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  

          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.