BILL NUMBER: AB 2662	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 18, 2012

INTRODUCED BY   Committee on Education (Brownley (Chair), Ammiano,
Buchanan, Butler, Carter, Eng, Beth Gaines, Halderman, Wagner, and
Williams)

                        FEBRUARY 29, 2012

   An act to amend  Section 48070.5   Sections
35   566, 35787, 41326, 41344, 42127, 42131, 42238.12,
48070.5, 48070.6, 48904, 49550.3, and 60605.86  of the Education
Code,   and to amend Section 75.70 of the Revenue and Taxation
Code,   relating to  pupils   education
 .



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2662, as amended, Committee on Education.  Pupil
promotion and retention.   Education.  
   (1) Existing law provides a process for the reorganization of
school districts and includes within the actions to reorganize a
lapse, which is defined as an action to dissolve a school district
and annex the entire territory of that district to one or more
adjoining school districts. Existing law makes an action to lapse a
school district subject to specified general statutory provisions
regarding the reorganization of school districts.  
   This bill would make an action to lapse a school district also
subject to other provisions regarding plans and recommendations of a
county committee on school district organization.  
   (2) Existing law provides emergency apportionments for school
districts that have become insolvent, and requires various actions to
be taken by the school district and the Superintendent of Public
Instruction to receive these apportionments, including the
appointment of a trustee, the appointment of an administrator, and
the approval of recovery plans. Existing law authorizes the
Superintendent to reassume all the legal rights, duties, and powers
of the governing board of the school district if the district
violates a provision of the recovery plans within 5 years after the
trustee is removed.  
   This bill would authorize the Superintendent to reassume those
rights, duties, and powers during the period of the trustee's
appointment and when specified improvement plans are violated. 

   (3) Existing law requires the Superintendent and the Director of
Finance, jointly, to establish a plan for repayment of school funds
that a local educational agency received on the basis of average
daily attendance that did not comply with statutory or regulatory
requirements that were conditions of apportionments, as determined by
an audit or review. Existing law also requires the Superintendent
and the Director of Finance, jointly, to establish a plan for
repayment of a penalty arising from an audit exception. Existing law
authorizes a local educational agency to appeal a finding of a final
audit report.  
   This bill would specify, for purposes of the above-described
provisions, that a charter school is a local educational agency.
 
   (4) Existing law requires the governing board of a school district
to certify twice during a fiscal year whether the school district is
able to meet its financial obligations for the remainder of the
fiscal year and for the subsequent fiscal year. Existing law requires
these certifications to be classified as positive, qualified, or
negative and to be filed with the county superintendent of schools.
Existing law requires a county superintendent of schools to change a
positive certification to negative or qualified when the county
office of education determines a negative or qualified certification
should have been filed.  
   This bill would authorize the county superintendent of schools
also to change a qualified certification if it is determined that a
negative certification should have been filed.  
   (5) Existing law makes the parent or guardian of any minor whose
willful misconduct results in injury or death to a pupil or public or
private school employee or volunteer or who willfully cuts, defaces,
or otherwise injures real or personal property belonging to a school
district or private school, or personal property of a school
employee, liable for all damages so caused by the minor or for a
reward concerning information leading to the determination of the
identity of, and the apprehension of, a person causing that injury or
damage. Existing law limits the parent's or guardian's liability to
$10,000.  
   This bill would adjust the $10,000 limit on liability annually for
inflation, as specified.  
   Existing 
    (6)     Existing    law
requires the governing board of each school district and each county
board of education to approve a policy regarding the promotion and
retention of pupils between specified grades, and requires that
policy to provide for the identification of pupils who should be
retained or who are at risk of being retained in their current grade
level on the basis of specified factors. Existing law requires that
the policy provide for parental notification when a pupil is
identified as being at risk of retention, and that the policy provide
the pupil's parent or guardian the opportunity to consult with the
teacher or teachers responsible for the decision to promote or retain
the pupil. Existing law also requires, under specified
circumstances, that the pupil's parent or guardian be provided the
opportunity to discuss a teacher's recommendation with the teacher
and the principal before any final determination of pupil retention
or promotion is made.
   This bill would additionally require that the policy provide to a
person holding the right to make educational decisions for the pupil,
as specified, an opportunity to consult with the teacher or teachers
responsible for the decision to promote or retain the pupil, and
would require that this person have an opportunity, under certain
circumstances, to discuss a teacher's recommendation with the teacher
and the principal before any final determination of pupil retention
or promotion is made. By imposing additional duties on the governing
board of a school district or a county board of education, this bill
would impose a state-mandated local program. 
   (7) Existing law authorizes the governing board of a school
district to approve supplemental instructional materials other than
those approved by the state board if the governing board performs
specified reviews and determines that other supplemental
instructional materials are aligned with the California common core
academic content standards and meet the needs of the pupils of the
district.  
   This bill would extend this authorization to county offices of
education.  
   (8) Existing tax law excludes school districts that receive in the
prior fiscal year a minimum of $120 of state aid per pupil or $2,400
per school district from receiving specified supplemental tax
revenues. Existing law defines these school districts as basic aid
school districts or excess tax school entities.  
   This bill would refer to the school districts that are not
eligible to receive the specified supplemental tax revenues as excess
tax school entities.  
   (9) This bill would make technical amendments and nonsubstantive
changes.  
    The 
    (10)     The  California Constitution
requires the state to reimburse local agencies and school districts
for certain costs mandated by the state. Statutory provisions
establish procedures for making that reimbursement.
   This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 35566 of the  
Education Code   is amended to read: 
   35566.  Notwithstanding any provisions of this article, exchanges
of property tax revenues between school districts as a result of
reorganization shall be determined pursuant to subdivision (i) of
Section 99 of the Revenue and Taxation Code if one or more affected
school districts  receiving   receive only
basic aid apportionments required by Section 6 of Article IX of the
California Constitution.
   SEC. 2   .    Section   35787 of
the   Education Code   is amended to read: 
   35787.  Except as otherwise provided in this article, an action to
lapse a school district is subject to the provisions of Chapter 3
(commencing with Section 35500)  , and the county committee may
add to its order to lapse a district, pursuant to Section 35783,
appropriate provisions specified in Article 3 (commencing with
Section 35730) .
   SEC. 3.    Section 41326 of the   Education
Code   is amended to read: 
   41326.  (a) Notwithstanding any other provision of this code, the
acceptance by a school district of an apportionment made pursuant to
Section 41320 that exceeds an amount equal to 200 percent of the
amount of the reserve recommended for that district under the
standards and criteria adopted pursuant to Section 33127 constitutes
the agreement by the district to the conditions set forth in this
article.  Prior to   Before  applying for
an emergency apportionment in the amount identified in this
subdivision,  the governing board of  a school district
 governing board  shall discuss the need for that
apportionment at a regular or special meeting of the governing board
and, at that meeting, shall receive testimony regarding the
apportionment from parents, exclusive representatives of employees of
the district, and other members of the community. For purposes of
this article, "qualifying school district" means a school district
that accepts a loan as described in this subdivision.
   (b) The Superintendent shall assume all the legal rights, duties,
and powers of the governing board of a qualifying school district.
The Superintendent, in consultation with the county superintendent of
schools, shall appoint an administrator to act on his or her behalf
in exercising the authority described in this subdivision in
accordance with all of the following:
   (1) The administrator shall serve under the direction and
supervision of the Superintendent until terminated by the
Superintendent at his or her discretion. The Superintendent shall
consult with the county superintendent of schools before terminating
the administrator.
   (2) The administrator shall have recognized expertise in
management and finance.
   (3) To facilitate the appointment of the administrator and the
employment of any necessary staff, for  the 
purposes of this section, the Superintendent  of Public
Instruction  is exempt from the requirements of Article 6
(commencing with Section 999) of Chapter 6 of Division 4 of the
Military and Veterans Code and Part 2 (commencing with Section 10100)
of Division 2 of the Public Contract Code.
   (4) Notwithstanding any other law, the Superintendent may appoint
an employee of the state or the office of the county superintendent
of schools to act as administrator for up to the duration of the
administratorship. During the tenure of his or her appointment, the
administrator, if he or she is an employee of the state or the office
of the county superintendent of schools, is an employee of the
school district, but shall remain in the same retirement system under
the same plan that has been provided by his or her employment with
the state or the office of the county superintendent of schools. Upon
the expiration or termination of the appointment, the employee shall
have the right to return to his or her former position, or to a
position at substantially the same level as that position, with the
state or the office of the county superintendent of schools. The time
served in the appointment shall be counted for all purposes as if
the administrator had served that time in his or her former position
with the state or the office of the county superintendent of schools.

   (5) Except for an individual appointed as an administrator by the
Superintendent  of Public Instruction  pursuant to
paragraph (4), the administrator shall be a member of the State
Teachers' Retirement System, if qualified, for the period of service
as administrator, unless he or she elects in writing not to become a
member. A person who is a member or retirant of the State Teachers'
Retirement System at the time of appointment shall continue to be a
member or retirant of the system for the duration of the appointment.
