BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Carole Migden, Chair
1078 (Simitian)
Hearing Date: 5/16/05 Amended: 5/2/05
Consultant: Bob Franzoia Policy Vote: Ed 10-0
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BILL SUMMARY: SB 1078, an urgency measure, would expand a
statute that is currently inoperative that provides for the
transfer of property tax revenues from basic aid school
districts to charter schools.
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Fiscal Impact (in thousands)
Major Provisions 2005-06 2006-07 2007-08 Fund
State backfill for specified Up to $700 Up to $500Up to
$300 General*
charter school students
* Counts toward meeting the Proposition 98 minimum funding
guarantee
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STAFF COMMENTS: This bill meets the criteria to be referred to
the Suspense File.
School district revenue limits are comprised of state general
fund aid and local general purpose property tax revenues. A
"basic aid" school district is a district that has enough local
property tax revenue to fully fund its revenue limit (a limit or
amount unique to each district) and not require state general
aid beyond the $120 per student guaranteed by the state
Constitution. Although this $120 was once provided in general
aid, for the past two years the state has applied categorical
funding in satisfaction of the constitutional requirement so a
basic aid district may receive no state general aid unless the
district fails to receive enough categorical aid to satisfy the
$120 requirement. Most, if not all, districts receive enough
categorical aid to satisfy the $120 requirement.
Current law provides for charter schools to receive general
purpose entitlement funding in lieu of the general purpose
funding received by school districts as revenue limit funding.
The property tax portion of this general purpose entitlement is
generally paid to charter schools by the "sponsoring school
district", which in most cases is the school district that
granted the charter. Two exceptions are currently made to this
definition of "sponsoring district." One exception involves
students who are voluntarily attending a county community
charter school, and the second exception is made for students
who attend a countywide charter school but reside in a "basic
aid" school district. For both exceptions the sponsoring
district, which is responsible for the property tax portion of
the general purpose entitlement for those students, is defined
as their district of residence. At present, however, basic aid
districts are not paying into the general fund entitlements of
any charter schools due to difficulties implementing the
statute. As a result, the state is currently funding the
charter entitlements generated by students who reside in basic
aid school districts.
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Page 2
SB 1078 (Simitian)
If basic aid districts were to finance a charter school
entitlement on the basis of their property taxes per student,
the result would be that the entitlement would be fully funded
from local property tax revenues (there would be no state
support) because the per student property tax of most basic aid
districts exceeds the charter school per student entitlement.
By contrast, the entitlement of charter schools located in
non-basic aid districts is comprised of both state aid and
property tax reflecting the mix of the sponsoring district.
Chapter 586/01 (SB 955, Alpert) shifted the property tax
transfer for students who reside in a basic aid district but
attend a charter school in a non-basic aid district. Under this
chapter, the basic aid district of residence became responsible
for the transfer of property limited to the lesser of the
charter school's per student block grant or the basic aid
district's property tax per student. By requiring the basic aid
district to support residential students, the state paid less
for support of the charter to the extent that the basic aid
district's property tax contribution was greater than the
chartering school district's contribution. This chapter has yet
to be implemented as a result of disagreements over how to
implement its provisions.
This bill would reduce and phase-in the transfer of funding from
a basic aid district to the charter school in a non-basic aid
district, with the per student transfer always being at a level
below the charter school's per student general purpose block
grant. The phase-in would allow for the transfer of 30 percent
of the funding in 2005-06, 50 percent of the funding in 2006-07,
and 70 percent of the funding in 2007-08 with the state having
to backfill the difference. The bill does not provide for a
full transfer after 2009 thus requiring the state to backfill
the difference (30 percent) on an ongoing basis.
This bill is similar to AB 1366 (Simitian) of 2003, differing
primarily in the years of phase in so that basic aid districts
would be paying 70 percent of their per student property tax as
of 2005-06. Another similar bill, AB 1100 (Simitian) of 2002,
was vetoed by Governor Davis with the following message:
This bill would allow a basic aid district to retain a
significant portion of funding for a pupil that is no longer
served by that district. Specifically, it would reduce the
transfer of funds required for each resident pupil that moves to
a charter school approved by non-basic aid districts or county
offices of education. This bill also makes various technical
changes in an attempt to further clarify current law mechanisms
for transfers of property taxes between applicable districts and
charters.
By limiting in-lieu property tax transfers by basic aid
districts, this bill exposes the State to excessive General Fund
costs for instruction of pupils residing in those districts.
This is inconsistent with Chapter 586/2001 (SB 955, Alpert)
which I signed last year and is inappropriate because the
operation of charter schools is intended to be cost neutral to
the State. By allowing basic aid districts to shift costs to
the General Fund, this bill reduces the State's capacity to fund
other education priorities.
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Page 3
SB 1078 (Simitian)
I believe that current law is reasonable and adequate, and can
be implemented without further legislation. Therefore, I cannot
sign this bill. Rather, I direct the State Department of
Education to promptly implement existing law. This action will
save the State an additional $700,000 in Proposition 98 General
Fund in fiscal year 2002-03, $500,000 in fiscal year 2003-04,
and $300,000 in 2004-05.