BILL NUMBER: AB 1754 CHAPTERED 08/11/03 CHAPTER 227 FILED WITH SECRETARY OF STATE AUGUST 11, 2003 APPROVED BY GOVERNOR AUGUST 9, 2003 PASSED THE ASSEMBLY JULY 29, 2003 PASSED THE SENATE JULY 27, 2003 AMENDED IN SENATE JULY 27, 2003 AMENDED IN SENATE JUNE 24, 2003 AMENDED IN SENATE JUNE 23, 2003 INTRODUCED BY Committee on Budget (Oropeza (Chair), Bermudez, Chan, Chu, Diaz, Dutra, Dymally, Goldberg, Hancock, Jackson, Liu, Montanez, Nakano, Pavley, Reyes, Simitian, and Wolk) MARCH 11, 2003 An act to amend Sections 2557.5, 2558, 8222.5, 10554, 13030, 14002.1, 37253, 41203.1, 41975, 42238.12, 42239.1, 42239.15, 42241.7, 42243.7, 44395, 48005.10, 48005.13, 48005.15, 48005.25, 48005.30, 48005.35, 48005.45, 48005.55, 69618.9, 76300, 99234, and 99235 of, and to add Sections 2558.46, 17070.76, 33128.3, 42238.146, 84321, and 84322 to, the Education Code, to add Section 7576.5 to the Government Code, and to amend Section 39 of, and to repeal Section 51 of, Chapter 1167 of the Statutes of 2002, relating to education finance, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST AB 1754, Committee on Budget. Education finance. (1) Existing law, the Child Care and Development Services Act, authorizes alternative payment programs to provide payment to child care facilities with at least 75% subsidized children in prescribed circumstances, and authorizes the Superintendent of Public Instruction to adopt related regulations. This bill would prohibit the superintendent from adopting or implementing regulations for the 2003-04 fiscal year that differentiate provider reimbursement rates based upon the percentage of subsidized children receiving care in a facility. (2) Existing law requires a revenue limit to be calculated for each school district and each county superintendent of schools and requires the amount of the revenue limit to be adjusted for various factors. Existing law requires the Superintendent of Public Instruction to take into account the revenue limit of a school district and county superintendent of schools when apportioning funding to school districts and county superintendents of schools. This bill would reduce the revenue limit for the 2003-04 and 2004-05 fiscal years by 1.195% and by an additional 1.826% for county superintendents of schools and by 1.198% and an additional 1.826% for school districts, but would not apply these reductions to specified revenue limit adjustments. The bill would require the revenue limit computation for the 2005-06 fiscal year to be made using the reduced revenue limit amount. The bill would require the Superintendent of Public Instruction to certify to the Controller amounts needed to fund the revenue limits of school districts, the revenue limits of county superintendents of schools, and the revenue limit portion of charter school operational funding that reflect these reductions. The bill would authorize the governing board of a school district or county office of education, for the 2003-04 fiscal year only, to use up to 100% of the balances as of June 30, 2003, of restricted accounts, except as specified, to reduce the impact of the reductions to revenue limits in the 2003-04 fiscal year made pursuant to the bill. (3) Existing law establishes the California Civil Liberties Public Education Grant Program under the administration of the State Librarian. Existing law also expresses the intent of the Legislature that $1,000,000 be annually appropriated from the General Fund to the State Librarian in the 2000-01, 2001-02, and 2002-03 fiscal years. This bill would delete the expression of legislative intent that $1,000,000 be appropriated for the California Civil Liberties Public Education Grant Program in each of the 3 specified fiscal years and would make funding for the program subject to an appropriation in the annual Budget Act or other act for this purpose. (4) Existing law, until January 1, 2004, establishes the Educational Telecommunication Fund in order for the governing board of the County Office Fiscal Crisis and Management Assistance Team to carry out its responsibilities regarding the establishment of telecommunications standards to support the efficient sharing of school business and administrative information. This bill would make the fund permanent. (5) Existing law, the Leroy F. Greene School Facilities Act of 1998, requires the State Allocation Board to require a school district that receives funds under the act to agree to establish a restricted account within the school district's general fund for the exclusive purpose of providing moneys for ongoing and major maintenance of school buildings and to agree to deposit into the account, in each fiscal year for 20 years, a minimum amount equal to or greater than 3% of the school district's total general fund expenditures for that fiscal year. This bill, instead, would provide that for the 2003-04 fiscal year, the board shall only require a school district to deposit into that account an amount equal to 2% of the total expenditures by the district from its general fund in the 2003-04 fiscal year. (6) Existing law requires the State Board of Education to adopt standards and criteria to be used by local educational agencies in the development of annual budgets and the management of subsequent expenditures from that budget. This bill would provide that for the 2003-04 and 2004-05 fiscal years, the requirement for a reserve for economic uncertainties is 1/2 of the percentage for a reserve adopted by the State Board of Education as of May 1, 2003. (7) Existing law authorizes the governing board of any school district and a charter school to offer supplemental instructional programs in mathematics, science, or other core academic areas, as designated, and provides that the maximum entitlement of a school district or charter school for reimbursement for pupil hours of attendance in the supplemental instructional programs shall be calculated pursuant to a formula that is based on 7% of the total enrollment of the school district or charter school for the prior fiscal year. This bill would, instead, provide for the formula to be based on 5% of the total enrollment of the school district or charter school for the prior fiscal year. (8) Existing law requires, for the 1990-91 fiscal year and each fiscal year thereafter, that moneys to be applied by the state for the support of school districts and community college districts be distributed in accordance with certain calculations. This requirement expressly is made inapplicable to the 1992-93 to 2002-03 fiscal years, inclusive. This bill would, instead, make this requirement inapplicable to the 1992-93 to 2003-04 fiscal years, inclusive. (9) Existing law sets forth a minimum amount of money that is required to be apportioned or allowed to a school district from Section A of the State School Fund in a fiscal year. This bill would require that state funds apportioned to a school district for categorical education programs and other state funds apportioned to a school district from the State School Fund be applied to meet the minimum amount of money that is required to be apportioned or allowed to a school district from Section A of the State School Fund in a fiscal year. (10) Existing law makes school districts eligible for reimbursement for hours of pupil attendance claimed for intensive reading programs and makes school districts and charter schools eligible for reimbursement for hours of pupil attendance claimed for intensive algebra instruction academies. This bill would make those reimbursements contingent on an appropriation being made for that purpose in the annual Budget Act. (11) Existing law establishes the National Board for Professional Teaching Standards Certification Incentive Program to award grants to teachers who, among other things, have attained certification from the National Board for Professional Teaching Standards. Under the program, a teacher attaining a national board certification is eligible for a one-time merit award of $10,000, and is eligible for an additional award of up to $20,000 if he or she agrees to teach at a low-performing school for at least 4 years. Existing law authorizes the State Department of Education to provide fee assistance for the program to defray the fees of teachers seeking the certification. This bill would eliminate the one-time merit award of $10,000, and would eliminate the provisions authorizing the department to provide fee assistance. (12) Existing law establishes the Kindergarten Readiness Pilot Program, to be implemented in the 2003-04 school year, and requires a participating school district to offer admission to 1st grade at the beginning of the school year, or at a later time in the same school year, only to children who will have their 6th birthday on or before September 1 of that school year. Under existing law, these provisions become inoperative on July 1, 2010, and are repealed as of January 1, 2011. This bill would delay the implementation of that program until the 2006-07 school year and would make conforming changes. The bill would, in addition, delete the July 1, 2010, inoperative date and the January 1, 2011, repeal date of those provisions and would instead provide that the provisions become inoperative on July 1, 2013, and be repealed as of January 1, 2014. (13) Existing law establishes the Graduate Assumption Program of Loans for Education, under which an applicant enrolled in a graduate degree program, and who agrees to teach on a full-time basis at an accredited California college or university, is eligible to receive a conditional warrant for loan assumption, to be redeemed pursuant to a prescribed procedure upon becoming employed as a teacher at an accredited college or university in California. Under existing law, a program participant becomes eligible for up to $2,000 of loan assumption after each of the first 3 academic years of full-time teaching, for a total loan assumption of up to $6,000. Existing law requires that, commencing with the 1998-99 fiscal year, the Student Aid Commission issue warrants for the assumption of up to 500 student loans for eligible program participants. Existing law also requires that the issuance of warrants be subject to funding to be provided in the annual Budget Act for each fiscal year. This bill would prohibit warrants for loan assumptions under this program from being issued in the 2003-04 fiscal year. (14) Existing law requires the governing board of each community college district to charge each student a fee of $11 per unit per semester. This bill would raise that fee to $18 per unit per semester effective with the fall term of 2003-04 academic year. (15) Existing law requires the Board of Governors of the California Community Colleges to adopt regulations for the payment of apportionments to community college districts. Existing law requires the board of governors to certify estimated apportionments to the Controller on or before July 15, and for the first principal apportionment to be certified on or before February 20 and the 2nd principal apportionment to be certified on or before June 25, of each year. This bill would require that, commencing with the 2003-04 fiscal year, warrants for the 2nd principal apportionment be drawn in July pursuant to the certification made, under existing law, in June of that same calendar year, thereby causing the apportionment to be paid in the fiscal year immediately following the certification of the 2nd principal apportionment. The bill would provide that, for the purposes of the computations required by the constitutional minimum funding requirement for school districts and community college districts, the warrants drawn under the bill would be counted in the fiscal year in which they are drawn. The bill would authorize a community college district to recognize, for budgetary and financial reporting purposes, any amount of state appropriations deferred from the current fiscal year and appropriated in the subsequent fiscal year for payment of current-year costs as a receivable in the current fiscal year. (16) Existing law establishes the Mathematics and Reading Professional Development Program under which eligible local educational agencies receive an incentive award in each of the fiscal years between 2002-03 and 2006-07, inclusive, for a specified percentage of their eligible teachers. Existing law also authorizes an eligible local educational agency to receive funding in each of the fiscal years 2004-05 and 2005-06 for a specified percentage of their instructional aides and paraprofessionals. This bill would instead specify that the amount of the incentive award for teachers and the funding for instructional aides and paraprofessionals would be based on the percentage of eligible teachers and instructional aides and paraprofessionals calculated in accordance with provisional language in the annual Budget Act. (17) Existing law makes the State Department of Mental Health, or a community mental health service, as defined, that is designated by the State Department of Mental Health, responsible for the provision of mental health services, as specified, when required in a pupil's individualized education program. This bill would require local educational agencies, if funds are appropriated to them to support the costs of providing these mental health services, to transfer those funds to the community mental health services that provide the services. The bill would require the funds to be used exclusively for those mental health programs and would provide that the funds are offsetting revenues in any reimbursable mandate claim relating to special education programs and services. (18) Existing law authorizes the Superintendent of Public Instruction to