BILL ANALYSIS
AB 8
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 8 (Brownley)
As Amended September 3, 2009
Majority vote
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|ASSEMBLY: |78-0 |(June 2, 2009) |SENATE: |31-6 |(September 9, |
| | | | | |2009) |
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Original Committee Reference: ED.
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
California's current education finance system; also 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 educational agencies harmless by
transitioning to the new system as new funds become available.
2)Requires the Department of Finance (DOF) and Legislative
Analyst's Office (LAO) 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; also requires the working group to
consult with or invite organizations or experts as it deems
appropriate.
3)Requires the working group to consider and give weight to the
Getting Down to Facts (GDTF) research and resulting efforts,
including the report of the Governor's Committee on Education
Excellence (GCEE) and other subsequent research, and to draw
on, rather than repeat, those efforts; also requires the
working group to report its findings and recommendations to
the Legislature and Governor on or before December 1, 2010.
4)Requires the working group to make findings and
recommendations regarding:
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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
educational agency (LEA) and student characteristics that
clearly affect 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.
5)Requires that any costs, incurred by the working group, that
can not be absorbed by the participating entities be paid from
non-state funds donated or granted for that purpose.
6)Repeals the requirement that the calculation of revenue limit
funding for the Newport-Mesa Unified School district for
1996-97 and later fiscal years not include 1994-95 payments
that were made to the district in 1996-97 due to the County of
Orange 1994 filing of a voluntary Chapter 9 petition in the
United States Bankruptcy Court.
The Senate amendments repeal the revenue limit funding
requirement as described in 6) above.
EXISTING LAW :
1)Provides for Revenue Limit (base discretionary) funding for
school districts that is, in part, based on average daily
attendance (ADA), and provides, historically in specific
years, funding and a mechanism for equalizing school district
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revenue limits by increasing the base revenue limit for some
set of low revenue limit districts.
2)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.
3)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, and 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.
4)Authorizes the use of SACS, developed by the California
Department of Education, to account for school district
revenues and expenditures.
AS PASSED BY THE ASSEMBLY, this bill was substantially similar
to the version passed by the Senate, with the exception of the
provision repealing the revenue limit funding requirement as
described in item 6) under SUMMARY .
FISCAL EFFECT : According to the Senate Appropriations
Committee, costs for the working group of $50,000 or more for
LAO staffing costs, plus additional costs possible depending on
research/data needs; these costs would be covered by private
funds, however to the extent private funds do not materialize,
required activities represent pressure on the General Fund.
Also the bill creates cost pressure on the General Fund in the
billions to implement the working group's findings and
recommendations, the Senate Appropriations Committee notes that
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.
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 in reforming the state's current
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system of education finance in answer to well-accepted
criticisms. Studies, completed in 2007 under the GDTF project,
point to numerous shortcomings in our finance 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 provides the mechanism for turning
those broad, conceptual policy proposals into more specific
findings and recommendations that could be debated and proposed
for legislative action.
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 could 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 transition into the new funding system over time
that only applies the new funding rules to any new increases in
funding that may occur. 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. In addition the bill 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 related to increased transparency and sensitivity to
possible 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
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other aspect of the working group's charge, outside experts in
these areas would be necessary to inform and advise the working
group.
The bill also repeals the requirement that the calculation of
revenue limit funding for the Newport-Mesa Unified School
district for 1996-97 and later fiscal years not include 1994-95
payments that were not made to the district until a later fiscal
year. After the County of Orange filed a voluntary Chapter 9
petition in the United States Bankruptcy Court in 1994, certain
1994-95 payments to the Newport-Mesa Unified School District
were not made until the 1996-97 fiscal year. Counting those
receipts again in 1996-97 would have meant a double reduction in
funding for the district, once in 1994-95 and again in 1996-97,
even though the bankruptcy was no fault of the district. This
provision of law excluded these payments from the calculation of
the district's revenue limit funding for 1996-97 only; there is
no ongoing impact on funding, and this section can be repealed
with no impact.
Previous legislation: AB 2159 (Brownley), held in the Senate
Rules Committee in 2008, would have established a commission to
develop a plan for reforming the school finance system.
Analysis Prepared by : Gerald Shelton / ED. / (916)
319-2087FN: 0002587