BILL NUMBER: SB 1078 AMENDED BILL TEXT AMENDED IN SENATE MAY 2, 2005 INTRODUCED BY Senator Simitian FEBRUARY 22, 2005 An act to amend Sections 47632 and 47635 of the Education Code, relating to education finance, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST SB 1078, as amended, Simitian. Education finance : charter schools . (1) Existing law defines "sponsoring local educational agency" for purposes of provisions governing charter schools. This bill would include within that definition, only for the purpose of transferring amounts in lieu of property taxesandfor pupils who reside in , and are otherwise eligible to attend school in , a basic aid school district, as defined, but who attend a charter school authorized by a nonbasic aid school district or county office of education, the basic aid school district, as defined. (2) Existing law requires a local educational agency that sponsors a charter school annually to transfer to each of its charter schools a prescribed amount of funding in lieu of funding available through property taxes and exempts from this requirement funding for pupils who reside in, and are otherwise eligible to attend a school in, a basic aid school district, but who attend a charter school in a nonbasic aid school district. Existing law requires the sponsoring basic aid school district to transfer to the charter school an amount of funds equivalent to the revenue limit earned through average daily attendance by the charter school for each pupil's attendance, not to exceed the average property tax share per unit of average daily attendance for pupils residing in and attending the basic aid school district. This bill would, commencing with the 2005-06 fiscal year, revise the manner in which the amount to be transferred bythea sponsoringbasic aid districtlocal educational agency, as defined above, to the charter school is determined according to specific formulas. The bill would declare that the intent of this revision is to increase the amount of local property tax revenue retained by basic aid school districts, and that any costs associated with the revision shall be offset by the increase. (3) This bill would declare that it is to take effect immediately as an urgency statute. Vote: 2/3. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 47632 of the Education Code is amended to read: 47632. For purposes of this chapter, the following terms shall be defined as follows: (a) "General-purpose entitlement" means an amount computed by the formula set forth in Section 47633 beginning in the 1999-2000 fiscal year, which is based on the statewide average amounts of general-purpose funding from those state and local sources identified in Section 47633 received by school districts of similar type and serving similar pupil populations. (b) "Categorical block grant" means an amount computed by the formula set forth in Section 47634 beginning in the 1999-2000 fiscal year, which is based on the statewide average amounts of categorical aid from those sources identified in Section 47634 received by school districts of similar type and serving similar pupil populations. (c) "General-purpose funding" means those funds that consist of state aid, local property taxes, and other revenues applied toward a school district's revenue limit, pursuant to Section 42238. (d) "Categorical aid" means aid that consists of state or federally funded programs, or both, which are apportioned for specific purposes set forth in statute or regulation. (e) "Educationally disadvantaged pupils" means those pupils who are eligible for subsidized meals pursuant to Section 49552 or are identified as English learners pursuant to subdivision (a) of Section 306, or both. (f) "Operational funding" means all funding except funding for capital outlay. (g) "School district of a similar type" means a school district that is serving similar grade levels. (h) "Similar pupil population" means similar numbers of pupils by grade level, with a similar proportion of educationally disadvantaged pupils. (i) "Sponsoring local educational agency" means the following: (1) In the cases where a charter school is granted by a school district, the sponsoring local educational agency is the school district, except as provided in paragraph (6). (2) In cases where a charter is granted by a county office of education after having been previously denied by a school district, the sponsoring local educational agency means the school district that initially denied the charter petition, except as provided in paragraph (6). (3) In cases where a charter is granted by the State Board of Education after having been previously denied by a local educational agency, the sponsoring local educational agency means the local educational agency designated by the State Board of Education pursuant to paragraph (1) of subdivision (k) of Section 47605 or if a local educational agency is not designated, the local educational agency that initially denied the charter petition, except as provided in paragraph (6). (4) For pupils attending county-sponsored charter schools who are eligible to attend those schools solely as a result of parental request pursuant to subdivision (b) of Section 1981, the sponsoring local educational agency means the pupils' school district of residence, except as provided in paragraph (6). (5) For pupils attending countywide charter schools pursuant to Section 47605.6 who reside in a basic aid school district, the sponsoring local educational agency means the school district of residence of the pupil, except as provided in paragraph (6). (6) (A) For the sole purpose of transferring amounts in lieu of property taxes as provided in Section 47635, for pupils who reside in and are otherwise eligible to attend school in a basic aid school district, as defined in subparagraph (B), but who attend a charter school authorized by a nonbasic aid school district or county office of education, the sponsoring local educational agency is the basic aid school district.