BILL ANALYSIS                                                                                                                                                                                                    



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          SENATE THIRD READING
          SB 91 ( Budget and Fiscal Review Committee)
          As Amended  June 12, 2013
          Majority vote.  Budget Bill Appropriation Takes Effect  
          Immediately

           SENATE VOTE  :Vote not relevant  
           
           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.  Specifically,  this bill  :   

           District Formula Summary  
           
           1)Establishes a Local Control Funding Formula (LCFF) for school  
            districts, charter schools, and county offices of education  
            (COEs).

          2)Provides 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 

             d)   Grades 9 to 12:  $8,289

          3)Establishes an eight-year phase-in timeline, as specified, to  
            incrementally close the gap between actual funding and the  
            target level of funding.

          4)Establishes 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 uses an "unduplicated count" meaning that  








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            pupils who fall into more than one category are counted only  
            once. 

          5)Establishes a concentration grant equal to 50% of the base  
            grant for every unduplicated pupil above the threshold of 55%  
            of enrollment.

          6)Requires 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 requires a gradual reduction to the 24 to 1  
            ratio during the phase-in period.

          7)Caps 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)Requires that HTS funds to be spent for purposes of pupil  
            transportation.

          9)Maintains 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;

             g)   Early Childhood Education Programs;

             h)   Partnership Academies;

             i)   Agricultural Vocational Education;









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             j)   Specialized Secondary Programs;

             aa)  Foster Youth Services Programs; and

             bb)  Adults in Correctional Facilities.

          10)Repeals funding and program requirements for all other  
            categorical programs and redirects their monies to the  
            supplemental and concentration grant portions of the LCFF.

          11)Requires 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)Establishes 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)Provides, 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)Specifies 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)Repeals 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.
           
          County Office of Education (COE) Formula  

          16)Replaces the existing funding model for COEs with a two-part  
            formula based on the cost of providing regional services and  








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            alternative education.

          17)Provides 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)Provides 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)Requires 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 requires the LCAP to be effective  
            for three years.  

          2)Requires 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  








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            achieve specified goals.  

          3)Authorizes school districts and COEs to establish local  
            priorities for inclusion in the LCAP and requires 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)Requires a school district and COE, as part of the annual  
            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.  








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          5)Requires 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)Establishes a public process for the review and adoption of  
            LCAPs and requires a school district and COE to establish a  
            parent advisory committee, including one specific to EL  
            parents, as specified.  

          7)Requires 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)Establishes 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 requires 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)Requires a school district to file its LCAP with the COE.   
            Further establishes a process for the COE to review and submit  
            recommendations to the district and adopt the LCAP, as  
            specified.  This process includes provisions for the COE to  








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            ensure the LCAP adheres to the SBE template and includes  
            "expenditures sufficient to implement the specific actions and  
            strategies included in the LCAP."  

          10)Requires a COE to file its LCAP with the SPI.  Further  
            establishes 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)Requires 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)Authorizes the SPI to identify school districts and COEs in  
            need of intervention and requires 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)Authorizes the SPI, for districts and COEs in need of  
            intervention and with SBE approval, to do one or more of the  
            following: 








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             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)Requires 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  
            authorizes the petition to establish additional priorities and  
            goals in the same manner as districts and COEs.  

          15)Requires a charter petition, as part of describing pupil  
            outcomes, to include outcomes related to the applicable state  
            priorities defined above, as specified.  

          16)Requires 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. 








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          17)Requires charter schools to consult with teachers,  
            principals, other schoolsite staff, parents, and pupils in the  
            annual update to the charter plan referenced above.  

          18)Authorizes 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)Specifies 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)Requires 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)Requires 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 prohibits a charter  
            school from appealing a revocation determined based on the  
            provisions of this measure. 

           Economic Recovery Target (ERT)

           39)Calculates an Economic Recovery Target (ERT) for each school  
            district. The ERT will be a per-pupil rate consisting of: 








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             a)   The district's revenue limit in 2007-08-regardless of  
               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)Requires the SBE, no later than January 31, 2014, to adopt  
            regulations governing the expenditure of supplemental grant  
            funds, including concentration grant funds.  Requires 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)Requires 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)Requires 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)Prohibits the SBE or the SPI from waiving any part of the  
            Local Control and Accountability Plans.









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          44)Requires 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,  
            charter schools and county offices of education can identify  
            pupils in foster care.

          45)Makes various technical and conforming changes to, among  
            other things, replace statutory references to the revenue  
            limit with references to the LCFF.

          46)Contains 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  








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          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  
          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)  








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          319-2099 


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