BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 148| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- UNFINISHED BUSINESS Bill No: SB 148 Author: McGuire (D), et al. Amended: 8/27/15 Vote: 21 PRIOR VOTES NOT RELEVANT SENATE EDUCATION COMMITTEE: 9-0, 9/3/15 (pursuant to Senate Rule 29.10) AYES: Liu, Runner, Block, Hancock, Leyva, Mendoza, Monning, Pan, Vidak ASSEMBLY FLOOR: 79-0, 9/2/15 (Consent) - See last page for vote SUBJECT: School districts: reorganization: local control funding formula SOURCE: Superintendent of Public Instruction DIGEST: This bill updates statutory provisions and financial calculations regarding school district reorganization to reflect the state funding transition from revenue limit funding to the local control funding formula (LCFF). Assembly Amendments are substantive and replace the previous contents of this bill regarding the establishment of a career technical education program with provisions dealing with school district reorganizations. ANALYSIS: Existing law: SB 148 Page 2 1) Allows for school district reorganizations, which is the process of forming one or more districts from one or more existing districts and can take many forms. For example, two or more districts can combine to form a single district, a single district can annex a portion of a neighboring district (in which case the neighboring district also loses territory), or a single district is broken into two or more smaller districts. 2) Provides that the amount of funding that the reorganized districts are entitled to be computed by taking into account existing funding formulas and the historical funding levels of the former districts. This bill updates the various statutory provisions governing school district reorganization to reflect the change from revenue limit funding to the LCFF. Specifically, this bill: 1) Defines "affected district" to mean a district that has been, or is proposed to be, affected by an action to reorganize or before an action to lapse a district. 2) Defines "original district" to mean a district as it existed prior to an action to reorganize or before an action to lapse a district. 3) Defines "former district" to mean a district that has been wholly included in another district or has had all of its territory made part of two or more other districts through any action to reorganize or through a lapsation. 4) Defines "new district" to mean a district that is formed from all or portions of one or more other districts by an action to reorganize. 5) Defines "acquiring district" to mean a district that has all or portions of one or more other districts transferred into, or lapsed into, its boundaries. 6) Defines "divided district" to mean a district that has had a portion of its territory become part of a new district or transferred into one or more other districts by an action to SB 148 Page 3 reorganize. 7) Defines the "reorganized portion of a divided district" to mean the portion of the divided district's territory that becomes part of a new district or is transferred into one or more other districts. 8) Defines the "remaining portion of a divided district" to mean the portion of the divided district's territory that does not become part of a new district or that is not transferred into one or more other districts. 9) Defines "reorganized district" to mean a district that is a "new district," an "acquiring district," or a "divided district." 10)Defines "component district" to mean an elementary school district which is included within a high school district or an elementary school district excluded from an action to unify a high school district but which continues to feed into the high schools of the new unified school district. 11)Replaces references to "base revenue limit" with references to "local control funding formula (LCFF) entitlement." 12)Repeals the procedures for the computation of adjustments for employee salaries and benefits for a newly reorganized district based on revenue limit differences between the former districts. 13)Specifies procedures for making the following calculations for reorganized districts: a) The LCFF entitlement; b) The percentage of unduplicated pupils; c) Categorical program funding; d) Economic recovery target; e) Transition funding (from revenue limits to the LCFF), including the calculation of revenue limit funding rates used to determine base funding during transition; f) Prior year funding gap; and g) Necessary small school add-on. SB 148 Page 4 Comments Need for the bill. According to the author's office, "the passage of the Local Control Funding Formula (LCFF) in 2013-14 replaced the former school finance system under revenue limits that had been in existence for nearly 40 years. The statutes associated with the former revenue limit funding system were voluminous and complex, in part because revenue limits were used for a variety of ancillary purposes, not just for funding (e.g. class size penalties). "In the adoption of LCFF, an attempt was made to provide a methodology to blend LCFF funding for newly organized school districts. Unfortunately, that language as written does not address the specific categories of LCFF funding and how they should be calculated for each affected school district. Therefore, the current LCFF statutes relating to district reorganization is not necessarily revenue neutral for either the school districts or the state." Local Control Funding Formula. Chapter 47, Statutes of 2013 (AB 97, Committee on Budget), and subsequent legislation created the LCFF, which consolidated most of the state's categorical programs with general purpose revenue limit funding and would be phased in over the coming years. One of the main principles behind the LCFF is that English learners and low-income students require more attention and resources in the classroom than students who do not have these same challenges. By providing more services (and in turn, additional funding) to these student populations, it is widely believed that this will help close the achievement gap and help all students perform better. District reorganizations under LCFF. According to the California Department of Education (CDE), about a dozen districts are currently in the process of reorganization and that in the upcoming 2015-16 school year, there will be a lapsation of the Citrus South Tule Elementary School District into the Porterville Unified School District in Tulare County. The current LCFF statutes relating to district reorganization are not revenue neutral for some school districts or the state. This bill specifies how LCFF funding components will be SB 148 Page 5 calculated for various types of district reorganizations in a manner that is revenue neutral to the state and is equitable for all of the affected school districts. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Assembly Appropriations Committee, the CDE indicates no additional administrative costs as a result of this bill. School district reorganization is a voluntary activity; therefore, any costs associated with this bill will not constitute a state mandate. The impact to individual school districts is unknown. The intent of this bill is to ensure funding for reorganizing school districts is calculated in a manner that is revenue neutral to the state and equitable to all affected school districts. SUPPORT: (Verified9/2/15) Superintendent of Public Instruction (source) OPPOSITION: (Verified9/2/15) None received ASSEMBLY FLOOR: 79-0, 9/02/15 AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, SB 148 Page 6 Wilk, Williams, Wood, Atkins NO VOTE RECORDED: Jones-Sawyer Prepared by: Lenin Del Castillo / ED. / (916) 651-4105 9/3/15 18:27:07 **** END ****