apportion a specified sum to each school district and county office of education that operates a community day school and to a school district that operates a program to reduce class size in 2 courses in grade 9. Under existing law, the apportionment is adjusted annually for inflation, commencing with the 1999-2000 fiscal year. This bill would set the cost-of-living adjustment for community day schools and the program to reduce class size in 2 courses in grade 9 at 2% for the 2002-03 fiscal year and at 0% for the 2003-04 fiscal year. The bill would additionally set the cost-of-living adjustment for certain items contained in the Budget Act of 2003 at 0%. Existing law provides for an annual adjustment of state funding for certain programs, including, instructional materials, regional occupational programs and centers, school improvement programs, economic impact aid, staff development programs, and gifted and talented programs, pursuant to a specified formula. This bill would set that adjustment at 0% for the 2003-04 fiscal year. (19) Existing law requires the governing board of a school district to submit a report to the Legislature in any year in which the school district does not set aside 0.5% of its current year revenue limit for the deferred maintenance of school facilities. This bill would make those provisions inoperative for the 2003-04 fiscal year. (20) Existing law appropriated $203,000,000 for purposes of a revenue limit equalization adjustment for the 2003-04 fiscal year. This bill would repeal that appropriation. (21) This bill would require the Superintendent of Public Instruction to reduce, by $9,886,000, funding for basic aid districts from categorical education funds that are appropriated in the Budget Act of 2003. The bill would require the Superintendent by June 1, 2004, to report to the Controller and the Director of Finance the amount to be reduced from each categorical education program and identify the corresponding item of appropriation in the Budget Act of 2003. The bill would provide that on June 15, 2004, the amounts appropriated by those items are hereby reduced by the amounts reported by the superintendent. The bill would provide that the reductions shall be reductions in the amounts appropriated for purposes of Section 8 of Article XVI of the California Constitution for the 2003-04 fiscal year. (22) This bill would appropriate $570,263,000 from the General Fund, of which $370,263,000 would be appropriated to the Department of Education for the 2004-05 fiscal year for purposes of specified education programs and $200,000,000 would be appropriated to the Board of Governors of the California Community Colleges for apportionments to community college districts and for the Partnership for Excellence Program. The bill would provide that for the purposes of making the computations required by Section 8 of Article XVI of the California Constitution, the appropriation is General Fund revenues appropriated for school districts and community college districts for the 2004-05 fiscal year. (23) This bill would incorporate changes in Sections 44395 and 99234 of the Education Code that are contained in AB 96, Chapter 91 of the Statutes of 2003. (24) This bill would declare that it is to take effect immediately as an urgency statute. Appropriation: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 2557.5 of the Education Code is amended to read: 2557.5. (a) For the 1987-88 fiscal year, and each fiscal year thereafter, the revenue limit of any county superintendent of schools authorized pursuant to Section 2551, as that section read on January 1, 1999, may be increased by an amount sufficient to provide additional revenue equal to the expenditure estimated to be incurred by the county superintendent of schools in the budget year in complying with the following provisions of the Unemployment Insurance Code: Sections 605 and 803, Article 6 (commencing with Section 821) of Chapter 3 of Part 1 of Division 1, or Article 3 (commencing with Section 976) of Chapter 4 of Part 1 of Division 1, less the actual expenditures incurred by the county superintendent of schools in the 1975-76 fiscal year in complying with the following provisions of the Unemployment Insurance Code: Article 6 (commencing with Section 821) of Chapter 3 of Part 1 of Division 1 and former Section 605.2. (b) The increase in revenue limit provided in subdivision (a) shall be adjusted annually, including plus or minus adjustments for under- or over-estimating expenditures used in determining the increase in revenue limit provided by subdivision (a) in the previous fiscal year. (c) (1) For the 1994-95 to 2002-03 fiscal years, inclusive, the amount of the increase computed pursuant to this section may not be adjusted by the deficit factor applied to the revenue limit of each county superintendent of schools pursuant to Section 2558.45. (2) For the 2003-04 fiscal year and each fiscal year thereafter, the revenue limit reduction specified in Section 2558.46 may not be applied to the adjustment computed pursuant to this section. (d) Expenditures for employees of charter schools funded pursuant to Article 2 (commencing with Section 47633) of Chapter 6 of Part 26.8 are excluded from the calculations set forth in this section. SEC. 2. Section 2558 of the Education Code is amended to read: 2558. Notwithstanding any other law, for the 1979-80 fiscal year and each fiscal year thereafter, the Superintendent of Public Instruction shall apportion state aid to county superintendents of schools pursuant to this section. (a) The Superintendent of Public Instruction shall total the amounts computed for the fiscal year pursuant to Sections 2550, 2551.3, 2554, 2555, and 2557 and Section 2551, as that section read on January 1, 1999. For the 1979-80 fiscal year and for purposes of calculating the 1979-80 fiscal year base amounts in succeeding fiscal years, the amounts in Sections 2550, 2551, 2552, 2554, 2555, and 2557, as they read in the 1979-80 fiscal year, shall be multiplied by a factor of 0.994. For the 1981-82 fiscal year and for purposes of calculating the 1981-82 fiscal year base amounts in succeeding fiscal years, the amount in this subdivision shall be multiplied by a factor of 0.97. (b) For the 1995-96 fiscal year and each fiscal year thereafter, the county superintendent of schools shall adjust the total revenue limit computed pursuant to this section by the amount of increased or decreased employer contributions to the Public Employees' Retirement System resulting from the enactment of Chapter 330 of the Statutes of 1982, adjusted for any changes in those contributions resulting from subsequent changes in employer contribution rates, excluding rate changes due to the direct transfer of the state-mandated portion of the employer contributions to the Public Employees' Retirement System through the current fiscal year. The adjustment shall be calculated for each county superintendent of schools as follows: (1) Determine the amount of employer contributions that would have been made in the current fiscal year if the applicable Public Employees' Retirement System employee contribution rate in effect immediately prior to the enactment of Chapter 330 of the Statutes of 1982 were in effect during the current fiscal year. (2) Determine the actual amount of employer contributions made to the Public Employees' Retirement System in the current fiscal year. (3) If the amount determined in paragraph (1) is greater than the amount determined in paragraph (2), the total revenue limit computed pursuant to this part for that county superintendent of schools shall be decreased by the amount of the difference between those paragraphs; or if the amount determined in paragraph (1) is less than the amount determined in paragraph (2), the total revenue limit for that county superintendent of schools shall be increased by the amount of the difference between those paragraphs. (4) For the purposes of this subdivision, employer contributions to the Public Employees' Retirement System for any of the following positions shall be excluded from the calculation specified above: (A) Positions or portions of positions supported by federal funds that are subject to supplanting restrictions. (B) Positions supported by funds received pursuant to paragraph (1) of subdivision (a) of Section 54203. (C) Positions supported, to the extent of employers' contributions not exceeding twenty-five thousand dollars ($25,000) by any single educational agency, from a non-General Fund revenue source determined to be properly excludable from this subdivision by the Superintendent of Public Instruction with the approval of the Director of Finance. Commencing in the 2002-03 fiscal year, only positions supported from a non-General Fund revenue source determined to be properly excludable as identified for a particular local education agency or pursuant to a blanket waiver by the Superintendent of Public Instruction and the Director of Finance, prior to the 2002-03 fiscal year, may be excluded pursuant to this paragraph. (5) For accounting purposes, any reduction to county office of education revenue limits made by this subdivision may be reflected as an expenditure from appropriate sources of revenue as directed by the Superintendent of Public Instruction. (6) The amount of the increase or decrease to the revenue limits of county superintendents of schools made by this subdivision for the 1995-96 to 2001-02 fiscal years, inclusive, may not be adjusted by the deficit factor applied to the revenue limit of each county superintendent of schools pursuant to Section 2558.45. (7) For the 2003-04 fiscal year and any fiscal year thereafter, the revenue limit reduction specified in Section 2558.46 may not be applied to the amount of the increase or decrease to the revenue limits of each county superintendent of schools computed pursuant to paragraph (3). (c) The Superintendent of Public Instruction shall also subtract from the amount determined in subdivision (a) the sum of: (1) local property tax revenues received pursuant to Section 2573 in the then current fiscal year, and tax revenues received pursuant to Section 2556 in the then current fiscal year, (2) state and federal categorical aid for the fiscal year, (3) district contributions pursuant to Section 52321 for the fiscal year, and other applicable local contributions and revenues, (4) any amounts that the county superintendent of schools was required to maintain as restricted and not available for expenditure in the 1978-79 fiscal year as specified in the second paragraph of subdivision (c) of Section 6 of Chapter 292 of the Statutes of 1978, as amended by Chapter 51 of the Statutes of 1979, and (5) the amount received pursuant to subparagraph (C) of paragraph (3) of subdivision (a) of Section 33607.5 of the Health and Safety Code that is considered property taxes pursuant to that section. (d) The remainder computed in subdivision (c) shall be distributed in the same manner as state aid to school districts from funds appropriated to Section A of the State School Fund. (e) If the remainder determined pursuant to subdivision (c) is a negative amount, no state aid shall be distributed to that county superintendent of schools pursuant to subdivision (d), and an amount of funds of that county superintendent equal to that negative amount shall be deemed restricted and not available for expenditure during the current fiscal year. In the next fiscal year, that amount shall be considered local property tax revenue for purposes of the operation of paragraph (1) of subdivision (c). (f) The calculations set forth in paragraphs (1) to (3), inclusive, of subdivision (b) exclude employer contributions for employees of charter schools funded pursuant to Article 2 (commencing with Section 47633) of Chapter 6 of Part 26.8. SEC. 3. Section 2558.46 is added to the Education Code, to read: 2558.46. (a) (1) For the 2003-04 and 2004-05 fiscal years, the revenue limit for each county superintendent of schools determined pursuant to this article shall be reduced by a 1.195 percent deficit factor. (2) For the 2003-04 and 2004-05 fiscal years, the revenue limit for each county superintendent of schools determined pursuant to this article shall be further reduced by a 1.826 percent deficit factor. (b) In computing the revenue limit for each county superintendent of schools for the 2005-06 fiscal year pursuant to this article, the revenue limit shall be determined as if the revenue limit for that county superintendent of schools had been determined for the 2003-04 and 2004-05 fiscal years without being reduced by the deficit factors specified in this section. SEC. 4. Section 8222.5 of the Education Code is amended to read: 8222.5. (a) Alternative payment programs may provide payment to child care facilities with at least 75 percent subsidized children in any of the following circumstances: (1) There is a lack of licensed child care facilities in the area. (2) The facility is able to meet the special needs of a particular child. (3) Any other reason provided for by the department's regulations. (b) It is the intent of the Legislature that the Superintendent of Public Instruction adopt regulations to implement a process whereby a child care facility may apply to the department for funding pursuant to subdivision (a). (c) For the 2003-04 fiscal year, the Superintendent of Public Instruction may not adopt or implement regulations that differentiate provider reimbursement rates based upon the percentage of subsidized children receiving care in a facility. SEC. 5. Section 10554 of the Education Code is amended to read: 10554. (a) In order for the governing board to carry out its responsibilities pursuant to