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