BILL ANALYSIS Ó
AB 719
Page 1
Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON EDUCATION
Julia Brownley, Chair
AB 719 (Block and Lara) - As Amended: March 25, 2011
SUBJECT : Special education: funding
SUMMARY : Reestablishes the Special Education Special
Disabilities Adjustment (SDA), and creates a transition in the
calculation of SDA funding, that moves that calculation from
being based on pre-2008 data to data collected in or after 2008.
Specifically, this bill :
1)Makes Legislative findings and declarations as to the nature
of California's special education funding model, the
importance of the SDA, and the Legislature's commitment to
basing the SDA on recent data and providing transitional
changes in SDA funding.
2)States Legislative intent:
a) To amend these provisions to provide that the
calculation performed by the Superintendent of Public
Instruction (SPI) to determine the SDA for each special
education local plan area (SELPA) take into account data
collected in, or after, 2008, to identify high-need special
education local plan areas eligible to receive an adjusted
apportionment based upon a severity service concentration
factor in the 2011-12 to 2015-16 fiscal years, inclusive.
b) That the transition between use of the current
calculation pursuant to existing law using incidence
multipliers developed in 1998, and the updated calculation,
using a severity service concentration factor, shall take
place over a five-year period in order to mitigate the
effect on pupils in special education local plan areas that
suffer a severe reduction in services from one year to the
next.
c) That in specific fiscal years, specified percentages of
the funds appropriated for the purpose of funding the SDA,
be allocated pursuant to Legislative intent specified in 2)
a) or b) above; those percentages are:
i) 10 percent for the 2011-12 fiscal year
ii) 25 percent for the 2012-13 fiscal year
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iii) 50 percent for the 2013-14 fiscal year
iv) 75 percent for the 2014-15 fiscal year
d) That the SPI be required to allocate 100 percent of the
funds appropriated for the purpose of funding the SDA
pursuant to Legislative intent specified in 2) a) or b)
above.
3)Requires the SPI to allocate, in specific fiscal years,
specified percentages of the funds appropriated for the
purpose of funding the SDA, pursuant to existing law using
incidence multipliers developed in 1998; those percentages
are:
a) 90 percent for the 2011-12 fiscal year
b) 75 percent for the 2012-13 fiscal year
c) 50 percent for the 2013-14 fiscal year
d) 25 percent for the 2014-15 fiscal year
4)Requires that funding, for the purposes of these provisions,
be contingent upon an appropriation made in the annual Budget
Act or an appropriation contained in another measure.
EXISTING LAW :
1)Establishes special education local plan areas (SELPAs) as the
entities responsible for distributing state allocated special
education funding to school districts and for coordinating
services to students with disabilities.
2)Provides support for special education through a combination
of federal and state funds.
3)Allocates state, federal and local funding to each SELPA based
on a historical rate per average daily attendance (ADA) which
was substantially equalized by 2001, the total ADA in the
SELPA, growth and cost of living adjustments (COLA),
additional adjustments for equalization, and a SDA to offset
the fact that pupils with high cost/low incidence disabilities
are not uniformly distributed across SELPAs.
4)Provides for the calculation of the SDA, and makes the SDA
inoperable and repealed effective July 1, 2011 and January 1,
2012, respectively.
FISCAL EFFECT : Unknown
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COMMENTS : The disabilities that qualify a student for special
education vary widely, from a mild speech or learning disability
to conditions that require specialized, individual care that
goes well beyond classroom instruction. About half of students
enrolled in special education have a learning disability, and
another quarter have a speech or language impairment. These
conditions qualify a student for extra assistance but, in
general, have a moderate impact on the cost of education. Much
more dramatic are the costs of educating the other quarter of
students with more serious disabilities, including autism;
mental retardation; visual, orthopedic, or other health
impairments; emotional disturbance; loss of hearing and/or
sight; traumatic brain injuries; or multiple disabilities.
Funds for special education services are distributed to
districts through SELPAs; in addition, SELPAs coordinate
services for students with disabilities from infancy to age 22.
The member districts of a SELPA agree on how the required
services will be provided and how to allocate funding to each
district based on the programs it operates and the students it
serves.
A SELPA may include several school districts or simply coincide
with a particular school district or county boundary. In rare
cases, a particularly large school district may have more than
one SELPA.
