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  

          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.