BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 189 (Eng)
Hearing Date: 08/25/2011 Amended: 05/27/2011
Consultant: Jacqueline Wong-HernandezPolicy Vote: Education 7-2
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BILL SUMMARY: AB 189 modifies requirements local education
agencies (LEAs) must adhere to in order to participate in
categorical flexibility. Specifically, this bill:
1) Requires LEAs to hold the regularly scheduled public hearing
prior to and independent of a meeting where the school
district or the governing board of the county office of
education (COE) adopts a budget, as specified.
2) Requires the Department of Education (CDE) to establish a
unique resource code for these funds and to inform LEAs that
these funds are required to be considered general purpose
nonrevenue limit funding for the purposes of reporting
expenditures.
3) Authorizes the governing board of a school district to
charge for a class in English and citizenship until July 1,
2015.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14
Fund
Public hearings / notice Likely minor,
non-reimbursable district costs Local
Fee authority extension Likely minor revenue / cost
avoidance for districts Local
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
AB 189 (Eng)
Page 1
Categorical flexibility was implemented in order to assist
schools in absorbing extensive budget reductions imposed on them
in recent years. SB 4 (Chapter 12, 2009) and extended by SB 70
(Chapter 7, 2011), authorized LEAs through the 2014-15 fiscal
year, to use funding for approximately 38 categorical programs
for virtually any educational purpose, to the extent permitted
by federal law. These measures also deem LEAs to be in
compliance with program and funding requirements related to the
38 categorical programs, and require LEA governing boards to
make flexible expenditure decisions in a regularly scheduled
public meeting as a conditional of fund flexibility.
This bill modifies existing public hearing requirements on LEAs
that choose to utilize categorical flexibility. It requires an
LEAs to hold the public meeting at which flexible expenditure
decisions will be made, prior to, and independent of, a meeting
where the school district or the COE adopts its budget.
Additionally, this bill requires the governing board, if it
intends to close a program funded by a budget item specified
within the categorical flexibility statute, to identify in the
notice of the agenda of the public hearing or at another public
hearing, the program(s) proposed to be closed.
These additional meeting requirements would be borne by LEAs, as
a condition of categorical flexibility. The cost to individual
LEAs would depend upon the number of programs they intend to
close, their meeting procedures, and their staffing levels. This
bill only requires one additional public meeting (at which all
proposed program closures could be discussed), and is unlikely
to incur a significant cost for any single LEA.
This bill requires the CDE to establish a unique resource code
for categorical programs subject to the flexibility provision,
and to inform LEAs that these funds shall be considered general
purpose nonrevenue limit funding for the purposes of reporting
expenditures. The CDE is required to provide this information to
the Department of Finance and the Legislature annually on April
15 until, and including, April 15, 2016, consistent with
existing law. This provision, which places additional reporting
requirements on schools that utilize categorical flexibility, is
unlikely to result in any additional useful information
regarding how funds subject to flexibility are uniquely spent by
schools.
AB 189 (Eng)
Page 2
Under this bill, schools would receive a lump sum of all flexed
categorical funding under a single, new resource code, and then
that sum of money would become part of the school's general
purpose funding. Subsequently, all expenditures would be made
from the new general purpose fund which includes both amounts
(regular general purpose, and new resource code money). Schools
would have to decide whether a program was being funded from
regular general purpose or new resource code funds, which would
be mixed together and permitted to be used for the exact same
purposes. Because those funds functionally come from one
account, at the school level, for school expenditures, any
determination of the origin of a specific dollar would be
arbitrary.
Two schools that continue to fund a particular categorical
program at the exact same level might report differently as to
where the money originated from that is funding the program. One
school could report that it was funding the program from flexed
categorical funds, and the other school would report that it was
not using any flexed categorical funds for that program (because
it was using regular general purpose funding). At best, the
information is meaningless; at worst, schools will feel
compelled to report in a way that they think the state wants to
see funding used, and devote staff time to figuring out how to
most advantageously report expenditures.
PROPOSED Amendments would remove the resource code provisions
from the bill. This would limit the bill to the hearing
requirements, and the fee authority extension for specified
adult education courses.