BILL ANALYSIS                                                                                                                                                                                                    






                          SENATE COMMITTEE ON EDUCATION
                               Gloria Romero, Chair
                            2009-2010 Regular Session
                                         

          BILL NO:       AB 184
          AUTHOR:        Block
          AMENDED:       August 2, 2010
          FISCAL COMM:   Yes            HEARING DATE:  August 11, 2010
          URGENCY:       Yes            CONSULTANT:Lynn Lorber

           NOTE  :  This bill has been amended to replace its contents and  
          this is the first time the bill is being heard in its current  
          form.

           SUBJECT  :   Special Disabilities Adjustment

           KEY POLICY ISSUE   

          Should the special disabilities adjustment be extended to the  
          2009-10 fiscal year, thereby preventing school districts that  
          already received and spent some of this funding from owing  
          those funds to the state?


           SUMMARY   

          This bill, an urgency measure, extends the special  
          disabilities adjustment by one additional year, to the  
          2009-10 fiscal year.

           BACKGROUND  

          In 1997, the Legislature reformed special education funding  
          (AB 602, Ch. 854) to move from a formula based on the number  
          of special education pupils to one based on a school  
          district's overall average daily attendance (thereby removing  
          an incentive to identify higher numbers of pupils as needing  
          special education to drive an increase in funding).  As part  
          of this reform, a funding mechanism was created to provide  
          additional funding to special education local plan areas  
          (SELPAs) having a disproportionately large number of  
          "high-cost" special education pupils.  This funding is based  
          on an incidence multiplier that was developed pursuant to a  
          study completed in 1998 by the American Institutes for  
          Research (AIR).  




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          Recognizing that these factors may change over time, the  
          special education funding reform (AB 602) called for the  
          incidence multiplier to expire after the 2002-03 fiscal year,  
          and called for a new study to be completed by March 2003.   
          AIR completed this second study, which recommended that the  
          incidence multiplier be updated at least every five years, if  
          not annually, and that the state gradually phase-out SELPAs  
          that have been receiving adjustment funds for the five years  
          prior to the release of the report, and provide full and  
          immediate funding to SELPAs identified as responsible for a  
          disproportionate number of high cost students.  

          The Legislature has passed six bills to extend the  
          calculation of the special disabilities adjustment, each for  
          an additional fiscal year, with the latest extending this  
          calculation to the 2008-09 fiscal year.

          Current law requires the Superintendent of Public Instruction  
          to annually calculate the special disabilities adjustment for  
          each SELPA based on the incidence multiplier established  
          pursuant to the 1998 American Institutes for Research report.  
           (Education Code  56836.155)

           ANALYSIS  

           This bill  , an urgency measure, extends the special  
          disabilities adjustment by one additional year, to the  
          2009-10 fiscal year.  Specifically, this bill:

          1)   Requires the Superintendent of Public Instruction (SPI)  
               to calculate the special disabilities adjustment of each  
               SELPA for the incidence of disabilities for the 2009-10  
               fiscal year.

          2)   Specifies that the special disabilities adjustment for  
               the 2009-10 fiscal year is to be excluded from the  
               SELPA's base special education funding (per unit of  
               average daily attendance).

          3)   Requires the SPI to calculate the special disabilities  
               adjustment for the 2009-10 fiscal year and adjust this  
               funding for each SELPA regardless of when this bill  
               becomes operative.

          4)   Includes an urgency clause.

           STAFF COMMENTS  



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           1)   Need for the bill  .  According to the author, the state  
               budget last year included funds for the 2009-10 SDA and  
               the California Department of Education (CDE) had been  
               sending school districts their SDA funding this past  
               year.  In June 2010, CDE announced that it did not have  
               the authority for its distribution in the 2009-10 fiscal  
               year and without emergency legislation it would alert  
               the State Controller to offset 2010-11 special education  
               apportionments for school districts that received and  
               spent 2009-10 special disabilities adjustment funds.  

