BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
8 (Brownley)
Hearing Date: 08/17/2009 Amended: 07/23/2009
Consultant: Dan Troy Policy Vote: ED 8-0
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BILL SUMMARY: AB 8 would require the Director of Finance and
the Legislative Analyst to convene a working group to make
findings and recommendations to the Legislature and Governor
regarding the implementation of a restructured school finance
system on or before December 1, 2010. This bill would also
delete an obsolete provision of law relating to property tax
allocations to the Newport-Mesa Unified School District in the
1990s.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Working Group $50 or more for LAO staffing
costs, plus Private*
additional costs possible
depending on
research/data needs
K-12 finance reform Pressure in the billions
for implementing General**
restructured K-12 finance
system
*To the extent private funds do not materialize, required
activities represent pressure on the General Fund
**Most of the pressures would count toward meeting the
Proposition 98 minimum funding guarantee, though some of the
activities represent state-level non-Proposition 98 General Fund
pressures
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
In 2007, a package of 22 studies ("Getting Down to Facts")
concerning K-12 education finance and governance in the state of
California was released by Stanford University's Institute for
Research on Education Policy & Practice (IREPP). The studies,
commissioned by the Governor's Committee on Education Excellence
(GCEE), the Superintendent of Public Instruction (SPI), and the
offices of the Senator Pro Tem and the Speaker of the Assembly,
largely concluded that school finance in California was more a
patchwork of overly restrictive categorical programs and
outdated funding formulas than a rational and transparent
funding system. The IREPP reports concluded that while the
system was underfunded relative to pupil needs, that additional
funding was not likely to improve matters in the absence of
significant reform.
SBX3 4 (Ducheny, Chapter 12, Statutes of 2009) provided broad
flexibility to local education agencies by removing restrictions
on the use of funds from 43 categorical programs totaling over
$5 billion in funding.
In addition to the Director of Finance (DOF) and the Legislative
Analyst (LAO), the working group required by this bill would
include representatives of the Governor, from the Superintendent
of Public Instruction, and majority and minority staff of the
appropriate policy and fiscal committees of the Legislature.
The working group would be required to draw upon recent research
and to make findings and recommendations regarding specified
issues, such as alternative funding structures, a means of
transition from the current structure to a new one when funds
are available, the policy and fiscal implications of the
alternative funding structure or structures identified,
modifications to the standardized account that would facilitate
comparisons of revenue and expenditure issues, and an evaluation
mechanism to facilitate the transparency, accountability, and
effectiveness of the finance systems and any separately funded
programs.
The working group would be required to present its findings and
recommendations to the Legislature and the Governor on or before
December 1, 2010. The bill specifies intent to fund any
nonabsorbable costs of the working group through nonstate funds.
The LAO reports costs of approximately $50,000 for staff time
associated with the working group. The Department of Finance
suggests costs for their participation could potentially be
absorbed, depending on the analysis required to satisfy
conditions of the bill. The modifications to the standardized
account code structure and other data systems suggested by the
bill could lead to state costs or pressures in the millions,
plus there would be potential local Proposition 98 costs or
pressures for district data collection and reporting.
Additionally, designing a new K-12 finance system would likely
result in cost pressures in the billions of dollars to implement
the working group's findings and recommendations.
AB 2159 (Brownley, 2008) would have required a commission to
recommend parameters for a revised K-12 base district funding
formula, as specified. The bill was held by the Senate Rules
Committee.