BILL ANALYSIS                                                                                                                                                                                                    Ó




                                                                  AB 189
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          Date of Hearing:   March 30, 2011

                           ASSEMBLY COMMITTEE ON EDUCATION
                                Julia Brownley, Chair
                      AB 189 (Eng) - As Amended:  March 3, 2011
           
          SUBJECT  :   Education funding

           SUMMARY  :  Specifies that commencing with the 2011-12 fiscal year 
          (FY), a local educational agency (LEA) that receives funding for 
          four specified categorical programs shall allocate a sufficient 
          amount of funding for those programs.  Specifically,  this bill  :

          1)Extends categorical flexibility from FY 2012-13 to FY 2014-15 
            and makes corresponding changes in sections related to 
            categorical flexibility.

          2)Requires, as a condition of receipt of categorical funds, the 
            governing board of a school district or board of a county 
            office of education to certify that a sufficient amount of 
            funding has been provided for the four categorical programs 
            identified by this bill at a regularly scheduled open public 
            hearing.

          3)For purposes of this bill, defines a "sufficient amount" as 
            maintaining a sufficient level of instruction services for the 
            four categorical programs specified in this bill to the extent 
            that a LEA shall be able to reinstate full funding for the 
            programs upon the expiration of the funding flexibility.

          4)Specifies the four categorical programs subject to the 
            requirements of this bill as Adult Education, California High 
            School Exit Exam (CAHSEE) - Instructional Support and 
            Services, Regional Occupational Centers and Programs (ROC/Ps), 
            and Supplemental Instruction (Summer School).  

          5)Finds and declares that the funding flexibility is for the 
            purpose of assisting LEAs in responding to the state's current 
            fiscal emergency and is intended to last only for the duration 
            of the fiscal emergency.

          6)Expresses the intent of the Legislature that, after a LEA 
            makes the determination that a sufficient amount of funding 
            has been allocated, the LEA should ensures that there are an 
            adequate number of administrative and credentialed teaching 









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            staff to provide a baseline level of core courses during the 
            period that funding flexibility is authorized so that there is 
            sufficient staffing to fully expand programmatic offerings 
            upon the expiration of the funding flexibility.

          7)Strikes the provision prohibiting a governing board of a 
            district to charge a fee for a class in English and 
            citizenship for foreigners or a class in an elementary 
            subject.

           EXISTING LAW  :

          1)Specifies that for FY 2008-09 to FY 2012-13, specified 
            categorical program funds may be used for any educational 
            purposes.

          2)Specifies that for FY 2009-10 to FY 2012-13, the 
            Superintendent of Public Instruction or other administering 
            state agency shall apportion the funds based on the same 
            relative proportion that a recipient received in FY 2008-09 
            for specified categorical programs.

          3)Requires, as a condition of receipt of funds, a governing 
            board of a school district or a board of county office of 
            education, at a regularly scheduled open public hearing, to 
            take testimony from the public, discuss, approve or disapprove 
            the proposed use of funding, and make explicit for each of the 
            specified categorical program items, the purposes for which 
            the funds will be used.  

          4)Specifies that, for FY 2008-09 to FY 2012-13, LEAs that use 
            the flexibility provision shall be deemed to be in compliance 
            with the program and funding requirements contained in 
            statutory, regulatory, and provisional language.
             
           FISCAL EFFECT  :  Unknown

           COMMENTS  :  There are approximately 60 categorical programs that 
          serve specific goals (e.g., to assist high school students in 
          passing the high school exit exam) or for specific programs 
          (e.g., ROC/Ps, special education).  There are also numerous 
          statutes and regulations that specify allowable use of 
          categorical funds and how funds are allocated.  The FY 2009-10 
          budget had an important impact on categorical programs.  The 
          budget agreement imposed a 20% reduction on 39 programs and gave 









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          LEAs that received those funds in FY 2007-08 the flexibility to 
          use the funds for any educational purposes from FY 2008-09 
          through FY 2012-13 (SBX3 4 (Ducheny), Chapter 12, Statutes of 
          the 2009-10 Third Extraordinary Session).  This reduction and 
          flexibility provision is commonly known as "Tier 3" flexibility, 
          which essentially gives LEAs $4.5 billion in additional 
          unrestricted funds.  Tier 1 protected four categorical programs 
          from cuts and flexibility while 11 categorical programs 
          sustained reductions but were given no flexibility under Tier 2. 
           For Tier 3 funds, school districts receive their allocations 
          for five years based on the applicable percentage the programs 
          received in FY 2007-08.  As a result, until 2013, LEAs are not 
          required to justify or report average daily attendance (ADA) in 
          order to receive the specified categorical funds.  The 
          Governor's FY 2011-12 budget proposes to extend the flexibility 
          provisions by two years.  

