BILL ANALYSIS Ó AB 189 Page A 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 AB 189 Page B 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 AB 189 Page C 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 AB 189 Page D 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 AB 189 Page E 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 AB 189 Page F 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 AB 189 Page G 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. AB 189 Page H 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 AB 189 Page I 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 AB 189 Page J 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