BILL ANALYSIS Ó SENATE COMMITTEE ON EDUCATION Carol Liu, Chair 2013-2014 Regular Session BILL NO: AB 2585 AUTHOR: Daly AMENDED: March 25, 2014 FISCAL COMM: Yes HEARING DATE: June 11, 2014 URGENCY: No CONSULTANT:Daniel Alvarez SUBJECT : School finance: annual budgets. SUMMARY This bill eliminates the dual budget adoption option for school districts and county offices of education (COEs), revises and recasts provisions related to approval of conditional or disapproved budgets, and makes other technical and clarifying changes. BACKGROUND Current law : 1) Provides for external financial oversight of COEs by the Superintendent of Public Instruction (SPI), and of school districts by county superintendents. 2) Requires local educational agency's (LEAs) to adopt a budget prior to July 1 of each year, and requires that budget to be approved by the county superintendent (for districts) or the SPI (for COEs) by August 15. Under the dual budget cycle an LEA needs to file a revised and readopted budget, at a public hearing, based on projected income and expenses budget by September 8; this differs from a single budget cycle where the budget is readopted only if it is disapproved or as needed, and no later than 45 days after the Governor signs the Budget Act. Both single and dual budget cycles processes require specified oversight and interventions if the budget is not approved by specified dates. (Education Code § 42127) 3) Requires all LEAs to provide two interim reports AB 2585 Page 2 each fiscal year by specified due dates, and requires each LEA to self-certify as to whether the LEA will meet or may not meet its financial obligations for the current and two subsequent fiscal years, or will be unable to do so for the current and one subsequent year; also requires specified oversight and interventions if a LEA may not meet or will be unable to meet its financial obligations. (Education Code § 42130 et. seq.) ANALYSIS This bill eliminates the dual budget adoption option for school districts and county offices of education (COEs), revises and recasts provisions related to approval of conditional or disapproved budgets, and makes other technical and clarifying changes. STAFF COMMENTS 1) Need for the bill . According to the author's office, the number of school districts and county offices of education electing to use the dual budget adoption option has been dwindling for many years. For fiscal year 2014-15, only 13 of the approximately 1,100 school districts and COEs that elected to use this budget adoption option. Eliminating the dual budget adoption option will not create new responsibilities for districts or COEs, nor will it prohibit school districts or COEs from modifying their budgets throughout the year. In addition, this bill does not prevent districts or COEs from holding additional public hearings to elicit feedback from parents, community leaders, and other important stakeholders. 2) According to California Department of Education , the dual budget adoption is redundant and minimally used. Currently, only 13 LEAs use this process. Districts and COEs that choose the single adoption cycle are subject to the same review and timeline used in dual budget adoption. The difference is that single adoption districts and COEs revise their budgets by AB 2585 Page 3 September 8 and submit the revisions for review, but do not formally re-adopt them. CDE further notes that all districts and COEs routinely revise their budgets throughout the year as more accurate information becomes available. Within 45 days after the state budget is adopted, all districts and COEs must make available for public review any revisions to their budgets to reflect the funding made available by the Budget Act. The budget review process also requires all districts and COEs to submit two interim budget reports per year, one as of October 31 and another as of January 31. The bill also revises and recasts portions of the process for review and modification of conditionally approved or disapproved budgets. Rather than hold a separate hearing to address concerns, for example, a school district or COE would instead address concerns at a regularly scheduled meeting. The number of districts and COEs selecting the dual adoption option has declined over the years, and only 13 currently use it. They are: a) Fairfax Elementary b) Lost Hills Union Elementary c) King City Union elementary d) Orange County Department of Education e) Coastline ROP JPA f) Brea-Olinda Unified g) Garden Grove Unified h) Newport-Mesa Unified i) Savanna Elementary j) Tustin Unified aa) Banning Unified bb) Los Alamos Elementary cc) Sonoma Valley Unified 1) Assembly Appropriations Committee indicates the following fiscal impact: a) One-time General Fund and Federal Fund savings of $100,000 to the California Department AB 2585 Page 4 of Education (CDE) related to not implementing a software systems upgrade. Estimated annual General Fund savings of $10,000 to CDE for elimination of workload related to processing dual budget adoption information. b) Minor state-mandated costs to school districts and COEs for activities related to review and response of conditionally approved or disapproved budget revisions. SUPPORT California Federation of Teachers State Superintendent of Public Instruction OPPOSITION None on file.