BILL ANALYSIS Ó
AB 1066
Page 1
Date of Hearing: May 1, 2013
ASSEMBLY COMMITTEE ON EDUCATION
Joan Buchanan, Chair
AB 1066 (Holden) - As Amended: April 9, 2013
SUBJECT : School finance: average daily enrollment
SUMMARY : Changes from an attendance-based to an
enrollment-based system of funding schools. Specifically, this
bill :
1)Requires, commencing on July 1, 2016, that school district
revenue limit funding be based on average daily enrollment
(ADE) and that all other statutory references to average daily
attendance (ADA) be deemed to refer to average daily
enrollment.
2)Defines "average daily enrollment" to mean the pupils in
enrollment in the school district, county office of education,
or charter school on the first day of school, plus all later
enrollees, minus all withdrawals.
3)Phases in the ADE-based funding system as follows:
a) For 2014-15, defines ADA as consisting of two-thirds ADA
and one-third ADE; and
b) For 2015-16, defines ADA as consisting of one-third ADA
and two-thirds ADE.
4)Requires that a pupil deemed a habitual truant have all of his
or her ADE funding allocated for the sole purposes of securing
pupil attendance and success.
EXISTING LAW
1)Funds schools on the basis of average daily attendance, which
is the total number of all days of attendance for all pupils
during a school year divided by the number of days in the
school year.
2)Defines "habitual truant" as a pupil who has been reported as
a truant three or more times per school year and with whom,
and with whose parent or guardian, an appropriate district
employee has made a conscientious effort to hold at least one
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conference.
3)Defines "truant" as a pupil who is absent from school without
a valid excuse three full days in one school year or tardy or
absent for more than a 30-minute period during the schoolday
without a valid excuse on three occasions in one school year.
FISCAL EFFECT : Unknown
COMMENTS : The Center for Evaluation & Education Policy (CEEP)
has identified six commonly-used methods of counting pupils for
funding purposes ("Student Count Mechanisms for Funding
Purposes," Education Policy Brief, Volume 10, Number 2, Spring
2012). They are:
Single Count Date: A count done on a single day,
usually near the beginning of the school year, which can be
based on either enrollment or attendance (used by 10
states).
Multiple Count Dates: Two or more counts done during
the school or calendar year, with one occurring in the fall
and the second occurring in the winter or spring (used by 9
states).
Average Daily Attendance: Seven states, including
California, use this. The other states are Illinois,
Kentucky, Mississippi, Missouri, New York, and Texas.
Average Daily Membership: An average of a daily count
during all or most of the year of pupils enrolled (used by
14 states).
Single Count Period: An average of a daily count during
a designated period near the beginning of the school year;
may or may not include absent pupils (used by 3 states).
Multiple count period . An average of multiple daily
counts conducted during two or more periods during the
school year (used by 1 state).
Six states did not respond to the CEEP survey, which also found
that nine states base their formulas on attendance, three on a
combination of attendance and enrollment, and the rest on
enrollment.
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SB 727 (Rosenthal, Chapter 855, Statutes of 1997) changed the
method for computing ADA for apportionment purposes. Prior to
the enactment of SB 727, ADA included excused absences. SB 727
changed the calculation to exclude excused absences. Thus, ADA
is currently based on actual attendance.
This bill moves to an enrollment-based system over a three year
period, beginning in 2014-15. It does not change the amount of
funding, particularly revenue limit funding, per pupil. Rather
it changes the way pupils are counted. By counting pupils on
the basis of enrollment instead of attendance, this bill
increases the total revenue limit funding to which districts are
entitled.
The statewide average ratio of attendance to enrollment is about
95%, meaning that, on average, about 5% of the state's pupils
are absent each day. However, there is variability around this
average, so some districts may have an average daily absence
rate of 10%, while others have a rate of 2%. Because enrollment
is higher than ADA, all districts would see their total revenue
increase under this bill, but not by the same amount. Districts
with larger gaps between ADA and enrollment would get larger
increases.
Supports of an enrollment-based finance system argue that an
attendance-based system penalizes districts that serve pupil
populations that are prone to higher rates of absenteeism.
Specifically, low-income students have a higher incidence of
health problems and are more likely to be subject to other
out-of-school conditions that lead to more absences. Data from
the California Department of Education show that, in general, a
high percentage of low-income pupils is associated with a high
rate of absenteeism. The out-of-school conditions that lead to
a high rate of absenteeism are beyond the ability of a district
to control. Therefore, they argue that an attendance-based
system "punishes" districts with high percentages of low income
pupils.
Supporters of an enrollment-based system also argue that school
districts must staff, provide classroom space, purchase books,
etc., on the basis of enrollment, not attendance. An
enrollment-based system recognizes this reality. According to
the author's office, "Using ADA as the multiplier for pupil
funding has the effect of unfairly and discriminately reducing
aid to school districts, county offices of education and charter
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schools with higher poverty, English learner, and minority
concentrations because education costs are fixed regardless of
variations in attendance. Sometimes the disparity caused by the
current ADA funding calculation results in 10 to 20 percent less
funding."
