BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair 1381 (Simitian) Hearing Date: 05/03/2010 Amended: 04/20/2010 Consultant: Dan Troy Policy Vote: ED 8-0 _________________________________________________________________ ____ BILL SUMMARY: SB 1381 would change the date by which a child is required to be admitted to kindergarten at the beginning of the school year (or any time later in the school year) from December 2 of the year in which the child will have his or her 5th birthday to November 1 for the 2012-13 school year, October 1 of the 2013-14 school year, and September 1 for the 2014-15 school year and each year thereafter. A corresponding change for admittance to 1st grade would be made for a child having his or her 6th birthday during the year. The bill would also express the intent of the Legislature to appropriate one-half of the savings resulting from the bill's changes for the purposes of expanding the state's preschool system. The bill further states the intent of the Legislature that children aged four and five that are ineligible for kindergarten admission be allowed to participate in the state preschool program. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund Age of admission/preschool Cost pressure in the tens of millions General* in 2012-13, followed by subsequent savings in the hundreds of millions *Counts toward meeting the Proposition 98 minimum funding guarantee _________________________________________________________________ ____ STAFF COMMENTS: This bill meets the criteria for referral to the Suspense File. Current law makes education compulsory for individuals aged 6 through 18. While current law does not compel kindergarten attendance, it requires districts to offer admittance to kindergarten at the beginning of the school year for a child who will turn 5 on before December 2 of that calendar year. Thus many children begin kindergarten several months before their fifth birthday. By moving the cutoff date of admission to September 1 (the change would be phased in over 3 years), this bill would essentially ensure that kindergarteners would be aged 5 or older at the beginning of the school year. Current law provides for general purpose funding to school districts through the revenue limit program. Each district has a defined revenue limit per unit of average daily attendance (ADA) that is based on historical expenditures on education as modified through various statutory adjustments. A district's total revenue limit apportionment is calculated based on the greater of current or prior year ADA. Thus, districts are held harmless for losses in ADA for one year (the declining enrollment adjustment). Revenue limit apportionments are offset by local property taxes, and have been deficited in recent years due to the state's fiscal condition. Page 2 SB 1381 (Simitian) Current law establishes the state preschool program, for purposes of providing part-day and full-day programs of educational development for three- and four-year old children. By adjusting the date of admission back 1 month in three successive years, this bill would reduce the size of the kindergarten cohort by approximately 1/12th of the size it would otherwise have been for three successive years. These reduced cohorts will flow though the K-12 system for 13 years each, achieving, at the least, programmatic savings in Proposition 98 programs. The largest programmatic cost savings would be in the revenue limit program. According to data provided by the Legislative Analyst's Office, the provisions of this bill would reduce the number of students in the K-12 system by approximately 43,000 in the 2012-13 school year, by 89,000 in the 2013-14 school year, and by 126,000 for the 2014-15 school year and for several years thereafter, until these cohorts begin exiting the system in 2026-27. If implemented, the state would begin to realize savings in revenue limit apportionments the year after the age of admission cutoff date begins to move up earlier in the year. Revenue limit savings in the first year are unlikely to materialize due to the revenue limit declining enrollment adjustment. Assuming the current deficited revenue limit average of $5,215 per unit of ADA, the state would realize programmatic savings of $227.2 million in the 2013-14 fiscal year, of $462.2 million in 2014-15, and $658.2 million from the 2015-16 through the 2027-28 fiscal years, once the cohorts begin exiting the system. Note that actual state savings in these years would only be half of those amounts, as the bill states the intent to utilize half of the savings for purposes of expanding the preschool program to help accommodate the displaced 4-year olds that would otherwise be attending kindergarten. The bill does create a significant cost pressure in the 2012-13 fiscal year to fund additional preschool slots for the children who would otherwise have been eligible to enroll in kindergarten. It's not known how many of the displaced families would apply for preschool slots or how the displaced 4 and 5 year olds would be prioritized given the current waiting list, but as the average annual cost for part day preschool is $3,714, the cost pressure would be significant. As an example, the cost for every 10,000 new slots would equal $37.1 million. After the 2012-13 fiscal year, the revenue limit savings would help mitigate the preschool cost pressure. Further, reducing the enrollment will likely have some impact on the Proposition 98 minimum guarantee. Projections this far out are very uncertain, but current LAO projections estimate that this bill would decrease the guarantee by up to $100 million in 2012-13, by $50 million to $250 million in 2013-14, and by $200 million to $600 million in 2014-15. There would be no effect if the state was in a Test 1 situation.