If the administrator chooses to become a member or is already a
member, the administrator shall be placed on the payroll of the
school district for  the  purposes of providing
appropriate contributions to the system. The Superintendent may also
require the administrator to be placed on the payroll of the school
district for purposes of remuneration, other benefits, and payroll
deductions.
   (6) For  the  purposes of workers' compensation
benefits, the administrator is an employee of the qualifying
district, except that an administrator appointed pursuant to
paragraph (4) may be deemed an employee of the state or office of the
county superintendent of schools, as applicable.
   (7) The qualifying district shall add the administrator as a
covered employee of the school district for all purposes of errors
and omissions liability insurance policies.
   (8) The salary and benefits of the administrator shall be
established by the Superintendent  of Public Instruction
 and paid by the qualifying school district.
   (9) The Superintendent or the administrator may  employ 
, on a short-term basis,  employ  at district
expense any staff necessary to assist the administrator, including,
but not limited to, a certified public accountant.
   (10) The administrator may do all of the following:
   (A) Implement substantial changes in the fiscal policies and
practices of the district, including, if necessary, the filing of a
petition under Chapter 9 (commencing with Section 901) of Title 11 of
the United States Code for the adjustment of indebtedness.
   (B) Revise the educational program of the district to reflect
realistic income projections and pupil performance relative to state
standards.
   (C) Encourage all members of the school community to accept a fair
share of the burden of the fiscal recovery of the district.
   (D) Consult, for the purposes described in this subdivision, with
the governing board of the school district, the exclusive
representatives of the employees of the district, parents, and the
community.
   (E) Consult with, and seek recommendations from, the
Superintendent, county superintendent of schools, and the County
Office Fiscal Crisis and Management Assistance Team authorized
pursuant to subdivision (c) of Section 42127.8 for the purposes
described in this article.
   (F) With the approval of the Superintendent, enter into agreements
on behalf of the district and, subject to any contractual obligation
of the district, change any existing district rules, regulations,
policies, or practices as necessary for the effective implementation
of the recovery plans referred to in Sections 41327 and 41327.1.
   (c) (1) For the period of time during which the Superintendent
 of Public Instruction  exercises the authority
described in subdivision (b), the governing board of the qualifying
school district shall serve as an advisory body reporting to the
state-appointed administrator, and has no rights, duties, or powers,
and is not entitled to any stipend, benefits, or other compensation
from the district.
   (2) Upon the appointment of an administrator pursuant to this
section, the district superintendent of schools is no longer an
employee of the district.
   (3) A determination of the severance compensation for the district
superintendent shall be made pursuant to subdivision (j).
   (d) Notwithstanding Section 35031 or any other law, the
administrator  may  , after according the 
affected  employee reasonable notice and the opportunity for a
hearing,  may  terminate the employment of any deputy,
associate, assistant superintendent of schools, or any other district
level administrator who is employed by a school district under a
contract of employment signed or renewed after January 1, 1992, if
the employee fails to document, to the satisfaction of the
administrator, that  prior to   before  the
date of the acceptance of the apportionment he or she either advised
the governing board of the district, or his or her superior, that
actions contemplated or taken by the governing board could result in
the fiscal insolvency of the district, or took other appropriate
action to avert that fiscal insolvency.
   (e) The authority of the Superintendent, and the administrator,
under this section shall continue until all of the following occur:
   (1) (A) After one complete fiscal year has elapsed following the
district's acceptance of a loan as described in subdivision (a), the
administrator determines, and so notifies the Superintendent and the
county superintendent of schools, that future compliance by the
school district with the recovery plans approved pursuant to
paragraph (2) is probable.
   (B) The Superintendent may return power to the governing board for
any area listed in subdivision (a) of Section 41327.1 if performance
under the recovery plan for that area has been demonstrated to the
satisfaction of the Superintendent.
   (2) The Superintendent has approved all of the recovery plans
referred to in subdivision (a) of Section 41327 and the County Office
Fiscal Crisis and Management Assistance Team completes the
improvement plans specified in Section 41327.1 and has completed a
minimum of two reports identifying the district's progress in
implementing the improvement plans.
   (3) The administrator certifies that all necessary collective
bargaining agreements have been negotiated and ratified, and that the
agreements are consistent with the terms of the recovery plans.
   (4) The district has completed all reports required by the
Superintendent and the administrator.
   (5) The Superintendent determines that future compliance by the
school district with the recovery plans approved pursuant to
paragraph (2) is probable.
   (f) When the conditions stated in subdivision (e) have been met,
and at least 60 days after the Superintendent  of Public
Instruction  has notified the Legislature, the Department of
Finance, the Controller, and the county superintendent of schools
that he or she expects the conditions prescribed pursuant to this
section to be met, the  school district  governing
board  of the school district  shall regain all of its legal
rights, duties, and powers, except for the powers held by the
trustee provided for pursuant to Article 2 (commencing with Section
41320). The Superintendent shall appoint a trustee under Section
41320.1 to monitor and review the operations of the district until
the conditions of subdivision (b) of that section have been met.
   (g) Notwithstanding subdivision (f), if the district violates any
provision of the recovery plans approved by the Superintendent
pursuant to this article within five years after the trustee
appointed pursuant to Section 41320.1 is removed  or the
improvement   plans specified in Section 41327.1 during the
period of the trustee's appointment  , the Superintendent may
reassume, either directly or through an administrator appointed in
accordance with this section, all of the legal rights, duties, and
powers of the governing board of the district. The Superintendent
shall return to the  school district  governing
board  of the school district  all of its legal rights,
duties, and powers reassumed under this subdivision when he or she
determines that future compliance with the approved recovery plans is
probable, or after a period of one year, whichever occurs later.
   (h) Article 2 (commencing with Section 41320) shall apply except
as otherwise specified in this article.
   (i) It is the intent of the Legislature that the legislative
budget subcommittees annually conduct a review of each qualifying
school district that includes an evaluation of the financial
condition of the district, the impact of the recovery plans upon the
district's educational program, and the efforts made by the
state-appointed administrator to obtain input from the community and
the governing board of the district.
   (j) (1) The district superintendent is entitled to a due process
hearing for purposes of determining final compensation. The final
compensation of the district superintendent shall be between zero and
six times his or her monthly salary. The outcome of the due process
hearing shall be reported to the Superintendent  of Public
Instruction  and the public. The information provided to the
public shall explain the rationale for the compensation.
   (2) This subdivision applies only to a contract for employment
negotiated on or after June 21, 2004.
   (k) (1) When the Superintendent assumes control over a school
district pursuant to subdivision (b), he or she shall, in
consultation with the County Office Fiscal Crisis and Management
Assistance Team, review the fiscal oversight of the district by the
county superintendent of schools. The Superintendent may consult with
other fiscal experts, including other county superintendents of
schools and regional fiscal teams, in conducting this review.
   (2) Within three months of assuming control over a qualifying
district, the Superintendent shall report his or her findings to the
Legislature and shall provide a copy of that report to the Department
of Finance. This report shall include findings as to fiscal
oversight actions that were or were not taken and may include
recommendations as to an appropriate legislative response to improve
fiscal oversight.
   (3) If after performing the duties described in paragraphs (1) and
(2), the Superintendent determines that the county superintendent of
schools failed to carry out his or her responsibilities for fiscal
oversight as required by this code, the Superintendent may exercise
the authority of the county superintendent of schools who has
oversight responsibilities for a qualifying school district. If the
Superintendent finds, based on the report required in paragraph (2),
that the county superintendent of schools failed to appropriately
take into account particular types of indicators of financial
distress, or failed to take appropriate remedial actions in the
qualifying district, the Superintendent shall further investigate
whether the county superintendent of schools failed to take into
account those indicators, or similarly failed to take appropriate
actions in other districts with negative or qualified certifications,
and shall provide an additional report on the fiscal oversight
practices of the county superintendent to the appropriate policy and
fiscal committees of each house of the Legislature and the Department
of Finance.
   SEC. 4.    Section 41344 of the   Education
Code   is amended to read: 
   41344.  (a) If, as the result of an audit or review, a local
educational agency is required to repay an apportionment significant
audit exception or to pay a penalty arising from an audit exception,
the Superintendent and the Director of Finance, or their designees,
 shall  jointly  shall  establish a plan
for repayment of state school funds that the local educational agency
received on the basis of average daily attendance, or other data,
that did not comply with statutory or regulatory requirements that
were conditions of the apportionments, or for payment of a penalty
arising from an audit exception. A local educational agency shall
request a plan within 90 days of receiving the final audit report or
review, within 30 days of withdrawing or receiving a final
determination regarding an appeal pursuant to subdivision (d), or, in
the absence of an appeal pursuant to subdivision (d), within 30 days
of withdrawing or receiving a determination of a summary review
pursuant to subdivision (d) of Section 41344.1. At the time the local
educational agency is notified, the Controller  also  shall
 also  be notified of the plan. The plan shall be
established in accordance with the following:
   (1) The Controller shall withhold the disallowed or penalty amount
at the next principal apportionment or pursuant to paragraph (2),
unless subdivision (d) of this section or subdivision (d) of Section
41344.1 applies, in which case the disallowed or penalty amount shall
be withheld, at the next principal apportionment or pursuant to
paragraph (2) following the determination regarding the appeal or
summary appeal. In calculating a disallowed amount, the Controller
shall determine the total amount of overpayment received by the local
educational agency on the basis of average daily attendance, or
other data, reported by the local educational agency that did not
comply with one or more statutory or regulatory requirements that are
conditions of apportionment.
