BILL ANALYSIS Ó SB 645 Page 1 Date of Hearing: August 17, 2011 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair SB 645 (Simitian) - As Amended: July 13, 2011 Policy Committee: Education Vote:6-2 Urgency: No State Mandated Local Program: No Reimbursable: No SUMMARY This bill authorizes the Charter School Financing Authority (CSFA) to refinance working capital for charter schools. Further establishes new accountability measures for charter school renewal and expands eligibility of the Charter School Facility Grant Program (CSFGP). Specifically, this bill: FISCAL EFFECT 1)GF administrative costs of at least $160,000 to SDE to conduct academic reviews of charter schools seeking renewal, as specified in this measure. These costs are associated with staff conducting the reviews and making recommendations to the SBE for final determination. The 2011 Budget Act allocated $410,000 (GF) to SDE's charter school division to conduct work related to implementation of the SBE's new regulations regarding charter school revocations and charter school facilities programs, including the CSFGP. SDE originally requested 10 positions and $1.1 million (GF) to complete this work, with 3.5 positions devoted exclusively to charter school revocation duties. The Legislature provided seven positions and $734,000 (GF) to SDE. The governor, however, vetoed this allocation to $410,000 (GF). 2)Potential loss of GF/98 savings, likely in the low to tens of millions, due to the proposed eligibility expansion of the CSFGP. It is unclear why nonclassroom based charter schools would need grant funding for the leasing costs of school facilities. SB 658 (Romero), Chapter 271, Statutes of 2008, phased out the SB 645 Page 2 Multi-Track Year Round Education (MTYRE) grant program and shifted this funding (approximately $115 million GF/98) to the CSFGP over a period of time. The last payment of $15 million (GF/98) to the CSFGP is expected in the 2012-13 fiscal year. As referenced below, however, statute was changed in 2009 to no longer allocate this program funding in arrears. In order to implement this change, SDE was directed to "double fund" this program in order to pay off prior grant claims. Essentially, SDE allocates yearly funding to program grantees and any prior year funding owed. With the transfer of MTYRE funds, it is expected the CSFGP will have significant funds unspent and these funds could be swept as GF/98 savings. SUMMARY CONTINUED: Specifically, this bill: 1)Requires the Superintendent of Public Instruction (SPI), in consultation with the Public Schools Accountability Act (PSAA) advisory committee, to develop the EQI for schools and districts. Further requires all schools and districts, commencing with the 2014-15 school year and each school year thereafter, to be evaluated using the EQI value. 2)Requires the EQI, for school districts maintaining any of grades 9-12 to include, at a minimum, the following components: (a) The State Assessment Index (SAI), (b) the Graduation Rate Index (GRI), (c) The College Preparedness Index (CPI), and the Career Readiness Index (CRI). Defines each component within the EQI as follows: a) The SAI is required to be comprised of pupil scores from the standards-based achievement tests, or any successor assessments adopted by the SBE, and the high school exit examination. Further requires the SAI to include test scores of pupils enrolled in alternative education programs, as specified. b) The GRI is required to include one or both of the following: (i) Four, five, and six year graduation rates and rates at which pupils successfully promote from one grade to the next in middle and high school, as specified. Further requires pupils enrolled in alternative education SB 645 Page 3 programs to be included in this data under specified parameters. c) The CPI is required to consist of multiple, and stable measures of pupil preparedness for postsecondary education. Authorizes the SPI to include local and state assessments, course enrollment and completion; academic and extracurricular programs; and advanced or additional learning opportunities as indicators for pupils in grades 9-12. d) The CRI is required to consist of multiple, and stable measures of pupil readiness for career. Authorizes the SPI to include course enrollment and completion career technical education (CTE) programs; industry validated courses and certifications; intersegmental articulation with institutions of higher education; and local and state assessments as indicators for pupils in grades 9-12. 1)Prohibits a charter school authorizer from granting the renewal of a charter school unless the school meets at least one of the following criteria: a) An Academic Performance Index (API) score of at least 700 in the most recent year. b) Academic growth of at least 50 points over the prior three years as measured by the API. c) A rank of six to 10 on the API for a demographically comparable school in the prior year or in two of the prior three years. d) Participation in the alternative accountability system. Specifies if this system is no longer operative, a dropout recovery high school is required to meet the other specified criteria. e) Receipt of a positive determination of academic eligibility for renewal from the State Board of Education (SBE) within the prior 12 months. 