BILL NUMBER: AB 8	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Brownley

                        DECEMBER 1, 2008

   An act to add Section 41054 to the Education Code, relating to
education finance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 8, as introduced, Brownley. Education finance: working group.
   Existing law establishes the public school system in this state,
and, among other things, provides for the establishment of school
districts throughout the state and for their provision of instruction
at the public elementary and secondary schools they operate and
maintain. Existing law establishes a public school funding system
that includes, among other elements, the provision of funding to
local educational agencies through state apportionments, the proceeds
of property taxes collected at the local level, and other sources.
   This bill would express findings and declarations of the
Legislature with respect to the school funding system in the state.
This bill would require the Director of Finance and the Legislative
Analyst to convene a working group to make findings and
recommendations to the Legislature and the Governor on or before
December 1, 2010, regarding restructuring California's school finance
system. The bill would require those findings and recommendations to
include, among other things, alternative structures for funding
public schools, the policy and fiscal implications of the alternative
funding structure or structures, and an evaluation mechanism to
facilitate continuous improvement, maximum transparency, and
accountability of the funding structures.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.

   AB 8, as introduced, Brownley. Education finance: working group.
   Existing law establishes the public school system in this state,
and, among other things, provides for the establishment of school
districts throughout the state and for their provision of instruction
at the public elementary and secondary schools they operate and
maintain. Existing law establishes a public school funding system
that includes, among other elements, the provision of funding to
local educational agencies through state apportionments, the proceeds
of property taxes collected at the local level, and other sources.
   This bill would express findings and declarations of the
Legislature with respect to the school funding system in the state.
This bill would require the Director of Finance and the Legislative
Analyst to convene a working group to make findings and
recommendations to the Legislature and the Governor on or before
December 1, 2010, regarding restructuring California's school finance
system. The bill would require those findings and recommendations to
include, among other things, alternative structures for funding
public schools, the policy and fiscal implications of the alternative
funding structure or structures, and an evaluation mechanism to
facilitate continuous improvement, maximum transparency, and
accountability of the funding structures.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) The 22 studies of the Getting Down to Facts Project and the
Governor's Committee on Education Excellence were consistent in their
conclusions that California's current education finance system is
overly complex, irrational, and burdensome, and is in need of a
long-term plan for comprehensive reform.
   (b) The complexity of the current system poses a major obstacle to
transparency and effectiveness. It is almost impossible to determine
how much revenue each school district receives or how those revenues
are spent, let alone to report this information to local
communities, stakeholders, and the state.
   (c) The current system is not logical, with district revenues that
are largely a historical artifact of spending in the 1970s combined
with a confusing and burdensome system of categorical programs.
Disparities in school and district revenues are substantial and are
not aligned to pupil or educator needs.
   (d) The system places substantial restrictions on the use of
resources by schools and districts, creating high compliance costs
and making it difficult for local educators to respond to the needs
of their pupils. Fewer paperwork requirements and more flexibility in
allocating resources are cited by school principals as two of the
most important factors in improving pupil outcomes.
   (e) Many schools and districts lack the proper tools or capacity
to ensure that money is spent on the most effective programs and
practices. Research consistently finds that successful schools use
data to inform teaching practices and innovation. However, California
schools and districts vary widely in their use of data and in their
capacity to use data to improve pupil performance.
   (f) Ensuring that money is spent efficiently and effectively
requires a full understanding of how money is allocated by school
districts and spent within schools. However, California does not
collect financial data that is useful for determining the
effectiveness of resources at the state, district, or school levels.
   (g) Therefore, it is the intent of the Legislature to do all of
the following:
   (1) Build on previous research and recommendations to produce a
comprehensive plan for finance reform to support pupil achievement,
with specific consideration given to the interactions of incentives
in school finance formulas.
   (2) Establish simpler formulas for allocating funding to each
local educational agency.
   (3) Make the allocation of funding more rational so that the
revenues received by each local educational agency reflect the cost
of educating pupils with varying needs in varying environments.
   (4) Support accountability by increasing the transparency of state
funding mechanisms and of expenditure decisions at the local level.
   (5) Improve the reporting of financial data so that programmatic
investments can be linked to programs that increase pupil
achievement.
   (6) Support continuous improvement by requiring periodic review of
the school finance system and of local resource decisions.
   (7) Hold local educational agencies harmless, and transition to
the new system gradually, as new moneys become available.
  SEC. 2.  Section 41054 is added to the Education Code, to read:
   41054.  (a) The Director of Finance and the Legislative Analyst
shall convene a working group to make findings and recommendations to
the Legislature and the Governor regarding restructuring California'
s school finance system as set forth in subdivision (b).
