BILL ANALYSIS AB 185 Page 1 CONCURRENCE IN SENATE AMENDMENTS 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. AB 185 Page 2 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 Committee: 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) | | | AB 185 Page 3 |---------------------+---------------------+---------------------| | 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 AB 185 Page 4 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 day/year. 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 AB 185 Page 5 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 pupils. 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 AB 185 Page 6 FN: 0006871