this chapter, there is hereby established the Educational Telecommunication Fund. The amount of moneys to be deposited in the fund shall be the amount of any offset made to the principal apportionments made pursuant to Sections 1909, 2558, 42238, 52616, Article 1.5 (commencing with Section 52335) of Chapter 9 of Part 28, and Chapter 7.2 (commencing with Section 56836) of Part 30, based on a finding that these apportionments were not in accordance with law. The maximum amount that may be annually deposited in the fund from the offset is fifteen million dollars ($15,000,000). The Controller shall establish an account to receive and expend moneys in the fund. The placement of the moneys in the fund shall occur only upon a finding by the Superintendent of Public Instruction and the Director of Finance that the principal apportionments made pursuant to Sections 1909, 2558, 42238, 52616, and Article 1.5 (commencing with Section 52335) of Chapter 9 of Part 28, and Chapter 7.2 (commencing with Section 56836) of Part 30 were not in accordance with existing law and were so identified pursuant to Sections 1624, 14506, 41020, 41020.2, 41320, 42127.2, and 42127.3, or an independent audit that was approved by the department. (b) Moneys in the fund established pursuant to subdivision (a) shall only be available for expenditure upon appropriation by the Legislature in the Budget Act. (c) The moneys in the fund established pursuant to subdivision (a) may be expended by the governing board to carry out the purposes of this chapter, including for the following purposes: (1) To support the activities of the team established pursuant to subdivision (c) of Section 10551. (2) To assist the school districts and county superintendents of schools in purchasing both hardware and software to allow school districts, county superintendents of schools, and the department to be linked for school business and administrative purposes. The governing board shall establish a matching share requirement that applicant school districts and county superintendents of schools must fulfill to receive those funds. It is the intent of the Legislature to encourage the distribution of grants to school districts and county superintendents of schools to the widest extent possible. (3) To provide technical assistance through county offices of education to school districts in implementing the standards established pursuant to subdivision (a) of Section 10552. SEC. 6. Section 13030 of the Education Code is amended to read: 13030. (a) Funding for this program is subject to an appropriation for this purpose in the annual Budget Act or other act. (b) Subject to an appropriation for this purpose in the annual Budget Act or other measure, the State Librarian shall review and identify programs with similar goals that may be combined with this project in the future. (c) Subject to an appropriation in the annual Budget Act or other measure for this purpose, the State Librarian shall report to the Legislature by November 1, 2004, on the progress of the program and on the results of the review required by subdivision (b). SEC. 7. Section 14002.1 of the Education Code is amended to read: 14002.1. Notwithstanding any other law, for purposes of determining (a) the amounts to be certified pursuant to Sections 14002 and 14004, (b) allocations made pursuant to Section 41301, (c) the apportionments required to be made pursuant to Sections 41330, 41332, and 41335, (d) revenue limits for school districts pursuant to Section 42238, as adjusted pursuant to Sections 42238.14, 42238.145, and 42238.146, and (e) revenue limits for county offices of education pursuant to Section 2558, as adjusted pursuant to Sections 2558.4, 2558.45, and 2558.46, the Superintendent of Public Instruction shall use the property tax estimates received from county auditors pursuant to Section 75.70 of the Revenue and Taxation Code. SEC. 8. Section 17070.76 is added to the Education Code, to read: 17070.76. Notwithstanding Section 17070.75, for the 2003-04 fiscal year, the board shall only require a school district to deposit into the account established pursuant to paragraph (1) of subdivision (b) of Section 17070.75 an amount equal to 2 percent of the total expenditures by a district from its general fund in the 2003-04 fiscal year. SEC. 9. Section 33128.3 is added to the Education Code, to read: 33128.3. (a) Notwithstanding the standards and criteria adopted pursuant to paragraph (3) of subdivision (a) of Section 33128, for the 2003-04 and 2004-05 fiscal years, the minimum state requirement for a reserve for economic uncertainties is one-half of the percentage for a reserve adopted by the State Board of Education pursuant to Section 33128 as of May 1, 2003. (b) For the 2005-06 fiscal year, the minimum state requirement for a reserve for economic uncertainties shall be restored to the percentage adopted by the State Board of Education pursuant to Section 33128 as of May 1, 2003. SEC. 10. Section 37253 of the Education Code is amended to read: 37253. (a) The governing board of any school district and a charter school may offer supplemental instructional programs in mathematics, science, or other core academic areas designated by the Superintendent of Public Instruction. (b) The Superintendent of Public Instruction shall adopt rules and regulations necessary to implement this section, including, but not limited to, the designation of academic areas other than mathematics and science as core academic areas. (c) The maximum entitlement of a school district or charter school for reimbursement for pupil hours of attendance in supplemental instructional programs offered pursuant to this section shall be an amount equal to 5 percent of the total enrollment of the school district or charter school for the prior fiscal year multiplied by 120 hours, multiplied by the hourly rate for the current fiscal year, as determined pursuant to subdivision (c) of Section 42239. (d) To the extent appropriated funding allows, a school district or charter school may enroll more than 5 percent of its pupils, or may enroll pupils for more than 120 hours per year, in supplemental instructional programs offered pursuant to this section, if the total state apportionment to the district or charter school for these programs does not exceed an amount computed equal to 10 percent of the total enrollment of the school district or charter school for the prior fiscal year multiplied by 120 hours, multiplied by the hourly rate for the current fiscal year, as determined pursuant to subdivision (c) of Section 42239. (e) Instructional programs may be offered pursuant to this section during the summer, before school, after school, on Saturday, or during intersession, or in any combination of summer, before school, after school, Saturday, or intersession instruction, but shall be in addition to the regular schoolday. Any minor pupil whose parent or guardian informs the school district that the pupil is unable to attend a Saturday school program for religious reasons, or any pupil 18 years of age or older who states that he or she is unable to attend a Saturday school program for religious reasons, shall be given priority for enrollment in supplemental instruction offered at a time other than Saturday, over a pupil who is not unable to attend a Saturday school program for religious reasons. (f) Notwithstanding any other law, neither the State Board of Education nor the Superintendent of Public Instruction may waive compliance with any provision of this section. SEC. 11. Section 41203.1 of the Education Code is amended to read: 41203.1. (a) For the 1990-91 fiscal year and each fiscal year thereafter, allocations calculated pursuant to Section 41203 shall be distributed in accordance with calculations provided in this section. Notwithstanding Section 41203, and for the purposes of this section, school districts, community college districts, and direct elementary and secondary level instructional services provided by the State of California shall be regarded as separate segments of public education, and each of these three segments of public education shall be entitled to receive respective shares of the amount calculated pursuant to Section 41203 as though the calculation made pursuant to subdivision (b) of Section 8 of Article XVI of the California Constitution were to be applied separately to each segment and the base year for the purposes of this calculation under paragraph (1) of subdivision (b) of Section 8 of Article XVI of the California Constitution were based on the 1989-90 fiscal year. Calculations made pursuant to this subdivision shall be made so that each segment of public education is entitled to the greater of the amounts calculated for that segment pursuant to paragraph (1) or (2) of subdivision (b) of Section 8 of Article XVI of the California Constitution. (b) If the single calculation made pursuant to Section 41203 yields a guaranteed amount of funding that is less than the sum of the amounts calculated pursuant to subdivision (a), then the amount calculated pursuant to Section 41203 shall be prorated for the three segments of public education. (c) Notwithstanding any other law, this section does not apply to the 1992-93 to 2003-04 fiscal years, inclusive. SEC. 12. Section 41975 of the Education Code is amended to read: 41975. (a) Apportionments and allowances to a school district from Section A of the State School Fund in a fiscal year may not be less than the product of one hundred twenty dollars ($120) multiplied by the average daily attendance of the district in the preceding fiscal year, or two thousand four hundred dollars ($2,400), whichever amount is the greater. (b) State funds apportioned to each school district for categorical education programs, or other state funds apportioned to each school district from the State School Fund, shall be applied to meet the requirement of Section 6 of Article IX of the California Constitution to provide a minimum of one hundred twenty dollars ($120) of state aid per pupil or two thousand four hundred dollars ($2,400) per school district. (c) Notwithstanding any other law, the Superintendent of Public Instruction may not increase the revenue limit apportionment of any school district to provide basic state aid pursuant to Section 6 of Article IX of the California Constitution or any other law, unless that school district has not received the greater amount of one hundred twenty dollars ($120) per pupil or two thousand four hundred dollars ($2,400) from all state funds, including funds for categorical education programs. If a school district receives less than the amount specified in this subdivision, the Superintendent of Public Instruction shall allocate the difference between the amount of state funds received and the constitutional minimum of the greater amount of one hundred twenty dollars ($120) per pupil or two thousand four hundred dollars ($2,400) per school district. SEC. 13. Section 42238.12 of the Education Code is amended to read: 42238.12. (a) For the 1995-96 fiscal year and each fiscal year thereafter, the county superintendent of schools shall adjust the total revenue limit for each school district in the jurisdiction of the county superintendent of schools by the amount of increased or decreased employer contributions to the Public Employees' Retirement System resulting from the enactment of Chapter 330 of the Statutes of 1982, adjusted for any changes in those contributions resulting from subsequent changes in employer contribution rates, excluding rate changes due to the direct transfer of the state-mandated portion of the employer contributions to the Public Employees' Retirement System, through the current fiscal year. The adjustment shall be calculated for each school district, as follows: (1) (A) Determine the amount of employer contributions that would have been made in the current fiscal year if the applicable Public Employees' Retirement System employer contribution rate in effect immediately prior to the enactment of Chapter 330 of the Statutes of 1982 were in effect during the current fiscal year. (B) For the purposes of this calculation, no school district shall have a contribution rate higher than 13.020 percent. (2) Determine the actual amount of employer contributions made to the Public Employees' Retirement System in the current fiscal year. (3) If the amount determined in paragraph (1) for a school district is greater than the amount determined in paragraph (2), the total revenue limit computed for that school district shall be decreased by the amount of the difference between those paragraphs; or, if the amount determined in paragraph (1) for a school district is less than the amount determined in paragraph (2), the total revenue limit for that school district shall be increased by the amount of the difference between those paragraphs. (4) For the purpose of this section, employer contributions to the Public Employees' Retirement System for any of the following positions shall be excluded from the calculation specified above: (A) Positions or portions of positions supported by federal funds that are subject to supplanting restrictions. (B) Positions supported by funds received pursuant to paragraph (1) of subdivision (a) of Section 54203. (C) Positions supported, to the extent of employers' contributions not exceeding twenty-five thousand dollars ($25,000) by any single educational agency, from a non-General Fund revenue source determined to be properly excludable from this section by the Superintendent of Public Instruction with the approval of the Director of Finance. Commencing in the 2002-03 fiscal year, only positions supported from a non-General Fund revenue source determined