BILL ANALYSIS Ó AB 97 Page 1 ( Without Reference to File ) CONCURRENCE IN SENATE AMENDMENTS AB 97 (Budget Committee) As Amended June 13, 2013 Majority vote. Budget Bill Appropriation Takes Effect Immediately ----------------------------------------------------------------- |ASSEMBLY: | |(May 13, 2013) |SENATE: |38-0 |(June 14, | | | | | | |2013) | ----------------------------------------------------------------- (vote not relevant) Original Committee Reference: BUDGET SUMMARY : Replaces the existing revenue limit and categorical funding structure with the Local Control Funding Formula (LCFF), beginning in the 2013-14 fiscal year. The formula is comprised of a base grant, supplemental grant and concentration grant for school districts, charter schools and county offices of education. Requires the State Board of Education (SBE) to adopt regulations governing the expenditure of supplemental and concentration grant funds. Includes an "Economic Recovery Target" with the goal of restoring districts back to their 2007-08 funding levels. The Senate amendments delete the Assembly version of this bill, and instead: District Formula Summary 1)Establish a Local Control Funding Formula (LCFF) for school districts, charter schools, and county offices of education (COEs). 2)Provide target base grant amounts per unit of average daily attendance (ADA), adjusted by grade level as follows: a) Grades kindergarten through 3: $6,845 b) Grades 4 to 6: $6,947 c) Grades 7 and 8: $7,154 AB 97 Page 2 d) Grades 9 to 12: $8,289 3)Establish an eight-year phase-in timeline, as specified, to incrementally close the gap between actual funding and the target level of funding. 4)Establish a supplemental grant equal to 20% of the base grant for every pupil identified as either an English learner (EL), eligible for a free or reduced price meal (FRPM), or in foster care; and use an "unduplicated count" meaning that pupils who fall into more than one category are counted only once. 5)Establish a concentration grant equal to 50% of the base grant for every unduplicated pupil above the threshold of 55% of enrollment. 6)Require the pupil-to-teacher ratio in grades K-3 to be no more than 24 to 1, when the formula is fully implemented, unless a higher ratio is negotiated through collective bargaining, and require a gradual reduction to the 24 to 1 ratio during the phase-in period. 7)Cap funding for Home-to-School transportation funding (HTS) and the Targeted Instructional Improvement Program (TIIG) at their 2012-13 levels and continues to provide this funding to school districts currently receiving it in addition to their Local Control Funding Formula (LCFF) base grant. 8)Require that HTS funds to be spent for purposes of pupil transportation. 9)Maintain funding and program requirements for the following categorical programs: a) Special education; b) After School Education and Safety Program; c) State Preschool; d) Quality Education Investment Act; e) Assessments; f) American Indian Education Centers; AB 97 Page 3 g) Early Childhood Education Programs; h) Partnership Academies; i) Agricultural Vocational Education; j) Specialized Secondary Programs; aa) Foster Youth Services Programs; and bb) Adults in Correctional Facilities. 10)Repeal funding and program requirements for all other categorical programs and redirect their monies to the supplemental and concentration grant portions of the LCFF. 11)Require school districts that spent funds on Regional Occupational Centers/Programs and Adult Education in 2012-13 to spend the same level of funding on those programs in 2013-14 and 2014-15. 12)Establish a hold harmless provision to maintain total revenue limit and categorical program funding for each district and charter school at its 2012-13 level, unadjusted for changes in ADA or cost-of-living adjustments (COLA). 13)Provide, for basic aid districts, that local property tax revenues be used to offset the entire LCFF allocation. However, as part of the hold harmless approach, basic aid districts will continue to receive the same level of state aid as allocated in 2012-13. 14)Specify that Necessary Small Schools (NSS) funding will be the same as current law for geographically isolated schools/districts going forward. However, for those NSS that are "single school, school districts" and that cannot meet the miles traveled, and other criteria, as specified, a "hold harmless" (guarantee of same funding level as 2012-13) provision will be in effect, even if their funding level exceeds their LCFF target. 15)Repeal the requirement that districts receiving state general obligation bond funding for facilities set aside 3% of the general fund expenditures in a routine maintenance account. AB 97 Page 4 County Office of Education (COE) Formula 16)Replace the existing funding model for COEs with a two-part formula based on the cost of providing regional services and alternative education. 17)Provide that the regional services component of the COE funding formula consist of the following: a) A base operations grant of $655,920 per county; b) An additional amount of $109,320 per school district in the county; c) An additional $70 per ADA in the counties with up to 30,000 ADA; $60 per ADA for counties with ADA between 30,000 and 60,000; $50 per ADA in counties with ADA between 60,000 and 140,000; and $40 per ADA in counties with ADA above 140,000. 