BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 847
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          Date of Hearing:   August 25, 2010

                           ASSEMBLY COMMITTEE ON EDUCATION
                                Julia Brownley, Chair
                  SB 847 (Steinberg) - As Amended:  August 20, 2010

           SENATE VOTE  :   (vote not relevant)
           
          SUBJECT  :   Education finance

           SUMMARY  :   Creates an urgency statute that appropriates  
          $1,201,534,585 from the Federal Trust Fund to the California  
          Department of Education (CDE) for purposes of implementing the  
          federal Education Jobs and Medicaid Assistance Act of 2010  
          (Education Jobs Act), Public Law 111-226, requires that  
          $1,200,034,585 of those funds be allocated to local educational  
          agencies (LEAs) in accordance with federal law, and makes $1.5  
          million available to the CDE during the period from August 10,  
          2010 through December 30, 2012.

          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.

           FISCAL EFFECT  :   This bill appropriates $1,201,534,585 in  
          federal funds available to the state under the recently enacted  
          Education Jobs Act.

           COMMENTS  :   On August 10, President Obama signed HR 1586 into  
          law, enacting the Education Jobs Act which includes $16.1  
          billion in expanded Federal Medical Assistance Percentage (FMAP)  
          funding for the states and $10 billion in education funding  
          provided to the states to support an estimated 160,000 education  
          jobs nationwide.  The Education Jobs Act requires that the  
          education funds provided to the states be spent by LEAs to  
          prevent teacher layoffs in the 2010-11 school year, that the  
          funding be allocated to LEAs based on a state's primary funding  
          formula as specified in the state's State Fiscal Stabilization  
          Fund (SFSF) application (in the case of California's application  
          this would mean that funds are allocated in a manner consistent  
          with the requirements of Proposition 98) or each districts'  
          relative share of federal Title I funds, that states show that  
          they have met maintainence of effort provisions, and that this  








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          funding not be used to supplant state education funding or  
          provide a funding reserve.  

          The $10 billion in education funding will be allocated to the  
          states proportional to state population; California will receive  
          an allocation of over $1.2 billion.  The U.S. Department of  
          Education (USDOE) estimates that this funding will save  
          approximately 16,500 teacher jobs in California; an estimated  
          22,000 teachers received layoff notices in spring of this year.   
          According to United States Secretary of Education (USSE) Arne  
          Duncan, "With the support of the jobs bill, these educators will  
          be helping our children learn instead of looking for work.  This  
          is the right thing to do for our children, for our teachers, and  
          for our economy."

          In order to ensure that states receive funding as quickly as  
          possible, USDOE is streamlining the application process to allow  
          states to submit applications in an expedited manner.  The  
          Governor submitted California's application for these funds on  
          August 13, 2010.  In that application the Governor responded  
          that the state's primary funding formula as specified in the  
          state's State Fiscal Stabilization Fund (SFSF) application would  
          be used to allocate funds to LEAs, and provided a number of  
          assurances related to this program.  Specifically, the Governor  
          assured USDOE that the state will:

          1)Comply and use funds in a manner consistent with all  
            applicable statutes, regulations, and the state's approved  
            Education Jobs Act application.

          2)Comply with the maintenance-of-effort (MOE) requirements and,  
            within 60 days of the date of the State's grant award, provide  
            USDOE the most current applicable MOE data available.

          3)Use fiscal control and fund accounting procedures that ensure  
            proper disbursement of and accounting for funds.

          4)Reserve not more than 2 percent of its allocation for the  
            administrative costs and use all remaining funds to make  
            awards to LEAs.

          5)Make awards to LEAs on a timely basis so that funds are  
            available for their use during the 2010-2011 school year.

          6)Not require an LEA, that has previously submitted the required  








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            local application under SFSF, to submit an application to  
            receive funding under the Education Jobs Act. 

          7)Not use these funds, directly or indirectly, to establish,  
            restore, or supplement a rainy-day fund; (b) supplant State  
            funds in a manner that has the effect of establishing,  
            restoring, or supplementing a rainy-day fund; (c) reduce or  
            retire debt obligations incurred by the State; or (d) supplant  
            State funds in a manner that has the effect of reducing or  
            retiring debt obligations incurred by the State.

          8)Develop and implement a monitoring plan that will enable the  
            State to ensure that its LEAs comply with all applicable  
            programmatic and fiscal requirements.

          9)Comply with the reporting requirements of the American  
            Recovery and Reinvestment Act of 2009 and other reporting  
            requirements established by the USSE.

          10)Comply with all standard assurances and prohibitions,  
            including prohibitions against using federal funds for  
            lobbying purposes.

          According to USDOE, it will award funding to states within two  
          weeks of a state's submission of an approvable application.  The  
          purpose of this bill is to appropriate these expected federal  
          funds and to provide the appropriate state entity with the  
          expenditure authority necessary for it to allocate those funds,  
          when received by the state, to LEAs at the earliest time  
          possible.

           Committee amendments  :  Committee staff recommends, and the  
          author has accepted, amendments to conform the appropriation  
          provisions to federal law, provide resources for administrative  
          activities related to this federal funding, provide a mechanism  
          for the allocation of these new federal funds to LEAs, ensure  
          that the funds are allocated to LEAs as quickly as possible, and  
          ensure that these funds are used in a manner consistent with  
          federal law, regulations, and guidance.  These amendments  
          propose to:

          1)Appropriate $1,201,534,585 from the Federal Trust Fund to the  
            Office of Planning and Research (OPR), rather than the CDE, in  
            order to conform to federal funding requirements under the  
            Education Jobs Act.








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          2)Authorize $128,000 of those federal funds to be available to  
            OPR for the purpose of providing oversight of funds allocated  
            to LEAs under the Education Jobs Act.

          3)Require that $1,201,406,585 of those federal funds be  
            transferred to the CDE for the purpose of implementing the  
            Education Jobs Act, and require those funds to be expended as  
            follows:

             a)   $1,199,906,585 to be allocated to LEAs on the basis of  
               an equal amount per unit of 2010-11 Second Principal  
               Apportionment average daily attendance (P-2 ADA).  Also  
               requires a preliminary allocation equal to ninety percent  
               (90%) of the estimated final allocation, with that estimate  
               based on 2009-10 P-2 ADA, to be allocated no later than 14  
               days following the enactment of this bill or the  
               notification of an award for federal funding, whichever is  
               later.  This amendment will ensure that funds are allocated  
               in an equitable manner and as quickly as possible.

             b)   $1,500,000 to be available to the CDE for the purposes  
               of distributing and administering the funds allocated to  
               LEAs.

          4)Clarify that LEAs are required to use allocated Education Jobs  
            Act funds in a manner consistent with the requirements of the  
            Education Jobs Act and any related federal regulations or  
            guidance, and require the funds to be used only for  
            compensation, benefits and other expenses, such as support  
            services, necessary to retain existing employees, to recall or  
            rehire former employees, and to hire new employees, where  
            those employees provide school-level educational and related  
            services.  These requirements are consistent with the  
            requirements of the Education Jobs Act.

          5)Authorize, consistent with federal law, any local educational  
            agency that receives an allocation of Education Jobs Act funds  
            and has funds remaining after the 2010-2011 fiscal year, to  
            use those remaining funds through September 30, 2012 for the  
            purposes specified.

          6)Make technical and conforming changes to the appropriation  
            language in the bill.









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           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          California Teachers Association
           
            Opposition 
           
          None on file

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