BILL ANALYSIS Ó AB 948 Page 1 ASSEMBLY THIRD READING AB 948 (Olsen) As Amended May 24, 2013 Majority vote EDUCATION 6-0 APPROPRIATIONS 17-0 ----------------------------------------------------------------- |Ayes:|Buchanan, Olsen, Campos, |Ayes:|Gatto, Harkey, Bigelow, | | |Chávez, Nazarian, | |Bocanegra, Bradford, Ian | | |Williams | |Calderon, Campos, | | | | |Donnelly, Eggman, Gomez, | | | | |Hall, Ammiano, Linder, | | | | |Pan, Quirk, Wagner, Weber | | | | | | ----------------------------------------------------------------- SUMMARY : Expands eligibility and makes other changes to the Charter School Facility Grant Program (CSFGP). Specifically, this bill : 1)Specifies that in any year in which additional funds remain after state and federal funds have been allocated to eligible applicants, the California Department of Education (CDE) shall expand eligibility by reducing the free and reduced-price meals threshold one percentage point at a time, but in no case below 60%, for charter schools that meet eligibility based on the school's enrollment of pupils that are eligible for free and reduced-price meals. 2)Deletes an obsolete provision requiring the CDE to submit a report to the Legislature. 3)Deletes the provision expressing the intent of the Legislature that not less than $18 million annually be appropriated for the grant program. 4)Specifies that a charter school that receives CSFGP funds shall be subject to audits conducted pursuant to the audit guide. FISCAL EFFECT : According to the Assembly Appropriations Committee, there is likely to be a potential loss of General Fund/Proposition 98 savings over the next two fiscal years, likely between $9 million and $20 million. There is also AB 948 Page 2 potential increased General Fund/Proposition 98 cost pressure, likely in the hundreds and thousands to low millions, to increase funding for the CSFGP. COMMENTS : 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 average daily attendance (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; or, 2)A charter school in which 70% or more of its pupil enrollment is eligible for free or reduced- price meals. According to the CDE, 60% of the charter schools that received funds in 2011-12 were eligible based on the charter school meeting the 70% threshold, while 40% of the charter schools funded were eligible based on the enrollment of the public school in the attendance area. 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), 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 AB 948 Page 3 CSFGP at a rate of 20% each year. The FY 2009-10 budget reduced allocations to categorical programs, including this program. 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 ADA and estimated costs. This bill expands eligibility for charter schools that meet eligibility based on their enrollment of pupils that are eligible for the free and reduced-priced meal program by lowering the 70% threshold by one percentage at a time, but not lower than 60% of kids eligible for free and reduced-price meals, if funds are available after all applicants that meet the 70% threshold are funded. This bill also deletes obsolete language and requires the CSFGP funds to be subject to audit through the audit guide. 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 Governor's FY 2013-14 budget proposes to transfer the administration of the program from the CDE to the California School Finance Authority under the State Treasurer's office. 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 county office of education (COE) facilities to receive funds for the portions of 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. The Governor's proposal incorporates the funds in the audit guide. Analysis Prepared by : Sophia Kwong Kim / ED. / (916) 319-2087 AB 948 Page 4 FN: 0000997