to be properly excludable as identified for a particular local educational agency or pursuant to a blanket waiver by the Superintendent of Public Instruction and the Director of Finance, prior to the 2002-03 fiscal year, may be excluded pursuant to this paragraph. (5) For accounting purposes, any reduction to district revenue limits made by this provision may be reflected as an expenditure from appropriate sources of revenue as directed by the Superintendent of Public Instruction. (6) The amount of the increase or decrease to the revenue limits of school districts computed pursuant to paragraph (3) for the 1995-96 to 2002-03 fiscal years, inclusive, may not be adjusted by the deficit factor applied to the revenue limit of each school district pursuant to Section 42238.145. (7) For the 2003-04 fiscal year and any fiscal year thereafter, the revenue limit reduction specified in Section 42238.146 may not be applied to the amount of the increase or decrease to the revenue limits of school districts computed pursuant to paragraph (3). (b) The calculations set forth in paragraphs (1) to (3), inclusive, of subdivision (a) exclude employer contributions for employees of charter schools funded pursuant to Article 2 (commencing with Section 47633) of Chapter 6 of Part 26.8. (c) Funding appropriated through the Budget Act of 2001 or legislation amending the Budget Act of 2001 for the purpose of limiting the reductions to revenue limits calculated pursuant to this section and to Section 2558 for the 2001-02 fiscal year shall be allocated on a one-time basis in the following manner: (1) Each school district and county office of education subject to a reduced apportionment pursuant to this section or to Section 2558 shall receive a share of the amount described in paragraph (3) that is proportionate to the reduction in their apportionment pursuant to this section or to Section 2558 for the 2001-02 fiscal year as compared to the statewide total reduction that would occur absent this paragraph. (2) For the 2001-02 fiscal year, instead of the alternative calculation authorized by paragraph (1), San Francisco Unified School District shall receive an amount equal to five dollars and 57 cents ($5.57) multiplied by its second principal apportionment average daily attendance for the 2001-02 fiscal year. (3) Notwithstanding any other law, total allocations pursuant to this subdivision may not exceed thirty-five million dollars ($35,000,000). (d) Thirty-five million dollars ($35,000,000) is hereby appropriated from the General Fund for transfer to Section A of the State School Fund for local assistance for the purpose of limiting the reductions to revenue limits calculated pursuant to this section and to Section 2558 for the 2003-04 fiscal year. Funding from this appropriation shall be allocated in the following manner: (1) Each school district and county office of education subject to a reduced apportionment pursuant to this section or to Section 2558 shall receive a share of the amount appropriated in this subdivision that is proportionate to the reduction in their apportionment pursuant to this section or to Section 2558 for the 2003-04 fiscal year as compared to the statewide total reduction that would occur absent this paragraph. (2) For the 2003-04 fiscal year, instead of the alternative calculation authorized by paragraph (1), the San Francisco Unified School District shall receive an amount equal to five dollars and 57 cents ($5.57) multiplied by its second principal apportionment average daily attendance for the 2003-04 fiscal year. (3) Notwithstanding any other law, total allocations pursuant to this subdivision may not exceed thirty-five million dollars ($35,000,000) for the 2003-04 fiscal year. (4) For the purposes of making the computations required by Section 8 of Article XVI of the California Constitution, the appropriation made by this section shall be deemed to be "General Fund revenues appropriated for school districts," as defined in subdivision (c) of Section 41202, for the 2003-04 fiscal year and included within the "total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIII B," as defined in subdivision (e) of Section 41202, for the 2003-04 fiscal year. (e) For the 2004-05 fiscal year, and each fiscal year thereafter, apportionment reductions pursuant to this section and to Section 2558 shall be limited as follows: (1) Each school district and county office of education subject to a reduced apportionment pursuant to this section or to Section 2558 shall receive a share of the amount described in paragraph (3) that is proportionate to the reduction in their apportionment pursuant to this section or to Section 2558 for the 2004-05 fiscal year as compared to the statewide total reduction as would occur absent this paragraph. (2) Instead of the alternative calculation authorized by paragraph (1), the San Francisco Unified School District shall receive funding equal to the amount of funding per unit of average daily attendance specified in paragraph (2) of subdivision (c) as increased annually by cost-of-living adjustments specified in Section 42238.1, multiplied by its second principal apportionment average daily attendance for that fiscal year. (3) Notwithstanding any other law, total limitations pursuant to this subdivision may not annually exceed the amount described in paragraph (3) of subdivision (c) as annually increased by the cost-of-living adjustments specified in Section 42238.1, multiplied by the annual statewide percentage growth in total average daily attendance, measured at the second principal apportionment. SEC. 14. Section 42238.146 is added to the Education Code, to read: 42238.146. (a) (1) For the 2003-04 and 2004-05 fiscal years, the revenue limit for each school district determined pursuant to this article shall be reduced by a 1.198 percent deficit factor. (2) For the 2003-04 and 2004-05 fiscal years, the revenue limit for each school district determined pursuant to the article shall be further reduced by a 1.826 percent deficit factor. (b) In computing the revenue limit for each school district for the 2005-06 fiscal year pursuant to this article, the revenue limit shall be determined as if the revenue limit for that school district had been determined for the 2003-04 and 2004-05 fiscal years without being reduced by the deficit factors specified in this section. SEC. 15. Section 42239.1 of the Education Code is amended to read: 42239.1. (a) For the 1999-2000 fiscal year and each fiscal year thereafter, each school district is eligible for reimbursement for hours of pupil attendance claimed for intensive reading programs offered pursuant to Article 1 (commencing with Section 53025) of Chapter 16 of Part 28 in an amount up to 10 percent of the district's total enrollment in kindergarten and grades 1 to 4, inclusive, for the prior fiscal year multiplied by 120 hours, multiplied by the hourly rate for the current fiscal year determined pursuant to subdivision (c) of Section 42239. This amount shall be provided in addition to amounts claimed pursuant to Sections 37252, 37252.2, 37252.5, 35252.6, 37252.8, and 37253. (b) When expending funds received pursuant to this section, a school district shall give first priority for the purpose specified in paragraph (1) of subdivision (c) of Section 53027. (c) Reimbursement pursuant to this section is contingent on an appropriation being made for that purpose in the annual Budget Act. SEC. 16. Section 42239.15 of the Education Code is amended to read: 42239.15. (a) For the 2000-01 fiscal year and each fiscal year thereafter, each school district and charter school is eligible for reimbursement for hours of pupil attendance claimed for intensive algebra instruction academies offered pursuant to Chapter 18 (commencing with Section 53091) of Part 28 in an amount up to 6 percent of the total enrollment in grades 7 and 8 of the school district or charter school for the prior fiscal year multiplied by 120 hours, multiplied by the hourly rate for the current fiscal year determined pursuant to subdivision (c) of Section 42239. This amount shall be provided in addition to the amount provided pursuant to Section 42239. (b) When expending funds received pursuant to this section, a school district shall give first priority for the purpose specified in paragraph (1) of subdivision (d) of Section 53092. (c) Reimbursement pursuant to this section is contingent on an appropriation being made for that purpose in the annual Budget Act. SEC. 17. Section 42241.7 of the Education Code is amended to read: 42241.7. (a) For the 1978-79 fiscal year, and each fiscal year thereafter, the revenue limit of any elementary, high, or unified school district authorized pursuant to Sections 42237 and 42238 may be increased by an amount sufficient to provide additional revenue equal to the expenditures estimated to be incurred by the district in the budget year in complying with the following provisions of the Unemployment Insurance Code: Sections 605 and 803, Article 6 (commencing with Section 821) of Chapter 3 of Part 1 of Division 1, or Article 3 (commencing with Section 976) of Chapter 4 of Part 1 of Division 1, less the actual expenditures incurred by the district in the 1975-76 fiscal year in complying with the following provisions of the Unemployment Insurance Code: Section 605.2 and Article 6 (commencing with Section 821) of Chapter 3 of Part 1 of Division 1. (b) If, at the end of any fiscal year, the actual expenditures of the district specified in subdivision (a) are less than the revenue derived from the increase in revenue limit provided in subdivision (a) for that fiscal year, the difference shall be used in the following fiscal year exclusively for expenditures required pursuant to the Unemployment Insurance Code provisions specified in subdivision (a). (c) If, at the end of any fiscal year, the actual expenditures of the district specified in subdivision (a) exceed the revenue derived from the increase in revenue limit provided in subdivision (a) for that fiscal year, the difference may be added to the increase in revenue limit, authorized pursuant to this section, in the following fiscal year. (d) (1) For the 1994-95 to 2002-03 fiscal years, inclusive, the adjustment computed pursuant to this section shall not be adjusted by the deficit factor applied to the revenue limit of each school district pursuant to Section 42238.145. (2) For the 2003-04 fiscal year and each fiscal year thereafter, the revenue limit reduction specified in Section 42238.146 may not be applied to the adjustment computed pursuant to this section. (e) Expenditures for employees of charter schools funded pursuant to Article 2 (commencing with Section 47633) of Chapter 6 of Part 26.8 are excluded from the calculations set forth in this section. SEC. 18. Section 42243.7 of the Education Code is amended to read: 42243.7. (a) For any school district that commenced operations on or after June 30, 1978, or for any school district that receives approval from the department for a new continuation education high school for the 1979-80 fiscal year, or any fiscal year thereafter, the Superintendent of Public Instruction shall compute an adjustment to the district revenue limit pursuant to this section. (b) Determine the amount of foundation program that the district would have been entitled to pursuant to subdivision (a) of Section 41711, as that Section read on July 1, 1977, if the district had operated during the 1977-78 fiscal year, utilizing the number of units of average daily attendance attending high school in the district in the fiscal year for which the revenue limit is being computed. (c) Determine the amount of foundation program that the district would have been entitled to pursuant to paragraph (1) of subdivision (b) of Section 41711, as that section read on July 1, 1977, if the district had operated during the 1977-78 fiscal year, utilizing the same number of units of average daily attendance used in subdivision (b) of this section. (d) Subtract the amount determined pursuant to subdivision (c) from the amount computed pursuant to subdivision (b). (e) The amount computed pursuant to subdivision (d), if greater than zero, shall be added to the revenue limit computed pursuant to subdivision (c) of Section 42237 or pursuant to Section 42238. If the amount in subdivision (d) is less than zero there is no adjustment. (f) The Superintendent of Public Instruction shall reduce by the amount computed pursuant to subdivision (e) the revenue limit computed pursuant to Section 42238 of any district discontinuing the operation of a continuation education school approved pursuant to subdivision (a). (g) (1) For the 1994-95 to 2002-03 fiscal years, inclusive, the adjustment computed pursuant to this section may not be adjusted by the deficit factor applied to the revenue limit of each school district pursuant to Section 42238.145. (2) For the 2003-04 fiscal year and each fiscal year thereafter, the revenue limit reduction specified in Section 42238.146 may not be applied to the adjustment computed pursuant to this section. (h) The adjustment computed pursuant to this section for a new continuation education high school may be applicable for any unified school district that was not fully operational during the first year of operation of the continuation education high school. The number of units of average daily attendance to be used in computing the adjustment shall be the number of units of average daily attendance generated by the continuation education high school in the district for the first year that the district is fully operational in all grades. (i) In the 1998-99 fiscal year and each fiscal year thereafter, the ranges of