BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 18
                                                                  Page  1

          Date of Hearing:   May 4, 2011

                           ASSEMBLY COMMITTEE ON EDUCATION
                                Julia Brownley, Chair
                    AB 18 (Brownley) - As Amended:  April 27, 2011
           
          SUBJECT  :   School-based financial reporting system

           SUMMARY  :   Restructures, commencing in the 2015-16 fiscal year, 
          California's system for allocating state funding for public 
          schools.  Specifically,  this bill  :  

          1)Makes legislative findings and declarations related to:

             a)   The complexity, illogic, and lack of transparency in 
               California's current education finance system.
             b)   The lack of flexibility, high compliance costs, and 
               revenue inequities facing California schools and districts.
             c)   The lack of data, effective data systems, and ability to 
               use such data - all of which are shown by research to be 
               important to successful schools and districts.
             d)   The specific lack of information on and understanding of 
               how money is allocated to schools within any school 
               district.
             e)   The lawsuits, currently faced by California, which claim 
               that the state's system for funding public education is 
               deficient.

          2)States legislative intent to implement comprehensive school 
            finance reform that:

             a)   Builds on previous research, supports student 
               achievement and provides appropriate incentives.
             b)   Establishes simpler allocation formulas that provide 
               base funding along with an amount that is tied to the 
               specific needs of pupils.
             c)   Improves rationality and equity in the system, so that 
               all pupils are prepared for college, career, and 
               citizenship.
             d)   Supports accountability and local flexibility through 
               improved fiscal transparency and reporting, and supports 
               ongoing improvement and reform.
             e)   Holds local education agencies harmless by transitioning 
               to the new system as new funds become available.









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                                                                  Page  2

          3)Consolidates, commencing in the 2015-16 fiscal year, the 
            funding for 25 existing revenue limit add-ons and categorical 
            programs (see Table 1 in the Comment section of this analysis 
            for additional detail) into school district Total Revenue 
            Limits as base funding, and provides this funding on the basis 
            of average daily attendance (ADA).

          4)Consolidates, commencing in the 2015-16 fiscal year, the 
            funding for eight existing categorical programs (see Table 2 
            in the Comment section of this analysis for additional detail) 
            into a new Targeted Pupil Equity Grant for the purpose of 
            creating weighted pupil funding, and provides this funding to 
            school districts and charter schools on the basis of the 
            number of English learner and economically disadvantage 
            pupils.

          5)Requires that school districts and charter schools use funding 
            received in the Targeted Pupil Equity Grant as a supplement to 
            funds otherwise provided for English learners and low-income 
            pupils, and for any educational purpose that provides 
            instruction or support services, with the goal of improving 
            the academic performance or workforce preparation, to those 
            pupils.

          6)Consolidates, commencing in the 2015-16 fiscal year, the 
            funding for nine existing categorical programs (see Table 3 in 
            the Comment section of this analysis for additional detail) 
            into a new Quality Instruction Grant as a restricted portion 
            of base funding, and provides this funding to school districts 
            and charter schools on the basis of ADA.

          7)Requires, unless otherwise prohibited under federal law or 
            specified in these provisions, school districts and charter 
            schools to use funding received in the Quality Instruction 
            Grant, for any of the following purposes:

             a)   To reduce class sizes.
             b)   To provide professional development training to 
               teachers, administrators, and staff on any of the following 
               areas:
               i)     The state common core content standards adopted by 
                 the State Board of Education (SBE).
               ii)    The curriculum frameworks adopted by the SBE.
               iii)   The English language development standards adopted 
                 by the SBE.








                                                                  AB 18
                                                                  Page  3

             c)   To provide leadership coaching and individualized 
               support to school site staff and administrators in order to 
               support staff in becoming instructional leaders and 
               administrators.
             d)   To provide teacher, administrator, and staff mentoring 
               or coaching in order to support beginning teachers with the 
               goal of increasing academic achievement.
             e)   To establish teacher recruitment programs that provide 
               professional development assistance to paraprofessionals in 
               order for them to obtain a teaching credential.
             f)   To establish intern programs to provide an alternative 
               route for individuals to obtain a teaching credential.
             g)   To provide support for beginning teacher support and 
               assessment.