(j)(B) For purposes of thissectionsubdivision , "basic aid school district" means a school district that does not receive an apportionment of state funds pursuant to subdivision (h) of Section 42238. SEC. 2. Section 47635 of the Education Code is amended to read: 47635. (a) A sponsoring local educational agency, other than those defined in paragraph (6) of subdivision (i) of Section 47632, shall annually transfer to each of its charter schools funding in lieu of property taxes equal to the lesser of the following two amounts: (1) The average amount of property taxes per unit of average daily attendance, including average daily attendance attributable to charter schools, received by the local educational agency, multiplied by the charter school's average daily attendance. (2) The statewide average general-purpose funding per unit of average daily attendance received by school districts, as determined by the State Department of Education, multiplied by the charter school's average daily attendance in each of the four corresponding grade level ranges: kindergarten and grades 1, 2, and 3; grades 4, 5, and 6; grades 7 and 8; and grades 9 to 12, inclusive. (b) For the 2005-06 fiscal year, a sponsoring local educational agency, as defined in paragraph(5)(6) of subdivision (i) of Section 47632, shall annually transfer to each of its charter schools funding in lieu of property taxes equal to the lesser of the following two amounts: (1) The average amount of property taxes per unit of average daily attendance, including average daily attendance attributable to charter schools, received by the local educational agency, multiplied by the charter school's average daily attendance, multiplied by 30 percent. (2) The statewide average general-purpose funding per unit of average daily attendance received by school districts, as determined by the State Department of Education, multiplied by the charter school's average daily attendance in each of the four corresponding grade level ranges: kindergarten and grades 1, 2, and 3; grades 4, 5, and 6; grades 7 and 8; and grades 9 to 12, inclusive. (c) For the 2006-07 fiscal year, a sponsoring local educational agency, as defined in paragraph(5)(6) of subdivision (i) of Section 47632, shall annually transfer to each of its charter schools funding in lieu of property taxes equal to the lesser of the following two amounts: (1) The average amount of property taxes per unit of average daily attendance, including average daily attendance attributable to charter schools, received by the local educational agency, multiplied by the charter school's average daily attendance, multiplied by 50 percent. (2) The statewide average general-purpose funding per unit of average daily attendance received by school districts, as determined by the State Department of Education, multiplied by the charter school's average daily attendance in each of the four corresponding grade level ranges: kindergarten and grades 1, 2, and 3; grades 4, 5, and 6; grades 7 and 8; and grades 9 to 12, inclusive. (d) Commencing with the 2007-08 fiscal year and each fiscal year thereafter, a sponsoring local educational agency, as defined in paragraph(5)(6) of subdivision (i) of Section 47632, shall annually transfer to each of its charter schools funding in lieu of property taxes equal to the lesser of the following two amounts: (1) The average amount of property taxes per unit of average daily attendance, including average daily attendance attributable to charter schools, received by the local educational agency, multiplied by the charter school's average daily attendance, multiplied by 70 percent. (2) The statewide average general purpose funding per unit of average daily attendance received by school districts, as determined by the State Department of Education, multiplied by the charter school's average daily attendance in each of the four corresponding grade level ranges: kindergarten and grades 1, 2, and 3; grades 4, 5, and 6; grades 7 and 8; and grades 9 to 12, inclusive. (e) The sponsoring local educational agency shall transfer funding in lieu of property taxes to the charter school in monthly installments, by no later than the 15th of each month. (1) For the months of August to February, inclusive, a charter school's funding in lieu of property taxes shall be computed based on the amount of property taxes received by the sponsoring local educational agency during the preceding fiscal year, as reported to the Superintendent for purposes of the second principal apportionment. A sponsoring local educational agency shall transfer to the charter school the charter school's estimated annual entitlement to funding in lieu of property taxes as follows: (A) Six percent in August. (B) Twelve percent in September. (C) Eight percent each month in October, November, December, January, and February. (2) For the months of March to June, inclusive, a charter school's funding in lieu of property taxes shall be computed based on the amount of property taxes estimated to be received by the sponsoring local educational agency during the fiscal year, as reported to the Superintendent for purposes of the first principal apportionment. A sponsoring local educational agency shall transfer to each of its charter schools an amount equal to one-sixth of the difference between the school's estimated annual entitlement to funding in lieu of property taxes and the amounts provided pursuant to paragraph (1). An additional one-sixth of this difference shall be included in the amount transferred in the month of March. (3) For the month of July, a charter school's funding in lieu of property taxes shall be computed based on the amount of property taxes estimated to be received by the sponsoring local educational agency during the prior fiscal year, as reported to the Superintendent for purposes of the second principal apportionment. A sponsoring local educational agency shall transfer to each of its charter schools an amount equal to the remaining difference between the school's estimated annual entitlement to funding in lieu of property taxes and the amounts provided pursuant to paragraphs (1) and (2). (4) Final adjustments to the amount of funding in lieu of property taxes allocated to a charter school shall be made in February, in conjunction with the final reconciliation of annual apportionments to schools. (f) The Legislature finds and declares that the net effect of subdivisions (b), (c), and (d), is to increase the amount of local property tax revenue retained by basic aid school districts. Thus, any costs associated with subdivisions (b), (c), and (d), including any reporting requirements necessary to implement this section, shall be offset by that amount of increased local property tax revenue. SEC. 3. 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 effect General Fund savings through the formula for funding pupils who reside in basic aid school districts, but attend charter schools authorized by a nonbasic aid school district, at the earliest possible time, it is necessary that this act take effect immediately.