BILL ANALYSIS                                                                                                                                                                                                    


          |SENATE RULES COMMITTEE            |                    AB 94|
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                                 THIRD READING

          Bill No:  AB 94
          Author:   Assembly Budget Committee 
          Amended:  3/16/11 in Senate
          Vote:     27 - Urgency

           SENATE BUDGET & FISCAL REVIEW COMMITTEE  :  10-5, 3/16/11
          AYES:  Leno, Alquist, DeSaulnier, Evans, Lowenthal, Rubio, 
            Simitian, Wright, Hancock, Wolk
          NOES:  Huff, Emmerson, Fuller, Anderson, La Malfa
          NO VOTE RECORDED:  Liu

           ASSEMBLY FLOOR  :  Not relevant

           SUBJECT  :    Education budget statutory revisions

           SOURCE  :     Author

           DIGEST  :    This bill makes education- related statutory 
          revisions consistent with the 2011-12 budget package.

           Senate Floor Amendments  of 3/14/11 delete the prior version 
          of the bill and insert the current language relating to 
          education budget statutory revisions.

           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



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           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 
             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.  



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             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 
             7. Reappropriation of Proposition 98 Savings for Selected 
             Programs  .  Reappropriates an additional $13.1 million in 
             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 



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             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 
           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 
             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 



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             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.  
             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 
            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 from 
             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 K-12 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 
            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 



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             Proposition 98 minimum guarantee in 2011-12. 
            25.Statute Related to Fuel Tax Swap  .  Adds sections that 
             repeal and reenact an Education Code section related to 
             the fuel tax swap.  The budget trailer bills related to 
             transportation (AB 105 and SB 81) repeal and reenact the 
             fuel tax swap, which was originally enacted in early 
             2010 by AB X8 6 and SB 70, in order to pass the measure 
             with a two-thirds vote and comply with the requirements 
             of Proposition 26 of 2010.  Current law specifies the 
             fuel tax swap shall have no negative effect upon the 
             amounts that would otherwise be calculated under Test 1 
             of the Proposition 98 minimum education funding 
             guarantee.  These amendments will repeal and reenact 
             this Education Code section to conform with repeal and 
             reenactment of the fuel tax swap in the transportation 
             trailer bill.  
            Child Care and Development

           1. 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.  

           2. 11 and 12-Year Olds  .  Effective July 1, 2011, 
             deprioritizes child care for 11 and 12-year olds, with 
             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.  
           3. 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.  
           4. Family Fees.  Effective July 1, 2011, increase the 
             family fee schedule by 10 percent, but continues 



                                                                 AB 94

             existing policy that the family fees cannot exceed 10 
             percent of the family's total income. 
           5. 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.  
           6. 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 
           7. 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 
             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 
             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 



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           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.'  

          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   



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          Local:  No

          CM:cpm  3/16/11   Senate Floor Analyses 


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