          8)States legislative intent to:

             a)   Provide an inflation adjustment and an equalization 
               adjustment to the per pupil amount calculated for the 
               Targeted Pupil Equity Grant and the Quality Instruction 
               Grant in any fiscal year in which funds are available.
             b)   Use the augmentation to Total Revenue Limits in 3) 
               above, in conjunction with other base funding provided to 
               school districts, for any educational purpose necessary to 
               maintain and improve the educational services provided to 
               all pupils in the district.
             c)   Use the Targeted Pupil Equity Grant, in conjunction with 
               funding provided to school districts and charter schools 
               for all pupils, to appropriately weight educational funding 
               so as to provide additional resources for the instruction 
               of English learners and low-income pupils and to enable 
               school districts and charter schools to direct resources 
               toward improving the academic performance of those pupils.
             d)   Use the Quality Instruction Grant, in conjunction with 
               other base funding provided to school districts and charter 
               schools, to maintain and improve high quality instruction 
               in all classrooms and to enable school districts and 
               charter schools to direct resources toward improving the 
               academic performance of all pupils by supporting teaching 
               and instructional leadership.

          9)Specifies that nothing in these funding provisions authorizes 
            a school district, which receives funding on behalf of a 
            dependent charter school, to redirect this funding for another 
            purpose unless otherwise authorized.








                                                                  AB 18
                                                                  Page  4


          10)Requires the Superintendent of Public Instruction (SPI) to 
            study and report on:

             a)   Modifications to the standardized account code structure 
               (SACS) to provide school-level reports on revenue and 
               expenditures so as to facilitate easy comparisons across 
               schools and districts, including comparisons of school, 
               district, and statewide demographics and academic 
               performance, and data on program-level expenditures.
             b)   An evaluation mechanism to facilitate continuous 
               improvement, maximum transparency, and accountability of 
               the primary funding structures, as well as a consistent 
               process to evaluate the effectiveness of any specific 
               programs that are funded separately.

          11)Requires the Superintendent to present the findings and 
            recommendations from the study in 10) above to the Legislature 
            and the Governor on or before December 1, 2012.

           EXISTING LAW  :

          1)Provides for revenue limit funding for school districts that 
            is based on a per pupil base revenue limit multiplied by 
            average daily attendance (ADA) reported by each district in 
            the last attendance report of the fiscal year, for the current 
            or prior fiscal year, whichever is greater.

          2)Defines base revenue limit for any school district to be equal 
            to the prior year amount adjusted to account for 
            cost-of-living increases and any other adjustment specified by 
            statute (e.g., adjustment implementing revenue limit 
            equalization by increasing the base revenue limit for some set 
            of low revenue limit districts).

          3)Adjusts revenue limit funding further by making adjustments, 
            as specified in statute, for individual programs or district 
            characteristics; these adjustments are collectively referred 
            to as revenue limit add-ons.

          4)Establishes and funds categorical programs that focus 
            resources and/or compliance requirements on specific classes 
            of students or schools, or on specific uses of funds, 
            identified by the Legislature as priorities.









                                                                  AB 18
                                                                  Page  5

          5)Consolidates a number of historical categorical programs into 
            a smaller set of block grants, where a block grant gives 
            funding recipients the flexibility to spend the funds across 
            any of the previously individual programs consolidated into 
            that block grant.

          6)Allows for limited transfers of funds between specific 
            categorical programs.

          7)Provides for temporary flexibility to spend the funds 
            appropriated for most categorical programs in order to relieve 
            local budget pressure created by the current economic 
            downturn.

          8)Requires that each school district produce an annual school 
            accountability report card for each school in the district, 
            including various specific data elements describing the school 
            and its condition.

          9)Requires the development of the California Longitudinal Pupil 
            Achievement Data System, and authorizes the use of SACS, 
            developed by the California Department of Education, to 
            account for revenues and expenditures.

           FISCAL EFFECT  :   Unknown

           COMMENTS  :  The "Getting Down to Facts" studies published in 2007 
          described California's education finance system as a "complex 
          and irrational finance system", where the funding available to 
          each school district is largely related to funding in the 1970s 
          (revenue limit funding) combined with a complex system of 
          categorical grant programs.  The studies suggested that under 
          this system, similar districts receive substantially different 
          revenues per pupil, and differences in student needs, based on 
          demographic or learning characteristics, across districts are 
          not reflected in funding levels.  Also, the administrative 
          burdens imposed on both state and local education agencies by 
          such a complex system of funding and associated compliance 
          requirements is both substantial and costly.  In addition, the 
          studies point out that the current finance structure was put in 
          place before the advent of the current state and federal 
          accountability systems, and has never been updated to align with 
          those systems; this means that the current funding and related 
          compliance system tracks inputs in the production of education 
          services, while the accountability systems focus on outcomes.  