          The 39 Tier 3 programs include:  Adult Education, Advanced 
          Placement Programs, American Indian Early Childhood Education 
          Centers, American Indian Education Centers, Arts and Music Block 
          Grant, California Association of Student Councils, CAHSEE - 
          Instructional Support, California School Age Families Education, 
          Certificated Staff Mentoring, Charter School Categorical Block 
          Grant, Child Oral Health Assessments, Civic Education, Class 
          Size Reduction (9th Grade), Community Day Schools, 
          Community-Based English Tutoring Program, County Office of 
          Education:  Williams Audit, Deferred Maintenance, Educational 
          Technology - CTAP, Gifted and Talented, Instructional Materials 
          Block Grant, Mathematics and Reading Professional Development, 
          National Board Certification Incentives, Peer Assistance and 
          Review, Physical Education Teacher Incentive Program, Principal 
          Training Program, Professional Development Block Grant, Public 
          School Accountability Act, Pupil Retention Block Grant, Regional 
          Occupational Centers and Programs, Sanctions - High Priority 
          Schools Grant Program, School and Library Improvement Block 
          Grant, School Safety Block Grant (8-12), School Safety 
          Competitive Grants, Specialized Secondary Program Grants, 
          Supplemental Instruction (Summer School), Supplemental School 
          Counseling Program, Targeted Instructional Improvement Block 
          Grant, Teacher Credentialing Block Grant, and Teacher Dismissal 
          Apportionments.  

          This bill requires a LEA that receives any of the four specified 
          Tier 3 funds to allocate a sufficient amount of funding for 
          those programs that will enable the LEA to reinstate full 









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          funding for the programs when the flexibility provisions end.  
          What this means is that flexibility is reduced for four programs 
          under Tier 3.  The four programs are Adult Education, CAHSEE - 
          Instructional Support and Services, ROC/Ps, and Supplemental 
          Instruction (Summer School).  This bill is sponsored by the 
          California Council for Adult Education.  The author states that 
          while "categorical flexibility has enabled school districts to 
          remain solvent during a time of unprecedented budget cuts?this 
          flexibility is resulting in the dismantling of our state's core 
          categorical programs like adult education, which will be 
          virtually impossible to restore once categorical flexibility 
          ends."  According to the author, adult education cuts represent 
          the largest single diversion of any single categorical program 
          within Tier 3.  The bill, however, covers more than just adult 
          education programs.  It is unclear how or why the other three 
          programs were selected.  The following briefly describes the 
          four programs addressed by this bill:

           Adult Education  :  The FY 2011-12 budget proposes $634.7 million 
          for adult education.  Adult education is provided by a number of 
          delivery systems, including community colleges, public 
          libraries, nonprofit and faith-based organizations, prisons, and 
          county offices of education, but the largest providers are 
          school districts.  In 2007-08, adult education programs enrolled 
          1.2 million adult learners in almost 300 adult schools 
          throughout California.  Prior to the implementation of 
          flexibility in 2009-10, school districts' funding levels were 
          based on what they received in 1977-78 and grew by a cap of 2.5% 
          from the previous year's funding level.  The revenue limit in 
          2007-08 for each unit of ADA (comprised of 525 hours of 
          accumulated seat time) was $2,645.30.  

          Adult education schools offer the following ten programs:  Adult 
          Basic Education, English as a Second Language (ESL), High School 
          Diploma or Adult Secondary Education, including General 
          Education Development certification, Citizenship Preparation, 
          Career Technical Education, Adults with Disabilities, Health and 
          Safety, Parent Education, Home Economics, and Older Adult.

           CAHSEE - Instructional Support and Services  :  This program is 
          intended to provide remediation for students who have not passed 
          one or both portions of the CAHSEE.  The funds can be used for 
          individual or small group instruction, hiring of additional 
          teachers, purchasing, scoring, and reviewing diagnostic 
          assessments, counseling, and other supports.  According to the 









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          CDE, almost 275,000 students obtained CAHSEE remediation during 
          the 2007-08 school year.  The FY 2011-12 budget proposes $58.3 
          million for this program.

           ROC/Ps  :  The objective of ROC/Ps is to provide work-based 
          learning opportunities for pupils that will prepare them to 
          enter the workforce.  ROC/Ps teach specific occupational skills 
          and general employment skills in 15 industry sectors, as 
          outlined in the Career Technical Education standards adopted by 
          the State Board of Education.  ROC/Ps are established as 
          regional programs or centers that have a link to business and 
          industry through advisory committees.  The FY 2011-12 budget 
          proposes $384.6 million for this program.

           Supplemental Instruction (Summer School)  :  Supplemental 
          Instruction funds are used for remedial instruction programs for 
          students who are not demonstrating sufficient progress toward 
          passing the CAHSEE, students in grades two through nine who are 
          retained or recommended for retention, and students with low 
          standardized test scores or are at risk of retention.  Classes 
          may be offered during the summer, before or after school, on 
          Saturday, or during intersession.  The FY 2011-12 budget 
          proposes $336.2 million for this program.  