   (1) In addition to the Department of Finance and the Legislative
Analyst, the working group shall be composed of representatives of
the Governor, representatives of the Superintendent of Public
Instruction, and majority and minority staff of the appropriate
policy and fiscal committees of the Assembly and Senate.
   (2) The working group shall consult with, or invite the
participation of, organizations or experts it deems appropriate to
accomplish its tasks.
   (3) In its deliberations, the working group shall consider and
give appropriate weight to the findings and recommendations of the
Governor's Committee on Education Excellence and to the research
results embodied in the Getting Down to Facts Project.
   (b) The working group shall make findings and recommendations
regarding all of the following:
   (1) Alternative structures for funding public schools that shall
include, but not necessarily be limited to, all of the following
characteristics:
   (A) Simple formulas for allocating funding to each local
educational agency.
   (B) Rational allocation of funding so that the revenues received
by each local educational agency reflect the cost of educating pupils
with varying needs in varying environments.
   (C) A funding structure that supports accountability by providing
transparency of state revenue allocation rules as well as expenditure
decisions at the local level.
   (D) A funding structure that facilitates reporting of financial
data so that programmatic investments can be linked to pupil
achievement.
   (E) A funding structure that allocates consistent additional
resources to school districts and county offices of education on the
basis of exogenous characteristics of the local educational agency
and its students that research has shown clearly affect the costs of
educating pupils.
   (F) A funding structure that recognizes the financial consequences
of growth or decline in the number of students served.
   (G) A funding structure that reinforces the academic goals of the
public schools.
   (2) Pathways to transition from the current school funding
structure to the more desirable and comprehensive alternative
structure or structures identified pursuant to paragraph (1), and a
specific mechanism to initiate the transition as increased funding
becomes available in future years. In particular, the findings and
recommendations shall address:
   (A) The conditions that should be in place before a transition
begins.
   (B) The length of time that is necessary or appropriate to
transition to a new funding structure.
   (C) The manner in which local educational agencies should be held
harmless during a transition period from revenue changes associated
with a new funding structure.
   (D) An equalization component for the transition to the new
funding structure, based on the characteristics identified in
subparagraphs (B) and (E) of paragraph (1).
   (E) How and when to eliminate unnecessary statutory and budgetary
elements of the current school funding structure.
   (3) The policy and fiscal implications of the alternative funding
structure or structures identified pursuant to paragraph (1). In
particular, the findings and recommendations shall address all of the
following:
   (A) Costs associated with implementing new school funding
structures.
   (B) Trade offs inherent among the characteristics set forth in
paragraph (1).
   (C) Equity considerations.
   (D) Incentives and disincentives that new school funding
structures may create or eliminate.
   (E) Governance considerations.
   (4) Modifications to the standardized account code structure to
provide school-level reports on revenue and expenditures to
facilitate easy comparisons across schools and districts, including
comparisons of school, district, and statewide demographics and
academic performance, and data on program-level expenditures.
   (5) An evaluation mechanism to facilitate continuous improvement,
maximum transparency, and accountability of the primary funding
structures, as well as a consistent process to evaluate the
effectiveness of any specific programs that are funded separately.
   (c) The working group shall present its findings and
recommendations to the Legislature and the Governor on or before
December 1, 2010.
  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) The 22 studies of the Getting Down to Facts Project and the
Governor's Committee on Education Excellence were consistent in their
conclusions that California's current education finance system is
overly complex, irrational, and burdensome, and is in need of a
long-term plan for comprehensive reform.
   (b) The complexity of the current system poses a major obstacle to
transparency and effectiveness. It is almost impossible to determine
how much revenue each school district receives or how those revenues
are spent, let alone to report this information to local
communities, stakeholders, and the state.
   (c) The current system is not logical, with district revenues that
are largely a historical artifact of spending in the 1970s combined
with a confusing and burdensome system of categorical programs.
Disparities in school and district revenues are substantial and are
not aligned to pupil or educator needs.
   (d) The system places substantial restrictions on the use of
resources by schools and districts, creating high compliance costs
and making it difficult for local educators to respond to the needs
of their pupils. Fewer paperwork requirements and more flexibility in
allocating resources are cited by school principals as two of the
most important factors in improving pupil outcomes.
   (e) Many schools and districts lack the proper tools or capacity
to ensure that money is spent on the most effective programs and
practices. Research consistently finds that successful schools use
data to inform teaching practices and innovation. However, California
schools and districts vary widely in their use of data and in their
capacity to use data to improve pupil performance.