                                                                  AB 18
                                                                  Page  6

          If the focus is now on holding school districts responsible for 
          outcomes, the question clearly arises concerning why the state 
          would continue to focus and restrict funding and compliance 
          based on inputs.  Though the current categorical flexibility 
          granted through the budget process alleviates some of this 
          problem, that flexibility is a medium-term fix granted to help 
          local educational agencies remain solvent amidst large 
          recession-related budget cuts and is scheduled to end following 
          the 2014-15 fiscal year.

          The "Getting Down to Facts" studies also recommended areas that 
          warrant the focus of policy makers.  These areas include the 
          "relaxation of state regulations and restrictions on categorical 
          funds in order to allow greater local flexibility for resource 
          allocation, including the flexibility to make more effective use 
          of instructional time and possible expansion of that time 
          especially in schools with high concentration of disadvantaged 
          students, and the simplification and rationalization of school 
          finance formulas to promote better strategic planning for the 
          best use of resources by local school officials."  Clearly these 
          two recommendations could be served by a school finance reform 
          proposal that consolidates categorical funding programs, 
          allocates that funding in a manner that accounts for differences 
          in student need, and relies on increases in funding that will 
          occur in the future to fuel the transition to the new system.

          The "Getting Down to Facts" studies implicitly provided broad 
          suggestions for how the system could be changed.  Many of those 
          broad suggestions were further debated and developed into more 
          concrete policy proposals by the Governor's Committee on 
          Education Excellence and in subsequent research.   Individual 
          researchers (e.g., Bersin, Kirst and Liu), including those at 
          the Public Policy Institute of California (Sonstelie, Rose, 
          Weston, et al), have gone further in terms of developing more 
          specific proposals for education finance reform or developing 
          tools that can be used to analyze such proposals.

          At least four different types of proposals for school finance 
          reform have been discussed in this research and/or enacted by 
          the Legislature over the last five Legislative Sessions.

          Funding Flexibility simply converts categorical funds (i.e., 
          restricted accounts) into discretionary or unrestricted funding, 
          allowing school districts freedom in making expenditures.  The 
          obvious example of this approach is the current budget 








                                                                  AB 18
                                                                  Page  7

          flexibility provided for approximately 40 categorical programs, 
          where a set of previously restricted funding streams is now 
          provided as a single allocation of unrestricted funds.  On a 
          smaller scale, actions taken to allow specific carryover 
          balances of restricted accounts to be available for expenditure 
          in a discretionary manner has also provided additional 
          flexibility.  As a long-term proposal, funding flexibility 
          suffers from its lack of connection to the state's funding 
          priorities, and may mean (as has been the case in some school 
          districts since the implementation of the current flexibility 
          provisions) that programs traditionally offered in individual 
          school districts are dramatically cut or closed as a result of 
          local governing board decisions.  However, this result may also 
          be seen in a beneficial light, in that flexibility allows local 
          decision makers the ability to tailor resource use to fit local 
          needs.

          Pupil-Weighted Funding has been discussed widely and positively 
          by the Getting Down to Facts project, the Governor's Committee 
          on Education Excellence, previous and subsequent researchers, 
          and this Committee's School Finance Working Group convened 
          during the 2006 legislative year.  The primary attraction to 
          this model is that funds are targeted at specific pupils on the 
          basis of need.  For example, most would agree that a English 
          learner student requires additional educational services and is 
          more costly to educate than a non-English learner student, all 
          else being the same; under a pupil-weighted approach a school 
          district would receive a larger allocation related to that 
          English learner student than it would for a non- English learner 
          student.  A district would still receive some base amount equal 
          to that received for every other student, plus an augmentation 
          related to those English learner needs.  Other need-related 
          characteristics would be treated similarly, and the total amount 
          of funding going to a given district would be the sum of the 
          amounts provided on the basis of each of its individual 
          students.  The phrase "pupil-weighted" comes from the 
          augmentations for these characteristics; the English learner 
          student would receive the base amount increased by some 
          legislatively determined weight (e.g., 1.05, 1.1) to reflect the 
          costs due to that students extra need and cost.  Many states use 
          some variant of this approach to distribute funds to districts 
          based on the number and types of students in attendance.  This 
          is an attractive funding model in that it matches revenue to 
          need. One criticism of this approach is that it leaves the 
          question of expenditure restrictions unanswered; in other words, 








