BILL ANALYSIS Ó
AB 948
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Date of Hearing: May 1, 2013
ASSEMBLY COMMITTEE ON EDUCATION
Joan Buchanan, Chair
AB 948 (Olsen) - As Introduced: February 22, 2013
SUBJECT : Charter schools: school facilities: Charter School
Facility Grant Program
SUMMARY : Expands eligibility and authorized uses, and makes
other changes to the Charter School Facility Grant Program
(CSFGP). Specifically, this bill :
1)Deletes the provision specifying that the purpose of the
program is to provide assistance with facilities rent and
lease costs and instead specifies that the program is intended
to provide assistance with facilities costs for pupils in
charter schools.
2)Deletes the requirement that an amount of up to, but not more
than $750 per unit of average daily attendance (ADA), as
certified at the second principal apportionment, is provided
up to, but no more than 75 percent of the annual facilities
rent and lease costs for a charter school, and instead
specifies that an eligible charter shall receive the lesser of
the following:
a) The actual eligible annual facility costs;
b) $750 per unit of ADA attendance for a classroom-based
charter school; or,
c) $375 per unit of ADA for nonclassroom-based charter
school.
3)Specifies that the initial payment shall be based on prior
year ADA, as certified at the second principal apportionment,
for a charter school that operated in the prior year, and
shall be based upon the ADA approved as specified for a
charter school in its first year of operation. The final
payment shall be based upon ADA, as certified at the second
principal apportionment.
4)Requires the California Department of Education (CDE) to
inform and provide charter schools with an application for the
grant program by July 1 of each year.
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5)Specifies that in any year in which additional funds remain
after funds have been allocated to eligible applicants, the
CDE shall expand eligibility to additional charter schools by
reducing the free and reduced-price meals threshold one
percentage point at a time, until all available funds are
allocated.
6)Deletes an obsolete provision requiring the CDE to submit a
report to the Legislature.
7)Strikes the provision prohibiting grant funds to be
appropriated to units of ADA generated through
nonclassroom-based instruction.
8)Authorizes charter schools to receive grants for school
facility costs not associated with existing school district or
county office of education (COE) facilities if the school
district or COE is otherwise required to provide the charter
school with facilities pursuant to Proposition 39 of 2000.
9)Authorizes charter schools to receive grants for school
facility costs not associated with reasonably equivalent
facilities provided by a school district pursuant to
Proposition 39.
10)Expands allowable use of funds to include facility purchases
and debt service related to facilities.
11)Deletes the provision specifying that if an existing charter
school located in an elementary attendance area in which less
than 50 percent of pupil enrollment is eligible for free and
reduce-price meals relocates to an attendance area determining
eligibility under the grant program, admissions preference
shall be given to pupils who reside in the elementary school
attendance area into which the charter school is relocating.
12)Deletes the provision expressing the intent of the
Legislature that not less than $18 million annually be
appropriated for the grant program.
13)Requires the Superintendent of Public Instruction to provide
an initial payment of at least 75 percent of the eligible
facilities costs. The final payment shall be apportioned on
or before August 1 of the year following the fiscal year in
which the costs were incurred and shall equal the difference
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between the actual total eligible facilities costs and the
initial payment.
14)Requires the eligibility for grant program funds and the
amount of grant program funds received by a charter school to
be included in the scope of the annual, independent financial
audit of the charter school.
EXISTING LAW :
1)Establishes the CSFGP intended to provide assistance with
facilities rent and lease costs for pupils in charter schools.
2)Specifies that subject to the annual Budget act, eligible
schools shall receive an amount up to, but not more than $750
per unit of ADA to provide an amount up to, but not more than,
75% of the charter school's annual facilities rent and lease
costs. Specifies that in any fiscal year in which there are
insufficient funds to fully fund the approved amounts, the SPI
shall apportion the available funds on a pro rata basis.