average daily attendance resulting from the calculation set forth in this section pursuant to Section 41711, as that section read on July 1, 1977, shall be reduced by the statewide average percentage that absences excused pursuant to subdivision (b) of Section 46010, as that section read on July 1, 1996, were of total second principal apportionment regular average daily attendance for high schools in 1996-97, with the reduced ranges then rounded to the nearest integer. SEC. 19. Section 44395 of the Education Code is amended to read: 44395. (a) The National Board for Professional Teaching Standards Certification Incentive Program is hereby established to award grants to school districts for the purpose of providing awards to teachers who are employed by school districts or charter schools, are assigned to teach in California public schools, and have attained certification from the National Board for Professional Teaching Standards. Awards shall be granted to the extent that funds have been appropriated for this purpose in the annual Budget Act. (1) Commencing July 1, 2000, any teacher who has attained certification from the National Board for Professional Teaching Standards is eligible to receive an award of up to twenty thousand dollars ($20,000) if he or she agrees to teach at a high-priority school for at least four years. Teaching service before July 1, 2000, may not be counted towards satisfaction of this four-year commitment. (2) Awards granted pursuant to this subdivision shall be disbursed in annual payments of five thousand dollars ($5,000) over a four-year period. The annual payment shall be made upon completion of the school year, and upon approval of a district-certified application pursuant to the guidelines of subdivision (c) of Section 44396. (b) The department shall administer the awards authorized by subdivision (a), and shall develop, in consultation with the Commission on Teacher Credentialing, certification and award information, criteria, procedures, and applications, all of which shall be submitted to the State Board of Education for approval. Amendments requested by the State Board of Education to that information, criteria, procedures, and applications shall be made before the dissemination of the material and the granting of any award under this article. (c) The department shall distribute the materials described in subdivision (b) to school districts. Each school district is strongly encouraged to ensure that teachers employed by the district or by charter schools affiliated with the district are informed about the program and can acquire the necessary application and information materials. (d) School districts are encouraged to provide for adequate release time and support for a teacher to complete the certification process. As a condition to providing that release time and support, a school district may require that a teacher serve in a mentor teacher capacity. (e) For purposes of this article, the following definitions apply: (1) "School district" means school district, county board of education, county superintendent of schools, a state operated program, including a special school, or an education program providing instruction in kindergarten or any of grades 1 to 12, inclusive, that is offered by a state agency, including the California Youth Authority and the State Department of Developmental Services. (2) "High-priority school" means a school in the bottom half of all schools based on the Academic Performance Index rankings established pursuant to subdivision (a) of Section 52056. This designation shall be determined as of the date of the agreement by the teacher described in paragraph (1) of subdivision (a). SEC. 20. Section 48005.10 of the Education Code is amended to read: 48005.10. (a) This article shall be known, and may be cited, as the Kindergarten Readiness Pilot Program. (b) The Legislature hereby finds and declares the following: (1) The available data indicate all of the following: (A) By changing the age at which children generally enter kindergarten, California's children will be better prepared to enter into the academic environment that is required by the California content standards for kindergarten. (B) Success in school is often related to socioeconomic status, English language fluency at school entry, and access to preschool. By providing a kindergarten readiness program for the children most at risk for low performance and delaying entry to allow all children time to become more developmentally ready to learn, pupils are more likely to succeed in school. (C) Comparisons between California pupils and pupils in other states on national achievement tests in the later grades are likely to be more equitable if the entry age of California pupils is more closely aligned to that of most other states. (D) Children who have attended an educationally based kindergarten readiness program, including, but not limited to, a quality state preschool, Head Start, or kindergarten readiness program, are better prepared academically and socially for the existing kindergarten curriculum, as reflected by the state adopted standards. (2) The purpose of the pilot project established pursuant to this article is intended to test these data. (3) For participating school districts, the change in enrollment required pursuant to this article will result in a decrease in the number of pupils enrolled in kindergarten classes for the class entering kindergarten in the 2006-07 school year. Thus, it is estimated that in participating school districts there will be a 25 percent decrease in the enrollment of the kindergarten class in the initial year of implementation. (4) The school district revenue related provision of this article in Section 48005.30 is intended to fully fund participation in the program and provide an incentive to participate. SEC. 21. Section 48005.13 of the Education Code is amended to read: 48005.13. (a) The Superintendent of Public Instruction shall establish and administer the Kindergarten Readiness Pilot Program to permit school districts to provide opportunities for children to enhance their readiness for kindergarten, thereby increasing their likelihood for future academic success. (b) The Superintendent of Public Instruction shall convene an advisory panel to assist the department in developing its request for proposals, and in evaluating and selecting the proposals submitted to the department. The advisory panel shall include, but need not be limited to, a representative of each of the following: (1) The Department of Finance. (2) The Legislature. (3) The California Research Bureau. (4) The Legislative Analyst. (5) The State Board of Education. (6) The Secretary for Education. (c) By February 1, 2006, the superintendent shall notify elementary and unified school districts maintaining kindergarten about the existence of this program, shall notify them about the procedures for participation, and shall request proposals for participation. (d) Participation in the program by a school district shall be voluntary. (e) A school district that elects to participate in the program shall apply to the Superintendent of Public Instruction by May 1, 2006, upon forms adopted by the superintendent for this purpose. (f) The Superintendent of Public Instruction, with the advice of the advisory panel, and in consultation with the Secretary for Education, shall select participants from the group of applicants. The Superintendent of Public Instruction shall give priority to applicant school districts that are representative of the diversity of pupils and of the various types of school districts within the state. The Superintendent of Public Instruction shall also give priority to unified school districts. (g) This article does not prohibit a school district from implementing the program in selected schools within the district if adequate records are kept to substantiate the accuracy of the declining enrollment incentive and limits on prekindergarten instruction funding provided pursuant to Section 48005.30. SEC. 22. Section 48005.15 of the Education Code is amended to read: 48005.15. By July 1, 2006, each participant school district shall enter into an agreement with the Superintendent of Public Instruction setting forth the requirements under the program, including, but not limited to, all of the following: (a) The participating school district shall make a reasonable effort to identify parents and guardians of children from three to five years of age who reside within the school district and to provide the parents and guardians with information regarding, and access to, services, programs, or methods, to assist them in assessing the level of readiness of a child to enter school. (b) The effort set forth in subdivision (a) shall include, but need not be limited to, information regarding available care services, preschool programs, and educationally based kindergarten readiness programs. The school district may coordinate this effort with local parent-teacher organizations. (c) "Reasonable effort" as used in this subdivision does not require that the school district individually contact every potential parent who resides within the school district. (d) The school district shall provide assistance to parents or guardians who request assistance regarding activities that parents may initiate in preparing children for school. (e) At a minimum, participating school districts shall supply parents or guardians with written readiness guidelines developed by the department. (f) Assistance provided pursuant to this section shall be based on generally accepted child development theory and may include information related to social and development readiness and professional consultations with teachers and school administrators. (g) The participating school district shall make a reasonable effort to collect data and make it available to the independent evaluator, as specified in Section 48005.45. SEC. 23. Section 48005.25 of the Education Code is amended to read: 48005.25. (a) Notwithstanding any law, including, but not limited to, Section 48000, for the 2006-07 school year, and each school year thereafter in which a school district continues to participate in the program, the school district shall offer admission to kindergarten at the beginning of the school year, or at a later time in the same school year, only to children who will have their fifth birthday on or before September 1 of that school year. For a school district that is not implementing the pilot project authorized by this article on a districtwide basis, this subdivision applies only to children whose residence is in the regular attendance boundary of a participating school or who would otherwise attend that school under school assignment policies established in the school year prior to implementation of this pilot program. (b) Notwithstanding any law, including, but not limited to, Section 48010, for the 2007-08 school year, and each school year thereafter in which a school district continues to participate in the program, a school district shall offer admission to first grade at the beginning of the school year, or at a later time in the same school year, only to children who will have their sixth birthday on or before September 1 of that school year. Kindergarten may not be a prerequisite for enrollment in first grade pursuant to this article. For a school district that is not implementing the pilot project authorized by this article on a districtwide basis, this subdivision applies only to children whose residence is in the regular attendance boundary of a participating school or who would otherwise attend that school under school assignment policies established in the school year prior to implementation of this pilot program. (c) Notwithstanding subdivisions (a) and (b), the governing board of each school district participating in this program shall adopt a policy to allow, for good cause, admission of a child to kindergarten or to the first grade at the beginning of a school year in which the child's birthday will be after September 1, or at a later time in the same school year. It is the intent of the Legislature that this subdivision authorize rare exceptions for only the most gifted and socially mature children. Therefore, exceptions are limited to no more than the greater of either one child or the number of children determined by multiplying .01 times the prior school year second principal apportionment average daily attendance in kindergarten within the participating school district or the school implementing the program, as applicable. A school or school district may not exceed this limitation without specific written approval from the Superintendent of Public Instruction upon consideration of a statement by the school or school district of the circumstances that meet the legislative intent regarding this subdivision. SEC. 24. Section 48005.30 of the Education Code is amended to read: 48005.30. (a) For the 2006-07 to 2012-13 school years, inclusive, the Superintendent of Public Instruction shall allocate a grant of funds for a participating school district for each year of participation to cover the costs of developing and operating the school district kindergarten readiness program, including, but not limited to, the costs of administration and the costs associated with services provided to parents and children in the program. For any participating school district, annual funding is subject to the limitations and requirements of this subdivision and may not exceed the per-pupil amount nor the total amount computed as follows: (1) Five dollars ($5) per hour for each hour of attendance for each child participating in the kindergarten readiness program