                                                                  AB 18
                                                                  Page  8

          this model allocates funds, but does not necessarily restrict 
          the expenditure of those funds to the targeted pupils.  That 
          shortcoming, however, is easily eliminated by specifying 
          restrictions on the expenditure of the funds.

          Clustered Block Grants were enacted by the legislature in 2004.  
          Under this approach the funds allocated for categorical programs 
          focusing on a similar sub-population or on similar activities 
          are clustered together to create one larger grant, however, the 
          individual programs are still retained within the single grant.  
          In other words the revenue is consolidated and some flexibility 
          is given on the expenditure side, but that flexibility is 
          limited to expending the consolidated funds only on the programs 
          that exist within the cluster.  An example of this was created 
          by AB 825 (Firebaugh), Chapter 871, Statutes of 2004, in the 
          form of the School Safety Block Grant that allowed the 
          consolidated funds to be spent on 6 previously existing school 
          safety programs.  This approach reduces administrative burdens 
          on districts, increases transparency and maintains the spending 
          priorities of the Legislature, but it does not provide the level 
          of flexibility that would be necessary to allow LEAs to create 
          educational programs that match the needs of their student 
          populations, unless those needs happen to match the programs 
          previously created and now clustered by the state.

          True Block Grants go an additional step beyond the clustered 
          approach, and provide an effective way to distribute state funds 
          for activities where the state seeks some broad restriction on 
          the use of funds, but where increased flexibility, transparency, 
          and fairness are desired.  In a true block grant, the funding 
          for broadly similar programs is bound together as a single 
          funding source, and expenditure of those funds would be allowed 
          on a broadly defined, but related, set of activities.  For 
          example, the School Safety Block Grant created by AB 825 allowed 
          the consolidated funds to be spent on 6 previously existing 
          school safety programs, but in a true school safety block grant 
          those funds could be expended on school safety very broadly 
          defined and thus would place greater discretion in the hands of 
          the governing board of each school district.

          According to the author, "AB 18 is a vehicle for comprehensively 
          reforming the state's public school finance system.  The first 
          step in this reform process is to simplify the number of funding 
          streams provided to school districts and to provide continuing 
          flexibility in the expenditure of those funds."  In implementing 








                                                                  AB 18
                                                                  Page  9

          this simplification, this bill employs three of the four 
          approaches discussed above.

          This bill, commencing at the end of the current budget 
          flexibility provisions, treats current categorical funding 
          streams in one of four ways:

             1)   Categorical funding and current revenue limit add-ons 
               that are provided in a broad-based manner for programs and 
               that are part of the base educational or operational 
               program of the district (see Table 1) are consolidated into 
               an add-on to revenue limit funding for school districts and 
               thus provided on a per ADA basis; this funding becomes 
               discretionary for the school district and provides a 
               greater level of base funding.  This Funding Flexibility 
               approach consolidates 25 existing revenue limit add-ons and 
               categorical programs, totaling approximately $3 billion in 
               funding in 2010-11, and provides expenditure flexibility to 
               school districts.

             2)   Categorical funding currently targeted to English 
               learner or economically disadvantaged pupils (see Table 2) 
               is provided to school districts and charter schools in the 
               Targeted Pupil Equity Grant, and is provided on the basis 
               of the number of EL and economically disadvantaged pupils; 
               this funding is required to be expended on services to 
               support learning and improved academic performance for 
               those students.  The bill states Legislative intent to 
               provide for future cost of living and equalization 
               adjustments to this funding, as funds are available in 
               future years, and establishes this grant as the weighted 
               targeted funding in what can be viewed as a Pupil-Weighted 
               Funding approach.  Funding provided in this grant, 
               approximately $2.3 billion in 2010-11, comes from eight 
               current categorical programs.

