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. _________________________________________________________________ ____ 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 - 1 - Page 2 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.