BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 94| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 94 Author: Assembly Budget Committee Amended: 3/14/11 Vote: 27 - Urgency ASSEMBLY FLOOR : 49-0, 2/22/11 - See last page for vote SUBJECT : Education budget statutory revisions SOURCE : Author DIGEST : This bill makes education- related statutory revisions consistent with the 2011-12 budget package. ANALYSIS : This bill makes the following statutory revisions affecting K-12 education and higher education as part of the 2011-12 budget package: K-12 Education 1. New Inter-Year Payment Deferrals for 2011-12 . Defers an additional $2.1 billion in payments for K-12 revenue limits from 2011-12 to 2012-13. More specifically, the deferral moves $1.3 billion in March 2012 and $763 million in April 2012 payments to August 2012. The deferral reduces 2011-12 appropriations, but allows schools to retain general purpose funds for programs in 2011-12. The deferral continues to allow local educational agencies (LEAs) facing financial hardship to continue to receive June apportionment payments CONTINUED AB 94 Page 2 scheduled to be deferred to July. 2. Extends Repayment of 2010-11 Inter-Year Deferrals . Makes changes to current statute to extend the repayment period for inter-year deferrals for 2010-11 in order to meet state cash needs. 3. Revenue Limit Deficit Factors. Establishes county office of education revenue limit deficit factor of 19.892percent and school district revenue limit deficit factor of 19.608 percent in 2011-12 to current revenue limit funding at current levels. Revenue limit deficit factors keep track of base reductions and foregone cost-of-living adjustment (COLA) increases in recent years, so they may be restored in future years when state funds are available. 4. Suspends COLAs for K-12 Programs . Establishes a zero percent COLA for K-12 programs - revenue limits and categorical programs - in 2011-12. While COLA is estimated at 1.67 percent, it is not funded in 2011-12. 5. Implements "Fair Share" Savings for "Basic Aid Districts . Applies an 8.921 percent reduction to categorical programs for Basic Aid districts in 2010-11 and 2011-12. This reduction is commensurate to the base revenue limit reduction ate for non-Basic Aid school districts in 2010-11 and 2011-12. States intent that categorical funding reductions for Basic Aid districts be restored as base revenue limit reductions are restored for non-Basic Aid districts. Basic Aid districts are defined as districts that do not receive state funding for revenue limits. 6. Provide Funding for Special Education Mental Health Services . Reappropriates $80.8 million in one-time Proposition 98 savings to address a funding shortfall for mental health related services for special education students in 2010-11. Funds are appropriated on a one-time basis based upon the relative costs of services provided. 7. Reappropriation of Proposition 98 Savings for Selected Programs . Reappropriates an additional $13.1 million in CONTINUED AB 94 Page 3 one-time Proposition 98 savings to offset other program adjustments in 2010-11. 8. Restores Federal Funds for Student Data Systems . Appropriates $2.3 million in available federal funds that were vetoed form the 2010-11 Budget Act to continue support for the California Pupil Achievement Data System (CALPADS). First priority for funding shall be to support the transfer of knowledge from the CALPADS contractor to the California Department of Education (CDE) and other relevant state agencies. 9. Requires CDE to Assist LEAs with Data for School Accountability Report Card . As a condition of CALPADS funding, requires the CDE to provide LEA's with data templates to allow them to comply with the School Accountability Report Card. 10.Extends Instructional Materials Purchase Flexibility . Extends for two additional years (through 2014-15) the suspension of statutory requirements that LEAs buy newly-adopted instructional materials and that the State Board of Education adopt new materials. 11.Extends Routine Maintenance Flexibility . Extends for two additional years (through 2014-15) the suspension of a statutory requirement that school districts that meet the facility requirements of the Williams settlement deposit an amount equal to one percent of their General Fund expenditures into their deferred maintenance funds, on the condition that they maintain their facilities in good repair. 12.Extends Surplus Property Sale Flexibility . Extends for two additional years (through 2014-15) existing statutory authority for schools to sell non-state funded surplus property and use the proceeds for any one-time general fund purpose.