           2)   How did we get here  ?  The CDE has annually calculated  
               and allocated the special disabilities adjustment,  
               beginning with the 1998-99 fiscal year.  This funding is  
               sent to SELPAs as part of the overall special education  
               funding, and is made in monthly payments.  CDE began  
               sending monthly payments to SELPAs for the 2009-10  
               fiscal year in February 2010 (as part of the First  
               Principal Apportionment, also known as P1), under the  
               assumption that the special disabilities adjustment  
               would continue to be included in the overall special  
               education funding (for those SELPAs that are eligible  
               for the special disabilities adjustment).  However,  
               while the 2009 Budget Act included an appropriation for  
               the special disabilities adjustment (as part of overall  
               special education funding), statutory authority to  
               allocate those funds for the 2009-10 fiscal year was not  
               included in budget trailer bill language, as had been  
               the case in prior years.  As part of the P1 notification  
               to SELPAs, CDE included a link to the calculations used  
               to determine the 2009-10 P1, which specifically states  
               that authority to use the special disabilities  
               adjustment in the calculation of overall special  
               education funding was not extended to the 2009-10 fiscal  
               year and that CDE will not include incidence multipliers  
               or special disabilities adjustment funding in its Second  
               Principal Apportionment (P2) calculation if the statute  
               is not extended.  At the point of the P2 calculation  
               (June 2010), school districts within SELPAs that  
               received these funds had already included the special  
               disabilities adjustment funding in their budgets and  
               expended some of those funds.  

           3)   For prior fiscal year  .  This bill provides for the  
               special disabilities adjustment only for the 2009-10  
               fiscal year.  Will the problem addressed by this bill  



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               recur for the current fiscal year?  Should this bill be  
               amended to clearly state that SELPAs should not expect  
               to continue to receive special disabilities adjustment  
               funding in the future? 

           4)   Not all SELPAs are eligible  .  Thirty-two SELPAs (out of  
               122) are currently eligible to receive the special  
               disabilities adjustment, based on the formula in current  
               law.  While this adjustment is calculated annually, it  
               is based on a formula that is 12 years old.

           5)   Related budget action  .  The Budget Conference Committee  
               recently reached a compromise relative to the special  
               disabilities adjustment, which provides for the  
               continuation of this funding through the 2010-11 fiscal  
               year.  The compromise recognizes the usefulness of this  
               bill in ensuring CDE can allocate the remaining 2009-10  
               funds if the budget continues to be delayed.  The  
               compromise also provides federal funding for a study to  
               determine options for the replacement of the special  
               disabilities adjustment, and repeals the existing  
               adjustment funding formula on July 1, 2011.

           6)   Fiscal impact  .  The 2009-10 special disabilities  
               adjustment amount totals $69.85 million, which was  
               appropriated but not allocated for the 2009-10 fiscal  
               year.  Because these funds were appropriated, this bill  
               would not result in additional costs to the state.  

           7)   Prior legislation  .  

                           SB 1564 (Schiff, Ch. 330, 1998) established  
                    the special disabilities adjustment through the  
                    2002-03 fiscal year.
                           AB 97 (Nation, Ch. 21, 2004) extended the  
                    special disabilities adjustment to the 2003-04  
                    fiscal year.
                           AB 2525 (Committee on Education, Ch. 896,  
                    2004) extended the special disabilities adjustment  
                    to the 2004-05 fiscal year.
                           SB 63 (Committee on Budget and Fiscal  
                    Review, Ch. 73, 2005) extended the special  
                    disabilities adjustment to the 2005-06 fiscal year.
                           AB 1802 (Committee on Budget, Ch. 79, 2006)  
                    extended the special disabilities adjustment to the  
                    2006-07 fiscal year.
                           SB 80 (Committee on Budget and Fiscal  



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                    Review, Ch. 174, 2007) extended the special  
                    disabilities adjustment to the 2007-08 fiscal year.
                           AB 519 (Committee on Budget, Ch. 757, 2008)  
                    extended the special disabilities adjustment to the  
                    2008-09 fiscal year.

           SUPPORT
           
          San Diego Unified School District

           OPPOSITION
           
          None received.