BILL ANALYSIS                                                                                                                                                                                                    



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          SENATE THIRD READING
          SB 81 (Alquist)
          As Amended  September 4, 2009
          2/3 vote.  Urgency

           SENATE VOTE  :   Vote not relevant
            
           SUMMARY  :  Creates an urgency statute that:

          1)Requires, for the 2009-10 through the 2012-13 fiscal year,  
            that a regional occupational center or program (ROC/P),  
            established and maintained by school districts acting as a  
            joint powers agency (JPA), receive its operating funds  
            directly from the county office of education of the county in  
            which it is located in a manner that is consistent with the  
            apportionments for those school districts that comprise the  
            JPA and that are provided to the county office of education  
            pursuant to the annual Budget Act.

          2)Authorizes a joint powers agency receiving an apportionment  
            for a school district pursuant to 1) above to disburse those  
            funds, pursuant to its joint powers agreement, to the school  
            district to which that apportionment was made.

          3)Specifies that nothing in these provisions prevents any school  
            district or county office of education from using ROC/P  
            funding for any educational purpose.

          EXISTING LAW  :

          1)Authorizes the establishment of ROC/Ps by high school  
            districts, district consortia (operating as a JPA), or county  
            offices of education.

          2)Establishes a funding formula for ROC/Ps based on per pupil  
            revenue limits for each ROC/P, current year average daily  
            attendance (ADA) or a cap on funded ADA as established  
            historically and in the prior year, any annual cost of living  
            adjustment (COLA) made to the per pupil revenue limit amounts  
            in the annual Budget Act, and any adjustments to the funded  
            cap on ADA made for growth.

          3)Provides for temporary flexibility to spend the funds  
            appropriated for nearly all categorical programs, including  
            funding for ROC/Ps, in order to relieve local budget pressure  








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            created by the current economic downturn.

           FISCAL EFFECT  :   According to the Assembly Appropriations  
          Committee analysis of a substantially similar bill, this bill  
          creates potential General Fund Proposition 98 cost pressure,  
          likely between $200,000 and $280,000, if a school district that  
          terminates its participation in a ROC/P JPA does not receive  
          their funding from the JPA.  There are 26 JPA operated ROC/Ps.

           COMMENTS  : This bill originally served as a budget bill intended  
          to enact statutory changes relating to the Budget Act of 2009;  
          as such, this bill has not been heard in any policy of fiscal  
          committee.  The bill in its current version is substantially  
          similar to SB 307 (Alquist); that bill was heard by the Assembly  
          Education Committee and was held under submission in the  
          Assembly Appropriations Committee.

          ROC/Ps offer a vocational educational program for high school  
          students and adults, and may be operated by a district, a  
          consortium of districts under a joint powers agreement, or by a  
          county office of education.  Nearly every county office of  
          education in California operates a single, countywide ROC/P.   
          California's 74 ROC/Ps have existed as part of California's  
          educational system for over 35 years.  According to the  
          California Department of Education (CDE), nearly 470,000  
          students age 16 or older enroll in ROC/Ps each year;  
          approximately 30 percent of those students are adult learners.   
          26 of the current ROC/Ps operate as a JPA.  These JPAs operate  
          under specific requirements, defined in Government Code, dealing  
          with governance, fiscal and programmatic accountability, and the  
          nature of the agreement between the member districts.  The JPA  
          administers the programs, classes and day-to-day operations of  
          the ROC/P; ROC/P funding apportioned to each of the member  
          districts provides the fiscal support for the JPA.

          ROC/P funding is provided to districts as part of the Principal  
          Apportionment, which also includes regular revenue limit  
          funding, and is included in a block of funding (equal to the sum  
          of Principal Apportionment funding for all districts in a  
          county) that the CDE provides to the county office of education  
          (COE); COEs have historically served as clearinghouses that  
          distribute this funding to each of the districts in the county  
          according to a schedule that is also provided by the CDE.  Up to  
          and including the 2008-09 fiscal year, funding for ROC/Ps  
          operating as a JPA was treated in this manner with the funds  








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          moving from the CDE to the COE, then being transferred to each  
          JPA member district, and finally being submitted by the member  
          districts to the JPA.  This process was to be changed commencing  
          with the 2009-10 fiscal year as a result of SB 1197 (Alquist),  
          Chapter 519, Statutes of 2008; SB 1197 requires that a ROC/P  
          operated as a JPA receive its funding directly from the COE,  
          rather than the funds being transferred from the COE to the  
          member districts prior to the JPA receiving those funds from  
          each of the school districts.  This new provision was enacted  
          January 1, 2009, and was to be operative for the 2009-10 fiscal  
          year.