             3)   Categorical funding currently provided for class-size 
               reduction and staff professional development (see Table 3) 
               is consolidated into the Quality Instruction Grant and is 
               provided on the basis of ADA; this funding is required to 
               be expended on class-size reduction, professional 
               development, or in support of leadership coaching and 
               individualized support, teacher/administrator/staff 
               mentoring or coaching, teacher recruitment programs, intern 
               programs, or support and assessment for beginning teachers. 








                                                                  AB 18
                                                                  Page  10

                The bill states Legislative intent to provide for future 
               cost of living and equalization adjustments to this 
               funding, as funds are available in future years.  This True 
               Block Grant consolidates nine existing categorical 
               programs, totaling approximately $1.4 billion in funding in 
                                                         2010-11, and provides expenditure flexibility within a 
               broadly defined restriction.

             4)   This bill also leaves some funding streams outside of 
               the proposal.  Primarily this includes funding for special 
               education, funding that has interactions with federal or 
               other state programs or funding sources, funding for 
               programs operated by entities outside of the traditional 
               educational system (e.g., Indian Education Centers), 
               funding for county offices of education, funding for career 
               technical education, and funding for capital purchases.

          Historical discussions concerning the transition from one school 
          funding model to another have generally focused on making the 
          change in one step, while sorting out those winners that gain 
          funding and those losers that receive less funding; that 
          traditional approach then either holds the losers harmless or 
          simply lets the losers suffer from the loss of funds.  The 
          former result is often, and certainly would currently be, 
          prohibitively expensive, and the latter approach is particularly 
          unattractive when, as research indicates is the current case, 
          all California school districts are dramatically under-funded.  
          Thus these traditional approaches would either count on funds 
          that the state does not now have, or takes funding away from 
          under-funded school districts to give to other school districts 
          in a zero sum game.  According to the author, "AB 18 provides a 
          transition over time by allowing the Legislature to direct 
          funding toward increasing the weight given to the targeted 
          funding, or providing COLA or equalization to any of the funding 
          pieces, as new funding becomes available.  In this way districts 
          will continue to receive their pre-transition levels of funding 
          and no district would lose funding as a result of the move to 
          the new system."  

          This proposal, since it enacts changes commencing in the 2015-16 
          fiscal year, would also serve to eliminate the uncertainty that 
          school districts are facing with respect to the lack of an exit 
          strategy from the current budget flexibility provisions.  At 
          this point in time, budget planning at the local level beyond 
          2014-15 is impossible in that it is unknown whether some 








                                                                  AB 18
                                                                  Page  11

          flexibility provisions will continue or whether categorical 
          funding will return to its pre-flexibility state.  Enactment of 
          this proposal would constitute something of a compromise between 
          continuing full flexibility and full return to restricted 
          categorical funding.

          The author describes this version of the bill as a "first step." 
           As the bill moves forward, Committee staff recommends that the 
          author consider a number of unanswered questions, including:

          1)What happens to the statutory requirements and restrictions on 
            current categorical programs?
          2)How is charter school funding treated?
          3)How is the weighting of the Targeted Pupil Equity Grant 
            ultimately determined?
          4)Are there any unwanted incentives created by the transition to 
            this funding model?

          The tables below provide more detail on how the school finance 
          reform proposal in this bill treats various funding streams.

           ---------------------------------------------------------------- 
          |Table 1 - Funding Added to Total Revenue Limits or Base Funding |
           ---------------------------------------------------------------- 
          |------------+---------------------------------------------------|
          |Budget Item |Program                                            |
          |------------+---------------------------------------------------|
          |            |Unemployment Insurance RL Add-on - 15 year avg.    |
          |------------+---------------------------------------------------|
          |            |PERS Adjustment Add-on - 15 year avg.              |
          |------------+---------------------------------------------------|
          |6110-108-000|Supplemental School Counseling Program             |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-111-000|Home to School Transportation (except Special Ed)  |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-122-000|Specialized Secondary Program Grants               |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-124-000|Gifted and Talented Program                        |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-181-000|Educational Technology - CTAP                      |
          |1           |                                                   |