3)Specifies that eligibility is based on the geographic location
of the charter schoolsite, pupil eligibility for free or
reduced price meals, and a preference in admissions, as
appropriate. Specifies that charter schoolsites are eligible
for funding if the charter schoolsite meets either of the
following conditions:
a) The charter schoolsite is physically located in the
attendance area of a public elementary school in which 70%
or more of the pupil enrollment is eligible for free or
reduced price meals and the schoolsite gives preference in
admissions to pupils who are currently enrolled in or
reside in the attendance area where the charter schoolsite
is located.
b) Seventy percent or more of the pupil enrollment at the
charter schoolsite is eligible for free or reduced price
meals.
4)Prohibits grant funds to be apportioned for any of the
following:
a) Units of ADA generated through nonclassroom-based
instruction.
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b) Charter schools occupying existing school district or
county office of education facilities.
c) Charter schools receiving reasonably equivalent
facilities from their chartering authority.
5)Specifies that grant funds shall be used for costs associated
with facilities rents and leases and may also be used for
costs associated with remodeling of a building, deferred
maintenance, initially installing or extending service systems
and other built-in equipment, and improving sites.
FISCAL EFFECT : Unknown
COMMENTS : Charter School Facility Grant Program . The CSFGP was
established by SB 740 (O'Connell), Chapter 892, Statutes of
2001, to provide charter schools serving low-income areas with
assistance in rent and lease payments. Eligible charter schools
may receive up to $750 per unit of ADA, but may not receive more
than 75% of the school's annual rent or lease costs. If the
program is oversubscribed, the funds would be distributed on a
pro-rata basis.
Eligibility is limited to:
1)A charter school physically located in the attendance area of
a public school with at least 70% of its students eligible for
free or reduced price meals, and the school gives preference
in admissions to pupils who are currently enrolled in that
public elementary school and to pupils who reside in the
attendance area where the charter school is located (called
the Expanded Eligibility criterion), or
2)A charter school in which 70% or more of its pupil enrollment
is eligible for free or reduce price meals. Funds may be used
for costs associated with facilities rents and leases, but may
also include remodeling, deferred maintenance, initially
installing or extending service systems and other built-in
equipment, and improving sites.
The enacting legislation stated the Legislature's intent to
appropriate $10 million for the program for the 2001-02,
2002-03, and 2003-04 fiscal years (FY). Funds for this program
have increased substantially over time, with the bulk of the
funding coming from the transfer of funds from the phase out of
the Year-Round Operational Grant Program. SB 658 (Romero),
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Chapter 271, Statutes of 2008, required all funds appropriated
for the Year-Round School Grant Program at the FY 2007-08 level,
which, at the time, was $97 million, to be transferred to the
CSFGP at a rate of 20% each year. The FY 2009-10 budget reduced
allocations to categorical programs, including this program, by
approximately 35%. The program received $92 million in FY
2012-13.
Up until FY 2010-11, the CSFGP was a reimbursement-based
program. The FY 2010-11 budget contained language authorizing
charters to receive grants at the beginning of the fiscal year
based on prior year average daily attendance and estimated
costs.
This bill makes a number of eligibility, funding and
programmatic changes to the CSFGP.
Eligibility and funding changes .
Cap of 75 percent of costs . This bill removes the cap of 75
percent of annual facilities rent and lease costs, thereby
increasing the amount of funds provided to each charter to
potentially 100 percent of facilities rent and lease costs. It
is unclear what the rationale is for removing the 75 percent
cap.
Nonclassroom-based charters . Current law prohibits grants for
nonclassroom-based charters. This bill expands eligibility to
nonclassroom-based charters. Under the bill, funds will be
based on the lesser of 1) the actual annual facility costs or 2)
$750 per unit of ADA for a classroom-based charter or $375 per
unit of ADA for a nonclassroom-based charter. The author's
office states that the funds for nonclassroom-based charters
will only be provided for instructional space. However, that is
not in the bill. A previous proposal allowed only the portions
of facilities used by charters and only for the amount of time
pupils actually spend in a facility. This proposal reduces the
amount of funds per ADA, but allows a nonclassroom-based charter
school to receive funds for all pupils regardless of the amount
of time spent in a facility and regardless of how much of the
facility is actually being used for instructional purposes.
