BILL ANALYSIS Ó
AB 18
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Date of Hearing: May 18, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 18 (Brownley) - As Amended: April 27, 2011
Policy Committee: Education
Vote:9-1
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill, commencing with the 2015-16 fiscal year (FY), revises
the K-12 public school financing system by establishing new
levels of base revenue limit funding (general purpose) and
consolidating specified categorical program funds into two new
grant allocations, as specified. Specifically, this bill:
1)Consolidates two revenue limit add-on formulas and 23
categorical programs into school districts' base revenue limit
funding (general purpose) and allocates this funding according
to a district's average daily attendance (ADA). The
categorical programs consolidated currently serve a wide range
of purposes, including adult education, facility maintenance,
instructional materials, school safety, instruction for
at-risk pupils, transportation, counseling, and instructional
support to pass the high school exit examination.
2)Establishes the Targeted Pupil Equality Grant (TPEG), which
consolidates the funds of eight categorical programs into one
supplemental grant for allocation to school districts and
charter schools to provide services to English language
learner (ELL) and low-income pupils. Further specifies
districts and charter schools will receive grant funding based
on a per pupil funding amount determined by the number of ELL
and low-income pupils, as specified.
a) Consolidates current categorical programs that serve ELL
and low-income pupils into the TPEG, including Economic
Impact Aid (EIA), summer school, programs that serve ELL
parents, and specified charter school block grant funding.
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b) Expresses legislative intent to provide an inflation and
equalization adjustment to the per pupil amount school
districts and charter schools receive under TPEG in any
fiscal year (FY) in which funds are available for this
purpose. Further specifies intent to use the TPEG as the
basis for any weighted per pupil funding formula
established in the future.
FISCAL EFFECT
1)GF/98 reallocation of specified categorical program funds, in
the hundreds of millions. The chart below details the
proposed funding grants specified in the bill (using 2010
Budget Act allocations).
-----------------------------------------------------------------
| Base Revenue Limit | Targeted Pupil | Quality |
| Grant1 | Equity Grant | Instructional Grant |
|---------------------+---------------------+---------------------|
| $2.73 billion | $2 billion |$1.63 |
| | |billion |
-----------------------------------------------------------------
1Assumes specified categorical funding is rolled into the base
revenue limit (general purpose)
2)GF/98 cost pressure, likely in the between $63.2 million and
$167.2 million, to provide an inflation adjustment to the
Targeted Pupil Equity and the Quality Instruction Grants, as
specified. This assumes between a 1.67% and 5% adjustment.
For the last two years, the state has not provided an
inflation adjustment to categorical programs.
3)GF/98 cost pressure, likely in the hundreds of millions, to
provide an equalization adjustment to the Targeted Pupil
Equity and the Quality Instruction Grants, as specified.
4)GF administrative costs to the State Department of Education
(SDE), likely between $150,000 and $300,000, to make
recommendations regarding statutory and regulatory changes
that would be necessary to support the development,
implementation, and use of comprehensive school-level
financial data. These costs include system changes to support
the reporting of this information by school districts.
SUMMARY, Continued
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1)Establishes the Quality Instruction Grant (QIG), which
consolidates the funds of nine categorical programs into one
grant for allocation to school districts and charter schools
to provide specified services to pupils. Further specifies
districts and charter schools will receive grant funding based
on a per pupil funding amount multiplied by ADA, as specified.
a) Consolidates current categorical programs that provide
professional development to teachers/administrators for
various purposes and reduce class size in grades K-3 into
the QIG. Further requires districts and charter schools to
use this funding for specified purposes, including reducing
class sizes; providing professional development and
mentoring to teachers/administrators; and establishing
teacher recruitment programs, as specified.
b) Expresses legislative intent to provide an inflation and
equalization adjustment to the per pupil amount school
districts and charter schools receive under QIG in any
fiscal year (FY) in which funds are available for this
purpose.
2)Requires the Superintendent of Public Instruction (SPI), on or
before December 1, 2012, to make recommendations to the
Legislature and the governor concerning statutory and
regulatory changes that would be necessary to support the
development, implementation, and use of comprehensive
school-level financial data that would be used to produce
specified information.
3)Requires the SPI, on or before July 1, 2012, to make all
ministerial changes that are necessary to support the future
reporting of school-level financial data reporting by local
education agencies (LEAs), as specified.
