BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair 184 (Block) Hearing Date: 8/12/2010 Amended: 08/02/2010 Consultant: Dan Troy Policy Vote: ED 7-0 _________________________________________________________________ ____ BILL SUMMARY: AB 184, an urgency measure, would extend the special disabilities funding adjustment through the 2009-10 fiscal year. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund Special Disabilities Adjustment Prevents reversion of $69.9 million General* in funds appropriated in the 2009-10 Budget Act. *Counts toward meeting the Proposition 98 minimum funding guarantee _________________________________________________________________ ____ STAFF COMMENTS: This bill meets the criteria for referral to the Suspense File. 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), and is commonly referred to as the special disabilities adjustments (SDA). According to the Department of Education, 32 out of 122 SELPAs currently receive this adjustment. AB 602 also required the expiration of this adjustment after the 2002-03 fiscal year and required the completion of a new study by March of 2003. There was no broad agreement reached on the merits of the study's revised recommendations, and, as a result, the original SDA factors have been simply been extended one year at a time through budget trailer legislation. However, no such reauthorization of the SDA was authorized for the 2009-10 fiscal year. The result is that while approximately $69.9 million dollars for the program have been appropriated in the 2009-10 budget, there is no authority for their allocation. The Department of Education included funding for SDA in the first principal apportionment, and was subsequently obligated to send a letter to local education agencies advising them that these funds would need to be recaptured (from deductions to 2010-11 apportionments) absent legislation that would provide retroactive authority. This bill would provide that authority. Page 2 AB 184 (Block) 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 suggests legislation separate from the budget to restore funding authority for the 2009-10 fiscal year. The compromise further requires federal funding for a study to determine options for the replacement of the special disabilities adjustment, and makes the existing adjustment funding formula inoperative as of July 1, 2011. While the SDA funding for the 2009-10 fiscal year was appropriated in the 2009 Budget Act, absent this legislation, those funds revert at the end of that fiscal year. Therefore, this bill would prevent the reversion of $69.9 million in the 2009-10 fiscal year. It is staff's understanding that the author will propose amendments, reflective of a commitment made in the Senate Education Committee, that will extend the SDA allocation formula through the 2010-11 fiscal year and make the formula inoperative as of July 1, 2011. Funding for the 2010-11 year is proposed in the 2010 budget.