   (2) If the Superintendent and the Director of  the
Department of  Finance concur that repayment of the full
liability or payment of the penalty in the current fiscal year would
constitute a severe financial hardship for the local  educational
 agency, they may approve a plan of equal annual payments over
a period of up to eight years. The plan shall include interest on
each year's outstanding balance at the rate earned on the state's
Pooled Money Investment Account during that year. The Superintendent
and the Director of  the Department of  Finance
 shall  jointly  shall  establish this
plan. The Controller shall withhold amounts pursuant to the plan.
   (3) If the Superintendent and the Director of  the
Department of  Finance do not jointly establish a plan, the
Controller shall withhold the entire disallowed amount determined
pursuant to paragraph (1), or the penalty amount, at the next
principal apportionment.
   (b) (1) For purposes of computing average daily attendance
pursuant to Section 42238.5, a local educational agency's prior
fiscal year average daily attendance shall be reduced by an amount
equal to any average daily attendance disallowed in the current year,
by an audit or review, as defined in subdivision (e).
   (2) Commencing with the  1999-2000  
1999-2000  fiscal year, this subdivision may not result in a
local educational agency repaying more than the value of the average
daily attendance disallowed in the audit exception plus interest and
other penalties or reductions in apportionments as provided by
existing law.
   (c) Notwithstanding any other  provision of  law,
this section may not be waived under any authority set forth in this
code except as provided in this section or Section 41344.1.
   (d) Within 60 days of the date on which a local educational agency
receives a final audit report resulting from an audit or review of
all or any part of the operations of the local educational agency, or
within 30 days of receiving a determination of a summary review
pursuant to subdivision (d) of Section 41344.1, a local educational
agency may appeal a finding contained in the final report, pursuant
to Section 41344.1. Within 90 days of the date on which the appeal is
received by the panel, a hearing shall be held at which the local
educational agency may present evidence or arguments if the local
educational agency believes that the final report contains any
finding that was based on errors of fact or interpretation of law, or
if the local educational agency believes in good faith that it was
in substantial compliance with all legal requirements. A repayment
schedule may not commence until the panel reaches a determination
regarding the appeal. If the panel determines that the local
educational agency is correct in its assertion, in whole or in part,
the allowable portion of any apportionment payment that was withheld
shall be paid at the next principal apportionment.
   (e)  (1)    As used in this section, "audit or
review" means an audit conducted by the Controller's office, an
annual audit conducted by a certified public accountant or a public
accounting firm pursuant to Section 41020, and an audit or review
conducted by a governmental agency that provided the local
educational agency with an opportunity to provide a written response.

   (2) As used in this section, "local educational agency" includes a
charter school. 
   SEC. 5.    Section 42127 of the   Education
Code   is amended to read: 
   42127.  (a) On or before July 1 of each year, the governing board
of each school district shall accomplish the following:
   (1) Hold a public hearing on the budget to be adopted for the
subsequent fiscal year. The budget to be adopted shall be prepared in
accordance with Section 42126. The agenda for that hearing shall be
posted at least 72 hours  prior to   before
 the public hearing and shall include the location where the
budget will be available for public inspection.
   (A) For the 2011-12 fiscal year, notwithstanding any of the
standards and criteria adopted by the state board pursuant to Section
33127, each school district budget shall project the same level of
revenue per unit of average daily attendance as it received in the
2010-11 fiscal year and shall maintain staffing and program levels
commensurate with that level.
   (B) For the 2011-12 fiscal year, the school district shall not be
required to demonstrate that it is able to meet its financial
obligations for the two subsequent fiscal years.
   (2) Adopt a budget. Not later than five days after that adoption
or by July 1, whichever occurs first, the governing board shall file
that budget with the county superintendent of schools. That budget
and supporting data shall be maintained and made available for public
review. If the governing board of the district does not want all or
a portion of the property tax requirement levied for the purpose of
making payments for the interest and redemption charges on
indebtedness as described in paragraph (1) or (2) of subdivision (b)
of Section 1 of Article XIII A of the California Constitution, the
budget shall include a statement of the amount or portion for which a
levy shall not be made.
   (b) The county superintendent of schools may accept changes in any
statement included in the budget, pursuant to subdivision (a), of
the amount or portion for which a property tax levy shall not be
made. The county superintendent or the county auditor shall compute
the actual amounts to be levied on the property tax rolls of the
district for purposes that exceed apportionments to the district
pursuant to Chapter 6 (commencing with Section 95) of Part 0.5 of
Division 1 of the Revenue and Taxation Code. Each school district
shall provide all data needed by the county superintendent or the
county auditor to compute the amounts. On or before August 15, the
county superintendent shall transmit the amounts computed to the
county auditor who shall compute the tax rates necessary to produce
the amounts. On or before September 1, the county auditor shall
submit the rate computed to the board of supervisors for adoption.
   (c) The county superintendent of schools shall do all of the
following:
   (1) Examine the adopted budget to determine whether it complies
with the standards and criteria adopted by the state board pursuant
to Section 33127 for application to final local educational agency
budgets. The county superintendent shall identify, if necessary, any
technical corrections that are required to be made to bring the
budget into compliance with those standards and criteria.
   (2) Determine whether the adopted budget will allow the district
to meet its financial obligations during the fiscal year and is
consistent with a financial plan that will enable the district to
satisfy its multiyear financial commitments. In addition to his or
her own analysis of the budget of each school district, the county
superintendent of schools shall review and consider studies, reports,
evaluations, or audits of the school district that were commissioned
by the district, the county superintendent, the Superintendent, and
state control agencies and that contain evidence that the school
district is showing fiscal distress under the standards and criteria
adopted in Section 33127 or that contain a finding by an external
reviewer that more than three of the 15 most common predictors of a
school district needing intervention, as determined by the County
Office Fiscal Crisis and Management Assistance Team, are present. The
county superintendent of schools shall either conditionally approve
or disapprove a budget that does not provide adequate assurance that
the district will meet its current and future obligations and resolve
any problems identified in studies, reports, evaluations, or audits
described in this paragraph.
   (d) On or before August 15, the county superintendent of schools
shall approve, conditionally approve, or disapprove the adopted
budget for each school district. If a school district does not submit
a budget to the county superintendent of schools, the county
superintendent of schools shall  develop  , at district
expense,  develop  a budget for that school district
by September 15 and transmit that budget to the governing board of
the school district. The budget prepared by the county superintendent
of schools shall be deemed adopted, unless the county superintendent
of schools approves any modifications made by the governing board of
the school district. The approved budget shall be used as a guide
for the district's priorities. The Superintendent shall review and
certify the budget approved by the county. If, pursuant to the review
conducted pursuant to subdivision (c), the county superintendent of
schools determines that the adopted budget for a school district does
not satisfy paragraph (1) or (2) of that subdivision, he or she
shall conditionally approve or disapprove the budget and, not later
than August 15, transmit to the governing board of the school
district, in writing, his or her recommendations regarding revision
of the budget and the reasons for those recommendations, including,
but not limited to, the amounts of any budget adjustments needed
before he or she can  conditionally  approve that
budget. The county superintendent of schools may assign a fiscal
adviser to assist the district to develop a budget in compliance with
those revisions. In addition, the county superintendent of schools
may appoint a committee to examine and
              comment on the superintendent's review and
recommendations, subject to the requirement that the committee report
its findings to the  county  superintendent no later than
August 20. For the 2011-12 fiscal year, notwithstanding any of the
standards and criteria adopted by the state board pursuant to Section
33127, the county superintendent, as a condition on approval of a
school district budget, shall not require a school district to
project a lower level of revenue per unit of average daily attendance
than it received in the 2010-11 fiscal year nor require the school
district to demonstrate that it is able to meet its financial
obligations for the two subsequent fiscal years.
   (e) On or before September 8, the governing board of the school
district shall revise the adopted budget to reflect changes in
projected income or expenditures subsequent to July 1, and to include
any response to the recommendations of the county superintendent of
schools, shall adopt the revised budget, and shall file the revised
budget with the county superintendent of schools.  Prior to
  Before  revising the budget, the governing board
shall hold a public hearing regarding the proposed revisions, to be
conducted in accordance with Section 42103. In addition, if the
adopted budget is disapproved pursuant to subdivision (d), the
governing board and the county superintendent of schools shall review
the disapproval and the recommendations of the county superintendent
of schools regarding revision of the budget at the public hearing.
The revised budget and supporting data shall be maintained and made
available for public review.
