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 reductions. _________________________________________________________________ ____ 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 Page 2 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 2). 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 Page 3 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 follows: $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.