           Surveys  :  With the flexibility provisions, LEAs are not required 
          to report how much funds were diverted and which programs they 
          were transferred to.  As a result, there is no data available to 
          discern the extent to which LEAs diverted categorical funds for 
          other educational needs or the number of programs that have been 
          dismantled.  The Legislative Analyst's Office (LAO) has 
          conducted two surveys, in the fall of 2009 and 2010, in an 
          effort to ascertain the effects of flexibility and other 
          resources in helping LEAs balance their budgets.  The survey 
          results were based on 382 completed surveys out of the 1,000 
          school districts; the respondents represent 58% of the state's 
          ADA.  Highlights from the LAO's February 2011 report include the 
          following:

                 Compared with FY 2009-10, a higher percentage of 
               districts in FY 2010-11 are diverting Tier 3 program funds 
               or discontinuing Tier 3 programs.

                 Every major Tier 3 categorical program has sustained 
               fund shifts, with more than 70% of districts report 
               diverting funds from Grade 9 Class Size Reduction, Music 









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               and Art, Adult Education, Supplemental Instruction, Gifted 
               and Talented Education, and Professional Development.

                 More districts are discontinuing programs in FY 2010-11 
               compared with FY 2009-10.  For the four programs affected 
               by this bill, the report shows that in FY 2010-11:  7% of 
               survey respondents discontinued adult education programs, 
               5% discontinued CAHSEE - Instructional Support and 
               Services, 1% closed ROC/Ps, and 13% discontinued 
               Supplemental Instruction (summer school) programs. 

                 The LAO recommends expanding flexibility in FY 2011-12 
               to Tier 1 programs, including K-3 Class size Reduction, 
               Home-to-School Transportation, and After School Education 
               and Safety Program.   

          The LAO is currently finalizing a report specifically on adult 
          education and the impact of flexibility on this program.  The 
          LAO is projecting its release in a couple of months.  

           Discussion  :  When the Legislature approved the flexibility 
          provision, it intended to give LEAs discretion to make local 
          decisions.  Some have argued that the Legislature did not intend 
          or expect programs to be dismantled.

          Why these four programs?  It is unclear why the Legislature 
          should treat four programs under Tier 3 differently.   If the 
          Legislature believes that these four programs should not be 
          dismantled, the Legislature can move these programs to Tier 2, 
          which offers no flexibility.  Alternatively, the Legislature can 
          provide limited flexibility by prohibiting the dismantling of 
          any program.  Regardless, all Tier 3 programs should be treated 
          similarly.  

          How will this bill be implemented in FY 2011-12?  By the time 
          this bill is signed into law, half the school and fiscal year is 
          over.  Will LEAs be required to make modifications to the budget 
          and programs mid-year?  If a district has already eliminated any 
          of these four programs, does that mean that they have to 
          resurrect them mid-year?  How will they do that if the funds are 
          already allocated?  

          What happens to districts that are already on the brink of 
          bankruptcy and take over by the state?
          The CDE recently reported 13 districts with negative 









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          certifications following first interim status report for FY 
          2010-11 while 97 districts have a qualified certification<1>.  

          What does "sufficient funds" really mean?  What is the 
          threshold?  Can any amount below 50% be considered sufficient?  
          The author and sponsor state that it will be determined on a 
          district by district basis.  According to the author and 
          sponsor, even though current law requires a public discussion of 
          proposed transfer of funds, some LEAs claim compliance at the 
          meeting where they adopt the budget and do not offer the 
          community a real opportunity to voice opinions as intended by 
          law.  The sponsor argues that this bill will force LEAs to hold 
          public meetings to determine a "sufficient" level of funding.  
          The sponsor also recognizes that the definition of "sufficient" 
          may vary from one locality to another.  

          It is not unreasonable to require LEAs to hold independent 
          meetings that will allow the community to express their opinions 
          prior to the transfer of Tier 3 funds.  Existing law already 
          requires a public meeting.  Perhaps that provision should be 
          strengthened by specifying that the meeting must be a separate 
          meeting from the meeting where the governing board adopts the 
          budget.  Additionally, dismantling a program is drastic as each 
          program serves a purpose and has constituency.  If a governing 
          board intends to shut down a program, it should be required to 
          provide full disclosure by noticing a proposed elimination of a 
          program at the meeting to discuss proposed transfer of Tier 3 
          funds or another meeting that is not the meeting to adopt the 
          budget.  In lieu of the requirement that a substantial amount be 
          provided to four Tier 3 programs, staff recommends the 
          following:

          1)Require the public meeting where a governing board solicits 
            input on proposed Tier 3 transfer of funds to be a separate 
            meeting from the meeting to adopt a budget.

