BILL ANALYSIS                                                                                                                                                                                                    

                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           185 (Buchanan)
          Hearing Date:  08/30/2010           Amended: 08/27/2010
          Consultant:  Dan Troy           Policy Vote: NA
          BILL SUMMARY:   AB 185 would appropriate federal School  
          Improvement Grants (SIG) to K-12 local education agencies for  
          the purposes of funding local improvement plans for low  
          performing schools, as specified.  

          AB 185 would also appropriate federal stabilization funds (SFSF)  
          to the K-12 local education agencies, the California Community  
          Colleges, the California State University, and to University of  
          California for the purposes of mitigating state funding  
                            Fiscal Impact (in thousands)

           Major Provisions         2010-11      2011-12       2012-13     Fund
           K-12 SFSF              $271,000                         Federal

          CCC SFSF               $5,000                           Federal

          CSU SFSF               $106,000                         Federal

          UC SFSF                $106,000                         Federal

          K-12 SIG               $415,845                         Federal

          STAFF COMMENTS: This bill meets the criteria for referral to the  
          Suspense File.

           School Improvement Grants  

          Per the federal No Child Left Behind (NCLB) Act, schools, and  
          local education agencies (LEAS) must meet four sets of  
          requirements to make Adequate Yearly Progress (AYP), the federal  
          calculation utilized to determine if schools and LEAS are  
          meeting performance targets for all students.  The requirements  


          include: (1) student participation rate on statewide tests, (2)  
          percentage of students scoring at the proficient level or above  
          in English-language arts and mathematics on statewide tests, (3)  
          API score, and (4) graduation rate (if high school students are  
          enrolled).  Numerically significant groups of students at a  
          school or school district also must meet the four requirements.

          LEAs that receive federal Title I funds and do not meet AYP  
          targets for two consecutive years, are identified for Program  
          Improvement (PI). Title I schools also enter PI after failing to  
          meet AYP for two consecutive years.  The state decides  
          appropriate corrective actions for LEAs in PI while the LEA  
          makes the decision for schools in PI.  The state is 

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          AB 185 (Buchanan)

          required to provide technical assistance to LEAs and schools in  
          PI.  Schools and LEAs exit PI if they achieve AYP for two  
          consecutive years.

          The federal government provides two streams of funding to states  
          to be used directly to improve student achievement in Title I  
          schools identified for improvement, corrective action, or  
          restructuring so as to enable those schools to make adequate  
          yearly progress (AYP) and exit PI status. These funding sources  
          are Title I Set-Aside (NCLB requires states to set aside four  
          percent of their total Title I grant to help schools and  
          districts improve their performance) and the School Improvement  
          Grant (SIG).  SIG was established by the federal government in  
          2008 to provide technical assistance for Title I schools in PI.

          In 2009, the federal American Recovery and Reinvestment Act  
          (ARRA) also provided one-time funding to California under the  
          Title I Set-Aside and the SIG program on top of the base funding  
          provided to California. 

          The U.S. Department of Education issued new guidelines earlier  
          this year that modified the allocation priorities and uses of  
          SIG funding.  States are now required to use SIG resources to  
          turn around the bottom five percent of schools in PI (i.e.,  
          persistently low performing schools).  Per federal rules,  
          schools can receive a minimum of $50,000 and maximum of $2  
          million per year for three years.  


          As a condition of receiving funds, schools must implement one of  
          four intensive intervention models:  

             1.   Close the school.
             2.   Convert the school into a charter school.
             3.   Release at least 50 percent of instructional staff and  
               provide certain flexibility related to staffing and  
               instructional time.
             4.   Give schools considerable flexibility, including control  
               over personnel decisions, budgeting, and length of the  
               school day/year. 

          The new federal rules also establish priority for intervention  
          among schools:   

           First priority is for schools receiving Title I funds that  
            either are in the bottom five percent of Program Improvement  
            schools, as measured by standardized test scores in math and  
            Language Arts, or high schools with a graduation rate below 60  
            percent for several consecutive years (Tier 1).  
           Second priority is for high schools that would have been in  
            the bottom five percent but do not receive Title I funds (Tier  
           Third priority is for additional schools receiving Title I  
            funds that the state identifies at its discretion (Tier 3). 

          This bill would appropriate $415,845,000 in SIG funding ($351.8  
          million in one-time ARRA plus $64.1 million in base funding) for  
          supporting three-year school improvement grants to local  
          education agencies, to be provided over a three-year period. The  
          bill provides that the funds will allocated on the basis of  
          school size per the action of the 

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          AB 185 (Buchanan)

          State Board of Education (SBE) during their August 24, 2010  
          meeting.  At that meeting, the SBE agreed to pursue a federal  
          waiver that would allow for allocation of the entire grant  
          (federal otherwise require 25 percent of the funds to be held in  
          reserve for future use if not all schools meeting Tier 1 and  
          Tier 2 criteria are funded in the allocation plan).  This action  


          allows for the funding of a greater number of schools across the  
          state than what had been initially proposed by the California  
          Department of Education (CDE).  The appropriation of the funds  
          in this bill would be contingent upon the federal waiver  
          approval. The U.S. Department of Education has indicated support  
          of the waiver in concept, but has requested that the CDE first  
          confirm that schools could implement their approved plans with  
          the funds provided under the school size allocation (while  
          schools may receive differing amounts based on other factors,  
          school size funding would approximate the following: $4 million  
          for small schools (less than 400 pupils), $5 million for medium  
          (between 400 and 1,000), and $6 million for large schools (more  
          than 1,000).

           Federal Stabilization Funding

           The federal State Fiscal Stabilization Fund (SFSF) program  
          provides one-time formula grants to states under the American  
          Recovery and Reinvestment Act of 2009 (ARRA) for the purpose  
          stabilizing state and local government budgets in order to  
          minimize and avoid reductions in education and other essential  
          public services. 

          The SFSF grant is issued to states in two phases.  California  
          received $2.9 billion for K-12 education in Phase I. The state  
          further received nearly $1.5 billion for the higher education  
          ($716.5 million each for UC and CSU and $30 million for CCC). 

          This bill would appropriate Phase II of the SFSF grants, as  

                  $271 million to K-12 local education agencies to  
               mitigate reductions made to revenue limits and  
               corresponding reductions made to basic aid districts.

                 $106 million each (a total of $212 million) to the  
               University of California and to the California State  
               University to mitigate budget finding reductions.

                 $5 million to Board of Governors of the California  


               Community Colleges to mitigate funding reductions.