BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 851|
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THIRD READING
Bill No: AB 851
Author: Brownley (D)
Amended: 7/15/09 in Senate
Vote: 21
SENATE EDUCATION COMMITTEE : 9-0, 7/08/09
AYES: Romero, Huff, Alquist, Hancock, Liu, Maldonado,
Padilla, Simitian, Wyland
SENATE APPROPRIATIONS COMMITTEE : 8-0, 8/17/09
AYES: Kehoe, Cox, Corbett, Denham, Leno, Price, Runner,
Wolk
NO VOTE RECORDED: Hancock, Oropeza, Walters, Wyland, Yee
ASSEMBLY FLOOR : 78-0, 5/21/09 (Consent) - See last page
for vote
SUBJECT : School finance
SOURCE : Author
DIGEST : This bill simplifies calculation of school
district general purpose funding (revenue limits) by
consolidating five add-on formulas into two fixed
adjustments.
ANALYSIS : School district revenue limits were created in
1972 in response to the Serrano v. Priest lawsuit that was
then pending in the courts. The Serrano case determined
that the state's then existent property tax based system of
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school funding was unconstitutional and the state was
ordered to equalize per pupil revenues that had no rational
basis to be different. The Serrano courts excluded
categorical funding from equalization order because the
need to compensate districts for differential needs
provided a rational basis for unequal distribution.
Over the years the state has provided school districts with
various general aid allocations that, arguably, had a
rational basis for not being equalized. These "revenue
limit add-ons" were allocated to districts with their
revenue limit funding but not included in equalization
calculations and thus always kept separate from the
districts' "base revenue limits." Some of these "add-ons,"
such as the "meals for needy pupils" were allocations to
districts to allow them to maintain local initiatives that
had been funded from "voted overrides" of local property
tax rates. All such property tax increments were
eliminated by Proposition 13 in 1978 and local districts
had appealed to the state to maintain what had been locally
funded programs with "add-on" funding.
In addition to preserving local initiatives, revenue limit
add-ons were created by statute to address costs that
varied among districts, and therefore did not make sense to
equalize, but still were basic funding needs that didn't
need to be restricted under a categorical program. The
minimum beginning teacher salary incentive was such an
add-on. Current law also requires the state to reimburse
school districts for costs of unemployment insurance that
exceed the amount incurred by the district in 1975-76 and
reimburse the Newport-Mesa Unified School District for
funding that was not received due to the bankruptcy of
Orange County in 1994-95.
Finally, current law requires that three school districts
in the Santa Cruz area receive a revenue limit adjustment
that equalizes funding among the districts participating in
an inter-district attendance agreement for middle school
pupils. The funding provided for this arrangement
constitutes a transfer in general purpose funding among the
districts.
This bill:
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1. Commencing with 2011-12, requires the Superintendent of
Public Instruction (SPI) to compute an amount for each
school district equal to the sum of funding received in
2007-08 (if any) for the Meals for Needy Pupils and
Beginning Teacher Salary Incentive divided by the
district's average daily attendance (ADA) and further
adjusted by the annual cost of living adjustment applied
to school district revenue limits.
2. Commencing with 2010-11, requires the SPI to compute an
amount for each school district equal to the sum of
funding received in 2007-08 (if any) for unemployment
insurance, Orange County bankruptcy, and the
inter-district transfer of middle school pupils in three
school districts, divided by the recipient district's
ADA.
3. Directs the SPI to increase affected school districts'
revenue limits per unit of ADA by the adjustments
computed above.
4. Provides that the statutes authorizing the five revenue
limit "add-ons", which are replaced by the above
adjustments, shall become, inoperative as of July 1,
2010, and repeal as of January 1, 2011.
5. Makes inoperative as of July 1, 2010, and repeals as of
January 1, 2011, the program statutes authorizing school
districts to implement the beginning teacher salary
incentive.
6. Authorizes county offices of education to maintain their
beginning teacher salary incentive.
Background
Need for the bill. According to the author's office, this
proposal will simplify and provide additional transparency
for the state's education finance system, goals that are
consistent with the Getting Down to Facts research studies
released in 2007. The author's office also points to
reduced administrative costs at the state and local levels
as a benefit of this proposal.
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Consolidation of revenue limit add-ons makes sense since
the funding has long ago lost all connection to the program
that initially existed. These add-ons are neither
restricted in purpose nor related to current program costs
and may be used for any discretionary purpose just like all
other revenue limit funding. In view of these facts, the
Legislative Analyst's Office has recommended that a number
of revenue limit add-ons, including those specified in this
bill, be rolled into revenue limits.
Previous legislation :
AB 599 (Mullin) of 2008 was substantially similar to this
bill, except that it also included 1983 instructional time
incentive in the adjustment that is created out of the
Meals for Needy Pupils and Beginning Teacher Salary
Incentive add-ons. AB 599 was vetoed with the following
message:
While this bill attempts to simplify an overly complex
education finance system, this bill has several
technical concerns in the way it was drafted. I am
concerned that the consolidated "add-on" may not be
revenue neutral, as the author intended, since various
factors could result in unanticipated General Fund
costs or savings in future years. Furthermore, the
bill as crafted may diminish the incentives for
districts to offer longer instructional time.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11
2011-12 Fund
Revenue limit add-on
Significant savings, General*
consolidations depending on the
Unemployment Insurance
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contribution rate in
a given fiscal year
*Counts toward meeting the Proposition 98 minimum funding
guarantee
SUPPORT : (Verified 8/20/09)
American Federation of State, County and Municipal
Employees, AFL-CIO
Small School Districts' Association
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Buchanan, Caballero, Carter, Chesbro, Conway,
Cook, Coto, Davis, De La Torre, De Leon, DeVore, Duvall,
Emmerson, Eng, Evans, Feuer, Fletcher, Fong, Fuentes,
Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore,
Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber,
Huffman, Jeffries, Jones, Knight, Krekorian, Lieu, Logue,
Bonnie Lowenthal, Ma, Mendoza, Miller, Monning, Nava,
Nestande, Niello, Nielsen, John A. Perez, V. Manuel
Perez, Portantino, Price, Ruskin, Salas, Silva, Skinner,
Smyth, Solorio, Audra Strickland, Swanson, Torlakson,
Torres, Torrico, Tran, Villines, Yamada, Bass
NO VOTE RECORDED: Charles Calderon, Saldana
DLW:do 8/20/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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