BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           1136 (Cox)
          
          Hearing Date:  05/27/2010           Amended: 04/19/2010
          Consultant:  Dan Troy           Policy Vote: ED 8-0
          _________________________________________________________________ 
          ____
          BILL SUMMARY:   SB 1136, an urgency measure, would prohibit the  
          deferral of a school district's revenue limit apportionment from  
          exceeding the district's required reserve for economic  
          uncertainties if the district average daily attendance (ADA) is  
          equal to or less than 500.
          _________________________________________________________________ 
          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2010-11      2011-12       2012-13     Fund
                                                                  
          Interest Loss                     Approximately $150 to $200,  
          depending       General
                                   on the applicable interest rate
          _________________________________________________________________ 
          ____

          STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
          
          Current law specifies that local education agencies (LEAs) shall  
          have up to a total of $2.5 billion in statewide apportionment  
          funding deferred during the 2010-11 school year with a maximum  
          of three deferrals during the fiscal year.  The first possible  
          deferral is scheduled for July 2010.  However, the latest any  
          funding deferral can take place would be March 2011; in this  
          instance the deferral would be paid by April 29, 2011.

          Current law also specifies that various state payments to local  
          governments may be deferred up to three times during 2010-11,  
          with no more than $1 billion being deferred at any point in  
          time.  In addition, current law exempts counties with a  
          population less than 50,000 or a city within a county with a  
          population less 50,000 from any deferral of funding.

          The intent of the bill is to ease the cash and administrative  
          burdens of the deferrals on small districts that may not have  
          the necessary economies of scale to manage the deferrals.











          By restricting the deferral of funds from the over 300 districts  
          with fewer than 500 ADA, the General Fund absorbs a loss of  
          interest for up to 6 months.  Assuming interest at 3 percent for  
          this time period, costs to the state would be at least $200,000.  
           However, the Department of Education suggests that the bill  
          would not be implementable in its current form, as district  
          reserve figures are not stable and are not reported to them.   
          Also, current statute regarding deferrals refers to "principal  
          apportionments" as opposed to revenue limit apportionments,  
          further complicating the workload required to meet the bill's  
          specifications.  The Department has suggested several changes to  
          make the bill implementable, which staff understands the author  
          has taken under consideration.    

          
          Page 2
          SB 1136 (Cox)
          
          Author's proposed amendments would limit deferrals to $225 per  
          ADA and restrict application to intra-year deferrals.