\ 13.Extends Deferred Maintenance Flexibility . Extends for two additional years (through 2014-15) the suspension of previously required General Fund set-asides for LEAs receiving deferred maintenance funds for school facilities. CONTINUED AB 94 Page 4 14.Extends K-12 Categorical Funding Flexibility. Extends by two years (through 2014-15) existing categorical funding flexibility that allows K-12 schools to use funding for nearly 40 categorical programs for any educational purpose. Requires school districts to discuss proposed use of these funds at a public meeting and to report on how they actually spent the funds. Requires the CDE to report each year on districts' use of this flexibility. 15.Extends Relaxation of K-3 Class Size Reduction (CSR) Program Penalties . Extends for two additional years (through 2013-14) the relaxation of penalties for school districts participating in the K-3 CSR incentive program that exceed the maximum class sizes allowable under the program. 16.Extends Instructional Time Flexibility . Extends by two years (through 2014-15) the authority for LEAs to reduce the number of instructional days by five - from 180 days to 175 days per year - without losing longer- year incentive grants. 17.Reduces local Reserve Requirements . Extends for two additional years (through 2011-12) existing statutory authority for school districts to reduce their "reserves for economic uncertainties" to one-third of the amounts previously required to be held, and requires them to restore those reserves to the normal levels by the beginning of 2013-14. 18.Extends Access to Supplemental Grants and Flexibility for New Schools . Allows new schools that began operation in 2008-09 through 2011-12 one additional year beyond 2010-11 to access supplemental categorical block grant funds that can be used for any education purpose. The budget bill provides partial funding for this purpose in 2011-12. 19.Suspends Funding Provisions for the Emergency Repair Program . Makes statutory changes conforming to zero funding for the Emergency Repair Program in the 2011-12 budget bill. CONTINUED AB 94 Page 5 20.Authorizes Proposition 98 Split . Suspends the statutory division of Proposition 98 funding among K-12 educational agencies, community colleges, and other state agencies, and instead conforms the division of funding based upon actual budget appropriations in 2011-12. 21.One-Year Statutory Appropriation for K-3 Class Size Reduction (CSR) Program . Provides an unspecified amount of funding for the K-3 CSR program in 2011-12 as determined by the Superintendent of Public Instruction. This statutory appropriation is provided in lieu of a budget act appropriation for this program. 22.Categorical Payment Deferrals . Continues up to $906 million in inter-year categorical payment deferrals form June to July of 2012. This amount is offset by no more than $570 million in 2011-12 CSR deferral payments made in 2012-13. Extends the period of availability of deferred-13 funds by one month, consistent with the continuing one-month deferral authorized in this bill. 23.Expands Charter School Revolving Loan Fund . Appropriates $5 million from the General Fund to augment the Charter School Revolving Loan Fund, which makes low-interest, start-up loans of up to $250,000 to new charter schools in order to meet the purposes of their charters. 24.Redevelopment Funds - Contingency Language . Requires the state to adjust the Proposition 98 calculation so that the any shift in local property taxes previously received by redevelopment agencies has no effect on the Proposition 98 minimum guarantee in 2011-12. 25.Income Ceiling Reduction . Effective July 1, 2011, lowers the maximum allowable income to receive subsidized child care to 70 percent of State Median Income (SMI) from 75 percent. The reduction applies to all child care, including preschool. 26.11 and 12-Year Olds . Effective July 1, 2011, deprioritizes child care for 11 and 12-year olds, with CONTINUED AB 94 Page 6 the exception of children who are in child protective services, at risk of abuse or neglect, homeless, disabled, or in non-traditional hours of care. Also prioritizes all and 12-year olds who lost child care for the waitlists or any open spaces in before and after school programs, and allows those 11 and 12-year olds to attend a before or after school program at a school rather than their own within their district. 