BILL ANALYSIS Ó SB 97 Page 1 Date of Hearing: August 29, 2013 ASSEMBLY COMMITTEE ON BUDGET Nancy Skinner, Chair SB 97 ( Budget and Fiscal Review) - As Amended: August 28, 2013 SENATE VOTE : Vote not relevant SUBJECT : Education SUMMARY : Makes various technical and clarifying changes to statutes related to K-12 and Higher Education in order to implement the 2013 Budget Act. Specifically, this bill : K-12 Education: 1)Makes clarifying changes related to the transfer of the California School Finance Authority from the State Department of Education (SDE) to the State Treasurer's Office. 2)Makes various technical changes related to implementation of the California Clean Energy Jobs Act (Proposition 39): a) Specifies, for purposes of calculating an average daily attendance equivalent for the state special schools, SDE will use 97% of their prior year enrollment as captured in the state's CalPADS data system. b) Clarifies that small school districts may receive two years' worth of Proposition 39 funding allocations in the first year, and extends the deadline by which they must apply for this treatment by one month. c) Clarifies an existing statutory requirement that schools receiving Proposition 39 funding repay that funding if they vacate the benefitting facility within five years of project completion, to specify that it applies to every local educational agency, not just school districts. 3)Clarifies that the terms and conditions of the General Fund cashflow loan to Inglewood Unified School District shall include costs incurred by the California Infrastructure and Economic Development Bank (I-Bank). SB 97 Page 2 4)Clarifies that the Program Specialists and Regionalized Services (PSRS) and professional development funds are included in the special education base funding when calculating the Statewide Target Rate. 5)Makes various changes related to the Local Control Accountability Plan (LCAP), including: a) Clarifies that a budget cannot be approved for a school district or county office of education (COE) before a local control accountability plan (LCAP) or update to the existing plan is adopted and clarifies terms under which a budget review committee shall be formed. b) Requires school district and COE actions related to achieving the goals of the LCAP to be consistent with local collective bargaining agreements. c) Clarifies that the initial LCAP program expenditures shall be listed and described in the same manner as the annual LCAP. d) Provides greater detail related to career technical education state priorities. e) Adds local bargaining units to the groups school district and COEs must consult in the development of the LCAP. f) Requires LCAP to adhere to regulations adopted related to expenditure of supplemental and concentration grant funding. 6)Makes a several technical and clarifying changes related to the Local Control Funding Formula (LCFF), including: a) Clarifies statutes related to the William's settlement agreement to delink from previous categorical funding while continuing requirements with the new funding model. b) Repeals law related to county community schools and the transfer of students to conform with LCFF requirements. c) Clarifies allocation methodology related to the Education Protection Account (EPA) for revenues for school SB 97 Page 3 districts, charter schools and COEs. d) Continues, through 2016, direct appropriation of categorical funding to Joint Power Authorities if they received these funds directly prior to the passage of the LCFF. e) Authorizes school districts and county offices of education to jointly meet ROC/P maintenance of effort requirements by allowing a county office or school district to include expenditures from both entities so long as the combined expenditures of both entities meet the maintenance of effort requirement in total. f) Clarifies free and reduce-price meal eligibility is based on federal income eligibility criteria for purposes of unduplicated pupil counts. g) Authorizes LEAs to submit changes to California Longitudinal Pupil Achievement Data System (CALPADS) within the timeframes and procedures established by the SDE. h) Excludes, for the 2013-14 and 2014-15 fiscal years, $3.5 million from the calculation of the LCFF transition adjustment for Torrance Unified School District to reflect the pass through of these funds to Southern California Regional Occupational Center. i) Clarifies the physical location of a charter school for purposes of generating concentration grant funding. j) Clarifies than Necessary Small School (NSS) average daily attendance (ADA) does not count for purposes of base funding but does count for supplemental and concentration grant funding. aa) Clarifies that the amount of NSS funding received by a school district that qualified for NSS funding in the 2012-13 fiscal year is included within their hold harmless calculation. bb) Repeals obsolete code sections related to Capistrano Unified School District and Fallbrook Union High School. cc) Specifies that Superintendent of Public Instruction SB 97 Page 4 (SPI) shall contract with a local education agency (LEA), or consortium of LEAs, to serve as the fiscal agent for the California Collaborative for Educational Excellence (CCEE). (The 2013 Budget Act appropriated $10 million for this purpose.) 