BILL ANALYSIS SB 687 Page 1 Date of Hearing: June 22, 2005 ASSEMBLY COMMITTEE ON EDUCATION Jackie Goldberg, Chair SB 687 (Simitian) - As Amended: May 27, 2005 SENATE VOTE : 37-2 SUBJECT : School accountability report card: reporting requirements: standardized template: review and revisions. SUMMARY : Requires that estimated expenditures per pupil, as reported on the annual School Accountability Report Card (SARC), reflect the actual salaries of personnel assigned to a schoolsite and be subtotaled by restricted and unrestricted revenue sources; requires that the actual average teacher salary of teachers assigned to a school be reported on the SARC; and requires specific revisions to the standardized template for the SARC. Specifically, this bill : 1)Requires that estimated per pupil expenditures, as reported on the SARC, incorporate all of the following: a) Reflect the actual salaries of personnel assigned to the school site; b) Be reported as a total and in subtotals for restricted (i.e. categorical) and unrestricted (i.e. general aid including incentive funding) sources. c) Include an average of actual salaries paid to certificated instructional personnel at that school site. 2)Requires the State Department of Education (SDE), by July 1, 2006, to develop and recommend for adoption by the State Board of Education (SBE) a revision to the standardized template for the SARC, to include: a) A comparison of the actual unrestricted funding per pupil allocated for the specific benefit of the school, or for the benefit of all schools in the district equally, with the districtwide average and the state average of the same computation. b) The percentage by which the school is above or below the SB 687 Page 2 districtwide average and the state average. c) A field for reporting the actual restricted funding per pupil allocated for the benefit of the school or for the benefit of all schools in the district equally. d) A comparison of the average of actual salaries paid to certificated instructional personnel at the school site with the districtwide average and the state average of the same computation, including the percentage by which the school is above or below the districtwide average and the statewide average. 3)Provides that this act "furthers the purpose" of the Classroom Instructional Improvement and Accountability Act. 4)Specifies cost reimbursement in accordance with provisions of existing if the bill is found to have established a state-mandated local program. EXISTING LAW : 1)Requires every K-12 school district to adopt a School Accountability Report Card (SARC) for each school in accordance with Proposition 98 of 1988, also known as the Classroom Instructional Improvement and Accountability Act. The statutory portions of Proposition 98 specified some of the contents of the SARC and called upon SBE to develop a model SARC that districts could use to satisfy the Act's requirement. 2)Provides that the statutory provisions of Proposition 98 may be amended only by a 2/3 vote of each house of the legislature as long as the amendment "furthers the purpose" of the Proposition. 3)Requires schools to report the "estimated expenditures per pupil and types of services funded" as well as a substantial amount of non-salary data about teachers at the school to align with the statutory prescription for the SARC. 4)Requires the SARC to report other teacher-related data, such as information on the number of fully-credentialed teachers and the number of teachers employed by emergency permit, as well as the number of teachers who are misassigned to teach subjects that are not appropriate for their credential. SB 687 Page 3 FISCAL EFFECT : According to the Senate Appropriations Committee analysis, the revisions of SARC required by this bill would result in an estimated annual General Fund cost to school districts of $200,000 (Proposition 98). COMMENTS : Related legislation . ACA 2 (Daucher) of the First Extraordinary Session (as proposed to be amended) requires each school district to annually prepare a Fiscal Accountability Report Card containing data elements prescribed by the Legislature, including the total budget and number of employees of each school within the district. This measure was held in the Education Finance and Teaching Profession committee after its initial hearing as introduced. The committee asked that the author and staff work to refine the proposal. As a result of that work, AB 2 (Daucher) of the First Extraordinary Session was introduced and would require SDE to develop a plan to implement a school-level standardized account code structure, and to test, revise and implement that structure in school districts and county offices of education. AB 2 would require that a 13 member committee to advise SDE on the development of the school-level accounting structure complete its work by September 1, 2006. What are restricted and unrestricted funds ? Most categorical funding programs that require that funds be used for specific populations or purposes require that funds be