In the Supplemental Report to the 1994-95 Budget Act, the
Legislature directed the California Department of Education, the
Legislative Analyst's Office (LAO) and the Department of Finance
(DOF) collaborate to address some of the concerns with the
special education funding model; specifically they were
instructed to review special education finance laws and propose
a new system that would be more fair, flexible, and less
complex. Over the next year and a half the agencies held
discussions that resulted in a series of recommendations
submitted in a draft report issued in spring 1995, and a final
report submitted later that year. Many of the recommendations
contained in the reports were incorporated into AB 602 (Davis),
Chapter 854, Statutes of 1997, changing California's special
education funding from a resource-based to a census-based
approach, which allocates funds according to the total ADA in
the school districts within a SELPA, rather than on the number
of identified special education students. The intent behind
this change was to provide comparable special education funding
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to SELPAs with comparable enrollment; under this ADA-based
approach, two SELPAs with the same overall average daily
attendance are generally treated the same for funding purposes.
The state provides a minimum basic special education allocation
based on each SELPA's per- ADA funding rate that was
historically established. Over time these per-ADA rates have
been substantially equalized. The funding model also includes
provision for making adjustments for growth and COLA, in
addition to equalization. Tying funding for students with
disabilities to a SELPA's total ADA was partly based on the
assumption that students with disabilities are roughly uniformly
distributed across districts and SELPAs. This assumption
generally held, except in the case of certain high cost/low
incidence disabilities; the funding model accounts for this by
providing an adjustment, the SDA, for SELPAs having a
disproportionately large number of "high-cost" or low incidence
special education pupils.
Since the initial implementation of the AB 602 funding model,
the SDA has been based on "severity service" or "incidence"
multipliers that were developed as part of a study completed in
1998 by the American Institutes for Research (AIR); the greater
the incidence of pupils with severe disabilities in a SELPA,
the higher the incidence multiplier and the greater the
adjustment to funding. These incidence multipliers were
incorporated into the funding model by SB 1564 (Schiff),
Chapter 330, Statutes of 1998. Recognizing that these factors
may change over time, AB 1564 called for the incidence
multipliers to expire after the 2002-03 fiscal year, and
required a new study to be completed by March 2003. AIR
completed this second study in September of 2003 and issued a
revised report in March, 2004. In the 2003-04 study, AIR found
that as a group the SELPAs not identified as serving a
disproportionate number of severe students in the 1998 study
had seen above average increases in disabilities that are
generally considered severe, such as Autism, Multiple
Disability, and Emotional Disturbance. These findings
suggested that while some placements remained constant
statewide, changes in disabilities may have indicated shifts in
"severity" in the time between the two studies.
The 2003-04 study, however, was affected by data problems
stemming from structural changes in the collection and coding of
special education data that had occurred since the 1998 study.
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As a result, AIR's methodology and the resulting incidence
multipliers were significantly different from 1998; concerns
over these changes led to the 2003-04 results never being
incorporated into the funding model. The incidence multipliers,
through the current 2010-11 fiscal year, continue to be based on
the original 1998 study and data.
In 2009-10, the state provided a total of $69.8 million in
funding to 32 of the state's 121 SELPAs for the SDA. Of that
total amount, Los Angeles Unified School District received $22
million, San Diego Unified School District received $9 million,
and Garden Grove Unified School district received $6 million;
most of the remaining SELPAs that did receive SDA funding
received an amount less than $2 million each. The 2010-11
budget appropriated approximately $59 million for the SDA.
During 2010-11 budget negotiations, the Legislature determined
that there would be merit in looking at the SDA methodology and
incidence multipliers from 1998. The budget and previous
legislation by this bill's author provided authorization for the
existing SDA formula, but made this authorization inoperable
effective July 1, 2011, and repealed as of January 1, 2012. In
addition, the 2010-11 budget provided $300,000 in one-time
federal funds for CDE to do the following:
1)Provide a summary of the extent to which the incidence of
severe disabilities is evenly or unevenly distributed across
the state.
2)Provide a determination of whether any observed differences in
incidence have a significant effect on the relative costs to
SELPAs for providing special education services.
3)Provide suggested methods for adjusting the state's funding
formula that do not create inappropriate fiscal incentives for
identifying students as needing special education or for
placing students in particular programs.
CDE has worked with Legislative staff, DOF and LAO during the
course of this study, and is preparing to deliver the study in
the coming weeks.
Historically, the Legislature has passed eight bills to extend
the 1998 calculation of the special disabilities adjustment for
an additional one or two fiscal years; the latest action
extended this calculation through the current 2010-11 fiscal
year. However, the Governor's budget proposed to reduce the
special education budget by $74 million in Proposition 98
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funding to reflect the July 1, 2011 sunset of the statutory
provisions that authorize the SDA; subsequent conference
committee action adopted the Governor's proposal. At this point
there is no appropriation providing funding for the SDA, and
statute authorizing the SDA is set to become inoperable prior to
the date upon which the provisions of this bill would be
enacted. Thus, this bill would serve, upon enactment, to
re-establish the SDA, and to transition calculation of the
incidence multipliers away from the 1998 data over a five year
period.
