BILL ANALYSIS
AB 8
Page 1
Date of Hearing: April 1, 2009
ASSEMBLY COMMITTEE ON EDUCATION
Julia Brownley, Chair
AB 8 (Brownley) - As Amended: March 26, 2009
SUBJECT : Education finance: working group
SUMMARY : Convenes a working group to make findings and
recommendations regarding the restructuring of California's
education finance system. Specifically, this bill :
1)Makes legislative findings and declarations related to:
a) The complexity, illogic, and lack of transparency in
California's current education finance system.
b) The lack of flexibility, high compliance costs, and
revenue inequities facing California schools and districts.
c) The lack of data, effective data systems, and ability to
use such data - all of which are shown by research to be
important to successful schools and districts.
d) The specific lack of information on and understanding of
how money is allocated to schools within any school
district.
2)States legislative intent to develop a comprehensive plan for
school finance reform, simplify and improve rationality and
equity in the system, support accountability through improved
fiscal transparency and reporting, support ongoing improvement
and reform, and hold local education agencies harmless by
transitioning to the new system as new funds become available.
3)Requires the Department of Finance and Legislative Analyst to
convene a working group that includes representatives of the
Governor and Superintendent of Public Instruction (SPI), as
well as majority and minority staff of the appropriate policy
and fiscal committees of both houses of the Legislature.
4)Requires the working group to consult with or invite
organizations or experts as it deems appropriate.
5)Requires the working group to consider and give weight to the
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Getting Down to Facts (GDTF) research and resulting efforts,
including the report of the Governor's Committee on Education
Excellence (GCEE) or other subsequent research, and to draw
on, rather than repeat, those efforts.
6)Requires the working group to make findings and
recommendations regarding:
a) Alternative funding structures that are simple,
rational, equitable, and based on costs; that support
accountability, facilitate financial reporting, recognize
the impact of growing or declining enrollment, reinforce
academic goals; and that are based on exogenous local
education agency (LEA) and student characteristics that
clearly effect costs.
b) A means of transitioning to a new restructured finance
system as new funds become available, including
pre-transition conditions, timing of the transition, the
manner in which LEAs are held harmless during the
transition, a component for equalizing funding based on the
cost of providing education services, and the mechanism for
and timing of elimination of the legacy funding system.
c) The policy and fiscal implications of the new system,
including costs, trade-offs, equity considerations,
incentives and disincentives, and governance
considerations.
d) Modifications to the Standardized Account Code Structure
(SACS) necessary to support school-level financial
reporting.
e) An evaluation mechanism to facilitate program
improvement, transparency, and accountability.
7)Requires the working group to report its findings and
recommendations to the Legislature and Governor on or before
December 1, 2010.
EXISTING LAW :
1)Provides for Revenue Limit (base discretionary) funding for
school districts that is, in part, based on average daily
attendance (ADA), where ADA is calculated by dividing the
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number of days of attendance for all pupils enrolled in the
district by the number of instructional days in the district's
fiscal year, and a day of attendance is generally defined as a
minimum number of instructional minutes (specific to grade
level) in a classroom setting with a certificated employee of
the school district present. The funding computation uses the
annual ADA reported by each district in the last attendance
report of the fiscal year, for the current or prior fiscal
year, whichever is greater. Total Revenue Limit (local
property taxes plus state General Fund) funding for a district
is then calculated by multiplying the district's set (per
pupil) base revenue limit by ADA.
2)Provides, historically in specific years, funding and a
mechanism for equalizing school district revenue limits by
increasing the base revenue limit for some set of low revenue
limit districts.
3)Establishes and funds categorical programs that focus
resources and/or compliance requirements on specific classes
of students or schools, or on specific uses of funds,
identified by the Legislature as priorities.
4)Consolidates a number of historical categorical programs into
a smaller set of block grants, where a block grant gives
funding recipients the flexibility to spend the funds across
any of the previously individual programs consolidated into
that block grant.
5)Allows for limited transfers of funds between specific
categorical programs.
6)Provides for temporary flexibility to spend the funds
appropriated for nearly all categorical programs in order to
relieve local budget pressure created by the current economic
downturn.
7)Requires that each school district produce an annual school
accountability report card for each school in the district,
including various specific data elements describing the school
and its condition.
8)Requires the development of the California Longitudinal Pupil
Achievement Data System, and authorizes the use of SACS,
developed by the California Department of Education, to
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account for revenues and expenditures.
FISCAL EFFECT : Unknown, but minor, costs related to the
convening of the staff working group.