          In February 2009, SB 4 X3 (Ducheny), Chapter 12, Statutes of  
          2009 Third Extraordinary Session [as amended in July by AB 2 X4  
          (Evans), Chapter 2, Statutes of 2009 Fourth Extraordinary  
          Session], implemented categorical flexibility for the 2008-09  
          through 2012-13 fiscal year; this flexibility allows recipients  
          to use restricted educational funding from 43 categorical  
          programs, including ROC/P funding, for any discretionary  
          educational purpose.  This flexibility was achieved by deeming  
          those funding recipients to be in compliance with the program  
          and funding requirements contained in statutory, regulatory, and  
          provisional language associated with those programs.  Funding  
          for these flexible programs is apportioned from the amounts  
          provided in the Budget Act in an amount based on the same  
          relative proportion that the recipient received in the 2008-09  
          fiscal year for those programs.  As a condition of receiving  
          this flexibility, district governing boards and county boards of  
          education are required to hold public hearings on the proposed  
          use of the flexible funds, and are required to fully account for  
          all expenditures.

          Implementation of the flexibility provision (i.e., placing the  
          flexibility provisions of AB 2 X4 ahead of the intent of SB  
          1197) in the case of JPA-operated ROC/P funding could create  
          fiscal problems for the JPA, in the same way that other  
          educational programs may be affected by flexibility, if a JPA  
          member school district chooses to make use of its flexibility  
          authority and move ROC/P funds to another use.  On the other  
          hand, failure to allow that district to implement flexibility  
          (by placing the intent of SB 1197 ahead of the flexibility  
          provisions), may jeopardize a JPA member district's fiscal  
          status.  The fundamental question raised by this bill is whether  
          the Legislature, in SB 4 X3, intended that ROC/P funds,  
          including those apportioned for JPA member school districts, be  








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          subject to flexibility in that those previously restricted  
          monies could be used by the recipient school district or COE for  
          any discretionary purpose?

          This bill proposes to resolve this question so that under any  
          circumstances during the 2009-10 through 2012-13 fiscal years,  
          COEs transfer the apportioned funds to JPAs in order to continue  
          the operation of the JPA ROC/Ps.  In other words this bill  
          places the provisions of SB 1197 in a dominant position over the  
          flexibility provisions of SB 4 X3; effectively this bill  
          provides a protected status for JPA operated ROC/Ps in that  
          funding apportioned to JPA member school districts will be spent  
          on the ROC/P activities with no opportunity for the member  
          school district to put those funds to another discretionary use.  
           Supporters of this bill state that, "SB 307 will correct an  
          unintended consequence of the 2009-10 budget trailer bill [SB 4  
          X3]," and describe this bill as "a cleanup bill" that "has no  
          fiscal impact and remains consistent with [SB 4 X3], by ensuring  
          local control and flexibility."  

          A question might also be asked as to what entity has the  
          authority to make decisions over the use of the funds  
          apportioned to JPA member school districts for ROC/P?  Since the  
          flexibility provision of SB 4 X3, as amended by AB 2 X4, allows  
          recipients of the funding to use the funds with discretion, and  
          since funding for JPA ROC/Ps is apportioned to the individual  
          districts that are members of that JPA, the strongest case might  
          be made that each member district has the authority to flexibly  
          use these funds through the 2012-13 fiscal year; this appears  
          also to be consistent with Legislative intent that all ROC/P  
          funding be eligible for flexible use.  At the same time, the  
          funds are provided to the COE in its role as a funding  
          clearinghouse; thus if a COE interprets the SB 1197 requirement  
          to be dominant over the flexibility provisions, then that COE  
          could move to transfer the member district's ROC/P  
          apportionments directly to the JPA.    It is clear that such a  
          COE action, combined with the fact that the funding would then  
          never be in the possession of the school district to which it  
          was apportioned, would act to eliminate a district's opportunity  
          to implement the flexibility provision.  As the Assembly  
          Appropriations Committee noted in its analysis, "this bill is  
          contrary to these [flexibility] provisions because school  
          districts participating in the ROC/P JPA will not have direct  
          access to ROC/P funding in order to use in a flexibility  
          manner."








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          Under this scenario, the only recourse that a JPA member  
          district would have if it desired to shift ROC/P funding to  
          another higher priority budget use would be to remove itself  
          from the JPA.  Since SB 4 X3 requires the CDE to apportion "an  
          amount to recipients based on the same relative proportion that  
          the recipient received in the 2008-09 fiscal year for the"  
          program, funds for ROC/P would continue to be apportioned to the  
          school district even after that school district was no longer a  
          member of the JPA.  Since the provisions of SB 1197 and the  
          proposal made in this bill only allow a COE to direct these  
          funds to the JPA for JPA member districts, the funds would go to  
          the district (albeit constrained by any contract or JPA  
          agreement signed by the district that speaks to the issue of  
          funding for former member districts continuing to be provided to  
          the JPA) and the district could use the funds flexibly.   
          Unfortunately, constraining districts to this one recourse also  
          creates a chilling effect on district participation in JPA  
          ROC/Ps, which may not be an optimal policy in the long run.  The  
          situation thus created could also lead to litigation if a COE  
          were to transfer a former member district's ROC/P apportionment  
          to the JPA.  


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

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