BILL ANALYSIS                                                                                                                                                                                                    Ó



            SENATE COMMITTEE ON EDUCATION
                                 Senator Liu, Chair
                                 2015 - 2016 Regular
            
            Bill No:       SB 191
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            |Author:       |Block                                             |
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            |Version:      |February 10, 2015   |Hearing    |March 18, 2015   |
            |              |                    |Date:      |                 |
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            |Urgency:      |No                  |Fiscal:    |Yes              |
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            |Consultant:   |Lenin Del Castillo                                |
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            Subject:  School transportation:  apportionments

            SUMMARY
            
            This bill would provide for school districts to be funded at  
            a minimum of 50 percent of approved transportation costs by  
            the 2021-22 fiscal year, thereby providing equalization  
            funding for school districts that are reimbursed at less  
            than 50 percent.  The equalization adjustments would occur  
            over a seven-year period beginning in 2015-16.  In addition,  
            this bill provides that school transportation funding  
            receive an annual cost-of-living adjustment (COLA) from the  
            2015-16 fiscal year through the 2021-22 fiscal year.

            BACKGROUND
            
            Current law authorizes school districts and county offices  
            of education to provide transportation services to regular  
            education students attending their schools at the discretion  
            of their governing board.  Additionally, current law  
            requires school districts to provide transportation services  
            for special education students whose individualized  
            education programs require such services. 
            (Education Code § 39800 and § 41850 et. seq.)  

            Federal law requires local educational agencies to transport  
            the following three groups of students:  (a) students with  
            disabilities; (b) students attending federally sanctioned  
            schools; and (c) homeless students.  School districts  
            generally use one of two types of funding for pupil  
            transportation:  general purpose or categorical funds.   







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            General purpose funds can be spent on anything from teacher  
            salaries to utility bills.  Categorical funds must be spent  
            on specific purposes, e.g., the Home-to-School  
            Transportation (HTST) program in which school districts  
            utilize the funds received to provide transportation  
            services to special education and regular education  
            students.

            In 2013, the Local Control Funding Formula (LCFF) was  
            enacted.  The LCFF replaces almost all sources of state  
            funding, including most categorical programs.  The LCFF  
            establishes a per-pupil funding target that is adjusted for  
            differences in grade level, but otherwise is uniform across  
            the state.  The LCFF also provides supplemental funding for  
            districts that serve students who are low-income, English  
            language learners, or foster youth.  However, one  
            categorical program not rolled into the LCFF is the HTST  
            program. This program retained its separate funding stream;  
            such that any district that received HTST funding in 2012-13  
            continues to receive that same amount of funding in addition  
            to its LCFF allocation each year.  However, the HTST, unlike  
            in prior years, would not be eligible for future  
            cost-of-living adjustments (COLAs).  And state law continues  
            to require that districts spend HTST funding on pupil  
            transportation. 

            ANALYSIS
            
            This bill:

            1.   Requires the Superintendent of Public Instruction, for  
                 the 2015-16 through 2021-22 fiscal years, to apportion  
                 to each school district, county office of education,  
                 entity providing services under a joint powers  
                 agreement, or regional occupational center or program  
                 that provides pupil transportation services either 100  
                 percent of its school transportation apportionment for  
                 the 2014-15 fiscal year, as adjusted for a  
                 cost-of-living-adjustment (COLA); or the following  
                 amount, whichever is greater:

                 A.        For the 2015-16 fiscal year, 41 percent of  
                 its approved 
                      transportation costs for the prior fiscal year.









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                 B.        For the 2016-17 fiscal year, 42.5 percent of  
                 its approved 
                      transportation costs for the prior fiscal year.

                 C.        For the 2017-18 fiscal year, 44 percent of  
                 its approved 
                      transportation costs for the prior fiscal year.

                 D.        For the 2018-19 fiscal year, 45.5 percent of  
                 its approved 
                      transportation costs for the prior fiscal year.

                 E.        For the 2019-20 fiscal year, 47 percent of  
                 its approved 
                      transportation costs for the prior fiscal year.

                 F.        For the 2020-21 fiscal year, 48.5 percent of  
                 its approved 
                      transportation costs for the prior fiscal year.

                 G.        For the 2021-22 fiscal year, 50 percent of  
                 its approved 
                      transportation costs for the prior fiscal year.

            2.   Requires for the 2013-14 fiscal year school  
                 transportation apportionment amount described above  
                 shall be adjusted by the percentage change in the  
                 annual average value of the Implicit Price Deflator for  
                 State and Local Government Purchases of Goods and  
                 Services for the United States, as published by the  
                 United States Department of Commerce for the 12-month  
                 period ending in the third quarter of the prior fiscal  
                 year.  This percentage change shall be determined using  
                 the latest data available as of May 10 of the preceding  
                 fiscal year compared with the annual average value of  
                 the same deflator for the 12-month period ending in the  
                 third quarter of the second preceding fiscal year,  
                 using the latest data available as of May 10 of the  
                 preceding fiscal year, as reported by the Department of  
                 Finance.