   (1) For the 2011-12 fiscal year, notwithstanding any of the
standards and criteria adopted by the state board pursuant to Section
33127, each school district budget shall project the same level of
revenue per unit of average daily attendance as it received in the
2010-11 fiscal year and shall maintain staffing and program levels
commensurate with that level.
   (2) For the 2011-12 fiscal year, the school district shall not be
required to demonstrate that it is able to meet its financial
obligations for the two subsequent fiscal years.
   (f) On or before September 22, the county superintendent of
schools shall provide a list to the Superintendent identifying all
school districts for which budgets may be disapproved.
   (g) The county superintendent of schools shall examine the revised
budget to determine whether it (1) complies with the standards and
criteria adopted by the state board pursuant to Section 33127 for
application to final local educational agency budgets, (2) allows the
district to meet its financial obligations during the fiscal year,
(3) satisfies all conditions established by the county superintendent
of schools in the case of a conditionally approved budget, and (4)
is consistent with a financial plan that will enable the district to
satisfy its multiyear financial commitments, and, not later than
October 8, shall approve or disapprove the revised budget. If the
county superintendent of schools disapproves the budget, he or she
shall call for the formation of a budget review committee pursuant to
Section 42127.1, unless the governing board of the school district
and the county superintendent of schools agree to waive the
requirement that a budget review committee be formed and the
department approves the waiver after determining that a budget review
committee is not necessary. Upon the grant of a waiver, the county
superintendent immediately has the authority and responsibility
provided in Section 42127.3. Upon approving a waiver of the budget
review committee, the department shall ensure that a balanced budget
is adopted for the school district by November 30. If no budget is
adopted by November 30, the Superintendent may adopt a budget for the
school district. The Superintendent shall report to the Legislature
and the Director of Finance by December 10 if any district, including
a district that has received a waiver of the budget review committee
process, does not have an adopted budget by November 30. This report
shall include the reasons why a budget has not been adopted by the
deadline, the steps being taken to finalize budget adoption, the date
the adopted budget is anticipated, and whether the Superintendent
has or will exercise his or her authority to adopt a budget for the
school district. For the 2011-12 fiscal year, notwithstanding any of
the standards and criteria adopted by the state board pursuant to
Section 33127, the county superintendent, as a condition on approval
of a school district budget, shall not require a school district to
project a lower level of revenue per unit of average daily attendance
than it received in the 2010-11 fiscal year nor require the school
district to demonstrate that it is able to meet its financial
obligations for the two subsequent fiscal years.
   (h) Not later than October 8, the county superintendent of schools
shall submit a report to the Superintendent identifying all school
districts for which budgets have been disapproved or budget review
committees waived. The report shall include a copy of the written
response transmitted to each of those districts pursuant to
subdivision (d).
   (i) Notwithstanding any other provision of this section, the
budget review for a school district shall be governed by paragraphs
(1), (2), and (3)  of this subdivision  , rather
than by subdivisions (e) and (g), if the governing board of the
school district so elects and notifies the county superintendent in
writing of that decision, not later than October 31 of the
immediately preceding calendar year. On or before July 1, the
governing board of a school district for which the budget review is
governed by this subdivision, rather than by subdivisions (e) and
(g), shall conduct a public hearing regarding its proposed budget in
accordance with Section 42103.
   (1) If the adopted budget of a school district is disapproved
pursuant to subdivision (d), on or before September 8, the governing
board of the school district, in conjunction with the county
superintendent of schools, shall review the superintendent's
recommendations at a regular meeting of the governing board and
respond to those recommendations. The response shall include any
revisions to the adopted budget and other proposed actions to be
taken, if any, as a result of those recommendations.
   (2) On or before September 22, the county superintendent of
schools  will   shall  provide a list to
the Superintendent identifying all school districts for which a
budget may be tentatively disapproved.
   (3) Not later than October 8, after receiving the response
required under paragraph (1), the county superintendent of schools
shall review that response and either approve or disapprove the
budget. If the county superintendent of schools disapproves the
budget, he or she shall call for the formation of a budget review
committee pursuant to Section 42127.1, unless the governing board of
the school district and the county superintendent of schools agree to
waive the requirement that a budget review committee be formed and
the department approves the waiver after determining that a budget
review committee is not necessary. Upon the grant of a waiver, the
county superintendent has the authority and responsibility provided
to a budget review committee in Section 42127.3. Upon approving a
waiver of the budget review committee, the department shall ensure
that a balanced budget is adopted for the school district by November
30. The Superintendent shall report to the Legislature and the
Director of Finance by December 10 if any district, including a
district that has received a waiver of the budget review committee
process, does not have an adopted budget by November 30. This report
shall include the reasons why a budget has not been adopted by the
deadline, the steps being taken to finalize budget adoption, and the
date the adopted budget is anticipated. For the 2011-12 fiscal year,
notwithstanding any of the standards and criteria adopted by the
state board pursuant to Section 33127, the county superintendent, as
a condition on approval of a school district budget, shall not
require a school district to project a lower level of revenue per
unit of average daily attendance than it received in the 2010-11
fiscal year nor require the school district to demonstrate that it is
able to meet its financial obligations for the two subsequent fiscal
years.
   (4) Not later than 45 days after the Governor signs the annual
Budget Act, the school district shall make available for public
review any revisions in revenues and expenditures that it has made to
its budget to reflect the funding made available by that Budget Act.

   (j) Any school district for which the county board of education
serves as the governing board is not subject to subdivisions (c) to
(h), inclusive, but is governed instead by the budget procedures set
forth in Section 1622.
   SEC. 6.    Section 42131 of the   Education
Code   is amended to read: 
   42131.  (a) (1) Pursuant to the reports required by Section 42130,
the governing board of each school district shall certify, in
writing, within 45 days after the close of the period being reported,
whether the school district is able to meet its financial
obligations for the remainder of the fiscal year and, based on
current forecasts, for the subsequent fiscal year. These
certifications shall be based upon the  governing  board's
assessment, on the basis of standards and criteria for fiscal
stability adopted by the  State Board of Education 
 state board  pursuant to Section 33127, of the district
budget, as revised to reflect current information regarding the
adopted State Budget, district property tax revenues pursuant to
Sections 95 to 100, inclusive, of the Revenue and Taxation Code, and
ending balances for the preceding fiscal year as reported pursuant to
Section 42100. The certifications shall be classified as positive,
qualified, or negative, as prescribed by the Superintendent 
of Public Instruction  for  the  purposes
of determining subsequent actions by the Superintendent  of
Public Instruction  , the Controller, or the county
superintendent of schools, pursuant to subdivisions (b) and (c).
These certifications shall be based upon the financial and budgetary
reports required by Section 42130 but may include additional
financial information known by the governing board to exist at the
time of each certification. For purposes of this subdivision, a
negative certification shall be assigned to any school district that,
based upon current projections, will be unable to meet its financial
obligations for the remainder of the fiscal year or the subsequent
fiscal year. A qualified certification shall be assigned to any
school district that, based upon current projections, may not meet
its financial obligations for the current fiscal year or two
subsequent fiscal years. A positive certification shall be assigned
to any school district that, based upon current projections, will
meet its financial obligations for the current fiscal year and
subsequent two fiscal years.
   (2)  (A)    A copy of each certification and a
copy of the report submitted to the governing board pursuant to
Section 42130 shall be filed with the county superintendent of
schools. If a county office of education receives a positive
certification when it determines a negative or qualified
certification should have been filed,  or receives a qualified
certification when it determines a negative certification should have
been filed,  the county superintendent of schools shall change
the certification to negative or qualified, as appropriate, and, no
later than 75 days after the close of the period being reported,
shall provide notice of that action to the governing board of the
school district and to the Superintendent  of Public
Instruction  . No later than five days after a school
district receives notice from the county superintendent of schools of
a change in the district's certification to negative or qualified,
the governing board of the district may submit an appeal to the
Superintendent  of Public Instruction  regarding the
validity of that change, in accordance with the criteria applied to
those designations pursuant to this subdivision. No later than 10
days after receiving that appeal, the Superintendent  of
Public Instruction  shall determine the certification to be
assigned to the district  ,  and shall notify the
 school district  governing board  of the
district  and the county superintendent of schools of that
determination. 
   Copies 
    (B)     Copies  of any certification
in which the governing board is unable to certify unqualifiedly that
these financial obligations will be met and a copy of the report
submitted to the governing board pursuant to Section 42130 shall be
sent by the county office of education to the Controller and the
Superintendent  of Public Instruction  at the time
of the certification, together with a completed transmittal form
provided by the Superintendent of Public Instruction
 . Within 75 days after the close of the reporting period on
all school district certifications that are classified as qualified
or negative pursuant to this section, the appropriate county
superintendent of schools shall submit to the Superintendent 
of Public Instruction  and the Controller his or her
comments on those certifications and report any action proposed or
taken pursuant to subdivision (b).
   (3) All reports and certifications required under this subdivision
shall be in a format or on forms prescribed by the Superintendent
 of Public Instruction,  and shall be based on
standards and criteria for fiscal stability adopted by the 
State Board of Education   state board  pursuant to
Section 33127.