The argument in support of an attendance-based system is that it
provides an incentive for school districts to reduce absenteeism
and truancy. An enrollment-based system, on the other hand,
does not provide such an incentive. This bill addresses this
issue by requiring districts to use all of the ADE funding for a
habitually truant pupil on efforts to secure his or her
attendance and success in school. The committee may wish to
consider whether a focus on habitually truant pupils is
sufficient to address general absenteeism.
Problems with the definition of "average daily enrollment ." The
bill defines "average daily enrollment" as "the pupils in
enrollment in the school district, county office of education,
or charter school on the first day of school, plus all later
enrollees, minus all withdrawals." Accordingly, if a district
has 100 pupils on the first day of school, and one pupil
transfers in during the last week of school, then the district
would be credited with 101 ADE, even though it really had only
100 ADE for nearly the entire year. Conversely, if the district
had a pupil transfer out during the last week of the year, then
it would be credited with only 99 ADE. Using this method to
compute ADE is not an accurate measure of a district's workload
or staffing needs throughout the course of the school year.
Impact on revenue limits . School district revenue limits are
currently deficited by about 22%. This means that districts
receive about 78 cents for every dollar they are entitled to.
The revenue limit is an amount per student, and the amount is
not changed by this bill. However, ADE is a larger number than
ADA, so multiplying the revenue limit per student by ADE instead
of ADA increases revenue limit funding for each district as well
as the statewide cost of funding district revenue limits. Since
revenue limits are already deficited, the likely effect of this
bill is to increase the deficit by an unknown amount. Unless
more funding is provided for revenue limits, districts will
receive a smaller funded revenue limit amount per student,
multiplied by a larger number of students, as defined by ADE.
Until the revenue deficit is eliminated, this may result in some
districts (i.e., districts with a low rate of absenteeism)
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getting less total revenue limit funding than under current law.
Interactions with Proposition 98 and the appropriations limit .
The California Constitution defines "changes in enrollment" as
the percentage change in average daily attendance for
determining the Proposition 98 minimum guarantee and defines
"change in population" as the change in average daily attendance
for purposes of computing the appropriations limit.
Accordingly, districts would still need to collect and report
ADA for these purposes unless the Legislature could statutorily
define ADE to mean ADA for purposes of the Constitution.
Impact on the Local Control Funding Formula . The Governor has
proposed a Local Control Funding Formula (LCFF) to replace the
current system of school finance. The LCFF establishes a target
level of funding for each district, which is higher than the
current level of funding. The Department of Finance estimates
that it would cost an additional $15.5 billion per year to fully
fund the target statewide, and that we will reach that level of
funding in seven years, given current state revenue estimates.
Changing from ADA to ADE would increase each district's target,
and therefore the statewide cost of funding all targets. K-12
Proposition 98 funding is now about $50 billion. ADE is about
5% higher than ADA. Therefore, changing from ADA to ADE would
increase the statewide cost of funding the target by about $2.5
billion. This would increase the length of time it would take
for each district to reach its target.
The LCFF would provide a base grant (a flat amount per ADA,
adjusted for grade level) and a supplemental grant, based on the
number of English learners, low income students, and students in
foster care enrolled in a district. These students would
generate additional funding for the district equal to 35% of the
base grant. If these students comprise more than 50% of a
district's ADA, then each such student over 50% would general
additional funding equal to 70% of the base grant (this is the
"concentration factor"). The base grant is based on ADA, and
the supplemental grant and concentration factor are based on
enrollment.
As discussed research shows that the rate of absenteeism is
higher among pupils from low income families. Therefore,
changing from ADA to ADE is likely to have the largest upward
impact on the base grants of the same districts that qualify for
the supplemental grant and concentration factor. This would
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amplify the effect of the LCFF by directing more resources to
districts with high numbers of the qualifying pupils. The size
of this impact is unknown.
SB 69 (Block), which is currently pending in the Senate,
eliminates the concentration factor proposed in the LCFF and
increases funding for the base grant, among other things. The
impact of this bill on SB 69 is unknown.
Given the broader discussions taking place on school finance
reform, and the lack of information on how an enrollment-based
system would affect current allocations for deficited revenue
limits as well as the alternative school finance models being
considered, the committee may wish to consider whether it is
premature to move ahead with this proposed change without
further study and analysis.
REGISTERED SUPPORT / OPPOSITION :
Support
Advancement Project
Association of California School Administrators
Bonita Unified School District
California Federation of Teachers
California School Employees Association
California Teachers Association
Franklin-McKinley School District
Turlock Unified School District
Opposition
None received
Analysis Prepared by : Rick Pratt / ED. / (916) 319-2087