Eligibility based on low-income students . This bill expands
eligibility to schools located in attendance areas enrolling
less than 70 percent free and reduce-price meal students by
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lowering the percentage point one point at a time until all
available funds are allocated in any year where additional funds
remain.
Funding needed . According to the CDE, grant requests have
increased since the program was changed to a grant program
instead of a reimbursement program. In 2011-12, the CDE
received 389 new applications totaling $58 million in requests.
The 2012-13 budget allocated $92 million for this program. The
author's office states that when additional funding was approved
in 2008, it was anticipated that at some point, it would be
necessary to revise the eligibility requirements and the
permissible expenses in order to align the funding. On the
contrary, there was not such an agreement. If funds cannot be
fully used, funds should be returned to the General Fund for use
for other purposes. The reversion account was established for
this purpose and every year, millions of dollars are
reallocated. Staff recommends striking the provisions
eliminating the 75 percent cap, expanding the CSFGP to
nonclassroom-based charters, and lowering the free and
reduce-price meal eligibility threshold beyond 70 percent.
Use of funds for purchase of facility and debt service . This
bill expands the authorized use of grant funds to include
facility purchases and debt service. This provision changes the
intent of this program. The purpose of this program is to
provide assistance with facility rent and lease. There is
another program through state bonds funds, which have provided
$900 million for the acquisition and construction of charter
school facilities. Purchase and paying debt service should
remain with state bond funds. Allowing the CSFGP, funded by
state general funds, to pay for the purchase and debt service of
charter school facilities raises issues of concerns. Under the
bond program, a charter is reviewed to ensure that it is
"financially sound" and to ensure it has the ability to incur
such debt. Facilities must meet state building regulations,
including seismic standards under the Field Act. This program
does not require the same level of financial review or require
the same level of building safety standards. The bond program
requires a 50 percent local match. This bill proposes to fund
up to 100 percent of lease or rent costs. Because the state
would not hold title to the facilities purchased using funds
from this program, there is no process to recoup the funds if a
charter school closes. Under the bond program, a process is
established to return the facility to the school district or to
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the state. A question can also be raised on whether it is good
policy to encourage long-term indebtedness using state funds
that may or may not be available from year to year. Lastly, if
a charter school closes or is not renewed by its chartering
authority, and the charter authority uses the facilities for
private purposes, it may constitute a gift of public funds. If
the Committee chooses to pass this bill, staff recommends
amendments to require the facility to be used only for
instructional purposes and to meet safety standards, including
the Field Act standards, and to establish a process for disposal
of the property, similar to the requirements and process under
the bond program.
Expanding eligibility to facility costs not provided by school
district or COE . This bill expands eligibility to charter
schools already receiving facilities from a school district or
county office of education (COE) pursuant to Proposition 39 of
2000, which, in part, requires school districts to provide
reasonably equivalent facilities to charter schools. Existing
law prohibits charter schools occupying existing school district
or COE facilities, or charter schools receiving reasonably
equivalent facilities from their chartering authority pursuant
to Proposition 39 from receiving CSFGP funds. The bill
authorizes facilities costs not associated with occupying
district or COE facility to be eligible for grant funds. The
bill also authorizes facilities costs associated with a charter
school occupying reasonably equivalent facilities from a school
district , rather than from their chartering authority, pursuant
to Proposition 39, to be eligible for grant funds.
Preference for enrollment . This bill deletes the provision
requiring a charter school that relocates from an attendance
area in which less than 50 percent of pupil enrollment is
eligible for free and reduce-price meals to an attendance area
eligible for the CSFGP to give admissions
preference to the pupils residing in the new attendance area.