up to a maximum of 150 hours of attendance for each child. The amount per hour shall be adjusted annually, commencing with the 2007-08 school year for the inflation adjustment calculated pursuant to subdivision (b) of Section 42238.1. (2) For purposes of total funding to a participating school district, the amount claimed may not exceed an amount equivalent to multiplying the amount in paragraph (1) by a number equal to 50 percent of the entire kindergarten second principal apportionment average daily attendance for the 2005-06 school year of the school district or, in a school district that is not implementing the pilot project authorized by this article on a districtwide basis, by a number equal to 50 percent of the kindergarten second principal apportionment average daily attendance for the 2005-06 school year of the schools in the district that are implementing the program. (b) For the 2006-07 school year, the Superintendent of Public Instruction shall allocate a one-time incentive grant to enhance transition of the school district for the reduced attendance that results from the program, to be determined by multiplying one-fourth of the kindergarten average daily attendance for the 2005-06 school year by the school district's base revenue limit per unit of average daily attendance. If a school district does not implement the program districtwide, this one-time incentive shall be determined by multiplying one-fourth of the specific portion of the district's kindergarten average daily attendance for the 2005-06 school year contributed by the implementing school or schools by the school district's base revenue limit per unit of average daily attendance. (c) A participating school district that does not implement the program on a districtwide basis shall provide to the Superintendent of Public Instruction a statement certifying the following: (1) The second principal apportionment average daily attendance in the implementing schools for the 2005-06 school year. The school district shall maintain these records for audit purposes. The Superintendent of Public Instruction may request documentation of the second principal apportionment average daily attendance in schools implementing the program as deemed necessary to enforce the funding limits of this article. (2) Attendance boundaries for the schools implementing the program will remain the same as they existed in the 2005-06 school year through the duration of the program, unless the district submits an application to and receives approval from the State Board of Education. The State Board of Education shall only consider applications for attendance boundary changes for participating schools in cases where significant population changes necessitate the opening of new schools or the closing of existing schools. In order to preserve the integrity of the evaluation required by this article, it is the intent of the Legislature that a school district applying to participate in the program on a less than districtwide basis avoid implementation of the program in schools that can reasonably be foreseen to be subject to boundary changes within the timeframe of the pilot program authorized in this article. The State Board of Education may not approve boundary changes that do not meet the requirements and intent of this paragraph. (3) The district has established procedures that restrict attendance in nonparticipating schools of the district for children residing in the attendance boundaries of the schools implementing the program. (d) Total incentive funding for reduced second principal apportionment average daily attendance provided pursuant to this article shall be subject to a statewide maximum funding level equal to the equivalent of 2,300 full annual units of average daily attendance multiplied by the statewide average school district revenue limit for the 2006-07 fiscal year as determined by the Department of Finance. SEC. 25. Section 48005.35 of the Education Code is amended to read: 48005.35. (a) A school district kindergarten readiness program operated pursuant to this article is exempt from the requirements of the Class Size Reduction Program (Ch. 6.10 (commencing with Sec. 52150), Pt. 28) and the regulations adopted by the Superintendent of Public Instruction pursuant to Section 8261 if the program meets kindergarten staffing and safety requirements. (b) Notwithstanding any other law, including, but not limited to, subdivision (a) of Section 17285, a commercial building that does not meet the requirements of Section 17280, that is leased to a school district may, until January 1, 2007, be used as a classroom in order to accommodate programs under this article if the governing board of the school district finds that conditions of subdivision (b) of Section 17285 have been met. (c) Any teacher participating in the kindergarten readiness program shall hold a permit or credential issued by the Commission on Teacher Credentialing that authorizes instruction in kindergarten or child care and development. SEC. 26. Section 48005.45 of the Education Code is amended to read: 48005.45. (a) The Superintendent of Public Instruction shall, by June 1, 2007, contract for an independent longitudinal evaluation regarding the effects of the change in the entry age for kindergarten and first grade pursuant to this article. In selecting the independent evaluator, awarding the contract pursuant to this section, and in monitoring performance under the contract, the Superintendent of Public Instruction shall consult with the advisory panel convened pursuant to subdivision (b) of Section 48005.13. (b) The evaluation shall be based upon samples of sufficient size and diversity to allow results to be reported separately for pupils of different ethnicity, socioeconomic status, and primary language, and results of the evaluation shall be so reported. (c) The primary purpose of the evaluation is to determine whether this entry age change results in improved readiness for school and an improvement in academic achievement among participating children. (d) The evaluation shall use representative sampling to identify the change's effects on all of the following: (1) Academic achievement, as measured by standardized tests, as compared with pupils not participating in the program. (2) Behavioral problems, as measured by objective data including, but not limited to, suspension and expulsion rates, as compared with pupils not participating in the program. (3) Academic problems, as measured by referrals to special education and remedial programs, as compared with pupils not participating in the program. (4) Age of kindergarten entry and previous educationally based preschool experience, including, but not limited to, access to child care and preschool by parents or guardians. (5) Overall retention rates in kindergarten and in subsequent grades. (6) Participation in remedial, supplemental, or summer school programs. (7) Class size. (8) Number of pupils participating in kindergarten. (9) Number of pupils participating in the kindergarten readiness programs. (10) Differences, if any, between programs with full preschool participation, and those with partial or no preschool. (11) Child care difficulties caused by the admission age change. (12) Demographic breakdown of participants and nonparticipants, including, but not limited to, socioeconomic and ethnic demographics. (13) Facilities difficulties, if any, encountered by participating school districts. (14) The ability of parents to gain access to the program, disaggregated by ethnic, primary language, and socioeconomic status. (e) It is the intent of the Legislature that funding for this evaluation be included in the Budget Act or a bill related to the Budget Act. It is the intent of the Legislature to subsequently increase the number of hours funded for the kindergarten readiness program if the reports pursuant to this section indicate that the increase would be beneficial. (f) (1) The independent evaluator shall report to the Legislature, the Governor, the Superintendent of Public Instruction, the State Board of Education, and the Secretary for Education. (2) The initial report shall be filed by June 1, 2009. The interim report shall be filed by January 1, 2011. The final report shall be filed by January 1, 2012. SEC. 27. Section 48005.55 of the Education Code is amended to read: 48005.55. This article shall become inoperative on July 1, 2013, and, as of January 1, 2014, is repealed, unless a later enacted statute, that becomes operative on or before January 1, 2014, deletes or extends the dates on which it becomes inoperative and is repealed. SEC. 28. Section 69618.9 of the Education Code is amended to read: 69618.9. Commencing with the 1998-99 fiscal year, the commission shall issue warrants for the assumption of up to 500 student loans for program participants eligible under this article. The issuance of warrants shall be subject to funding to be provided in the annual Budget Act for each fiscal year. Notwithstanding any other provision of law, no warrants for the assumption of loans under this article shall be issued in the 2003-04 fiscal year. SEC. 29. Section 76300 of the Education Code is amended to read: 76300. (a) The governing board of each community college district shall charge each student a fee pursuant to this section. (b) (1) The fee prescribed by this section shall be eighteen dollars ($18) per unit per semester, effective with the fall term of the 2003-04 academic year. (2) The chancellor shall proportionately adjust the amount of the fee for term lengths based upon a quarter system, and also shall proportionately adjust the amount of the fee for summer sessions, intersessions, and other short-term courses. In making these adjustments, the chancellor may round the per unit fee and the per term or per session fee to the nearest dollar. (c) For the purposes of computing apportionments to community college districts pursuant to Section 84750, the chancellor shall subtract, from the total revenue owed to each district, 98 percent of the revenues received by districts from charging a fee pursuant to this section. (d) The chancellor shall reduce apportionments by up to 10 percent to any district that does not collect the fees prescribed by this section. (e) The fee requirement does not apply to any of the following: (1) Students enrolled in the noncredit courses designated by Section 84757. (2) California State University or University of California students enrolled in remedial classes provided by a community college district on a campus of the University of California or a campus of the California State University, for whom the district claims an attendance apportionment pursuant to an agreement between the district and the California State University or the University of California. (3) Students enrolled in credit contract education courses pursuant to Section 78021, if the entire cost of the course, including administrative costs, is paid by the public or private agency, corporation, or association with which the district is contracting and if these students are not included in the calculation of the full-time equivalent students (FTES) of that district. (f) The governing board of a community college district may exempt special part-time students admitted pursuant to Section 76001 from the fee requirement. (g) (1) The fee requirements of this section shall be waived for any student who, at the time of enrollment, is a recipient of benefits under the Temporary Assistance to Needy Families program, the Supplemental Security Income/State Supplementary Program, or a general assistance program or has demonstrated financial need in accordance with the methodology set forth in federal law or regulation for determining the expected family contribution of students seeking financial aid. (2) The governing board of a community college district also shall waive the fee requirements of this section for any student who demonstrates eligibility according to income standards established by the board of governors and contained in Section 58620 of Title 5 of the California Code of Regulations. (h) The fee requirements of this section shall be waived for any student who, at the time of enrollment is a dependent, or surviving spouse who has not remarried, of any member of the California National Guard who, in the line of duty and while in the active service of the state, was killed, died of a disability resulting from an event that occurred while in the active service of the state, or is permanently disabled as a result of an event that occurred while in the active service of the state. "Active service of the state," for the purposes of this subdivision, refers to a member of the California National Guard activated pursuant to Section 146 of the Military and Veterans Code. (i) The fee requirements of this section shall be waived for any student who is the surviving spouse or the child, natural or adopted, of a deceased person who met all of the requirements of Section 68120. (j) The fee requirements of this section shall be waived for any student in an undergraduate program, including a student who has previously graduated from another undergraduate or graduate program, who is the dependent of any individual killed in the September 11, 2001, terrorist attacks on the World Trade Center and the Pentagon or the crash of United Airlines Flight 93 in southwestern Pennsylvania, if that dependent meets the financial need requirements set forth in Section 69432.7 for the Cal Grant A Program and either of the following apply: (1) The dependent was a resident of California on September 11, 2001. (2) The individual killed in the attacks was a resident of California on September 11, 