   (4) This subdivision does not preclude the submission of
additional budgetary or financial reports by the county
superintendent of schools to the  district 
governing board  of the district  , or to the Superintendent
 of Public Instruction  .
   (b) As to any school district having a negative or qualified
certification, the county superintendent of schools shall exercise
his or her authority, as necessary, pursuant to Section 42127.6.
   (c) Within 75 days after the close of each reporting period, each
county superintendent of schools shall report to the Controller and
the Superintendent  of Public Instruction  as to
whether the governing board of each of the school districts under his
or her jurisdiction has submitted the certification required by
subdivision (a). That report shall account for all districts under
the jurisdiction of the county office of education and indicate the
type of certification filed by each district.
   (d) The Controller's office may conduct an audit or review of the
fiscal condition of any district having a negative or qualified
certification.
   (e) The governing board of each school district filing a qualified
or negative certification for the second report required under
Section 42130, or classified as qualified or negative by the county
superintendent of schools, shall provide to the county superintendent
of schools, the Controller, and the Superintendent  of
Public Instruction  no later than June 1, financial
statement projections of the district's fund and cash balances
through June 30 for the period ending April 30. The governing boards
of all other school districts are encouraged to develop a similar
financial statement for use in developing the beginning fund balances
of the district for the ensuing fiscal year.
   (f) Any school district for which the county board of education
serves as the governing board is not subject to subdivisions (a) to
(f), inclusive, but is governed instead by the interim report,
monitoring, and review procedures set forth in subdivision (  l
 ) of Section 1240 and in Article 2 (commencing with Section
1620) of Chapter 5 of Part 2.
   SEC. 7.    Section 42238.12 of the   
 Education Code   is amended to read: 
   42238.12.  (a) For the 1995-96 fiscal year and each fiscal year
thereafter, the county superintendent of schools shall adjust the
total revenue limit for each school district in the jurisdiction of
the county superintendent of schools by the amount of increased or
decreased employer contributions to the Public Employees' Retirement
System resulting from the enactment of Chapter 330 of the Statutes of
1982, adjusted for any changes in those contributions resulting from
subsequent changes in employer contribution rates, excluding rate
changes due to the direct transfer of the state-mandated portion of
the employer contributions to the Public Employees' Retirement
System, through the current fiscal year. The adjustment shall be
calculated for each school district, as follows:
   (1) (A) Determine the amount of employer contributions that would
have been made in the current fiscal year if the applicable Public
Employees' Retirement System employer contribution rate in effect
immediately  prior to   before  the
enactment of Chapter 330 of the Statutes of 1982 were in effect
during the current fiscal year.
   (B) For  the  purposes of this calculation, no
school district shall have a contribution rate higher than 13.020
percent.
   (2) Determine the actual amount of employer contributions made to
the Public Employees' Retirement System in the current fiscal year.
   (3) If the amount determined in paragraph (1) for a school
district is greater than the amount determined in paragraph (2), the
total revenue limit computed for that school district shall be
decreased by the amount of the difference between those paragraphs;
or, if the amount determined in paragraph (1) for a school district
is less than the amount determined in paragraph (2), the total
revenue limit for that school district shall be increased by the
amount of the difference between those paragraphs.
   (4) For the purpose of this section, employer contributions to the
Public Employees' Retirement System for any of the following
positions shall be excluded from the calculation specified above:
   (A) Positions or portions of positions supported by federal funds
that are subject to supplanting restrictions.
   (B) Positions supported by funds received pursuant to 
paragraph (1) of subdivision (a) of Section 54203  
Section 41540 that are established in order to satisfy court 
 -ordered desegregation requirements .
   (C) Positions supported, to the extent of employers' contributions
not exceeding twenty-five thousand dollars ($25,000) by any single
educational agency, from a non-General Fund revenue source determined
to be properly excludable from this section by the Superintendent
 of Public Instruction  with the approval of the
Director of Finance. Commencing in the 2002-03 fiscal year, only
positions supported from a non-General Fund revenue source determined
to be properly excludable as identified for a particular local
educational agency or pursuant to a blanket waiver by the
Superintendent  of Public Instruction  and the
Director of Finance,  prior to   before 
the 2002-03 fiscal year, may be excluded pursuant to this paragraph.
   (5) For accounting purposes, any reduction to district revenue
limits made by this provision may be reflected as an expenditure from
appropriate sources of revenue as directed by the Superintendent
 of Public Instruction  .
   (6) The amount of the increase or decrease to the revenue limits
of school districts computed pursuant to paragraph (3) for the
1995-96 to 2002-03 fiscal years, inclusive, may not be adjusted by
the deficit factor applied to the revenue limit of each school
district pursuant to Section 42238.145.
   (7) For the 2003-04 fiscal year and any fiscal year thereafter,
the revenue limit reduction specified in Section 42238.146 may not be
applied to the amount of the increase or decrease to the revenue
limits of school districts computed pursuant to paragraph (3).
   (b) The calculations set forth in paragraphs (1) to (3),
inclusive, of subdivision (a) exclude employer contributions for
employees of charter schools funded pursuant to Article 2 (commencing
with Section 47633) of Chapter 6 of Part 26.8.
   (c) Funding appropriated through the Budget Act of 2001 or
legislation amending the Budget Act of 2001 for the purpose of
limiting the reductions to revenue limits calculated pursuant to this
section and to Section 2558 for the 2001-02 fiscal year shall be
allocated on a one-time basis in the following manner:
   (1) Each school district and county office of education subject to
a reduced apportionment pursuant to this section or to Section 2558
shall receive a share of the amount described in paragraph (3) that
is proportionate to the reduction in their apportionment pursuant to
this section or to Section 2558 for the 2001-02 fiscal year as
compared to the statewide total reduction that would occur absent
this paragraph.
   (2) For the 2001-02 fiscal year, instead of the alternative
calculation authorized by paragraph (1), San Francisco Unified School
District shall receive an amount equal to five dollars and 57 cents
($5.57) multiplied by its second principal apportionment average
daily attendance for the 2001-02 fiscal year.
   (3) Notwithstanding any other law, total allocations pursuant to
this subdivision may not exceed thirty-five million dollars
($35,000,000).
   (d) Thirty-five million dollars ($35,000,000) is hereby
appropriated from the General Fund for transfer to Section A of the
State School Fund for local assistance for the purpose of limiting
the reductions to revenue limits calculated pursuant to this section
and to Section 2558 for the 2003-04 fiscal year. Funding from this
appropriation shall be allocated in the following manner:
   (1) Each school district and county office of education subject to
a reduced apportionment pursuant to this section or to Section 2558
shall receive a share of the amount appropriated in this subdivision
that is proportionate to the reduction in their apportionment
pursuant to this section or to Section 2558 for the 2003-04 fiscal
year as compared to the statewide total reduction that would occur
absent this paragraph.
   (2) For the 2003-04 fiscal year, instead of the alternative
calculation authorized by paragraph (1), the San Francisco Unified
School District shall receive an amount equal to five dollars and 57
cents ($5.57) multiplied by its second principal apportionment
average daily attendance for the 2003-04 fiscal year.
   (3) Notwithstanding any other law, total allocations pursuant to
this subdivision may not exceed thirty-five million dollars
($35,000,000) for the 2003-04 fiscal year.
   (4) For the purposes of making the computations required by
Section 8 of Article XVI of the California Constitution, the
appropriation made by this section shall be deemed to be "General
Fund revenues appropriated for school districts," as defined in
subdivision (c) of Section 41202, for the 2003-04 fiscal year and
included within the "total allocations to school districts and
community college districts from General Fund proceeds of taxes
appropriated pursuant to Article XIII B," as defined in subdivision
(e) of Section 41202, for the 2003-04 fiscal year.
   (e) For the 2004-05 fiscal year, and each fiscal year thereafter,
apportionment reductions pursuant to this section and to Section 2558
shall be limited as follows:
   (1) Each school district and county office of education subject to
a reduced apportionment pursuant to this section or to Section 2558
shall receive a share of the amount described in paragraph (3) that
is proportionate to the reduction in their apportionment pursuant to
this section or to Section 2558 for the 2004-05 fiscal year as
compared to the statewide total reduction as would occur absent this
paragraph.
   (2) Instead of the alternative calculation authorized by paragraph
(1), the San Francisco Unified School District shall receive funding
equal to the amount of funding per unit of average daily attendance
specified in paragraph (2) of subdivision (c) as increased annually
by cost-of-living adjustments specified in Section 42238.1,
multiplied by its second principal apportionment average daily
attendance for that fiscal year.
   (3) Notwithstanding any other law, total limitations pursuant to
this subdivision may not annually exceed  the amount
described in paragraph (3) of subdivision (c)  
thirty-five million dollars ($35,000,000)  as annually increased
by the cost-of-living adjustments specified in Section 42238.1,
multiplied by the annual statewide percentage growth in total average
daily attendance, measured at the second principal apportionment.