7)Appropriates up to $3.164 million (General Fund) to the SDE for state operations: a) Provides $459,000 (one-time General Fund) for three limited term positions to oversee the California Career Technical Education Pathways Trust competitive grant program; b) Provides up to $1.4 million to support the implementation and administration of the LCFF. Specifically, the bill appropriates $$933,000 (ongoing General Fund) for six positions for this purpose. An additional $479,000 for up to five positions may be authorized, contingent upon Department of Finance approval of an expenditure plan. c) Provides up to $1.3 million for the support and development of the LCAP. Specifically, this bill appropriates $570,000 (ongoing General Fund) for five positions for this purpose. An additional $723,000 and six positions may be authorized, contingent upon Department of Finance approval of an expenditure plan. 8)Amends Chapter 47, Statutes of 2013 to clarify that the $2 million provided to the Office of Planning and Research is non-Proposition 98/General Fund. 9)Makes other technical and clarifying changes. Community Colleges: 1)Makes technical changes to statutes regarding community college mandates and the apprenticeship program; 2)Adjusts deferral amounts within the community college system by $2.8 million; 3)Allows community college districts to use Proposition 98 General Fund monies for cash-flow purposes until the final SB 97 Page 5 amount of funds from Redevelopment Agencies is determined. This change gives the Department of Finance discretion to allow districts to use Proposition 98 funding while districts wait for Redevelopment Agency (RDA) funding. There is no new cost to Proposition 98; the funding is needed for cash-flow purposes and will be reconciled once final RDA amounts are determined. Middle Class Scholarship: 1)Makes four minor changes to the Middle Class Scholarship program, which was established in the 2013 Budget Act. The changes are: a) Ensures that students are entitled to discounts of up to 40 percent of systemwide tuition and fees at the University of California and California State University under the programs. Previous language had inadvertently omitted systemwide fees; b) Requires that students maintain "satisfactory academic progress," as defined by federal regulation, to qualify for the program. This change aligns academic standards with that of the Cal Grant program; c) Clarifies legislative intent that students can qualify for the program if their annual household incomes does not exceed $150,000; d) Clarifies legislative intent that the new program does not allow the University of California or California State University to supplant their institutional financial aid programs and that the systems maintain institutional aid funding levels for undergraduate students at the 2013-14 level. EXISTING LAW : 1)Establishes the Local Control Funding Formula which replaces the prior revenue limit and categorical funding structure for K-12 education. The formula is comprised of a base grant (general purpose funding), supplemental grants (funding for English learners (EL), low income and foster youth) and SB 97 Page 6 concentration grants (additional funding for LEAs with high numbers of EL, low income and foster youth students). Existing law also includes accountability requirements through the development and adoption of LCAPs, which require the reporting of detailed pupil achievement data and information related to the expenditure of their LCFF allocations. Statute further requires the SBE to adopt a template for use by LEAs in developing LCAPs. 2)Authorizes Inglewood Unified School District to request, through the SDE, up to $55 million in cashflow loans from the General Fund, in lieu of financing through the I-Bank. The interest charged on these loans are at the annual rate of return of the Pooled Money Investment Account (PMIA) plus 2 percent. According to the Department of Finance, the I-Bank has incurred costs of roughly $144,000 to date. FISCAL EFFECT : Appropriates up to an additional $3.164 million (General Fund) to the State Department of Education for state operations. COMMENTS : This bill makes largely technical and clarifying amendments to the education trailer bills passed in June as part of the 2013 Budget Act. These bills were AB 86, Chapter 48, Statutes of 2013 (Education Omnibus Trailer Bill), AB 97, Chapter 47, Statutes of 2013 (Local Control Funding Formula) and AB 94, Chapter 50, Statutes of 2013. REGISTERED SUPPORT / OPPOSITION : Support None on file. Opposition None on file. Analysis Prepared by : Misty Feusahrens and Mark Martin / BUDGET / (916) 319-2099 SB 97 Page 7