2)Prohibits the authorizer of a charter school that has entered into year five of program improvement (PI) pursuant to the federal No Child Left Behind Act of 2001 (NCLB) and has not exited PI from considering or granting a renewal of the charter unless the school meets at least one of the following criteria: a) The school meets at least two of the criteria established in (a), (b), and (c) of #2 above. SB 645 Page 4 b) The school receives a positive determination of academic eligibility for renewal from the SBE within the prior 12 months. 3)Requires a charter school to apply to the SBE for a determination of academic eligibility, as referenced above, if it chooses to submit its charter for renewal and either of the following applies: a) The charter school does not meet at least one of the API criteria established in #1 above. b) A charter school in PI does not meet the criteria established in (a) of #2 above. 4)Requires the Superintendent of Public Instruction (SPI) to make a recommendation, based on valid and reliable evidence submitted by the charter school, to the SBE on the application for a determination of academic eligibility for the renewal of the charter school. 5)Requires the SBE to issue a positive determination of academic eligibility, if the SBE finds the charter school clearly demonstrates that pupil academic performance builds an expectation that pupils will continue to improve academically and have the opportunity to be successful in college or career, as specified. Further requires the SBE to consider how far the school is from achieving the academic benchmarks specified in #2 above, as specified. 6)Requires a renewal of a charter school granted based on a positive determination by the SBE to be granted for only three years, as specified. 7)Increases from $750 to $800 the per unit amount eligible schools receive under the CSFGP. 8)Requires the State Department of Education (SDE), in any year in which additional funds remain, to expand eligibility for the CSFGP to include schools in which less than 70% of its pupil enrollment is eligible for free/reduced price meals, as specified. 9)Authorizes CSFGP funds to be apportioned to charter schools providing nonclassroom-based instruction, if the charter school operates facilities that provide direct SB 645 Page 5 instruction/support to pupils enrolled at the school and meets all of the other existing eligibility requirements, as specified. 10)Requires a charter school offering nonclassroom-based instruction and applying for CSFGP funding to identify the proportion of time pupils in the school are scheduled to receive classroom-based instruction, as specified. COMMENTS 1)Purpose . A charter school is a public school that may provide instruction in any of grades K-12. It is usually created or organized by a group of teachers, parents and community leaders or a community-based organization. A charter school may be authorized by an existing local public school board, county board of education, or the SBE. Specific goals and operating procedures for the charter school are detailed in an agreement (charter) between the sponsoring board and charter organizers. A charter school is generally exempt from most laws governing school districts, except where specifically noted in the law. In 2009-10, there were 823 charter schools enrolling 323,859 students. This number includes 13 charter schools approved by the SBE. According to the author, "This bill increases accountability and oversight of charter schools by strengthening the criteria for renewal of charter schools. It prohibits the renewal of a charter school that does not meet the criteria. SB 645 creates a default non-renewal of any charter school that fails to meet the success measurements above. As a result, the charter authorizer would have no choice but to deny the renewal of a persistently low-performing charter school." The Charter School Association states: "Providing appropriate facilities for charter schools continues to be a substantial challenge. Unlike traditional public schools, charter schools do not have the range of tools available for securing facilities. One of the most successful facility programs is the Charter School Facility Grant program which provides rent/lease reimbursements for many schools in areas of profound economic struggles. However, the current program limits eligibility to schools that have70% free and reduced lunch students. This threshold leaves out many schools that are in low-income areas but fail to meet the 70% cut-off." SB 645 Page 6 This bill authorizes the CSFA to refinance working capital for charter schools. Further establishes new accountability measures for charter school renewal and expands eligibility of the CSFGP. 