   (f) Ensuring that money is spent efficiently and effectively
requires a full understanding of how money is allocated by school
districts and spent within schools. However, California does not
collect financial data that is useful for determining the
effectiveness of resources at the state, district, or school levels.
   (g) Therefore, it is the intent of the Legislature to do all of
the following:
   (1) Build on previous research and recommendations to produce a
comprehensive plan for finance reform to support pupil achievement,
with specific consideration given to the interactions of incentives
in school finance formulas.
   (2) Establish simpler formulas for allocating funding to each
local educational agency.
   (3) Make the allocation of funding more rational so that the
revenues received by each local educational agency reflect the cost
of educating pupils with varying needs in varying environments.
   (4) Support accountability by increasing the transparency of state
funding mechanisms and of expenditure decisions at the local level.
   (5) Improve the reporting of financial data so that programmatic
investments can be linked to programs that increase pupil
achievement.
   (6) Support continuous improvement by requiring periodic review of
the school finance system and of local resource decisions.
   (7) Hold local educational agencies harmless, and transition to
the new system gradually, as new moneys become available.
  SEC. 2.  Section 41054 is added to the Education Code, to read:
   41054.  (a) The Director of Finance and the Legislative Analyst
shall convene a working group to make findings and recommendations to
the Legislature and the Governor regarding restructuring California'
s school finance system as set forth in subdivision (b).
   (1) In addition to the Department of Finance and the Legislative
Analyst, the working group shall be composed of representatives of
the Governor, representatives of the Superintendent of Public
Instruction, and majority and minority staff of the appropriate
policy and fiscal committees of the Assembly and Senate.
   (2) The working group shall consult with, or invite the
participation of, organizations or experts it deems appropriate to
accomplish its tasks.
   (3) In its deliberations, the working group shall consider and
give appropriate weight to the findings and recommendations of the
Governor's Committee on Education Excellence and to the research
results embodied in the Getting Down to Facts Project.
   (b) The working group shall make findings and recommendations
regarding all of the following:
   (1) Alternative structures for funding public schools that shall
include, but not necessarily be limited to, all of the following
characteristics:
   (A) Simple formulas for allocating funding to each local
educational agency.
   (B) Rational allocation of funding so that the revenues received
by each local educational agency reflect the cost of educating pupils
with varying needs in varying environments.
   (C) A funding structure that supports accountability by providing
transparency of state revenue allocation rules as well as expenditure
decisions at the local level.
   (D) A funding structure that facilitates reporting of financial
data so that programmatic investments can be linked to pupil
achievement.
   (E) A funding structure that allocates consistent additional
resources to school districts and county offices of education on the
basis of exogenous characteristics of the local educational agency
and its students that research has shown clearly affect the costs of
educating pupils.
   (F) A funding structure that recognizes the financial consequences
of growth or decline in the number of students served.
   (G) A funding structure that reinforces the academic goals of the
public schools.
   (2) Pathways to transition from the current school funding
structure to the more desirable and comprehensive alternative
structure or structures identified pursuant to paragraph (1), and a
specific mechanism to initiate the transition as increased funding
becomes available in future years. In particular, the findings and
recommendations shall address:
   (A) The conditions that should be in place before a transition
begins.
   (B) The length of time that is necessary or appropriate to
transition to a new funding structure.
   (C) The manner in which local educational agencies should be held
harmless during a transition period from revenue changes associated
with a new funding structure.
   (D) An equalization component for the transition to the new
funding structure, based on the characteristics identified in
subparagraphs (B) and (E) of paragraph (1).
   (E) How and when to eliminate unnecessary statutory and budgetary
elements of the current school funding structure.
   (3) The policy and fiscal implications of the alternative funding
structure or structures identified pursuant to paragraph (1). In
particular, the findings and recommendations shall address all of the
following:
   (A) Costs associated with implementing new school funding
structures.
   (B) Trade offs inherent among the characteristics set forth in
paragraph (1).
   (C) Equity considerations.
   (D) Incentives and disincentives that new school funding
structures may create or eliminate.
   (E) Governance considerations.
   (4) Modifications to the standardized account code structure to
provide school-level reports on revenue and expenditures to
facilitate easy comparisons across schools and districts, including
comparisons of school, district, and statewide demographics and
academic performance, and data on program-level expenditures.
   (5) An evaluation mechanism to facilitate continuous improvement,
maximum transparency, and accountability of the primary funding
structures, as well as a consistent process to evaluate the
effectiveness of any specific programs that are funded separately.
   (c) The working group shall present its findings and
recommendations to the Legislature and the Governor on or before
December 1, 2010.