18)Provide that the alternative education component of the COE funding formula include: a) An unspecified base grant, per eligible pupil, equal to the sum of the 2012-13 per-pupil undeficited statewide average juvenile court school base revenue limit (eligible pupils are incarcerated, on probation, probation-referred, or mandatorily expelled); b) A supplemental grant of 35% for unduplicated pupils who are ELs, receiving free or reduced price meals, or in foster care. c) A concentration grant of 35% for each unduplicated pupil above 50% of enrollment. School District and COE Accountability 1)Require school districts and COEs, on or before July 1, 2014, (with annual updates beginning in 2015), to adopt a local control and accountability plan (LCAP) using a template adopted by the SBE. Further require the LCAP to be effective for three years. AB 97 Page 5 2)Require the LCAP to include annual goals for pupils (including each subgroup of pupils) to be achieved for state and local priorities and the specific actions the school district, or COE will take during each year of the plan to achieve specified goals. 3)Authorize school districts and COEs to establish local priorities for inclusion in the LCAP and require the following state priorities to be included in the LCAP: a) Priorities related to the Williams v. State of California settlement agreement (2004) - fully credentialed teachers, instructional materials, and school facilities. b) Implementation of the academic and performance standards, including English language development standards (ELD). c) Parental involvement, as specified. d) Pupil achievement, as measured by statewide assessments, the Academic Performance Index (API), percentage of pupils meeting A-G graduation requirements, percentage of ELs making progress toward English proficiency, the EL reclassification rate, the percentage of pupils who have passed the advanced placement exams, and the percentage of pupils demonstrating college preparedness. e) Pupil engagement, as measured by attendance, dropout and graduation rates, and pupil expulsions/suspensions. f) School climate as measured by suspensions/expulsion rates, and other local measures, as specified. g) The extent in which pupils (including ELs and special needs) have access and are enrolled in a broad course of study, as specified. h) Pupil outcomes, if available, for non-state assessed courses of study in grades 1-12 (e.g., other history-social science, visual performing arts, physical education, etc.). COEs are required to include outcomes specific to pupils in alternative programs, as specified. 4)Require a school district and COE, as part of the annual AB 97 Page 6 update of the LCAP, to include a listing and description of the expenditures in the fiscal year implementing the specific information included in the LCAP, as specified. 5)Require the superintendent of the school district and COE to present the LCAP, prior to its adoption, to the public and parent advisory committees (including the EL parent advisory committee) for review and comment and requires the superintendent to respond in writing to these comments, as specified and review the schoolsite plans for student achievement required under current law, ensuring the LCAP in consistent with the schoolsite plans, as specified. 6)Establish a public process for the review and adoption of LCAPs and require a school district and COE to establish a parent advisory committee, including one specific to EL parents, as specified. 7)Require the SBE, on or before October 1, 2015, to adopt evaluation rubrics for all of the following purposes: a) To assist a school district, COE, or charter school in evaluating its strengths, weaknesses, and areas that requirement improvement. b) To assist a COE in identifying school districts and charter schools in need of technical assistance, as specified. c) To assist the Superintendent of Public Instruction (SPI) in identifying school districts for which intervention is warranted, as specified. 8)Establish the California Collaborative for Educational Excellence (CCEE) to advise and assist school districts, COEs, and charter schools in achieving its goals established in its LCAP or charter petition. Further require the SPI to contract with individuals, local education agencies (LEAs), or organizations with expertise, experience, and a record of success to carry out the CCEE's mission of providing technical assistance to LEAs and charter schools, as specified. 9)Require a school district to file its LCAP with the COE. Further establish a process for the COE to review and submit recommendations to the district and adopt the LCAP, as AB 97 Page 7 specified. This process includes provisions for the COE to ensure the LCAP adheres to the SBE template and includes "expenditures sufficient to implement the specific actions and strategies included in the LCAP." 10)Require a COE to file its LCAP with the SPI. Further establish a process for the SPI to review and submit recommendations to the COE and adopt the LCAP, as specified. This process includes provisions for the SPI to ensure the LCAP adheres to the SBE template and includes "expenditures sufficient to implement the specific actions and strategies included in the LCAP." 11)Require the COE or SPI, if it does not approve a school district or COE's LCAP or if the district/COE requests technical assistance, to provide the assistance to the district/COE, including any of the following: a) To assist in identifying strengths and weaknesses with regard to the state priorities, as specified. b) Assignment of an academic expert or team of academic experts to assist in identifying and implementing effective programs that are designed to improve outcomes for pupil subgroups, as specified. c) The assignment of the CCEE to provide advice and assistance to the school district/COE, as specified. 