2)Opposition . The opponents of this measure (California Teachers Association, the Association of California School Administrators, and the California School Boards Association) argue the ability for the SBE to make a charter school renewal determination based on academic information is an infringement on the local control of the chartering authorizer. Specifically, ACSA states: "Ýwe] oppose the state transferring its statutory authority over defining student achievement to the SBE. SB 645 will allow the SBE to decide the ultimate fate of charter schools without understanding the local issues that affect that school. SB 645 vests new powers to the SBE and allows them to overrule local school and county boards of education without due process. SB 645 takes away local control from those who are ultimately held accountable for the success of all their students." 3)Existing law for charter school renewal and accountability . Statute authorizes a charter school to be granted one or more renewals for a five year period. Current law further requires a charter school to meet one of the following specified criteria (for the purposes of renewal): (a) attained its API growth target in the prior year or in two of the last three years; (b) ranked in deciles 4 to 10 on the API in the prior year or in two of the last three years; (c) ranked in deciles 4 to 10 on the API for a demographically comparable school in the prior year or in two of the last three years; and (d) the entity that granted the charter determines the academic performance of the charter school is at least equal to the performance of the public schools the charter pupils would have otherwise attended, as specified. When a charter authority renews a charter school based on its determination that the academic performance of the school is at least equal to the performance of the public school, it is SB 645 Page 7 required to submit copies to the SPI of its supporting documentation and a written summary of the basis of its determination. The SPI is required to review these materials and make recommendations to the chartering authority. The SPI's review is the basis for the SBE's authority to revoke a charter school, as specified. This measure significantly modifies current requirements related to a charter school's academic performance with respect to its renewal. Specifically, this bill deletes references to charter schools making growth targets and instead requires a charter school to score at least a 700 on the API or make at least 50 points growth on the API over the prior year three year. Likewise, this bill deletes the criterion that specifies charter schools have to perform at least equal to schools pupils would otherwise have attended. Instead, it establishes a process for the charter school to seek a determination by the SBE as to whether it has met its academic eligibility within the prior 12 months, as specified. This bill also prohibits a charter school in federal PI under NCLB (i.e., failed to make academic progress) from being renewed, unless it meets the API requirements referenced above or it receives a positive academic determination from the SBE, as specified. This bill also prohibits charter schools in federal PI year five from being renewed for more than three years. 4)Existing law for the CSFGP . The CSFGP is a non-competitive program that provides assistance with facilities rent and lease expenditures for charter schools that meet specific eligibility criteria. The program was enacted to reimburse charter schools for rental and lease costs in low-income areas. Eligible applicants must have at least 70% of students enrolled at the charter school who are eligible for free/ reduced price meals or the charter school must be physically located in an elementary school attendance area where at least 70% of students enrolled are eligible for free/reduced price meals. The charter school must also give a preference in admissions to students who reside in the elementary school attendance area. The charter schools are funded $750 per unit SB 645 Page 8 of classroom-based ADA, up to 75% of its annual facilities rent and lease costs for the school. AB 2 X4 (Evans), Fourth Extraordinary Session, Chapter 2, Statutes of 2009, requires the SPI to annually allocate CSFGP funds to eligible charter schools no later than October 1 of each fiscal year. Prior to Chapter 2, grants were paid in arrears to grantees. This statutory change has led SDE to provide double the amount of yearly funding to grantees because it paid the annual cost and the prior year costs all at once to ensure the program was a yearly paid program. This measure increases the allocation per unit of classroom-based ADA from $750 to $800 per unit and it also allows charter schools to receive funding for nonclassroom based ADA, provided the school operates facilities that provide direct instruction/support to pupils and meets all of the other existing eligibility requirements, as specified. This bill expands eligibility for the program to include schools in which less than 70% its pupil enrollment is eligible for free/reduced price meals. This expansion can only occur in years in which additional program funds remain and the eligibility can never be reduced below 50%. 5)Similar legislation . AB 440 (Brownely), pending in the Senate Appropriations Committee, contains identical language related to charter school renewals and accountability. It does not contain the school facility portions of this bill. Analysis Prepared by : Kimberly Rodriguez / APPR. / (916) 319-2081