BILL ANALYSIS                                                                                                                                                                                                    

           AB 185
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          AB 185 (Buchanan)
          As Amended  August 27, 2010
          Majority vote
          |ASSEMBLY:  |     |(May 4, 2009)   |SENATE: |35-0 |(August 31,    |
          |           |     |                |        |     |2010)          |
               (vote not relevant)

          Original Committee Reference:    BUDGET  

           SUMMARY  :  Appropriates a total of $903,845,000 in federal funds  
          for two educational purposes, the School Improvement Grant (SIG)  
          program and State Fiscal Stabilization Fund (SFSF).

           The Senate amendments  delete the Assembly version of this bill,  
          and instead:

          1)Appropriate $415,845,000 in federal funding ($352 million in  
            one-time funds plus $64 million in base funding) for SIG to  
            K-12 local educational agencies (LEAs) for the purposes of  
            funding local improvement plans for low performing schools.

          2)Require the appropriations for SIG to be allocated to LEAs to  
            fund school improvement grants based on school size as  
            approved by the State Board of Education (SBE).

          3)Make the appropriations for SIG contingent upon approval of  
            California's request to the United States Department of  
            Education (USDOE) for a waiver to allocate 100% of the funds  
            in a manner consistent with 2) above.

          4)Appropriate $488,000,000 in federal SFSF monies to K-12 LEAs,  
            the California Community Colleges (CCC), the California State  
            University (CSU), and to University of California (UC) for the  
            purposes of mitigating state funding reductions.

           EXISTING LAW  requires expenditure authority to be granted,  
          through an appropriation in the Budget Act, a continuous  
          statutory appropriation or through an appropriation in special  
          legislation, before a state agency or department is able to  
          expend or allocate funds to other entities, such as LEAs.


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           AS PASSED BY THE ASSEMBLY  , this bill expressed the intent of the  
          Legislature to enact statutory changes relating to the Budget  
          Act of 2009.  
           FISCAL EFFECT  :  According to the Senate Appropriations  

          1)Appropriates $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 LEAs, to be  
            provided over a three-year period. 

          2)Provides that the funds will be allocated on the basis of  
            school size per the action of the State Board of Education  
            (SBE) during their August 24, 2010, meeting.  

          3)Appropriates funds for Phase II of the SFSF grants, including  
            $271 million to K-12 LEAs to mitigate reductions made to  
            revenue limits and corresponding reductions made to basic aid  
            districts, $106 million each (for a total of $212 million) to  
            the University of California and to the California State  
            University to mitigate budget finding reductions, and $5  
            million to Board of Governors of the California Community  
            Colleges to mitigate funding reductions.

           COMMENTS  :   This bill provides federal funding for the SIG  
          program and SFSF, as shown in Table 1.
                   Table 1: Federal Funding Appropriated in AB 185
          |    Federal Funds    |     Educational     |       Amount        |
          |                     |   Entity/Purpose    |                     |
          |SIG Funding          |Allocated to LEAs    |$415.8 million       |
          |                     |approved by the SBE  |                     |
          |                     |to implement the     |                     |
          |                     |federal SIG program. |                     |
          |                     |                     |                     |
          |  One-time federal   |                     |  $351.8 million     |
          |  SIG American       |                     |                     |
          |  Recovery and       |                     |                     |
          |  Reinvestment Act   |                     |                     |
          |  (ARRA)             |                     |                     |


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          |  On-going federal   |                     |  $64.1 million      |
          |  SIG funding        |                     |                     |
          |Federal SFSF: Phase  |Allocated for the    |$488 million         |
          |II                   |mitigation of        |                     |
          |                     |budget reductions    |                     |
          |                     |and to be used       |                     |
          |                     |consistent with      |                     |
          |                     |Title XIV of ARRA    |                     |
          |                     |and SFSF Phase II    |                     |
          |  K-12 LEAs          |                     |  $271 million       |
          |  CCC                |                     |  $5 million         |
          |  UC                 |                     |  $106 million       |
          |  CSU                |                     |  $106               |
          |                     |                     |million              |
          |                     |                     |                     |

           School Improvement Grants:   Under the federal No Child Left  
          Behind (NCLB) Act, schools 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.   
          Any school that receives federal Title I funds and does not meet  
          AYP targets for two consecutive years, is identified for Program  
          Improvement (PI).  Schools in PI are required to meet various  
          requirements for sanctions and interventions if they remain in  
          PI for additional years.  Schools 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 schools  
          identified for improvement, corrective action, or restructuring  


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          under PI; these funds are provided 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 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.

          USDOE 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 Program Improvement (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 by:  1) closing the school;  
          2) converting the school to a charter school; 3) releasing at  
          least 50% of instructional staff and providing certain  
          flexibility related to staffing and instructional time; and, 4)  
          giving schools considerable flexibility, including control over  
          personnel decisions, budgeting, and length of the school  

          The new federal rules also establish priority tiers for  
          intervention among schools as shown below, and the SBE has  
          imposed a funding priority for districts choosing to implement  
          school reform in all of its eligible schools.

                 Tier 1: Schools receiving Title I funds that either are  
               in the bottom 5% of Program Improvement schools, as  
               measured by standardized test scores in math and Language  
               Arts, or high schools with a graduation rate below 60% for  
               several consecutive years.  

                 Tier 2: High schools that would have been in the bottom  
               5%, but do not receive Title I funds. 

                 Tier 3: Additional schools receiving Title I funds that  


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               the state identifies at its discretion.

          This bill would appropriate the funds shown in Table 1 for the  
          purpose of supporting three-year school improvement grants to  
          LEAs.  The bill provides that the funds will be allocated on the  
          basis of school size per the action of the SBE at its August 24,  
          2010, meeting.  At that meeting the SBE discussed ways to  
          mediate the fact that insufficient funds were available to fund  
          all eligible schools, and determined that a reduction in the  
          allocations to schools and a federal waiver would be necessary.   
          The SBE-requested federal waiver would allow for allocation of  
          the entire grant (federal guidelines require 25% 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 waiver would allow for the funding of a greater number of  
          schools across the state, as compared to what had been initially  
          proposed by the California Department of Education (CDE).  The  
          appropriation of the funds in this bill would be contingent upon  
          approval of that federal waiver.  USDOE 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 reduced funds provided under the school size allocation  
          (while schools may receive differing amounts based on other  
          factors, school size allocation would provide the following  
          approximate amounts:  $4 million for small schools - less than  
          400 pupils; $5 million for medium - between 400 and 1,000  
          pupils; and, $6 million for large schools - more than 1,000  

           State Fiscal Stabilization Funding  :  The federal SFSF program  
          provides one-time formula grants to states under ARRA, for the  
          purpose stabilizing state and local government budgets in order  
          to minimize and avoid reductions in education and other  
          essential public services.  SFSF funds are being 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 institutions of higher education ($716.5 million  
          each for UC and CSU and $30 million for CCC).  This bill would  
          appropriate funding Phase II of the SFSF grants as shown in  
          Table 1. 

           Analysis Prepared by  :    Gerald Shelton / ED. / (916) 319-2087 


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