BILL ANALYSIS
SENATE COMMITTEE ON EDUCATION
Gloria Romero, Chair
2009-2010 Regular Session
BILL NO: AB 8
AUTHOR: Brownley
AMENDED: June 30, 2009
FISCAL COMM: Yes HEARING DATE: July 15, 2009
URGENCY: No CONSULTANT:Kathleen Chavira
SUBJECT : Education Finance
SUMMARY
This bill requires the Director of Finance and the
Legislative Analyst to convene a working group to make
findings and recommendations to the Legislature and the
Governor regarding the implementation of a restructured
school finance system and outlines the specific
responsibilities of the working group.
BACKGROUND
In March of 2007, Stanford University researchers released
the "Getting Down to Facts" studies that were requested by
state leadership in order to answer the following
questions:
1) What do California school finance and governance systems
look like today?
2) How can we use the resources that we have more effectively
to improve student outcomes?
3) To what extent are additional resources needed so that
California's students can meet the goals that we have
for them?
The 22 Getting Down to Facts studies were considered by the
Governor's Committee on Education Excellence, which issued
their report in March of 2008. The Committee was charged
with focusing on four areas:
1) Finance: the efficiency and sufficiency of
education funding;
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2) Governance: the functioning and effectiveness of
governance structures;
3) Teaching: teacher recruitment, training, support,
and compensation; and
4) Administration: the preparation, support, and
retention of education leaders.
In conducting its work, the Committee expanded its work to
also focus on data and information systems that can support
instruction and Early Childhood Education: early learning
experiences that prepare children for success.
Current law also requires that three school districts in
the Santa Cruz area receive a revenue limit adjustment that
equalizes funding among the districts participating in an
inter-district attendance agreement for middle school
pupils. The funding provided for this arrangement
constitutes a transfer in general purpose funding among the
districts.
ANALYSIS
This bill :
1) Requires the Director of Finance and the Legislative
Analyst to convene a working group to make findings
and recommendations to the Legislature and the
Governor regarding the implementation of a
restructured school finance system, as specified.
2) Requires that the working group:
a) Include representatives of the
Governor, Superintendent of Public Instruction,
and majority and minority staff of the
appropriate policy and fiscal committees of the
Assembly and Senate.
b) Consult with or invite
participation of organizations or experts it
deems appropriate.
c) Consider and give weight to
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research, findings, and recommendations already
conducted, as specified.
d) Make findings and recommendations
regarding:
i) Alternative funding
structures that are simple, rational and
equitable, predictable and stable, that
reflect the cost of educating students with
varied needs, that support accountability,
facilitate reporting of financial data,
allocation of consistent additional
resources based upon student and district
characteristics, that recognize the
financial consequences of enrollment growth
and decline, and that reinforce academic
goals in the public schools.
ii) A means of transitioning to the
new structure(s), only as increased funding
become available, including necessary
conditions for transition, timing, the
extent to which local educational agencies
(LEAs) are held harmless, an equalization
component, and the timing and method for
elimination of unnecessary statutory or
budgetary elements of the current funding
structure.
iii) Policy and fiscal implications of
the alternative funding structure(s)
including costs of implementation, equity
considerations, creation or elimination of
incentives or disincentives, and governance
considerations.
iv) Modifications to the standardized
account code structure to provide
school-level reports on revenues and
expenditures.
v) An evaluation
mechanism, as specified.
e) Present its findings and
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recommendations to the Legislature and the
Governor by December 1, 2010.
3) Requires that any unabsorbed costs incurred by the
working group be paid from nonstate funds donated or
granted for that purpose.
4) Repeals, as of January 1, 2011, a current law
requirement that three school districts in the Santa
Cruz area receive a revenue limit adjustment that
equalizes funding among the districts participating in
an inter-district attendance agreement for middle
school pupils.
STAFF COMMENTS
1) Drafting error . This bill was recently amended to add
a provision repealing an existing authority to grant
the Santa Cruz area districts a revenue limit
adjustment. According to the author, it was the
intent to incorporate a repeal of Education Code
section 42238.21, not 42238.22. Education code
section 42238.21 contains an obsolete revenue limit
adjustment which was required for the Newport-Mesa
Unified School District for 996-97 only. Staff
recommends the bill be amended to delete Section 3 of
the bill and replace it with language that amends and
thereby repeals Education Code section 42238.21 with
the following language: This section shall remain in
effect only until July 1, 2010, and, as of January 1,
2011, is repealed, unless a later enacted statute,
that is enacted before January 1, 2011, deletes or
extends that date.
2) Need for the bill . Two major studies in the last two
years have addressed the need for school finance
reform. According to the author, this bill creates a
mechanism for turning the broad, conceptual policy
proposals which came out of these studies into more
specific findings and recommendations which can be
debated and proposed for legislative action. The bill
creates a working group comprised of representatives
of all policy makers, together with stakeholders and
experts, to make recommendations regarding the means
for transitioning into a new funding system. At the
same time, recognizing that the current fiscal
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environment makes it virtually impossible to undertake
any major restructuring, AB 8 calls for an approach
that allows for the transition over time and applies
any new funding structures to increases in funding
only, ensuring that no district would lose funding as
a result of the transition process. According to the
author, this bill would "provide 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."
3) Working group in statute ? Is statutory language
necessary to convene of DOF and LAO to accomplish
legislative goals? Is this type of request better
handled through supplemental budget language? Since
the activity outlined in the bill is not directly
linked to an individual budget item, statutory
language may be more appropriate. More importantly,
the bill outlines a number of parameters to guide the
recommendations being developed by the working group.
Statutory language provides an opportunity for the
legislature to review and refine these parameters as
resources become available to consider the
implementation of a restructured education finance
system.
4) Fiscal impact . The bill assumes that costs for the
working group can be absorbed by the participating
entities and provides that any costs that cannot be
absorbed be paid from donated nonstate funds.
According to the Assembly Appropriations analysis,
costs for the working group are likely less than
$100,000 for the Department of Finance and Legislative
Analyst Office to convene the group. However, if the
bill leads to a transition funding mechanism and
increased K-12 funding the General Fund cost pressures
would be significant.
5) Prior legislation . AB 2159 (Brownley) would have
established a Funding and Accountability Commission
for Transparency and Simplicity (FACTS) to provide
policymakers with a comprehensive plan to reform the
education finance system. The commission was composed
of an unspecified number of members representing the
education and business communities, parents and the
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research community with expertise in educational
policy and best practices. By contrast, AB 8 creates
a working group comprised of representatives of state
policy makers, together with stakeholders and experts.
AB 2159 was held in the Senate Rules Committee in
August 2008.
SUPPORT
Antioch Unified School District
Asian/Pacific Islander Youth Promoting Advocacy and
Leadership
Bay Area PLAN
Books Not Bars
California Acorn
California Association of School Business Officials
California Federation of Teachers
Californians for Justice
Gay-Straight Alliance Network
PICO California
Public Advocates
San Francisco Unified School District
Youth Together
OPPOSITION
None received.