The eligibility criteria for CSFGP funds requires a charter
school to give preference to the pupils residing in the
attendance area if the school itself does not enroll 70 percent
of pupils eligible for free and reduce-price meals. According
to the sponsor, the California Charter School Association
Advocates, this provision was removed "to delete any state law
dealing with preferences that gets crosswise with the feds. DOE
[Department of Education] was threatening to withhold charter
school grant money because we have some policies that are
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counter to recent fed law." However, according to the CDE, the
federal government's concerns are policies when applying for the
federal Public Charter School Grant program. This provision is
specific to the CSFGP. Staff recommends reinstating the
provision.
Programmatic changes . The bill specifies that the initial
payment to charter schools shall be based on prior year ADA, as
certified at the second principal apportionment, for a charter
school that operated the prior year, and upon the ADA approved
pursuant to EC 47652. EC 47652 establishes the process for
advance apportionment for charters operating in its first year
based on an estimate of ADA for the current fiscal year. EC
47652 also specifies that not later than five business days
following the first 20 days of school, a charter must report to
the CDE its actual ADA for the first month, and the
Superintendent of Public Instruction must adjust the
apportionment accordingly
This bill requires the CDE to provide at least 75 percent of
estimated facilities costs in its initial payment and requires
the final payment to be apportioned on or before August 1 of the
year following the fiscal year in which the costs were incurred.
According to the CDE, the August 1 requirement may be a
challenge. Costs are incurred through the end of the fiscal
year in June and the process for submitting and verifying
receipts would require more than one month.
This bill requires the eligibility for grant funds and the
amount of grant program funds received by a charter school to be
included in the scope of the annual, independent financial audit
of the charter school. Staff recommends an amendment to
incorporate the enforcement of the CSFGP funds in the audit
guide.
Governor's proposed 2013-14 budget . The Governor's 2013-14
budget proposes to transfer the administration of the program
from the CDE to the California School Finance Authority under
the Treasurer's office. The Governor also proposes some changes
that are similar to some of the proposals contained in this
bill. The Governor proposes to fund nonclassroom-base charter
school facilities, but only the portions that are used to
provide direct instruction and instructional support. The
Governor's proposal also allows charter schools that receive
district or COE facilities to receive funds for the portions of
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their facilities that are not existing district or COE
facilities or reasonably equivalent facilities received from
their chartering authority. The Governor's proposal moves, from
October 1 to August 31 or no later than 30 days after enactment
of the Budget Act, by which grant funds must be allocated to
charter schools. Rather than including the CSFGP funds in the
charter school's audit, the Governor's proposal incorporates the
enforcement in the audit guide.
The author states, "Providing appropriate facilities for charter
schools continues to be a substantial challenge. Unlike
traditional public schools, charter schools do not have a range
of tools available for securing facilities. One of the most
successful facility program is the "SB 70" program, which was
enacted in 2001 and provides reimbursement for facility rent and
lease costs to eligible charter schools."
Previous legislation . SB 645 (Simitian) creates charter school
academic accountability measures for renewal; expands
eligibility for Charter School Facility Grant Program; and,
authorizes the California School Finance Authority to refinance
working capital for charter schools. The bill was held in the
Assembly Appropriations Committee suspense file in 2011.
AB 2047 (Huff), strikes the provision of law stating the intent
of the Legislature to appropriate $10 million for the CSFGP for
the 2001-02, 2002-03, and 2003-04 fiscal years, and specifies
that for the 2006-07 fiscal year and each fiscal year
thereafter, the program shall be funded at the level appropriate
in the annual Budget Act, or other statute. The bill was held
in the Assembly Appropriations Committee suspense file in 2006.
AB 2323 (Huff) expands eligibility to charter schools located in
attendance areas of public schools where 50 percent or more but
less than 70 percent pupils are eligible for free and
reduce-price meals and the charter school gives preference to
students enrolled in the public school or the charter school
enrolls 50 percent or more but less than 70 percent of pupil
enrolled at the charter school are eligible for free and
reduce-price meals. The bill was held in the Assembly
Appropriations Committee in 2006.
REGISTERED SUPPORT / OPPOSITION :
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Support
California Charter Schools Association Advocates
Opposition
None on file
Analysis Prepared by : Sophia Kwong Kim / ED. / (916) 319-2087