   SECTION 1.   SEC. 8.   Section 48070.5
of the Education Code is amended to read:
   48070.5.  (a) In addition to the policy adopted pursuant to
Section 48070, the governing board of each school district and each
county board of education  shall  , in those
applicable grade levels,  shall  approve a policy regarding
the promotion and retention of pupils between the following grades:
   (1) Between second grade and third grade.
   (2) Between third grade and fourth grade.
   (3) Between fourth and fifth grade.
   (4) Between the end of the intermediate grades and the beginning
of middle school grades which typically occurs between sixth grade
and seventh grade, but may vary depending upon the grade
configuration of the school or school district.
   (5) Between the end of the middle school grades and the beginning
of high school which typically occurs between eighth grade and ninth
grade, but may vary depending upon the grade configuration of the
school or school district.
   (b) The policy shall provide for the identification of pupils who
should be retained and who are at risk of being retained in their
current grade level on the basis of either of the following:
   (1) The results of the assessments administered pursuant to
Article 4 (commencing with Section 60640) of Chapter 5 of Part 33 and
the minimum levels of proficiency recommended by the state board
pursuant to Section 60648.
   (2) The pupil's grades and other indicators of academic
achievement designated by the district.
   (c) The policy shall base the identification of pupils pursuant to
subdivision (b) at the grade levels identified pursuant to paragraph
(1) and (2) of subdivision (a) primarily on the basis of the pupil's
level of proficiency in reading. The policy shall base the
identification of pupils pursuant to subdivision (b) at the grade
levels identified pursuant to paragraphs (3) through (5) of
subdivision (a) on the basis of the pupil's level of proficiency in
reading, English language arts, and mathematics.
                                            (d) (1) If either measure
identified in paragraph (1) or (2) of subdivision (b) identifies
that a pupil is performing below the minimum standard for promotion,
the pupil shall be retained in his or her current grade level unless
the pupil's regular classroom teacher determines in writing that
retention is not the appropriate intervention for the pupil's
academic deficiencies. This written determination shall specify the
reasons that retention is not appropriate for the pupil and shall
include recommendations for interventions other than retention that
in the opinion of the teacher are necessary to assist the pupil to
attain acceptable levels of academic achievement. If the teacher's
recommendation to promote is contingent upon the pupil's
participation in a summer school or interim session remediation
program, the pupil's academic performance shall be reassessed at the
end of the remediation program, and the decision to retain or promote
the pupil shall be reevaluated at that time. The teacher's
evaluation shall be provided to and discussed with the school
principal and the pupil's parent, guardian, or other person holding
the right to make educational decisions for the pupil pursuant to
Section 361 or 727 of the Welfare and Institutions Code or Section
56055, before any final determination of pupil retention or
promotion.
   (2) If the pupil does not have a single regular classroom teacher,
the policy adopted by the school district shall specify the teacher
or teachers responsible for the promotion or retention decision.
   (e) The policy shall provide for parental notification when a
pupil is identified as being at risk of retention. This notice shall
be provided as early in the school year as practicable. The policy
shall provide the pupil's parent, guardian, or other person holding
the right to make educational decisions for the pupil pursuant to
Section 361 or 727 of the Welfare and Institutions Code or Section
56055 the opportunity to consult with the teacher or teachers
responsible for the decision to promote or retain the pupil.
   (f) The policy shall provide a process whereby the decision of the
teacher to retain or promote a pupil may be appealed. If an appeal
is made, the burden shall be on the appealing party to show why the
decision of the teacher should be overruled.
   (g) The policy shall provide that pupils who are  at-risk
  at risk  of being retained in their current grade
be identified as early in the school year, and as early in their
school careers, as practicable.
   (h) The policy shall indicate the manner in which opportunities
for remedial instruction will be provided to pupils who are
recommended for retention or who are identified as being at risk for
retention.
   (i) The policy adopted pursuant to this section shall be adopted
at a public meeting of the governing board of the school district.
   (j)  Nothing in this section shall be construed to
  This section does not  prohibit the retention of
a pupil not included in grade levels identified pursuant to
subdivision (a), or for reasons other than those specified in
subdivision (b), if  such  retention is determined
to be appropriate for that pupil.  Nothing in this section
shall be construed to   This section does not 
prohibit a governing board from adopting promotion and retention
policies that exceed the criteria established in this section.
   SEC. 9.    Section 48070.6 of the  
Education Code   is amended to read: 
   48070.6.  (a) On or before August 1, 2011, and annually
thereafter, utilizing data produced by the California Longitudinal
Pupil Achievement Data System pursuant to Section 60900 and other
available data, the Superintendent shall submit to the Governor, the
Legislature, and the state board  ,  a report that
shall be called the Annual Report on Dropouts in California. The
report shall include, but not be limited to, all of the following:
   (1) One-year dropout rates for each of grades 7 to 12, inclusive.
   (2) Four-year cohort dropout rates for grades 9 to 12, inclusive.
   (3) Two- or three-year cohort dropout rates, as appropriate, for
middle schools.
   (4) Grade 9 to grade 10 promotion rates.
   (5) Percentage of high school pupils for each of grades 9 to 12,
inclusive, who are on track to earn sufficient credits to graduate.
   (6) The average number of nonpromotional school moves that pupils
make between grades 6 to 12, inclusive.
   (7) "Full-year" dropout rates for alternative schools, including
dropout recovery high schools, calculated using a methodology
developed by the Superintendent to appropriately reflect dropout
rates in each type of alternative school.
   (8) An explanation of the methodology or methodologies used to
calculate "full-year" dropout rates for alternative schools pursuant
to paragraph (7).
   (9) Passage rates on the high school exit examination adopted
pursuant to subdivision (a) of Section 60850.
   (10) Other available data relating to dropout or graduation rates
or pupil progress toward high school graduation.
   (b) When cohort dropout rates can be calculated accurately using
longitudinal data, the rates described in paragraph (3) of
subdivision (a) shall be replaced by dropout rates for cohorts of
pupils entering middle school.
   (c) When data is available, the report shall also include all of
the following:
   (1) Rates at which pupils graduate in four, five, and six years,
pursuant to subparagraph (A) of paragraph (4) of subdivision (a) of
Section 52052.
   (2) Percentage of high school graduates and dropouts who completed
courses that are certified by the University of California as
meeting admission requirement criteria for the University of
California and California State University systems.
   (3) Percentage of high school graduates and dropouts who completed
two or more classes in career technical education.
   (4) Percentage of high school graduates and dropouts who completed
both course sequences described in paragraphs (2) and (3).
   (5) Behavioral data by school and district, including suspensions
and expulsions.
   (6) Truancy rates.
   (7) GED earning rates.
   (8) Chronic absentee rates, as defined in Section 60901.
   (d) If possible, the data listed in subdivisions (a) and (b) shall
be presented in the report, organized as follows:
   (1) By state.
   (2) By county.
   (3) By district, both including and excluding charter schools.
   (4) By school.
   (e) The report shall include data from alternative middle and high
schools, including continuation high schools, community day schools,
juvenile court schools, special schools, opportunity schools, and
schools attended by wards of the Department of Corrections and
Rehabilitation, Division of Juvenile Justice.
   (f) The report may include relevant data on school climate and
pupil engagement from the California Healthy Kids Survey.
   (g) If possible, the data listed in subdivisions (a) and (b) shall
be presented for the following subgroups, if the subgroup consists
of at least 50 pupils, and the subgroup constitutes at least 15
percent of the total population of pupils at a school:
   (1) Grade level.
   (2) Ethnicity.
   (3) Gender.
   (4) Low socioeconomic status.
   (5) English learners.
   (6) Special education status.
   (h) The first Annual Report on Dropouts in California shall
include data from the most recent year. Subsequent annual reports
shall include data from the most recent year and, at a minimum, the
two prior years, so that comparisons can be made easily.
   (i) The Superintendent or his or her designee shall make an oral
presentation of the contents of the report to the state board at a
regularly scheduled meeting of the board.
   (j) The Superintendent shall make the contents of the report
available on the department's Internet Web site in a format that is
easy for the public to access and understand.
   (k) If inclusion of school-level data would render the written
report unwieldy, the data may be omitted from the written report and
posted on the department's Internet Web site.
   (l) It is the intent of the Legislature that the report prepared
by the Superintendent be usable by schools, districts, policymakers,
researchers, parents, and the public, for purposes of identifying and
understanding trends, causal relations, early warning indicators,
and potential points of intervention to address the high rate of
dropouts in California.
   (m) For purposes of this section, dropouts shall be defined using
the exit/withdrawal codes developed by the department.
   (n) For purposes of this section, "dropout recovery high school"
has the same meaning as defined in subparagraph  (C)
  (D)  of paragraph (4) of subdivision (a) of
Section 52052.