2001. (k) A determination of whether a person is a resident of California on September 11, 2001, for purposes of subdivision (j) shall be based on the criteria set forth in Chapter 1 (commencing with Section 68000) of Part 41 for determining nonresident and resident tuition. (l) (1) "Dependent," for purposes of subdivision (j), is a person who, because of his or her relationship to an individual killed as a result of injuries sustained during the terrorist attacks of September 11, 2001, qualifies for compensation under the federal September 11th Victim Compensation Fund of 2001 (Title IV (commencing with Section 401) of Public Law 107-42). (2) A dependent who is the surviving spouse of an individual killed in terrorist attacks of September 11, 2001, is entitled to the waivers provided in this section until January 1, 2013. (3) A dependent who is the surviving child, natural or adopted, of an individual killed in the terrorist attacks of September 11, 2001, is entitled to the waivers under subdivision (j) until that person attains the age of 30 years. (4) A dependent of an individual killed in the terrorist attacks of September 11, 2001, who is determined to be eligible by the California Victim Compensation and Government Claims Board, is also entitled to the waivers provided in this section until January 1, 2013. (m) (1) It is the intent of the Legislature that sufficient funds be provided to support the provision of a fee waiver for every student who demonstrates eligibility pursuant to subdivisions (g) to (j), inclusive. (2) From funds provided in the annual Budget Act, the board of governors shall allocate to community college districts, pursuant to this subdivision, an amount equal to 2 percent of the fees waived pursuant to subdivisions (g) to (j), inclusive. From funds provided in the annual Budget Act, the board of governors shall allocate to community college districts, pursuant to this subdivision, an amount equal to ninety-one cents ($0.91) per credit unit waived pursuant to subdivisions (g) to (j), inclusive, for determination of financial need and delivery of student financial aid services, on the basis of the number of students for whom fees are waived. Funds allocated to a community college district for determination of financial need and delivery of student financial aid services shall supplement, and shall not supplant, the level of funds allocated for the administration of student financial aid programs during the 1992-93 fiscal year. (n) The board of governors shall adopt regulations implementing this section. SEC. 30. Section 84321 is added to the Education Code, to read: 84321. (a) Notwithstanding any other provision of law, commencing with the 2003-04 fiscal year, warrants for the principal apportionments for the month of June, for general apportionments in the amount of one hundred fifty million dollars ($150,000,000) and for the Partnership for Excellence in the amount of fifty million dollars ($50,000,000), shall instead be drawn in July of the same calendar year pursuant to the certification made under Section 84320. (b) For the purposes of making the computations required by Section 8 of Article XVI of the California Constitution, the warrants drawn pursuant to subdivision (a) shall be deemed to be "General Fund revenues appropriated for community college districts," as defined in subdivision (d) of Section 41202, for the fiscal year in which the warrants are drawn, and included within the "total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIII B," as defined in subdivision (e) of Section 41202, for the fiscal year in which the warrants are drawn. SEC. 31. Section 84322 is added to the Education Code, to read: 84322. Notwithstanding any other provision of law, a community college district may recognize, for budgetary and financial reporting purposes, any amount of state appropriations deferred from the current fiscal year and appropriated in the subsequent fiscal year for payment of current-year costs as a receivable in the current fiscal year. SEC. 32. Section 99234 of the Education Code is amended to read: 99234. (a) The Superintendent of Public Instruction shall notify local educational agencies that they are eligible to receive an incentive award based on the percentage of eligible teachers calculated in accordance with provisions of an item of appropriation in the annual Budget Act. It is the intent of the Legislature that a local educational agency give highest priority to training teachers assigned to high-priority schools. It is also the intent of the Legislature that funding appropriated in one fiscal year that is not expended by a local educational agency be redirected to local educational agencies that have trained more eligible teachers than the percentage funded. If a redirection of funding occurs, funding in subsequent fiscal years for the local educational agencies involved shall be adjusted to reflect the redirection of funding. (b) A school district that cannot make the certification required pursuant to paragraph (3) of subdivision (a) of Section 99237 for all the grade levels it maintains in reading and mathematics may apply for and receive incentive funding for the grade levels and subjects for which it can make the certification required pursuant to paragraph (3) of subdivision (a) of Section 99237, in which case the certified assurance submitted pursuant to Section 99237 applies only to the professional development provided to teachers and instructional aides and paraprofessionals who directly assist with classroom instruction in mathematics and reading in the grade levels and subjects for which it can make the certification required pursuant to paragraph (3) of subdivision (a) of Section 99237. (c) Of the incentive provided pursuant to subdivision (a), a local educational agency may use not more than one thousand dollars ($1,000) of the per teacher per subject amount to provide an individual teacher stipend. (d) The Superintendent of Public Instruction shall notify local educational agencies that the maximum funding for the purpose of this article for which they are eligible each year is equal to the percentage calculated in accordance with provisions of an item of appropriation in the annual Budget Act, multiplied by the sum of the following two factors multiplied by two thousand five hundred dollars ($2,500): (1) Twice the number of multiple subjects teachers teaching in a self-contained classroom and special education teachers, as specified in paragraphs (1) and (2) of Section 99233, that provide direct instruction in reading and mathematics as reported in the most recent available CBEDS data, who have not received training pursuant to either this article or Article 2 (commencing with Section 99220). (2) The number of mathematics, English, science, and social science teachers as specified in paragraphs (3) to (6), inclusive, of Section 99233 that were reported in the most recent available CBEDS data, who have not received training pursuant to either this article or Article 2 (commencing with Section 99220). (e) The Superintendent of Public Instruction shall allocate funding appropriated for the purposes of this article in the following order of priority: (1) Two thousand five hundred dollars ($2,500) for each qualifying teacher who was provided training pursuant to subdivision (a) in the prior year for whom the local educational agency did not receive funding due to insufficient availability of funds in the prior fiscal year. (2) Two thousand five hundred dollars ($2,500) for each qualifying teacher who was provided training pursuant to this article, subject to the limitations in subdivision (d). (3) Five hundred dollars ($500) for each qualifying teacher for each qualifying program as specified in Article 2 (commencing with Section 99220) who successfully completes mathematics or reading standards training, or both, at a California Professional Development Institute authorized pursuant to Article 2 (commencing with Section 99220) in the 2001-02 fiscal year to the 2004-05 fiscal year, inclusive, using funds received pursuant to Article 2 (commencing with Section 99220), and has had specific approved training on the mathematics or reading instructional materials selected for use in the school. (4) Five hundred dollars ($500) for each qualifying teacher in each qualifying program pursuant to Article 2 (commencing with Section 99220) who successfully completed mathematics or reading standards training, or both, at a California Professional Development Institute authorized pursuant to Article 2 (commencing with Section 99220) in the 1999-2000 or 2000-01 fiscal year, using funds received pursuant to Article 2 (commencing with Section 99220), and has had specific approved training on the mathematics or English-language arts instructional materials selected for use in the school. (5) Two thousand five hundred dollars ($2,500) for each qualifying teacher who was provided training pursuant to this article in excess of limitations in subdivision (d). (f) For purposes of this article, qualifying teachers who, in the 2000-01 fiscal year, received training at a California Professional Development Institute authorized pursuant to Article 2 (commencing with Section 99220) that was paid for by a local educational agency using funds that were not received pursuant to Article 2 (commencing with Section 99220) shall be deemed to have received training in the 2001-02 fiscal year. A local educational agency shall receive funding for these qualifying teachers in accordance with paragraph (2) of subdivision (e). (g) Except as provided in subdivision (f) of Section 99237, funding may not be provided to a local educational agency until the State Board of Education approves the agency's certified assurance submitted pursuant to Section 99237. (h) Of the funding a local educational agency is eligible to receive pursuant to this section for each eligible teacher, 50 percent shall be awarded following the provision of 40 hours of professional development as specified in subdivision (b) of Section 99237, with the remaining funding to be awarded following certification of the provision of the 80 hours of followup instruction as specified in subdivision (b) of Section 99237. (i) Except as provided in paragraphs (3) and (4) of subdivision (e), a local educational agency may not receive funds pursuant to this article for teachers who receive training pursuant to Article 2 (commencing with Section 99220) using funding provided pursuant to Article 2 (commencing with Section 99220). SEC. 33. Section 99235 of the Education Code is amended to read: 99235. (a) The Superintendent of Public Instruction shall notify local educational agencies that they are eligible to receive funding to provide instructional aides and paraprofessionals who directly assist with classroom instruction in mathematics and reading with professional development training in mathematics and reading, in an amount equal to one thousand dollars ($1,000) per qualifying instructional aide. Funding will be provided to local educational agencies on a first-come, first-serve basis. A local educational agency that chooses to participate in the program is eligible to receive funding for no greater than the percentage calculated in accordance with provisions of an item of appropriation in the annual Budget Act for its instructional aides and paraprofessionals. However, the statewide total number of instructional aides and paraprofessionals who directly assist with classroom instruction in mathematics and reading served under this program may not exceed 9,600 over the two fiscal years. (b) Of the incentive provided pursuant to subdivision (a), a local educational agency may use not more than five hundred dollars ($500) of the per instructional aide and paraprofessionals who directly assist with classroom instruction in mathematics and reading amount to provide an individual instructional aid stipend. SEC. 34. Section 7576.5 is added to the Government Code, to read: 7576.5. If funds are appropriated to local educational agencies to support the costs of providing services pursuant to this chapter, the local educational agencies shall transfer those funds to the community mental health services that provide services pursuant to this chapter in order to reduce the local costs of providing these services. These funds shall be used exclusively for programs operated under this chapter and are offsetting revenues in any reimbursable mandate claim relating to special education programs and services. SEC. 35. Section 39 of Chapter 1167 of the Statutes of 2002 is amended to read: Sec. 39. (a) Notwithstanding Section 42238.1 of the Education Code or any other law, the cost-of-living adjustment for Items 6110-104-0001, 6110-105-0001, 6110-156-0001, 6110-158-0001, 6110-161-0001, 6110-189-0001, 6110-190-0001, 6110-191-0001, 6110-196-0001, 6110-232-0001, 6110-234-0001, and 6110-235-0001 of Section 2.00 of the Budget Act of 2002, and those items identified in subdivision (b) of Section 12.40 of the Budget Act of 2002 shall be 2 percent. All funds appropriated in the items identified in this section are in lieu of the amounts that would otherwise be appropriated pursuant to any other law. (b) Notwithstanding Section 42238.1 of the Education Code, for purposes of Sections 2550, 42238, and 48664 of the Education Code, for the 2002-03 fiscal year, the cost-of-living adjustment shall be 2 percent. SEC. 36. Section 51 of Chapter 1167 of the Statutes of 2002 is repealed. SEC. 37. (a) Notwithstanding Sections 42238.1 and 42238.15 of the Education Code or any other law, the growth and cost-of-living adjustments for the programs funded by Items 6110-104-0001, 6110-105-0001, 