27.License-Exempt Provider Rate Reductions. Effective July 1, 2011, reduces the reimbursement rate for license-exempt providers from 80 to 60 percent of what licensed providers are paid. 28.Family Fees . Effective July 1, 2011, increase the family fee schedule by 10 percent, but continues existing policy that the family fees cannot exceed 10 percent of the family's total income. 29.Across-the Board Reduction . Allows the CDE to reduce contracts for all child care programs by 15 percent, effective July 1, 2011. Also provides prioritization for disenrollment of children from the program due to insufficient funding. 30.Administrative Process . Allows the CDE to implement the changes to child care authorized in this bill through management bulletins and similar instructions. Specifies that the child care changes in this bill are not subject to appeal by the agencies holding child care contracts. 31.CalWORKS Stage 3 . Provides $60 million from one-time funds for the April through June 2011 period to fund the CalWORKS Stage 3 program. California Community Colleges 1. Student Fee . Increases the community college student fee from $26 per unit to $36 per unit. 2. Deferral . Increases community college apportionment cash deferrals by $129 million. Provides hardship exemption for districts, with the Department of Finance CONTINUED AB 94 Page 7 approval, that do not have sufficient cash resources to sustain the deferral. 3. Categorical Flexibility . Extends the community college categorical flexibility to 2014-15 to be consistent with K-12 categorical flexibility. 4. Data Sharing . Amends existing student information privacy statute to allow California Community Colleges to share student data as permitted under the federal Family Educational Right and Privacy Act of 1974 (FERPA). 5. Suspends COLAs . Establishes a zero percent COLA for California Community Colleges for 2011-12. While the COLA is estimated at 1.67 percent, it is not funded in 2011-12. University of California (UC) and California State University (CSU) 1. Budget Reduction Reporting Language. Requires UC and CSU to provide a preliminary report by June 1, 2011 on how the segments will address their respective $500 million budget reductions. This preliminary report requires the segments to consider stakeholder input. Also requires a final report on September 1, 2012 on how the budget reductions were actually implemented and an explanation of how and why those reductions differed from the June 1, 2011 report. 2. Student Enrollment Language . Requires the UC to enroll 209,977 students during the 2011-12 academic year, which is the same number UC was required to enroll during the 2010-11 academic year. Requires CSU to enroll 331,716 students during the 2011-12 academic year, which is 8,157 fewer students than CSU was required to enroll during the 2010-11 academic year. California Student aid Commission 1.Income and Asset Verification . Requires that all returning Cal Grant recipients have their income and assets verified similarly to new students.' CONTINUED AB 94 Page 8 2.Student Default Standard . Requires all institutions of higher education, with more than 40 percent undergraduate students borrowing federal student loans, to maintain their Three-Year Cohort Default Rate below 24.6 percent in 2011-12, and 30 percent in 2012-13 and thereafter, in order to continue meeting eligibility to participate in the Cal Grant Program for initial awards. Reduces by 20 percent the renewal Cal Grants at institutions with three-year cohort default rates above 24.6 percent. Requires the Legislative Analyst's Office to review this policy and potential alternatives by January 1, 2013, and report to the policy and fiscal committees of the Legislature with recommendations. FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes Local: No ASSEMBLY FLOOR : AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Charles Calderon, Campos, Carter, Cedillo, Chesbro, Davis, Dickinson, Eng, Feuer, Fong, Fuentes, Furutani, Galgiani, Gatto, Gordon, Hall, Hayashi, Roger Hernandez, Hill, Huber, Hueso, Huffman, Lara, Ma, Mendoza, Mitchell, Monning, Pan, Perea, V. Manuel Perez, Portantino, Skinner, Solorio, Torres, Wieckowski, Williams, Yamada, John A. Perez NO VOTE RECORDED: Achadjian, Bill Berryhill, Butler, Conway, Cook, Donnelly, Fletcher, Garrick, Gorell, Grove, Hagman, Halderman, Harkey, Jeffries, Jones, Knight, Logue, Bonnie Lowenthal, Mansoor, Miller, Morrell, Nestande, Nielsen, Norby, Olsen, Silva, Smyth, Swanson, Valadao, Wagner, Vacancy CM:cpm 3/15/11 Senate Floor Analyses SUPPORT/OPPOSITION: NONE RECEIVED **** END **** CONTINUED AB 94 Page 9 CONTINUED