12)Authorize the SPI to identify school districts and COEs in need of intervention and require the SPI to only intervene in districts and COEs that meet both of the following criteria: a) The school district or COE did not improve outcomes for three or more pupil subgroups in regard to more than one state or local priority in three out of four consecutive school years. b) The CCEE has provided advice and assistance to the district or COE and submits findings to the SPI, as specified. 13)Authorize the SPI, for districts and COEs in need of intervention and with SBE approval, to do one or more of the following: AB 97 Page 8 a) Make changes to the district or COE's LCAP. b) Develop and impose a budget revision the SPI determines would allow the district or COE to improve the outcomes for all pupil subgroups in regard to state and local priorities. c) Stay or rescind an action, if that action is not required by a local collective bargaining agreement that would prevent the district or COE from improving outcomes for all pupil subgroups in regard to state and local priorities. d) Appoint an academic trustee to exercise the powers and authority specified in this measure on behalf of the SPI. Charter School Accountability 14)Require a charter school petition to include a description of the school's annual goals for all students and for each subgroup of students to be achieved in applicable state priority areas as defined above and the specific annual actions to achieve these goals, as specified. Further authorize the petition to establish additional priorities and goals in the same manner as districts and COEs. 15)Require a charter petition, as part of describing pupil outcomes, to include outcomes related to the applicable state priorities defined above, as specified. 16)Require a charter school, beginning in 2015, to provide an update to its petition no later than July 1 of each year and requires the update to use the SBE template and include the following: a) A review of the progress toward the goals included in the charter, an assessment of the effectiveness of the specific actions of the charter school in meeting its schools, as specified. b) A list and description of the expenditures for the subsequent year implementing the specific actions included in the charter, as specified. AB 97 Page 9 17)Require charter schools to consult with teachers, principals, other schoolsite staff, parents, and pupils in the annual update to the charter plan referenced above. 18)Authorize the SBE, whether or not it is the chartering authority, to revoke a charter school's charter if it finds the charter school failed to improve pupil outcomes across multiple state and local priorities, as specified. 19)Specify if a charter school fails to improve pupil outcomes for pupil subgroups in regard to more than one state or local priority in three out of four consecutive school years, all of the following apply: a) The chartering authority shall provide technical assistance to the charter school, using the SBE evaluation rubric, as specified. b) The SPI may assign, at the request of the chartering authority and approval of the SBE, the CCEE to provide technical assistance to the charter school, as specified. 37)Require a chartering authority to consider the revocation of any charter school to which the CCEE has provided advice and assistance and has made either of the following findings: a) The charter school has failed to implement, or is unable to implement, the recommendations of the CCEE. b) The inadequate performance of the charter school is either so persistent or so acute as to require revocation. 38)Require a chartering authority to consider the increases in pupil academic achievement for all groups of pupils served by the charter school as the most important factor in determining whether to revoke a charter. Further prohibit a charter school from appealing a revocation determined based on the provisions of this measure. Economic Recovery Target (ERT) 39)Calculate an Economic Recovery Target (ERT) for each school district. The ERT will be a per-pupil rate consisting of: a) The district's revenue limit in 2007-08-regardless of AB 97 Page 10 the mix of state aid and local property tax (LPT) revenue that funded the revenue limit. (The ERT does not count a basic aid district's "excess" local property tax revenue in the per-pupil rate.) b) Revenue limit cost-of-living adjustments for 2008-09 through 2020-21. c) The district's categorical funding in 2007-08 (before Control Section 12.42 or "fair share" reductions to categorical programs were implemented). SBE regulations and other provisions 39)Require the SBE, no later than January 31, 2014, to adopt regulations governing the expenditure of supplemental grant funds, including concentration grant funds. Require the regulations to: a) Require a school district, COE, or charter school "to increase or improve services for unduplicated pupils in proportion to its increase in funds apportioned on the basis of the number and concentration of unduplicated pupils in the district, COE, or charter school"; and b) Create authorization for the use of funds for schoolwide or districtwide purposes in a manner that is no more restrictive than federal No Child Left Behind Act of 2001 Title I funds (poor and needy pupils). 