   SEC. 10.    Section 48904 of the   Education
Code   is amended to read: 
   48904.  (a) (1) Notwithstanding Section 1714.1 of the Civil Code,
the parent or guardian of any minor whose willful misconduct results
in injury or death to any pupil or any person employed by, or
performing volunteer services for, a school district or private
school or who willfully cuts, defaces, or otherwise injures in any
way any property, real or personal, belonging to a school district or
private school, or personal property of any school employee, shall
be liable for all damages so caused by the minor. The liability of
the parent or guardian shall not exceed ten thousand dollars
($10,000)  , adjusted annually for inflation  . The parent
or guardian shall  also  be liable  also 
for the amount of any reward not exceeding ten thousand dollars
($10,000)  , adjusted annually for inflation,  paid pursuant
to Section 53069.5 of the Government Code. The parent or guardian of
a minor shall be liable to a school district or private school for
all property belonging to the school district or private school
loaned to the minor and not returned upon demand of an employee of
the district or private school authorized to make the demand.
   (2) The Superintendent  of Public Instruction 
 annually  shall compute an adjustment of the liability
limits prescribed by this subdivision  at a rate equivalent
 to  reflect  the percentage change in the 
average annual value of the  Implicit Price Deflator for State
and Local Government Purchases of Goods and Services for the United
States, as published by the United States Department of Commerce for
the 12-month period ending in the  third quarter of the
 prior fiscal year. The annual adjustment shall be
rounded to the nearest one hundred dollars ($100). 
   (b) (1) Any school district or private school whose real or
personal property has been willfully cut, defaced, or otherwise
injured, or whose property is loaned to a pupil and willfully not
returned upon demand of an employee of the district or private school
authorized to make the demand may, after affording the pupil his or
her due process rights, withhold the grades, diploma, and transcripts
of the pupil responsible for the damage until the pupil or the pupil'
s parent or guardian has paid for the damages thereto, as provided in
subdivision (a).
   (2) The school district or private school shall notify the parent
or guardian of the pupil in writing of the pupil's alleged misconduct
before withholding the pupil's grades, diploma, or transcripts
pursuant to this subdivision. When the minor and parent are unable to
pay for the damages, or to return the property, the school district
or private school shall provide a program of voluntary work for the
minor in lieu of the payment of monetary damages. Upon completion of
the voluntary work, the grades, diploma, and transcripts of the pupil
shall be released.
   (3) The governing board of each school district or governing body
of each private school shall establish rules and regulations
governing procedures for the implementation of this subdivision. The
procedures shall conform to, but are not necessarily limited to,
those procedures established in this code for the expulsion of
pupils.
   SEC. 11.    Section 49550.3 of the   
 Education Code   is amended to read: 
   49550.3.  (a) Because a hungry child cannot learn, the Legislature
intends, as a state nutrition and health policy, that the School
Breakfast Program be made available in all schools where it is needed
to provide adequate nutrition for children in attendance.
   (b) The  State Department of Education shall 
 department  , in cooperation with school districts and
county superintendents of schools,  shall  provide
information and limited financial assistance to encourage program
startup and expansion into all qualified schools, as follows:
   (1) Provide information to school districts and county
superintendents of schools concerning the benefits and availability
of the School Breakfast Program.
   (2) Each year, provide additional information and financial
assistance to schools in the state,  selected on the
following criteria: 
    (A)     Twenty
  in which 20  percent or more of the school
enrollment consists of children who have applied and qualify for free
and reduced-price meals. 
   (B) The school has not been awarded federal startup funds to
initiate a school breakfast program or a summer food service program.

   (c) The department shall award grants of up to fifteen thousand
dollars ($15,000) per schoolsite on a competitive basis to school
districts, county superintendents of schools, or entities approved by
the  State Department of Education   department
 , limited to an amount subject to budget appropriations each
fiscal year, for nonrecurring expenses incurred in initiating or
expanding a school breakfast program under this section or a summer
food service program pursuant to Article 10.7 (commencing with
Section 49547).
   (d) Grants awarded under this section shall be used for
nonrecurring costs of initiating or expanding a school breakfast
program or a summer food service program, including the acquisition
of equipment, training of staff in new capacities, outreach efforts
to publicize new or expanded school breakfast programs or summer food
service programs, minor alterations to accommodate new equipment,
computer point-of-service systems for food service, and the purchase
of vehicles for transporting food to schools. Funds may not be used
for salaries and benefits of staff, food, computers, except computer
point-of-service systems, or capital outlay.
   (e) In making grant awards under this section in any fiscal year,
the department shall give a preference to school districts and county
superintendents of schools that do all of the following:
   (1) Submit to the department a plan to start or expand school
breakfast programs or summer food service programs in the district or
the county, including a description of the following:
   (A) The manner in which the district or county will provide
technical assistance and funding to schoolsites to expand those
programs.
   (B) Detailed information on the nonrecurring expenses needed to
initiate a program.
   (C) Public or private resources that have been assembled to carry
out expansion of these programs during that year.
   (2) Agree to operate the breakfast program or the summer food
service program for a period of not less than three years.
   (3) Assure that the expenditure of funds from state and local
resources for the maintenance of the breakfast program or the summer
food service program shall not be diminished as a result of grant
awards received under this section.
   SEC. 12.    Section 60605.86 of the   
 Education Code   is amended to read: 
   60605.86.  (a) The department shall recommend, and the state board
shall approve, evaluation criteria to guide the development and
review of supplemental instructional materials.
   (b) Notwithstanding any other law, and on a one-time basis, the
department shall develop a list, on or before July 1, 2012, of
supplemental instructional materials for use in kindergarten and
grades 1 to 8, inclusive, that are aligned with the California common
core academic content standards for language arts and for use in
kindergarten and grades 1 to 7, inclusive, that are aligned with the
California common core academic content standards for mathematics.
The supplemental instructional materials shall provide a bridge
between the California common core academic content standards and the
standards-aligned instructional materials currently being used by
local educational agencies.
   (c) (1) The department shall recommend, and the state board shall
approve, content review experts to review, in an open and transparent
process, supplemental instructional materials submitted for approval
in the subject areas of mathematics and English language arts.
   (2) The majority of content review experts approved pursuant to
paragraph (1) shall be teachers who are credentialed in the subject
area they are reviewing. The content review experts shall also
include appropriate persons from postsecondary institutions and
school and school district curriculum administrators, and other
persons who are knowledgeable in the appropriate subject area.
   (3) The content review experts shall serve without compensation.
   (d) (1) On or before September 30, 2012, the state board shall do
the following:
   (A) Approve all, or a portion, of the list of supplemental
instructional materials proposed by the department, taking into
consideration the review of the content review experts and any other
relevant information, as appropriate.
   (B) Reject all, or a portion, of the list of supplemental
instructional materials proposed by the department, taking into
consideration the review of the content review experts and any other
relevant information, as appropriate.
   (2) The state board may add an item to the list of supplemental
instructional materials proposed by the department.
   (3) If the state board rejects all, or a portion, of the list of
supplemental instructional materials proposed by the department, or
adds an item to the list, the state board, in a public meeting held
pursuant to the Bagley-Keene Open Meeting Act (Article 9 (commencing
with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2
of the Government Code), shall provide written reasons for the
removal or addition of an item on the list. The state board shall not
approve a supplemental instructional material it adds to the list at
the same time it provides its written reason for adding the
material; instead, the state board shall approve the added material
at a subsequent public meeting.
   (e) (1) The governing boards of school districts  and county
offices of education  may approve supplemental instructional
materials other than those approved by the state board pursuant to
subdivision (d) if the governing board  of the school district or
county office of education  determines that other supplemental
instructional materials are aligned with the California common core
academic content standards and meet the needs of the pupils of the
district  or county office of education  . The governing
board of a school district  and a county office of education
 may only approve supplemental instructional materials that
comply with the evaluation criteria approved pursuant to subdivision
(a) and the requirements of Section 60226, subdivision (h), and
Article 4 (commencing with Section 60060).
   (2) (A) A supplemental instructional material approved by a
governing board of a school district  or a county office of
education  pursuant to this subdivision that is in the subject
area of mathematics or English language arts shall be reviewed by
content review experts chosen by the governing board  of the
school district or county office of education  .
   (B) The majority of the content review experts chosen pursuant to
subparagraph (A) shall be teachers who are credentialed in the
subject area they are reviewing. The content review experts shall
include appropriate persons from postsecondary institutions and
school and school district  or county office of education 
curriculum administrators, and other persons who are knowledgeable in
the appropriate subject area.
   (C) The content review experts shall serve without compensation.
   (f) Publishers choosing to submit supplemental instructional
materials for approval by the state board shall submit standards
maps.
   (g) (1) Before approving supplemental instructional materials
pursuant to this section, the state board shall review those
instructional materials for academic content, social content, and
instructional support to teachers and pupils. Supplemental
instructional materials approved by the state board pursuant to this
section shall meet required program criteria for grade-level
programs, intervention programs, and English learners and shall
include materials for use by teachers.
   (2) Before approving supplemental instructional materials pursuant
to this section, the governing board of a school district  or a
county office of education  shall review those instructional
materials for academic content and instructional support to teachers
and pupils. Supplemental instructional materials approved by the
governing board of a school district  or a county office of
education  pursuant to this section shall meet required program
criteria for grade-level programs, intervention programs, and English
learners, and shall include materials for use by teachers.