COMMENTS : According to the author, this bill would "provide
state policymakers with a comprehensive plan to reform the
current education finance system, to leverage and support pupil
achievement by making California's funding system simpler, more
transparent, and more effective." The author envisions this
working group as the next step toward reforming the state's
current system of education finance in answer to what have
become well-accepted criticisms. Studies, completed in 2007 as
part of the GDTF project, point to shortcomings in our finance
system that are well known to those who work within that system.
Those studies have also implicitly provided broad suggestions
for how the system could be changed. Many of those broad
suggestions have been further debated and developed into
conceptual policy proposals by the GCEE and in subsequent
research. The working group proposed in this bill might be the
mechanism necessary to turn those broad suggestions and
conceptual policy proposals into more specific findings and
recommendations that could be debated in the Legislature and,
with further legislative action, implemented.
This bill is intended to bridge that gap between the academic
conclusions of the GDTF studies, the findings of the GCEE, and
specific legislative proposals that can be drafted, enacted and
implemented. An additional positive aspect of this proposal is
that the composition of the working group brings representatives
of all policy makers together with other stakeholders and
experts to collaboratively craft specific recommendations that
may then receive broad-based support. The charge given to the
working group in this bill is both broad and in-depth, since the
working group is to produce recommendations for comprehensive
reform of the entire school funding system and the transition to
that new system.
This bill directs the working group to make recommendations
regarding a specific means of transitioning into the new funding
system. Historical discussions concerning the transition from
one funding scheme to another have generally focused on making
the change in one step, while sorting out those winners that
gain funding and those losers that receive less funding; the
traditional approach then either holds the losers harmless or
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simply lets the losers suffer from the loss of funds. The
former approach is often, and certainly would currently be,
prohibitively expensive, and the latter approach is particularly
unattractive when, as research indicates is the current case,
all California school districts are dramatically under-funded.
Thus these traditional approaches would either count on funds
that the state does not now have, or takes funding away from
under-funded school districts to give to other school districts
in a zero sum game. AB 8 takes a modified approach that
provides a transition over time by only applying the new funding
rules to new increases in funding. In this way districts will
continue to receive their pre-transition levels of funding
according to the funding allocation rules of the old legacy
system until some point in the future when that old system is
dismantled. Under this proposal, no district would lose funding
as a result of the move to the new system as long as the
transition is in place. The working group is charged with
designing the timing and other details of this transition
approach, including the eventual elimination of the legacy
system.
The bill also requires the working group to make recommendations
for the modification of the existing SACS system to support
school-level financial reporting. There are clear benefits to
school-level fiscal reporting - all related to increased
transparency and sensitivity to possible intra-district funding
and service inequities. There are also numerous technical,
administrative, accounting, and information technology issues
that would have to be examined in order for the working group to
make these recommendations. More than any other aspect of the
working group's charge, outside experts in these areas would be
necessary to inform and advise the working group.
Related legislation: AB 60 (Coto), pending in Assembly
Education, proposes a study of the weights that would be
necessary to implement a weighted-student funding approach. If
both AB 8 and AB 60 are enacted, then the AB 8 working group
would make use of any information produced in the course of the
AB 60 study, in the same way that the AB 8 working group is
designed to build upon the GDTF and GCEE research and findings.
Previous legislation: A number of bills have recently proposed
to further planning for education finance reform. AB 2159
(Brownley), held in the Senate Rules Committee in 2008, would
have established a commission to develop a plan for reforming
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the school finance system. AB 2394 (Coto), held in the Assembly
Appropriations Committee in 2008), was substantially similar to
the current AB 60. AB 586 (Coto), held in the Assembly
Appropriations Committee in 2008, would have stated Legislative
intent to replace the funding mechanisms for kindergarten
through twelfth grade education with a weighted student funding
formula that also included adjustments for grade level and
geographic cost differences, and would have directed the SPI to
convene a working group to develop the statutory language that
would enact this intent. SB 146 (Scott), vetoed in 2008, would
have directed the SPI to make calculations that would inform a
future change from attendance to enrollment based funding.
REGISTERED SUPPORT / OPPOSITION :
Support
All City Council
Californians for Justice
California ACORN
California Association of School Business Officials
California Federation of Teachers
California School Boards Association
California State PTA
California Teachers Association
EdVoice
Girls Incorporated of Alameda County
InnerCity Struggle
Parent Leadership Action Network
PICO California
Public Advocates
San Diego Unified School District
San Francisco Unified School District
Youth In Focus
Youth Together
Opposition
None on file
Analysis Prepared by : Gerald Shelton / ED. / (916) 319-2087