41)Require the SBE, on or before March 31, 2014, to establish templates for use by school districts, COEs, and charter schools to complete the LCAP, as specified. 42)Require school districts, COEs, and charter schools to establish local policies and procedures to implement a complaint process in accordance with the current Uniform Complaint process, as specified. 43)Prohibit the SBE or the SPI from waiving any part of the Local Control and Accountability Plans. 44)Require the Department of Education and Department of Social Services to enter into a memorandum of understanding to share disaggregated information on foster youth so that districts, AB 97 Page 11 charter schools and county offices of education can identify pupils in foster care. 45)Make various technical and conforming changes to, among other things, replace statutory references to the revenue limit with references to the LCFF. 46)Contain an appropriation allowing this bill to take effect immediately upon enactment. FISCAL EFFECT : Appropriates $2.1 billion from the General Fund for the following purposes: 1)$2.067 billion to the SPI for allocation to school districts and charter schools for first year implementation of the LCFF; and 2)$32 million to the SPI for allocation to COEs for the County Local Control Funding Formula, as specified. The budget bill also provides $10 million for CCEE activities and $2 million to the Governor's Office of Planning and Research in order for the SBE to develop and adopt regulations, as specified, develop and adopt evaluation rubrics, and develop and adopt LCAP templates. COMMENTS : The Governor's January Budget proposed the Local Control Funding Formula (LCFF) with the goal of allocating funding to school districts, charter schools, and county offices of education more equitably than under the current revenue limit and categorical program structure. According to the Administration, "California's school finance system has become overly complex, administratively costly, and imbalanced. There are many different funding streams, each with their own allocation formula and spending restrictions. Many program allocations have been frozen and are no longer reflective of current demographics, administrative costs, and legislative intent. The fiscal flexibility that has recently been provided to schools is not permanent and excludes some significant programs. Scholarly research and practical experience indicate that low-income students, foster children, and English learners come to school with unique challenges and often require supplemental instruction and other support in order to be successful in school. These challenges are most AB 97 Page 12 extreme in communities with high concentrations of poverty and non-English speakers." According to the Administration, the plan would allocate an estimated $25 billion over the next eight years to restore the significant funding reductions local educational agencies have experienced, including forgone cost-of-living adjustments to their existing revenue limits and ongoing cost-of-living adjustments for LCFF grants. Transition to the LCFF would be based on Proposition 98 growth and provide school districts, charter schools, and county offices of education with a guarantee that no school district, charter school, or county office of education would receive less funding in 2013-14 and into the future than it did in 2012-13 relative to current law. The LCFF ensures a uniform base grant for all students and provides local educational agencies with supplemental funding to support students that come to school with additional needs. Economic Recovery Target . Most school districts will receive the greater of the LCFF target or ERT. For the vast majority of school districts, the LCFF target for 2020-21 will be higher than the ERT for 2020-21. For about 230 districts, the ERT, however, will be higher. Over the next eight years, roughly 130 of these districts will receive additional payments in equal increments in excess of their LCFF payments to restore them to their ERT by 2020-21. (Districts that have an ERT above the 90th ERT percentile will receive no additional funding in excess of the 90th percentile. Approximately 96 districts have rates that are this high-more than $14,500 per pupil.) This calculation is intended to ensure that nearly all districts, with the exception of those with unusually high levels of historical per-pupil funding, are restored to their 2007-08 funding levels. Analysis Prepared by : Misty Feusahrens / BUDGET / (916) 319-2099 FN: 0001188 AB 97 Page 13