                                                                  AB 18
                                                                  Page  12

          |------------+---------------------------------------------------|
          |6110-187-000|Emergency Repair Program                           |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-188-000|Deferred Maintenance                               |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-189-000|Instructional Materials Block Grant                |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-190-000|Community Day Schools                              |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-195-000|National Board Certification Incentives (excluding |
          |1           |funds for prior awards)                            |
          |------------+---------------------------------------------------|
          |6110-198-000|California School Age Families Education (CalSAFE) |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-204-000|California High School Exit Exam-Instructional     |
          |1           |Support and Services                               |
          |------------+---------------------------------------------------|
          |6110-208-000|Civic Education                                    |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-209-000|Teacher Dismissal Apportionment                    |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-228-000|School Safety Block Grant (8-12)                   |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-232-000|Class Size Reduction (9th Grade)                   |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-240-000|Advanced Placement and International Baccalaureate |
          |1           |Programs                                           |
          |------------+---------------------------------------------------|
          |6110-243-000|Pupil Retention Block Grant                        |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-247-000|School and Library Improvement Block Grant         |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-248-000|School Safety Consolidated Competitive Grants      |
          |1           |                                                   |








                                                                  AB 18
                                                                  Page  13

          |------------+---------------------------------------------------|
          |6110-265-000|Arts and Music Block Grant                         |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-268-000|Child Oral Health Assessments                      |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-156-000|Adult Education - Schedule (1)                     |
          |1           |                                                   |
           ---------------------------------------------------------------- 

           ---------------------------------------------------------------- 
          |   Table 2 - Funding added to the Targeted Pupil Equity Grant   |
           ---------------------------------------------------------------- 
          |------------+---------------------------------------------------|
          |Budget Item |Program                                            |
          |------------+---------------------------------------------------|
          |6110-104-000|Supplemental Instruction (Summer School)           |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-128-000|Economic Impact Aid                                |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-150-000|American Indian Early Childhood Education Centers  |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-156-000|Adult Education Schedule (2) & (3)                 |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-211-000|Charter School Categorical Block Grant             |
          |1           |(proportional to T programs)                       |
          |------------+---------------------------------------------------|
          |6110-212-000|New School Categorical Funding (proportional to T  |
          |1           |programs)                                          |
          |------------+---------------------------------------------------|
          |6110-227-000|Community-Based English Tutoring Program           |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-246-000|Targeted Instructional Improvement Block Grant     |
          |1           |                                                   |
           ---------------------------------------------------------------- 

           ---------------------------------------------------------------- 
          |    Table 3 - Funding added to the Quality Instruction Grant    |
           ---------------------------------------------------------------- 








                                                                  AB 18
                                                                  Page  14

          |------------+---------------------------------------------------|
          |Budget Item |Program                                            |
          |------------+---------------------------------------------------|
          |6110-137-000|Mathematics and Reading Professional Development   |
          |1           |Program                                            |
          |------------+---------------------------------------------------|
          |6110-144-000|Administrator Training Program                     |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-193-000|Bilingual Teacher Training Assistance Program -    |
          |1           |Schedule (1)                                       |
          |------------+---------------------------------------------------|
          |6110-193-000|Teacher Peer Review - Schedule (2)                 |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-234-000|Class Size Reduction (K-3)                         |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-244-000|Teacher Credentialing Block Grant                  |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-245-000|Professional Development Block Grant               |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-260-000|Physical Education Teacher Incentive Grants        |
          |1           |                                                   |
          |------------+---------------------------------------------------|
          |6110-267-000|Certificated Staff Mentoring                       |
          |1           |                                                   |
           ---------------------------------------------------------------- 

          This bill also requires the SPI to make recommendations for the 
          modification of the state's existing fiscal systems to support 
          more comprehensive school-level financial reporting.  There are 
          clear benefits to school-level fiscal reporting - many related 
          to increased transparency and sensitivity to possible 
          intra-district funding and service inequities.  In addition, 
          school-level financial data reveals the effectiveness of 
          expenditures at the intended point of impact - the school and 
          classroom.  School-level financial information would serve a 
          variety of audiences, including the general public, education 
          researchers, school administrators, other district and school 
          employees (e.g., program coordinators, classroom teachers or 
          non-instructional employees), local governing boards, the 
          Legislature, and investors and creditors (e.g., bondholders and 








                                                                  AB 18
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          prospective bondholders, commercial banks, other creditors, 
          vendors).  According to a report from the National Center for 
          Educational Statistics, by 2001, 44 states had begun regulating 
          the financial reporting of school districts.  Of these, 20 
          states had mandated some type of school-level financial or 
          budget reporting.

