BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Kevin Murray, Chairman

                                           1358 (Simitian)
          
          Hearing Date:  5/25/06          Amended: A I
          Consultant:  Bob Franzoia       Policy Vote: Ed  8-0
          _________________________________________________________________ 
          ____
          BILL SUMMARY: SB 1358, an urgency measure, would require a K-12  
          equalization adjustment to be added for the 2006-07 fiscal year  
          base revenue limit.  The bill would set forth the specific  
          provisions the Superintendent of Public Instruction (SPI) shall  
          use to compute the adjustment in order to equalize base revenue  
          limits at 90 percent of the statewide average for the  
          appropriate size and type of school district.
          _________________________________________________________________ 
          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2006-07      2007-08       2008-09     Fund
           Equalization adjustment     $300,000* - $500,000** one  
          timeGeneral***                                
          * Amount in the Governor's proposed budget (6110-601).
          ** Amount necessary to equalize to the 90th percentile.
          *** Counts toward meeting the Proposition 98 minimum funding  
          guarantee.  An appropriation to fund an equalization adjustment  
          would become an ongoing obligation.
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          ____

          STAFF COMMENTS: SUSPENSE FILE.

          The bill provides that the SPI shall divide the amount  
          appropriated for equalization for the 2006-07 fiscal year by  
          specified calculations.  While the amount appropriated (as part  
          of the Budget Act or in a trailer bill) could be zero, and the  
          bill would have no fiscal impact, any appropriation sufficient  
          to ensure that a 2006-07 base revenue limit above which fall not  
          more than ten percent of the school districts statewide would  
          have a multimillion dollar fiscal impact.
          
          Equalization is a term that has traditionally been applied to  
          the process of revising school funding formulas in order to  
          reduce per pupil funding differences in general aid i.e.,  
          revenue limit funding.  Revenue limit equalization was initiated  










          in response to the Serrano decisions that ordered the reduction  
          of wealth related (assessed value related) disparity in general  
          funding for school districts of similar size and type.  

          The six groups of school districts are:
          Small elementary, > than 101 ADA
          Large elementary, < than 100 ADA
          Small high school, > than 301 ADA
          Large high school, < than 300 ADA
          Small unified, > than 1,501 ADA
          Large unified, < than 1,500 ADA


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          SB 1358 (Simitian)

          Although the last Serrano case was closed in 1986, the state has  
          continued to make equalizing adjustments to per pupil revenue  
          limits which have a tendency to become less equalized as a  
          result of various forces such as statutory revisions of the  
          definition of average daily attendance (ADA), declining  
          enrollment adjustments, and district mergers and territory  
          transfers.   In sum, most differences in today's per pupil  
          revenue limits cannot be ascribed to "wealth related  
          disparities" but rather result from policy changes unrelated to  
          equalization.

          In 2005, this committee passed SB 1077 (Simitian), which  
          appropriates $110 million for equalization to the 90th  
          percentile.  SB 1077 included funding attributable to (1)  
          beginning teacher salaries provisions (EC 45023.4), (2) longer  
          school year and longer schoolday provisions (EC 46200 and  
          46201), (3) Meals for Needy Pupils programs (EC 42241.2), and  
          (4) reimbursements for school district unemployment insurance  
          (EC 25575.5) in the base of funding to be equalized by the  
          formula.  This bill excludes (1) and (2).  Excluding these  
          programs should reduce future equalization costs.

          SB 1077 is in the Assembly Education Committee.