According to the author, this bill "provides a definitive
statement of legislative intent to update the severity service
concentration factor for each special education local plan area
using data from recent years. This would change the
supplemental funding rates for special education local plan
areas. Second, in order to protect students in areas that
experience significant funding reductions as a result of the
update, this bill outlines a steady five-year transition between
service concentration factors. This ensures that changes in
severity status do not create devastating funding instabilities
for students in impacted areas, such as San Diego, Orange,
Merced and Los Angeles counties."
According to the author, the SDA "will simply expire at the end
of the current fiscal year. This poses two problems. First,
there is no plan in place to transition to a new funding
adjustment to address the evidenced differences in funding needs
across special education local plan areas. Second, it creates
an overwhelming funding cliff for SDA-recipient special
education local plan areas, which may lose SDA funding at the
same time as they lose one-time federal stimulus IDEA funding.
This double blow would have serious, negative effects on
students in these impacted areas."
Committee amendments : Committee staff recommends the following
amendments to this bill:
1)Move intent language into the uncodified portion of the bill,
and incorporate additional intent language as a courtesy to
the author.
2)Replace the term "severity service concentration factor" with
"incidence multiplier" in order to conform to existing law.
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3)Consistent with the author's intent, make technical
corrections to ensure that all funding appropriated for the
SDA is authorized to be allocated to SELPAs in each fiscal
year.
This bill also faces a number of problems that would not easily
be eliminated by amending the bill:
1)No funding is currently appropriated for the SDA for the
2011-12fiscal year. Though the governor's proposal to not
fund the SDA stands and was adopted by the Budget conference
Committee in March, it is a possibility that SDA funds for the
2011-12 fiscal year could be appropriated as part of the May
Revision.
2)The allocation of SDA funding transitions over the five-year
period to reliance on incidence multipliers estimated using
post-2008 data; however, the data problems that haunted the
2003-04 study persist, and it is unclear that any usable
post-2008 incidence multipliers will be forthcoming.
3)The assumption that high cost/low incidence special education
pupils are distributed across districts in a non-uniform
manner is being increasingly questioned; in other words the
rationale for the SDA may no longer exist.
4)This bill implements one half of a two-part recommendation
made by AIR in its 2003-04 report. AIR recommended that the
incidence multiplier be updated at least every five years, if
not annually; it also recommended that the state gradually
phase-out SELPAs (i.e., provide for a soft landing) that have
been receiving adjustment funds for the five years prior to
the release of the report, and provide full and immediate
funding to SELPAs identified as responsible for a
disproportionate number of high cost students. This bill
provides for the soft landing transition for SELPAs that would
lose funds, but does so in a zero-sum manner by delaying full
and immediate funding for SELPAs that would gain.
5)There is a timing problem with this bill, in that the bill
will be enacted January 1, 2012, but the existing statutory
authorization of the SDA becomes inoperable July 1, 2011;
there will thus be no authority for the SDA in the first half
of the 2011-12 fiscal year. If this bill is enacted, the any
budget action taken by the Legislature to appropriate 2011-12
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funds for the SDA should only provide funding for the second
half of the fiscal year.
Previous legislation : AB 184 (Block), Chapter 403, Statutes of
2010, extended the SDA through the 2009-10 and 2010-11 fiscal
years, and established a sunset on the SDA effective July 1,
2011. AB 519 (Committee on Budget), Chapter 757, Statutes of
2008, extended the SDA through the 2008-09 fiscal year. SB 80
(Committee on Budget and Fiscal Review), Chapter 174, Statutes
of 2007, extended the SDA through the 2007-08 fiscal year. AB
1802 (Committee on Budget, Ch. 79, 2006) extended the SDA
through the 2006-07 fiscal year. SB 63 (Committee on Budget and
Fiscal Review, Ch. 73, 2005) extended the SDA through the
2005-06 fiscal year. AB 2525 (Committee on Education, Ch. 896,
2004) extended the SDA through the 2004-05 fiscal year. AB 97
(Nation), Chapter 21, Statutes of 2004, extended the SDA through
the 2003-04 fiscal year. SB 1564 (Schiff, Ch. 330, 1998)
extended the SDA through the 2002-03 fiscal year. AB 598
(Davis), Chapter 89, Statutes of 1998, makes numerous technical
and conforming amendments to existing provisions of law to
implement the revision and equalization of special education
funding formulas that was enacted by AB 602. AB 602 (Davis),
Chapter 854, Statutes of 1997, implements a new special
education funding system and provides a one-time equity
adjustment for the 1997-98 fiscal year.
REGISTERED SUPPORT / OPPOSITION :
Support
Los Angeles Unified School District (Sponsor)
San Diego Unified School District (Sponsor)
Small School Districts' Association
Opposition
None on file
Analysis Prepared by : Gerald Shelton / ED. / (916) 319-2087