early. Neither happened. Instead, roughly $200 million has simply sat unused while school advocates lobby for its release.

Local districts say they’re feeling the effects directly. In the Temecula Valley Unified School District, an assessment funded through the program’s first phase found that about a third of its heating and cooling equipment is near the end of its usable life. But before the district could apply for upgrade funding, the state stopped accepting applications.

“There are periods of the school year where it’s pretty much baking all day long, and some of the older units can’t keep up,” said Greg Page, an energy management specialist for the district. “Our team is working by emergency pretty much nonstop during those hot times.”

Torrance Unified School District ran into the same problem. After receiving $2.4 million to survey its facilities, the district identified 300 air conditioning units that had outlived their usefulness — but missed the window to seek money for replacements.

“This was money that was pulled back unjustifiably,” said Keith Butler, Torrance Unified’s deputy superintendent. “This is a good use of funds that has been set aside already — we just wanted it to go back out to finish the work.”

Butler said his district has been patching together temporary fixes to keep classrooms cool, but warned that some systems won’t last much longer. “We’ve been band-aiding what we have,” he said, “but there will be a point where they are not working in the not too distant future.”

The program was funded through a 2020 state law that required major utility companies — including Southern California Edison, San Diego Gas & Electric, Pacific Gas & Electric and Southern California Gas Company — to set aside a portion of their energy efficiency budgets for school facility upgrades. Combined, utilities contributed nearly $1 billion, of which $191 million remains unspent.

The funding mechanism has long been contentious. State finance officials warned before the program’s creation that it would raise utility rates, and a 2023 energy commission report confirmed that ratepayers had shouldered roughly $1 billion in costs. Utility rates have since climbed sharply — up 57% for Southern California Edison customers over the past five years, according to a report from the California Public Advocates Office, much of that driven by wildfire mitigation spending.

Some ratepayer advocates argue the program should never have been funded this way in the first place. “The fact that schools need new HVAC systems has nothing to do with producing electricity, delivering electricity, or generating electricity,” said Mark Toney, executive director of The Utility Reform Network.

But school advocates counter that halting the program now, after money has already been collected and earmarked, does little to help either students or ratepayers. If the leftover funds are returned to utility customers, the payout would amount to just $2 to $24 per household spread over a year — a figure critics call too small to be meaningful.

“We’re going to kneecap this program out of some philosophical argument about how programs should be funded?” said JuNelle Harris, founder of Clean Air Allies, a nonprofit focused on air quality in schools. “If the money is there and the program is working, why would we not use that money and try to make the program as successful as possible?”

Legislative efforts to resolve the standoff have stalled repeatedly. A 2024 bill aimed at speeding ratepayer refunds never received a committee hearing, and a 2025 proposal to extend CalSHAPE through 2030 was similarly blocked. State officials have pointed to Proposition 2, a $10 billion facilities bond, as an alternative funding source, but demand for those dollars already outstrips what’s available. Assemblymember Al Muratsuchi, who authored the bond measure, said it was never intended to replace CalSHAPE, noting the program specifically directs a quarter of its funding toward underserved communities — and has actually exceeded that target, delivering 45% to those areas.

Now, lawmakers are considering a narrower fix: spending about $70 million in interest earned on the unused CalSHAPE funds on a separate initiative known as a virtual power plant program, which links home solar panels, batteries and smart thermostats to help utilities manage electricity demand during heat waves. School advocates are pushing to use that moment to reopen CalSHAPE applications instead.

Senate budget staff have recommended extending the program, but its ultimate fate now rests on closed-door budget negotiations between the Legislature and Governor Gavin Newsom’s administration expected to continue through August. A spokesperson for the governor declined to comment.

For families in districts still waiting on repairs, the outcome could determine whether classrooms remain livable during the hottest months of the school year — a growing concern as research continues to show that heat negatively affects student learning and test performance.

Original source: CalMatters

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