   (h) Supplemental instructional materials approved pursuant to this
section shall comply with the social content review requirements
that would be imposed by Assembly Bill 339 of the 2011-12 Regular
Session if that bill becomes operative; otherwise, the governing
board of a school district  or a county office of education 
shall review supplemental instructional materials for social content
in compliance with Article 3 (commencing with Section 60040).
   (i) The department shall maintain on its Internet Web site the
list of supplemental instructional materials approved by the state
board pursuant to subdivision (d).
   (j) The department shall use federal carryover funds received
pursuant to Title I of the federal No Child Left Behind Act of 2001
(20 U.S.C. Sec. 6301 et seq.) to implement this section.
   (k) This section shall become inoperative on July 1, 2014, and, as
of July 1, 2015, is repealed, unless a later enacted statute, that
becomes operative on or before July 1, 2015, deletes or extends the
dates on which it becomes inoperative and is repealed.
   SEC. 13.    Section 75.70 of the   Revenue
and Taxation Code   is amended to read: 
   75.70.  (a) Notwithstanding any other  provision of
 law, for the 1983-84 fiscal year, each county auditor shall
allocate to all elementary, high school, and unified school
districts within the county in proportion to each district's average
daily attendance, as certified by the Superintendent of Public
Instruction for purposes of the advance apportionment of state aid in
the then current fiscal year, without respect to the allocation of
property tax revenues pursuant to Chapter 6 (commencing with Section
95) of Part 0.5, and without respect to allocation and payment of
funds as provided for in subdivision (b) of Section 33670 of the
Health and Safety Code, an amount equal to the additional revenues
generated by the rate levied pursuant to subdivision (a) of Section 1
of Article XIII A of the California Constitution applied to the
increased assessments for the current roll under this chapter.
Additional revenues generated by a rate or rates levied in excess of
the limitation prescribed by subdivision (a) of Section 1 of Article
XIII A of the California Constitution shall be allocated to the fund
for which the tax rate or rates were levied.
   (b) For the 1984-85 fiscal year, the county auditor shall, without
respect to the allocation of property tax revenues pursuant to
Chapter 6 (commencing with Section 95) of Part 0.5, do all of the
following:
   (1) Make the allocation and payment of funds as provided in
Section 33670 of the Health and Safety Code.
   (2) Allocate to the county the amount determined pursuant to
Section 75.60.
   (3) Allocate to the county an amount equal to the total amount of
additional revenues generated by the rate levied pursuant to
subdivision (a) of Section 1 of Article XIII A of the California
Constitution applied to the increased assessments under this chapter,
less the amount determined pursuant to paragraphs (1) and (2), the
remainder multiplied by the county's property tax apportionment
factor determined pursuant to Section 97.5.
   (4) Allocate to each community college district and county
superintendent of schools within the county an amount equal to the
total amount of additional revenues generated by the rate levied
pursuant to subdivision (a) of Section 1 of Article XIII A of the
California Constitution applied to the increased assessments under
this chapter, less the amount determined pursuant to paragraphs (1)
and (2), the remainder multiplied by each county superintendent of
schools' and community college district's property tax apportionment
factor determined pursuant to Section 97.5.
   (5) Allocate to each city within the county an amount equal to the
total amount of additional revenue generated by the rate levied
pursuant to subdivision (a) of Section 1 of Article XIII A of the
California Constitution applied to the increased assessments under
this chapter, less the amount determined pursuant to paragraphs (1)
and (2), the remainder multiplied by each city's property tax
apportionment factor determined pursuant to Section 97.5.
   (6) Allocate to each special district within the county an amount
equal to the total amount of additional revenues generated by the
rate levied pursuant to subdivision (a) of Section 1 of Article XIII
A of the California Constitution applied to the increased assessments
under this chapter, less the amount determined pursuant to
paragraphs (1) and (2), the remainder multiplied by each special
district's property tax apportionment factor determined pursuant to
Section 97.5. The amount allocated to each special district which is
governed by the board of supervisors of a county or whose governing
board is the same as the board of supervisors of a county, shall be
subject to Section 98.6.
   (7) Allocate the remaining revenues generated by the rate levied
pursuant to subdivision (a) of Section 1 of Article XIII A of the
California Constitution applied to the increased assessments under
this chapter to all elementary, high school, and unified school
districts within the county in proportion to each district's average
daily attendance, as certified by the Superintendent of Public
Instruction                                                    for
purposes of the advance apportionment of state aid in the then
current fiscal year.
   (8) Allocate additional revenues generated by a rate levied in
excess of the limitation prescribed by subdivision (a) of Section 1
of Article XIII A of the California Constitution to the fund or funds
for which the tax rate or rates were levied.
   These allocations shall be made on a timely basis but no later
than 30 calendar days after the close of the preceding monthly or
four-weekly accounting period.
   (c) For the 1985-86 fiscal year, and each fiscal year thereafter,
the county auditor shall, without respect to the allocation of
property tax revenues pursuant to Chapter 6 (commencing with Section
95) of Part 0.5, do all of the following:
   (1) Make the allocation and payment of funds as provided in
Section 33670 of the Health and Safety Code.
   (2) Allocate and pay to the county an amount equal to the total
amount of additional revenues generated by the rate levied pursuant
to subdivision (a) of Section 1 of Article XIII A of the California
Constitution applied to the increased assessments under this chapter,
less the amount determined pursuant to paragraph (1), the remainder
multiplied by the county's property tax apportionment factor
determined pursuant to Section 97.5.
   (3) Allocate and pay to each county superintendent of schools and
community college district within the county an amount equal to the
total amount of additional revenues generated by the rate levied
pursuant to subdivision (a) of Section 1 of Article XIII A of the
California Constitution applied to the increased assessments under
this chapter, less the amount determined pursuant to paragraph (1),
the remainder multiplied by each county superintendent of schools'
and community college district's property tax apportionment factor
determined pursuant to Section 97.5.
   (4) Allocate and pay to each city within the county an amount
equal to the total amount of additional revenues generated by the
rate levied pursuant to subdivision (a) of Section 1 of Article XIII
A of the California Constitution applied to the increased assessments
under this chapter, less the amount determined pursuant to paragraph
(1), the remainder multiplied by each city's property tax
apportionment factor determined pursuant to Section 97.5.
   (5) Allocate and pay to each special district within the county an
amount equal to the total amount of additional revenues generated by
the rate levied pursuant to subdivision (a) of Section 1 of Article
XIII A of the California Constitution applied to the increased
assessments under this chapter, less the amount determined pursuant
to paragraph (1), the remainder multiplied by each special district's
property tax apportionment factor determined pursuant to Section
97.5. The amount allocated to each special district which is governed
by the board of supervisors of a county or whose governing body is
the same as the board of supervisors of a county, shall be subject to
Section 98.6.
   (6) Allocate and pay the remaining revenues generated by the rate
levied pursuant to subdivision (a) of Section 1 of Article XIII A of
the California Constitution applied to the increased assessments
under this chapter to all elementary, high school, and unified school
districts within the county in proportion to each district's average
daily attendance, as certified by the Superintendent of Public
Instruction for the purposes of the advance apportionment of state
aid in the then current fiscal year.
   (7) Allocate and pay additional revenues generated by a rate
levied in excess of the limitation prescribed by subdivision (a) of
Section 1 of Article XIII A of the California Constitution to the
fund or funds for which the tax rate or rates were levied.
   These allocations and payments shall be made on a timely basis but
no later than 30 calendar days after the close of the preceding
monthly or four-weekly accounting period. For a county with a
population of 500,000 or less, the allocations may be made on a
biannual basis.
   (d) For purposes of the certification made by the Superintendent
of Public Instruction pursuant to subdivision (a), the average daily
attendance of the following districts shall be deemed to be zero:
   (1) In the case of multicounty districts, the portions of the
districts located other than in the county of control.
   (2)  Any district which received two thousand four hundred
dollars ($2,400) or one hundred twenty dollars ($120) per average
daily attendance, whichever is greater,   A school
district that is an excess tax school entity, as defined in
subdivision (n) of Section 95,  in the prior fiscal year.
   (e) The Superintendent of Public Instruction shall certify the
appropriate counts of average daily attendance pursuant to
subdivision (a) to each county auditor no later than July 15 of each
applicable fiscal year.
   (f) On or before November 15 and April 15, the auditor of each
county shall furnish to the Superintendent of Public Instruction the
estimated amount of tax receipts pursuant to this section of each
school district situated within his or her county.
   (g) In the event property tax revenues under this chapter are
generated by a change in ownership or completed new construction
which occurred on or before May 31, 1984, but are collected
subsequent to the 1983-84 fiscal year, the revenues for the current
roll shall be allocated to school districts as if they had been
collected and allocated during this 1983-84 fiscal year. Any of the
aforementioned revenues which are collected in the 1984-85 fiscal
year shall be applied to school apportionments for the 1984-85 fiscal
year.
   SEC. 2.   SEC. 14.   If the Commission
on State Mandates determines that this act contains costs mandated by
the state, reimbursement to local agencies and school districts for
those costs shall be made pursuant to Part 7 (commencing with Section
17500) of Division 4 of Title 2 of the Government Code.