BILL ANALYSIS Ó SB 97 Page 1 ( Without Reference to File ) SENATE THIRD READING SB 97 (Budget and Fiscal Review Committee) As Amended September 11, 2013 Majority vote. Budget Bill Appropriation Takes Effect Immediately SENATE VOTE :Vote not relevant BUDGET 14-10 -------------------------------- |Ayes:|Skinner, Bloom, Campos, | | |Chesbro, Daly, Dickinson, | |Skinn|Gordon, | |er, |Jones-Sawyer, Mitchell, | |Bloom|Mullin, Muratsuchi, | |, |Nazarian, Stone, Ting | |Campo| | |s, | | |Chesb|Gorell, Chávez, Grove, | |ro, |Harkey, Mansoor, | |Daly,|Melendez, Morrell, | | |Nestande, Patterson, | |Dicki|Wagner | |nson,| | | | | |Gordo| | |n, | | |Jones| | |-Sawy| | |er, | | |Mitch| | |ell, | | |Mulli| | |n, | | |Murat| | |suchi| | |, | | |Nazar| | |ian, | | |Stone| | |, | | |Ting | | SB 97 Page 2 | | | | | | | | | |Nays:| | | | | |Gorel| | |l, | | |Cháve| | |z, | | |Grove| | |, | | |Harke| | |y, | | |Manso| | |or, | | |Melen| | |dez, | | |Morre| | |ll, | | |Nesta| | |nde, | | |Patte| | |rson,| | | | | |Wagne| | |r | | | | | | | | | | | -------------------------------- 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 various changes related to the Local Control Accountability Plan (LCAP), including: a) Requires annual updates, as well as the initial LCAP, to adhere to regulations adopted related to expenditure of supplemental and concentration grant funding. SB 97 Page 3 b) Clarifies that a budget cannot be approved for a school district or county office of education (COE) before a LCAP or update to the existing plan is adopted and clarifies terms under which a budget review committee shall be formed. c) Specifies that actions in a district or COE LCAP cannot supersede provisions of an existing local collective bargaining agreement. d) Requires the template developed by the State Board of Education (SBE) to include guidance on the reporting of expenditures, including expenditures that will serve low income, English learner, foster youth and pupils redesignated as fluent English proficient. e) Provides greater detail related to career technical education state priorities. f) Adds local bargaining units to the groups school district and COEs must consult in the development of the LCAP. 2)Makes 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) Aligns county community schools and community day school funding with LCFF requirements. c) Clarifies allocation methodology related to the Education Protection Account (EPA) for revenues for school districts, charter schools and COEs. d) Clarifies funding calculations that apply to district reorganizations. e) 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. f) Authorizes school districts and COEs to jointly meet Regional Occupational Centers and Programs (ROCP) maintenance of effort SB 97 Page 4 requirements by allowing a COE 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. g) Clarifies free and reduce-price meal eligibility is based on federal income eligibility criteria for purposes of unduplicated pupil counts, instead of receipt of meals. h) Authorizes local educational agencies (LEAs) to submit changes to California Longitudal Pupil Achievement Data Systems (CalPADS) within the timeframes and procedures established by the State Department of Education (SDE). i) Clarifies that only charter schools serving students that a COE would otherwise be responsible for educating are eligible to claim the alternative education funding rate under LCFF. j) Specifies that the SDE and Department of Social Services shall enter into a memorandum of understanding, to share foster youth data, on or before February 1, 2014. Clarifies the definition of foster youth. Changes the due date of an SDE report on foster youth outcomes from February 15 to July 1 of each even-numbered year. aa) 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. bb) Clarifies that 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. cc) 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. dd) Clarifies that Necessary Small Schools (NSS) containing grades 7-8 are funded at the elementary NSS rate for those grades, not the high school NSS rate, consistent with existing law. ee) Allows school districts experiencing declining enrollment to SB 97 Page 5 receive either prior year or current year ADA funding and corresponding grade span proportions, whichever is greater. ff) Retain statutes for the Center for Advanced Research Technology (CART) program that guide minimum instructional day, computation of average daily attendance, supervision of pupils, and the program sunset date. Repeals statute authorizing special funding for CART, which will now be funded pursuant to LCFF formulas. 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). 4)Provides annual apportionments beginning in 2013-14 to the South Monterey County Joint Union High School District to fund the difference between annual payments under the I-Bank loan and what the district would be paying under a General Fund loan with an interest rate set at the Pooled Money Investment Account rate plus 2%. These "gap" payments will continue through 2029-30, reflecting the term of the loan. 5)Clarifies that LEAs, or a consortium of LEAs, shall serve as the fiscal agent for the California Collaborative for Education Excellence (CCEE). Further, establishes a five-member governing board of the CCEE that will direct the fiscal agent to contract with individuals, LEAs or organizations to carry out the purposes of the CCEE, as specified. 6)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. SB 97 Page 6 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. 7)Amends AB 97 (Budget Committee), Chapter 47, Statutes of 2013, to: a) Clarify that the $2 million provided to the Office of Planning and Research is non-Proposition 98/General Fund. b) Appropriate $250,000 of the Career Technical Education Pathways Grant Program ($250 million/Proposition 98) for an evaluation. 8)Makes clarifying changes related to the transfer of the California School Finance Authority from the SDE to the State Treasurer's Office. 9)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. 10)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. 11)Makes other technical and clarifying changes, including provisions SB 97 Page 7 to avoid chaptering conflicts with SB 344 (Padilla) of the current legislative session 12)Contains an urgency clause, allowing this bill to take effect immediately. 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 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. 4)Allow the Director of Finance to allocate up to $100 million to community colleges by December 31, 2013, based on a review of property tax revenues related to the dissolution of redevelopment agencies for the 2012-13 fiscal year. Requires notification of the Joint Legislative Budget Committee should Finance determine that an appropriation is necessary. 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% 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; SB 97 Page 8 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 : The 2013-14 Budget Act: 1)Established the Local Control Funding Formula (LCFF) 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 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)Established the California Collaborative for Educational Excellence (CCEE) to advise and assist school districts, COEs and charter schools in achieving the goals of the LCFF. The 2013 Budget Act appropriated $10 million for this purpose. The Governor's signing message regarding this appropriation stated the need to properly define the governance composition and ongoing role of the CCEE within the accountability structure of the LCFF with subsequent legislation. 3)Authorized 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 California Infrastructure and Economic Development Bank (I-Bank). The interest charged on these loans are at the annual rate of return of the Pooled Money Investment Account (PMIA) plus 2%. FISCAL EFFECT : Appropriates up to an additional $3.164 million (General Fund) to the State Department of Education for state SB 97 Page 9 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 (Higher Education Trailer Bill). Analysis Prepared by : Misty Feusahrens and Mark Martin / BUDGET / (916) 319-2099 FN: 0002841