          2)If a governing board wishes to eliminate a program by using 
            all its funding for another purpose, require the governing 
            board to provide a notice that specifically states a program 
            is proposed to be eliminated, for either at the public meeting 
            to discuss Tier 3 transfers or at a separate meeting that is 
          ---------------------------
          <1> A negative certification means that a LEA will not meet its 
          financial obligation for FY 2010-11 or 2011-12.  A qualified 
          certification means that a LEA may not meet its financial 
          obligation for FY 2010-11, 2011-12, and 2012-13.








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            not the meeting to adopt the budget.    

           Data collection  .  Thus far, evaluations of flexibility are based 
          on surveys.  There is no data that shows how much funds were 
          transferred and to which programs they were transferred to.  
          This is due to a change in how CDE tracks the allocation of Tier 
          3 funds.  The CDE uses a program called the Standardized Account 
          Code Structure (SACS) to track revenue and expenditures.  Prior 
          to the flexibility provision, the CDE assigned a SACS resource 
          code to each source of funding.  Due to the flexibility 
          provision, CDE consolidated all of the categorical flexibility 
          revenue streams into one resource code.  As a result, while CDE 
          collects data on how much LEAs are spending on each program, 
          there is no data that shows the source of the funds.  In order 
          to have more precise data on how LEAs have implemented the 
          flexibility provisions, staff recommends requiring the CDE to 
          develop a mechanism to track source of funding.  
           
          Adult Education Program Fees  :  Education Code Section 52612 
          authorizes districts to charge a fee required to maintain a 
          class, except for three programs:  Adult Basic Education, ESL, 
          and High School Diploma or Adult Secondary Education, including 
          General Education Development certification classes.  This bill 
          proposes to eliminate the provision prohibiting fees to be 
          charged.  According to the author, some districts have 
          discontinued ESL and citizenship courses due to uncertainty 
          whether fees can be assessed.  This is because the flexibility 
          provisions include a provision that deems the LEA to be in 
          compliance with the program and funding requirements contained 
          in statutory, regulatory, and provisional language.  It is 
          unclear to LEAs how to interpret that provision as it relates to 
          flexibility.  The author states that in order to address the 
          growing demand in English acquisition courses, eliminating the 
          prohibition to charge fees will enable districts to maintain the 
          courses, even if a small fee is assessed for these programs.  
          Rather than making a permanent change, staff recommends allowing 
          fees to be charged only while the flexibility provisions are in 
          effect.  

           Arguments in Support  .  The California Council for Adult 
          Education states, "California Adult Schools help adult students 
          find jobs, learn English, earn degrees, become citizens and 
          become better parents.  There are 5.3 million California adults 
          without high school diplomas and 3 million English language 
          learners who need access to adult education resources in order 









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          to work in the state's economy.  As categorical flexibility cuts 
          deeper into adult education programs, these opportunities will 
          be lost, perhaps permanently."

           Arguments in Opposition  .  The California Association of School 
          Business Officials (CASBO) states, "When it comes to categorical 
          programs, CASBO understands the importance of adult education, 
          career tech., and supplemental instruction.  But we are also 
          calling on the Legislature to stay the course when it comes to 
          categorical flexibility in order to allow local communities to 
          weather this financial crisis.  We are fully aware of the impact 
          that flexibility has had on programs throughout the state, but 
          we are also aware of the $18 billion in program cuts and 
          deferrals that have been dealt to schools in only three short 
          budget cycles."

           Previous Related Legislation  .  AB 1673 (Mendoza), requires the 
          LAO to provide a report to the Legislature on the impact of the 
          flexibility provision on adult education programs.  The bill was 
          held in the Assembly Appropriations Committee suspense file in 
          2010.  

           Related Legislation  .  SB 476 (Lowenthal), pending in the Senate 
          Education Committee, extends categorical flexibility by two 
          years.  

          SB 509 (Price), pending in the Senate Education Committee, 
          specifies that categorical flexibility is only available to LEAs 
          that provide sufficient textbooks or instructional materials, as 
          defined.  

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          California Council for Adult Education (sponsor)
          Asian Law Alliance
          Asian Americans for Civil Rights & Equality
          Asian and Pacific Islanders California Action Network
          Asian Resources, Inc.
          California Association for the Gifted
          California Association of Leaders for Career Preparation
          California Business Education Association
          California Federation of Teachers
          California School Employees Association









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          California Teachers of English to Speakers of Other Languages
          Council of Mexican Federations
          Korean Resource Center
          Numerous individuals

           Opposition 
           
          California Association of School Business Officials
          California County Superintendents Educational Services 
          Association
          Poway Unified School District (prior version)
          Torrance Unified School District
           
          Analysis Prepared by  :    Sophia Kwong Kim / ED. / (916) 319-2087