Cal. Education Code § 17071.46

(a) If an applicant school district proposes to demolish a single-story building and replace it with a multistory building on the same site, the State Allocation Board shall provide a supplemental grant for 50 percent of the replacement cost of the single-story building to be demolished, if all of the following conditions are met: (1) The cost of the demolition and construction of a new multistory building on the same site is less than the total cost of providing a new school facility, including land, on a new site for the additional number of pupils housed as a result of the multistory replacement building on the existing site, as determined by the State Allocation Board. For purposes of this subdivision, the method of estimating the site acquisition costs savings shall be based on previous actual site sizes and acquisition costs in the district for equivalent numbers of pupils, or as otherwise determined by the board if actual site acquisition comparisons are not available for the district. (2) The school district will maximize the increase in pupil capacity on the site when it builds the multistory replacement building, subject to the limits imposed on it pursuant to paragraph (3). (3) The State Department of Education has determined that the demolition of an existing single-story building and replacement with a multistory building at the site is the best available alternative and will not create a school with an inappropriate number of pupils in relation to the size of the site, as determined by the State Department of Education. (b) The State Allocation Board shall establish additional requirements it deems necessary to ensure that the economic interests of the state and the educational interests of the children of the state are protected.