          There are also numerous technical, administrative, accounting, 
          and information technology issues that would have to be 
          addressed by the SPI's recommendations before the Legislature 
          could act on those recommendations.  The state's SACS provides 
          all California school districts with a uniform and comprehensive 
          system of accounts that districts are required to use to 
          categorize each revenue and expenditure.  SACS, along with 
          guidance in California School Accounting Manual and from the 
          Governmental Accounting Standards Board, form the basis for 
          school district accounting and financial reporting in 
          California.  Within SACS, school-level data can be added to the 
          district's financial analyses; however, districts currently have 
          flexibility in the extent to and manner in which they use the 
          system to reflect school-level information.  Since school 
          districts have different levels of interest and expertise in 
          terms of going beyond what is required in SACS and district 
          financial reports, there may be a loss in uniformity in those 
          school-level reports if compared across districts.

          According to the author, "A simpler and more transparent system 
          is needed in order to support accountability for increased 
          success for all students.  One step toward improving the 
          transparency of the current system is to implement school-level 
          reports on revenue and expenditures to facilitate easy 
          comparisons across schools and districts, including comparisons 
          of school, district, and statewide demographics and academic 
          performance, and data on program-level expenditures."

           Previous legislation  :  AB 2335 (Brownley), held in the Senate 
          Rules Committee in 2010, would have required the SPI to make 
          recommendations on modifying the format and requirements on 
          school district accounting in order to support school-level 
          financial reporting.  AB 8 (Brownley), vetoed by the Governor in 
          2009, would have convened a working group to make findings and 
          recommendations regarding the restructuring of California's 
          education finance system, including changes necessary to support 
          school-level financial reporting.  AB 2159 (Brownley), held in 
          the Senate Rules Committee in 2008, would have established a 








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          commission to develop a plan for reforming the school finance 
          system.  AB 851 (Brownley), Chapter 374, Statutes of 2009, 
          consolidates four revenue limit add-ons into two fixed 
          adjustments to be included in each district's total revenue 
          limit funding, commencing with the 2010-11 fiscal year.  AB 599 
          (Mullin), vetoed in 2008, was substantially similar to AB 851, 
          except that it also included longer day-longer year incentive 
          funding in the fixed adjustment that receives the annual COLA.  
          AB 60 (Coto), held in the Assembly Appropriations Committee in 
          2009, proposed a study of the weights that would be necessary to 
          implement a weighted-student funding approach.  AB 2394 (Coto), 
          held in the Assembly Appropriations Committee in 2008, was 
          substantially similar to the current AB 60.  AB 586 (Coto), held 
          in the Assembly Appropriations Committee in 2008, would have 
          stated Legislative intent to replace the funding mechanisms for 
          kindergarten through twelfth grade education with a weighted 
          student funding formula.  AB 2890 (Duvall), failed in the 
          Assembly Education Committee in 2008, and AB 2933 (Committee on 
          Education), held in the Assembly Education Committee in 2008, 
          would have consolidated numerous K-12 education categorical 
          funding programs into several clustered categorical block grants 
          effective beginning in the 2008-09 fiscal year.  A number of 
          additional bills have made proposals to reform or equalize 
          revenue limits, or to consolidate categorical funding: AB 2531 
          (Mullin), vetoed in 2006; AB 60 (Nunez), held in the Assembly 
          Appropriations Committee in 2005; SB 1510 (Alpert), held on the 
          Assembly Floor in 2004; AB 2153 (Daucher), held in the Assembly 
          Appropriations Committee in 2004.  AB 825 (Firebaugh), Chapter 
          871, Statutes of 2004, places 26 historical categorical programs 
          into six block grants.  SB 512 (Committee on Education), Chapter 
          677, Statutes of 2005, changed the due date for annual financial 
          reports from September 15 to October 15.  AB 1578 (Migden), 
          Chapter 299, Statutes of 1997, in Section 39, targeted funds to 
          be used exclusively to develop and implement SACS.  

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          American Civil Liberties Union (prior version)
          California State PTA (prior version)
          Children Now
          EdVoice

           Opposition 








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          None on File
           
          Analysis Prepared by  :    Gerald Shelton / ED. / (916) 319-2087