BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 859
                                                                  Page  1


          (  Without Reference to File  )

          SENATE THIRD READING
          SB 859 (Budget and Fiscal Review Committee)
          As Amended  June 12, 2014
          Majority vote.  Budget Bill Appropriation Takes Effect  
          Immediately

           SENATE VOTE  :  Vote not relevant

           SUMMARY  :  Provides the necessary statutory and technical changes  
          to enact the education-related provisions of the Budget Act of  
          2014.  Specifically,  this bill  :

          1)Appropriates $4.7 billion for school districts and charter  
            schools and $25.9 million for county offices of education  
            (COEs), allocated through the Local Control Funding Formula  
            (LCFF).

          2)Makes the following adjustments to the LCFF calculations for  
            school districts, charter schools and COEs:

             a)   Authorizes schools participating in Provisions 2 or 3 of  
               the National School Lunch Program (which allow for free  
               meals to be provided to all enrolled pupils at schools with  
               very high poverty rates) to establish base-year student  
               eligibility for free or reduced-price meals no less than  
               once every four years, provided that they annually update  
               their counts of eligible students, as specified.

             b)   Requires the Superintendent of Public Instruction (SPI)  
               to revise a local educational agency's (LEA) three-year  
               rolling average number of unduplicated students by using  
               2014-15 student data in place of 2013-14, if doing so would  
               increase the local LEA's rolling average.

             c)   Expresses legislative intent to review, for each school  
               district and COE, the enrollment of unduplicated pupils for  
               the 2013-14 and 2014-15 fiscal years, and provide one time  
               funding, if necessary for those with higher enrollment of  
               unduplicated pupils in 2014-15 compared to 2013-14.  

             d)   Specifies points-in-time when making calculations  
               related to the LCFF, in order to ensure calculations are  








                                                                  SB 859
                                                                  Page  2


               not affected by future changes to average daily attendance.

             e)   Clarifies the definition of foster youth for purposes of  
               calculating unduplicated pupils.

          3)Makes the following adjustments to the LCFF calculations for  
            charter schools:

             a)   Requires charter schools to annually report their  
               physical location to the California Department of Education  
               no later than November 30 of each fiscal year, and specify  
               when the physical location is considered final for funding  
               purposes.

             b)   Clarifies that all charter districts can receive  
               declining enrollment funding under the LCFF, rather than  
               under the former Charter School Block Grant.  

             c)   Clarifies that for purposes of LCFF, charter districts  
               are treated as school districts.
             d)   Clarifies that a charter school located in a basic aid  
               district cannot receive in-lieu property tax payments in  
               excess of their entitlement. 

             e)   Adds juvenile court students to the list of students for  
               which a county program charter can receive a county rate  
               and clarify LCFF apportionments for county students  
               attending a county program charter.

             f)   Allows county charter programs to seek in-lieu payments  
               from the district for students not covered by the county  
               rate, similar to COEs. 

             g)   Clarifies that in-lieu payments for countywide charter  
               schools with students from basic aid districts are based on  
               a school district's prior year basic aid status.

          4)Allows the State Board of Education, until January 31, 2018,  
            to adopt the Local Control Accountability Plan (LCAP) template  
            pursuant to the Bagley-Keene Open Meetings Act process, with  
            specified restrictions, rather than the Administrative  
            Procedures Act.

          5)Provides a one-time hold harmless for out-of-state tuition  








                                                                 SB 859
                                                                  Page  3


            costs for 2014-15.  This is in recognition that some districts  
            entered into out-of-state tuition contracts prior to the  
            passage of the LCFF.  Following the 2014-15 fiscal year,  
            districts and COEs will be responsible for covering any  
            additional costs for students attending schools out of state  
            using their LCFF funds.

          6)Revises the methodology for assessing penalties for exceeding  
            maximum class size limits based upon the new grade-level  
            funding rates under LCFF.

          7)Requires, for the 2013-14 and 2014-15 fiscal years, the  
            Alameda County Superintendent to withhold a specified amount  
            from the LCFF apportionments of the Newark Unified School  
            District to be allocated to four specified school districts  
            that previously received these funds from Newark Unified  
            School District for purposes of beginning teacher induction  
            and training services.

          8)Expands the definition of a necessary small high school, until  
            July 1, 2017, for high schools exclusively serving juvenile  
            hall students with exceptional needs, COE operated high  
            schools exclusively serving foster youth, and a high school  
            maintained by a unified school district as the only  
            comprehensive high school if the average daily attendance is  
            less than 286 students and the school district has less than  
            50 students per square mile of the school district. 

          9)Repeals the unique revenue limit funding adjustment related to  
            an inter-district attendance agreement between the Fallbrook  
            Union High School District and the Capistrano Unified School  
            District, which receive federal Impact Aid to offset the local  
            property tax revenue lost from federally owned land.  Allows  
            these two districts to continue to receive federal Impact Aid,  
            while including the former revenue limit adjustment in the  
            district's LCFF funding. 

          10)Requires the State Board of Education, working in  
            collaboration with the Department of Education, to report to  
            the Legislature no later than February 1, 2015, regarding the  
            status of LCFF implementation.

          11)Specifies that 2013-14 average daily attendance calculations  
            are final as of the second principal apportionment (P-2) for  








                                                                  SB 859
                                                                  Page  4


            purposes of establishing Economic Recovery Targets (ERT).   
            Additionally, clarifies that the full ERT amount shall be  
            added on to the LCFF when the LCFF is fully implemented, and  
            that ERTs shall be subject to property tax offsets.
          12)Removes one-time redevelopment agency (RDA) revenue from the  
            basic aid fair share calculation applied to categorical  
            programs, to ensure that no district receives less than it did  
            in 2012-13. 

          13)Requires the Superintendent of Public Instruction to perform  
            the duties related to approving LCAP for counties with  
            jurisdiction over a single district, consistent with the  
            process for reviewing and approving a budget for these  
            districts. 

          14)Clarifies that county superintendents and school districts  
            may continue authorizing students to attend schools in  
            adjoining states and out-of-state tuition average daily  
            attendance is credited to the school district of residence.

          15)Clarifies that homeless students served by a COE shall  
            generate LCFF funding at the largest (in terms of average  
            daily attendance) non-basic aid district serving the student's  
            grade level. This change will ensure that basic aid districts  
            (who are not receiving additional state funding for these  
            students) are not responsible for providing local property tax  
            dollars to the COE.

          16)Clarifies that Supplemental Revenue Augmentation Fund (SRAF)  
            transfers should be reported to the State Controller's Office  
            (SCO) rather than the county auditor-controller, since SCO  
            implements the offset.  Authorizes the Director of Finance to  
            determine the amount of restricted excess local property tax  
            revenue available for transfer to SRAF. 

          17)Conforms existing COE and four-day school week instructional  
            time requirements and penalties to the district instructional  
            time penalties under the LCFF. 

          18)Clarifies that various basic aid adjustments are based on  
            LCFF target base grants and not on necessary small school  
            funding rates.

          19)Clarifies that COE Juvenile Court School funding is expended  








                                                                  SB 859
                                                                  Page  5


            pursuant to LCAP.

          20)Makes technical and conforming changes related to the LCFF.

          21)Provides that, if the Commission on State Mandates determines  
            that the bill contains costs mandated by the state,  
            reimbursement for those costs shall be made pursuant to  
            existing law.

          22)Declares that it is to take effect immediately as a bill  
            providing for appropriations related to the budget bill.


           Analysis Prepared by  :    Katie Hardeman / BUDGET / (916)  
          319-2099 


                                                                FN: 0003977