deposited to "restricted" accounts in a school district general fund. This allows auditors to determine whether the expenditures from those restricted accounts conform to legal requirements of the categorical program. Federal funds are generally restricted and most block grants, although more "flexible" still require restriction. Non- categorical funds, such as revenue limit funds are deposited to the unrestricted portion of local general funds. Similarly, funds awarded to districts as incentive to accomplish purposes such as class size reduction are also unrestricted since there is no requirement that the funds be used for any specific purpose. Those who are unaware that class size reduction and other, such as "longer year and day", incentive funding is otherwise unrestricted should recognize that these fund sources would be reported on the "non-categorical" side of the accounting required by this bill. SB 687 Page 4 How will this bill change current practice ? Currently, per pupil expenditure information is provided by SDE as part of the SARC template for schools, and reflects average expenditures at the school district level rather than site-specific spending. However, SDE does not collect this information at the school site level. School districts routinely use district average teacher salaries to estimate per pupil expenditures at each school site, rather than calculating the actual mean average salaries of teachers assigned to the site. This bill requires SARCs to reflect actual average per pupil expenditures that are specific to each schoolsite. School districts with well automated accounting systems will likely incur minor costs to report the information required by this bill. Some school districts with manual accounting systems will likely incur greater costs. There are approximately 1,000 school districts with approximately 8,000 school sites. If 20 percent of the school districts incur costs of $1,000 to report this information, costs would be $200,000 annually. Current SARC mandate claims exceed $4.7 million annually. Arguments in support . According to the author, "By examining estimated expenditures per pupil, taking into consideration salaries of personnel assigned to an individual school, SB 687 will help ensure that school officials, parents, and local communities have sufficient information about education resource allocation. Transparency as to the use of billions of dollars of public education funds promotes good government and encourages educational opportunities for California students. "A recent report released by Education Trust-West found that money spent on teacher salaries in California varies from school to school within districts. It is important to make information available so as to guarantee equity and equality in per pupil spending." The Education Trust - West report . In Spring 2005, Education Trust - West completed work on and released a report, California's Hidden Teacher Spending Gap: How State and District Budgeting Practices Shortchange Poor and Minority Students and Their Schools, that documented significantly lower average spending for teachers in schools with high numbers of poor and minority students. The report recommended that California: SB 687 Page 5 1)Make school-level teacher salary data publicly available. 2)Analyze the factors that contribute to the teacher-spending gap. 3)Close the gap in teacher spending and quality within districts. This bill is responsive to recommendation 1 of the report, and can provide information to support a healthy dialogue about recommendation 2. Staff recommendation . In light of the related proposals pending review by the Education Finance and Teaching Profession committee of the 1st Extraordinary Session, staff recommends that the effective date of the requirements of this bill be set as July 1, 2007. If AB 2 were enacted in its current form, this would allow sufficient time for the advisory committee established by that bill to complete its work and for SDE and SBE to implement a plan for school level financial accounting. REGISTERED SUPPORT / OPPOSITION : Support American Civil Liberties Union Berkeley Organizing Congregations for Action Business Roundtable for Education California Tomorrow Californians for Justice Community Voice - LA Congregations Building Community Congregations for Civic Action Congregations Organizing for Renewal Contra Costa Interfaith Supporting Community Organization Education Trust-West EdVoice Faith in Community Greater Long Beach Interfaith Community Organization Inland Congregations United for Change Justice Matters Institute Oakland Community Organizations Orange County Congregation Community Organizations Parents for Unity SB 687 Page 6 Peninsula Interfaith Action People and Congregations Together PICO California Public Advocates, Inc. San Diego Organizing Project Silicon Valley Leadership Group South & West Area Business Association Student Empowerment Project TechNet Opposition None on file. Analysis Prepared by : Michael Ricketts / ED. / (916) 319-2087