6110-156-0001, 6110-158-0001, 6110-161-0001, 6110-189-0001, 6110-190-0001, 6110-191-0001, 6110-196-0001, 6110-232-0001, 6110-234-0001, and 6110-235-0001, of Section 2.00 of the Budget Act of 2003, and those items identified in subdivision (b) of Section 12.40 of the Budget Act of 2002 shall be zero percent for the 2003-04 fiscal year. (b) Notwithstanding Section 42238.15 of the Education Code, the workload adjustments specified in paragraphs (2) to (10), inclusive, of subdivision (b) of Section 42238.15 shall be zero for the 2003-04 fiscal year. (c) Notwithstanding Section 42238.1 of the Education Code or any other provision of law to the contrary, for purposes of Section 48664 of the Education Code, for the 2003-04 fiscal year, the growth and cost-of-living adjustments shall be zero percent. (d) Funds appropriated in the items identified in this section are instead of the amounts that would otherwise be appropriated pursuant to any other law. SEC. 38. The Superintendent of Public Instruction shall reduce funding for basic aid districts from the categorical education funds appropriated in Section 2.00 of the Budget Act of 2003 by a total of nine million eight hundred eighty-six thousand dollars ($9,886,000). The reduction shall be allocated as follows: (a) The Superintendent of Public Instruction shall calculate a reduction for each district that was a basic aid district in the 2002-03 fiscal year that is proportionate to its revenue limit as determined at the second principal apportionment of the 2002-03 fiscal year that will achieve the amount of savings specified in this section. (b) (1) On or before October 26, 2003, the Superintendent of Public Instruction shall notify each district of the reduction amount calculated for that district pursuant to subdivision (a). (2) On or before February 1, 2004, each district shall notify the Superintendent of Public Instruction of the specific categorical education programs in which the reductions for that district shall be applied and the amount of the reduction for each program, provided that no reduction may be made to a program identified as requiring a maintenance of effort. The Superintendent of Public Instruction shall withhold or recover the identified amount of funds as necessary. (3) This section does not obligate the state to refund or repay reductions made pursuant to this section. A decision by a school district to reduce funding pursuant to this section for a state-mandated local program shall constitute a waiver of the subvention of funds that the school district is otherwise entitled to pursuant to Section 6 of Article XIII B of the California Constitution in the amount so reduced and that decision shall be made only after the school district first considers reductions to voluntary categorical education programs. (c) If a district does not receive property tax revenue sufficient to fully fund its revenue limit during the 2003-04 fiscal year, any reductions to that district's categorical education funding by this section shall be restored. (d) No later than June 1, 2004, the Superintendent of Public Instruction shall report to the Controller and the Director of Finance the amounts to be reduced from each categorical education program and identify the corresponding item of appropriation in the Budget Act of 2003 to be reduced. The reductions shall equal the total amount to be reduced pursuant to this section. On June 15, 2004, the amounts appropriated by the Budget Act of 2003 in the items identified by the superintendent are hereby reduced by the amounts reported by the superintendent. The amounts so reduced shall revert to the unexpended balance of the General Fund. The reductions pursuant to this subdivision shall be reductions in the amount appropriated for purposes of Section 8 of Article XVI of the California Constitution for the 2003-04 fiscal year. (e) For purposes of this section, "basic aid school district" means a school district that does not receive from the state, for any fiscal year in which the section is applied, an apportionment of state funds pursuant to subdivision (h) of Section 42238. SEC. 39. (a) For the 2003-04 fiscal year only, in order to provide local budgeting flexibility as a result of budget reductions enacted by the Legislature for the 2003-04 fiscal year, the governing board of a school district or county office of education may use, for the purposes identified in subdivision (a) of Section 40 of this act, up to 100 percent of the balances as of June 30, 2003, of restricted accounts in its General Fund or cafeteria fund, excluding restricted reserves committed for capital outlay, bond funds, sinking funds, and federal funds, and excluding balances in the following programs: (1) Public Schools Accountability Act (Ch. 6.1 (commencing with Sec. 52050), Pt. 28, Ed. C.). (2) Economic Impact Aid (Art. 2 (commencing with Sec. 54020) Ch. 1, Pt. 29, Ed. C.). (3) Targeted Instructional Improvement Grant (Ch. 2.5 (commencing with Sec. 54200), Ch. 2, Pt. 29, Ed. C.). (4) Instructional materials. (5) Special education. (b) For purposes of this section, balances of restricted accounts do not include the amounts deferred from the 2001-02 fiscal year to the 2002-03 fiscal year or the amounts deferred from the 2002-03 fiscal year to the 2003-04 fiscal year. (c) A governing board may not use the ending balance in any restricted account if that use would violate a federal maintenance of effort requirement. (d) This section does not obligate the state to refund or repay funds used pursuant to this section. If a school district uses an ending balance in a restricted account that consists, in whole or in part, of funds reimbursed to the district as a subvention of funds for a state-mandated local program, the school district may not submit a claim to the state for a subsequent reimbursement of the funds that were reimbursed pursuant to Section 6 of Article XIII B of the California Constitution and used pursuant to the authority granted to a school district pursuant to this section. (e) It is the intent of the Legislature that the use of balances of restricted accounts permitted by this section is limited to the 2003-04 fiscal year and not for any subsequent fiscal year. SEC. 40. (a) For the 2003-04 fiscal year, the governing board of a school district or county office of education may use any combination of funds made available pursuant to Sections 17070.76 and 33128.3 of the Education Code and Section 39 of this act for the purpose of mitigating the reduction in revenue limit funding in the 2003-04 fiscal year pursuant to paragraph (1) of subdivision (a) of Section 2558.46 of the Education Code and paragraph (1) of subdivision (a) of Section 42238.146 of the Education Code. (b) A governing board that elects to use balances in restricted accounts pursuant to Section 39 of this act shall report to the Superintendent of Public Instruction, in a manner determined by the superintendent, regarding the programs and amounts of restricted balances used for purposes of subdivision (a). The Superintendent of Public Instruction shall report this information to the Joint Legislative Budget Committee in a timely manner. SEC. 41. It is the intent of the Legislature that the first priority for the use of funds available to school districts and county offices of education in the 2004-05 fiscal year pursuant to Section 8 of Article XVI of the California Constitution in excess of the amount of funds available in the 2003-04 fiscal year, shall be to restore the reduction in revenue limit funding pursuant to paragraph (1) of subdivision (a) of Section 2558.46 of the Education Code and paragraph (1) of subdivision (a) of Section 42238.146 of the Education Code. SEC. 42. It is the intent of the Legislature, when the state's fiscal condition permits, to phase out the permanent deferral of second principal apportionment payments to school districts and county offices of education enacted in Chapter 4 of the Statutes of 2003 and to return local educational agencies to a traditional accounting and payment basis. It is further the intent of the Legislature that phasing out the permanent deferral not result in reductions in the level of services provided by school districts and county offices of education. It is further the intent of the Legislature that the permanent deferral be phased out in conjunction with the reduction of the maintenance factor pursuant to subdivision (e) of Section 8 of Article XVI of the California Constitution. SEC. 43. Subdivisions (b), (c), and (d) of Section 17584.1 of the Education Code shall be inoperative for the 2003-04 fiscal year. SEC. 44. (a) The sum of five hundred seventy million two hundred sixty-three thousand dollars ($570,263,000) is hereby appropriated from the General Fund for the 2004-05 fiscal year in accordance with the following schedule: (1) The sum of five million seven hundred thirty-eight thousand dollars ($5,738,000) to the State Department of Education for apprentice programs to be expended consistent with the requirements specified in Item 6110-103-0001 of Section 2.00 of the Budget Act of 2003. (2) The sum of eighty-three million fifty-six thousand dollars ($83,056,000) to the State Department of Education for supplemental instruction to be expended consistent with the requirements specified in Item 6110-104-0001 of Section 2.00 of the Budget Act of 2003. Of the amount appropriated in this paragraph, eighteen million eight hundred ninety-three thousand dollars ($18,893,000) shall be expended consistent with Schedule (1) of Item 6110-104-0001 of Section 2.00 of the Budget Act of 2002 (Ch. 379, Stats. 2002), three million nine hundred twenty-three thousand dollars ($3,923,000) shall be expended consistent with Schedule (3) of that item, and sixty million two hundred forty thousand dollars ($60,240,000) shall be expended consistent with Schedule (4) of that item. (3) The sum of fifty million one hundred three thousand dollars ($50,103,000) to the State Department of Education for home-to-school transportation to be expended consistent with the requirements specified in Schedule (1) of Item 6110-111-0001 of Section 2.00 of the Budget Act of 2003. (4) The sum of three million nine hundred fifty-eight thousand dollars ($3,958,000) to the State Department of Education for the Gifted and Talented Pupil Program to be expended consistent with the requirements specified in Item 6110-124-0001 of Section 2.00 of the Budget Act of 2003. (5) The sum of ninety-five million three hundred ninety-seven thousand dollars ($95,397,000) to the State Department of Education for Targeted Improvement Block Grant to be expended consistent with the requirements specified in Item 6110-132-0001 of Section 2.00 of the Budget Act of 2003. (6) The sum of forty million nine hundred twenty-five thousand dollars ($40,925,000) to the State Department of Education for adult education to be expended consistent with the requirements specified in Schedule (.5) of Item 6110-156-0001 of Section 2.00 of the Budget Act of 2003. (7) The sum of four million four hundred fifty-one thousand dollars ($4,451,000) to the State Department of Education for community day schools to be expended consistent with the requirements specified in Item 6110-190-0001 of Section 2.00 of the Budget Act of 2003. (8) The sum of four million six hundred thirty-five thousand dollars ($4,635,000) to the State Department of Education for categorical programs for charter schools to be expended consistent with the requirements specified in Item 6110-211-0001 of Section 2.00 of the Budget Act of 2003. (9) The sum of eighty-two million dollars ($82,000,000) to the State Department of Education for the Carl Washington School Safety Block Grant to be expended consistent with the requirements specified in Item 6110-228-0001 of Section 2.00 of the Budget Act of 2003. (10) One hundred fifty million dollars ($150,000,000) to the Board of Governors of the California Community Colleges for apportionments, to be expended in accordance with the requirements specified in Item 6870-101-0001 of Section 2.00 of the Budget Act of 2003. (11) Fifty million dollars ($50,000,000) to the Board of Governors of the California Community Colleges for the Partnership for Excellence, to be expended in accordance with the requirements specified in Item 6870-101-0001 of Section 2.00 of the Budget Act of 2003. (b) For the purposes of making the computations required by Section 8 of Article XVI of the California Constitution, the appropriations made by paragraphs (1) to (9), inclusive, of subdivision (a) shall be deemed to be "General Fund revenues appropriated for school districts," as defined in subdivision (c) of Section 41202 of the Education Code, for the 2004-05 fiscal year, and included within the "total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIII B," as defined in subdivision (e) of Section 41202 of the Education Code for the 2004-05 fiscal year. (c) For the purposes of making the computations required by Section 8 of Article XVI of the California Constitution, the appropriation made by paragraphs (10) and (11) of subdivision (a) shall be deemed to be "General Fund revenues appropriated for community college districts," as defined in subdivision (d) of Section 41202 of the Education Code, for the 2004-05 fiscal year, and included within the "total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIII B," as defined in subdivision (e) of Section 41202 of the Education Code, for the 2004-05 fiscal year. SEC. 45. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: In order to make the necessary statutory changes to implement the Budget Act of 2003 at the earliest time possible, it is necessary that this act take effect immediately.