COMMENTS
1)Purpose . In March 2007, the Institute for Research on
Education Policy & Practice released Getting Down to Facts:
School Finance and Governance in California (Loeb, Bryk, and
Hanushek), a research project intended to provide policymakers
and the public with comprehensive information about the status
of the state's school finance and governance systems. Getting
Down to Facts consists of several research reports addressing
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issues of school finance, governance, charter schools, and
special populations of pupils (English language learners
(ELLs), special education, etc.). In the area of school
finance, the reports argue that the current funding formula
for K-12 education is not meeting student outcome goals,
especially for students in poverty. Likewise, the reports
conclude that more money in the current finance system is
unlikely to dramatically improve student achievement, unless
accompanied by significant policy reforms.
The Governor's Committee on Education Excellence, established
in April 2005, is a non-partisan, privately funded group
charged with examining K-12 education in California and
recommending steps to improve the performance of public
schools. The 15-member committee focused on four interrelated
issues, including the distribution and adequacy of education
funding.
In April 2008, the Governor's Committee released its report
entitled Students First: Renewing Hope for California's
Future. The report provides a blue-print and specific
proposals on how to reform the state's educational system,
including funding formulas.
According to the author, "Specifically, The 22 studies of the
Getting Down to Facts Project were consistent in their
conclusions that California's current system is
overly-complex, irrational and burdensome and in need of
comprehensive reform. The complexity of the current system
poses a major obstacle to transparency and effectiveness. It
is almost impossible to determine how much revenue each
district or school receives or how those revenues are spent,
let alone report this information to local communities and
stakeholders. This is clearly the time to consider reforming
school finance - we know the current system is broken, we've
effectively dismantled a third of the system on a temporary
basis with flexibility, we (and more importantly districts)
don't know how we are going to exit the current flexibility."
This bill reforms the current K-12 school finance system.
2)Categorical program flexibility . As part of the February 2009
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budget package, SB 4 X3 (Ducheny), Third Extraordinary
Session, Chapter 12, Statutes of 2009, provided LEAs with
unprecedented fiscal and policy flexibility related to over 40
categorical programs between the 2008-09 FY and the 2012-13
FY. Specifically, any LEA that received funding for specified
categorical programs (including a majority of the programs
proposed for consolidation in this bill) in the 2008-09 FY is
authorized to use this funding for any other educational
purpose until the 2012-13 FY. The LEA may choose to continue
operating the categorical program that it received funding for
or redirect it for any other educational purpose it deems
appropriate.
SB 70 (Committee on Budget and Fiscal Review), Chapter 7,
Statutes of 2011, extended categorical flexibility until the
2014-15 FY. This bill establishes a new structure to
consolidate specified categorical programs into two new
grants. This measure differs from the existing categorical
flexibility in that the funding provided is not entirely
discretionary; instead, school districts are required to use
the new grant funds for specified purposes.
3)Revenue limit funding is the single largest source of support
for K-12 school districts and county offices of education,
accounting for approximately $30.1 billion in the 2010 Budget
Act. Of this amount, $20 billion is GF/98 and $11.1 billion is
local property tax funding. Revenue limits were initially
developed 30 years ago as a means of constraining growth in
high revenue districts. After Proposition 13, the state used
the revenue limit system to establish state funding levels.
AB 851 (Brownley), Chapter 374, Statutes of 2009, requires, as
of the 2010-11 FY, existing school district revenue limit
adjustments for the Meals for Needy Pupils program and minimum
teacher salaries to be rolled into the base revenue limit per
unit of average daily attendance for each district.
This bill rolls in the existing revenue limit adjustments for
unemployment insurance (UI) and the public employee retirement
system (PERS) (along with specified categorical programs) into
base revenue limit funding formula. This measure also
requires the adjustments to be calculated based on a 15-year
average. UI costs are approximately $215 million GF/98 and on
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average school districts receive about $45 per pupil.
According to the Legislative Analyst Office (LAO), UI costs
are expected to increase up to $445 million in the next year.
Likewise, the PERS adjustment is negative right now (-$157
million GF/98) and on average district receive a negative
offset of -$25 per pupil.
4)Previous legislation .
a) AB 2355 (Brownley), similar to this measure with respect
to the financial reporting provisions, was held by the
Senate Rules Committee in 2010.
b) AB 8 (Brownley) required the Director of the Department
of Finance and the Legislative Analyst to convene a working
group to make findings and recommendations to the
Legislature and governor regarding the implementation of a
restructured school finance system, as specified. This bill
was vetoed by the governor with the following message:
"I continue to support reforming the school finance system
to make it less complex and more transparent to parents,
teachers, and the public. However, this bill merely
authorizes the convening of yet another working group that
can be accomplished without statutory authorization. I am
concerned that this bill provides the appearance of
activity without actually translating to achievement. The
lack of urgency in voting on the substantive issues put
forth in the education Special Session can be seen as yet
another example of that appearance. Since nothing under
current law prohibits the objectives of this bill from
being met, it is unnecessary."
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081
AB 18
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