            STAFF COMMENTS
            








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            1.   Need for the bill.  According to the author's office,  
                 the Home-to-School Transportation (HTST) program has  
                 long been inequitable and in need of improvement where  
                 the current statewide average reimbursement rate is 35  
                 percent of approved costs.  The funding distribution is  
                 so uneven that some school districts see less than 10  
                 percent reimbursement, while others receive over 80  
                 percent of their approved costs.  Based on data from  
                 the Legislative Analyst's Office (LAO) report on the  
                 Home-to-School Transportation (HTST) program in 2014,  
                 school districts spent over $1.4 billion transporting  
                 students but received less than $492 million from the  
                 state to pay these costs resulting in encroachment on  
                 general purpose revenues that would otherwise go into  
                 instructional programs.  This funding deficit is an  
                 unequal burden that hits rural and growing school  
                 districts much harder than more densely populated and  
                 flat enrollment school districts.  

                 This bill would bring severely underfunded districts up  
                 to a 50 percent reimbursement rate; while also  
                 providing for a cost-of-living-adjustment (COLA) for  
                 transportation funds for all school districts.  The  
                 author's office also indicates that applying a COLA can  
                 ensure districts will not be negatively impacted as  
                 costs of service rise.

            2.   2014 Budget Act.  The 2014 Budget Act provides  
                 approximately $496 million in Proposition 98 General  
                 Fund for the HTST program, which includes both  
                 allocations for home-to-school transportation and  
                 allocations for some pupils with disabilities,  
                 specifically "severely disabled and orthopedically  
                 impaired" pupils.  

            3.   Legislative Analyst Office Report.  In 2013, the LAO  
                 was requested to consider new approaches that could  
                 address historical inequities and include incentives  
                 for efficient and effective pupil transportation  
                 services.  The report was issued February 2014 and  
                 included a description and assessment of three options:  
                  (1) funding pupil transportation services within the  
                 new Local Control Funding Formula (LCFF), (2) creating  
                 a new, targeted program to help districts facing  
                 extraordinarily high transportation costs, and (3)  








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                 creating a broad-based program whereby the state pays a  
                 share of each district's transportation costs.  

                 To assist the Legislature's deliberations, the LAO  
                 identified three options for funding pupil  
                 transportation moving forward.  The options primarily  
                 differ in the degree to which they account for  
                 transportation costs separately from the other costs  
                 districts face.  These three options are to (1) fund  
                 transportation costs within the LCFF; (2) fund only  
                 extraordinary transportation costs; or (3) fund a share  
                 of all transportation costs.  Although the basic  
                 approach for each option differs, all contain some key  
                 advantages.  Most notably, all three options provide a  
                 means to phase out the use of allocations linked to  
                 historical factors and apply the same funding rules to  
                 all local education agencies, addressing key problems  
                 with the state's existing approach. In addition, all of  
                 the options would encourage efficiency by requiring  
                 local budgets to cover a notable share of total costs.   
                 Finally, all three options would be relatively simple  
                 to implement and easy for districts and the public to  
                 understand. 

            4.   Problems with the existing program are not new.  The  
                 Bureau of State Audits (BSA) released a report on the  
                 HTST program in 2007, acknowledging many problems with  
                 the existing program funding formula.  Some of the  
                 findings include:

                 A.        The current funding mechanism prevents some  
                      school districts that did not receive  
                      Home-to-School Transportation (HTST) program funds  
                      in the immediately preceding fiscal year from  
                      receiving these funds because of the basis of  
                      allocation.

                 B.        Allocation increases are not always  
                      consistent with student population growth.  Some  
                      school districts have experienced dramatic  
                      increases in student population over the years;  
                      however, their allocations have not always  
                      increased at the same rate.

                 C.        Most school districts had to use other  








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                      funding sources to pay for some transportation  
                      costs and many reported it had varying levels of  
                      fiscal impact on other programs.

            5.   How much funding exposure would this bill create?   
                 According to information provided by the author, the  
                 total amount of funding to implement this measure is  
                 approximately $249 million over the seven year  
                 implementation period, or an average increase per year  
                 of approximately $35.6 million. 

            6.   California has long provided state funding to school  
                 districts for student transportation.  Before 1984, a  
                 law formally prescribed allocations for transportation  
                 to elementary and high school districts.  Legislation  
                 passed in 1983 required that Education allocate the  
                 HTST program funds based on the same amount as the  
                 school district's prior year's allocation, increased by  
                 the amount provided in the Budget Act, if its approved  
                 cost for that year was at least 95 percent of its  
                 Home-to-School program allocation for the same year.   
                 Otherwise, this legislation required an amount equal to  
                 the school district's certified percentage of the prior  
                 year's transportation costs plus 5 percent, the sum  
                 increased by the amount provided in the Budget Act.   
                 Legislation enacted in 1991 amended previous laws and  
                 created the current funding formula.  This legislation  
                 required that, beginning with fiscal year 1993-94, each  
                 school district receive a student transportation  
                 allowance equal to the lesser of its prior year  
                 Home-to-School program allocation or actual approved  
                 transportation expenditures from that year, increased  
                 by the growth in average daily attendance rate and  
                 cost-of-living adjustments as specified in the Budget  
                 Act.

            7.   Related and prior legislation
                 
                 SB 1137 (Torres, 2014), nearly identical to this  
                 measure, would have provided for school districts to be  
                 funded at a minimum of 50 percent of approved  
                 transportation costs by the 2020-21 fiscal year,  
                 thereby providing equalization funding for school  
                 districts that are reimbursed at less than 50 percent.   
                 SB 1137 passed this Committee on April 9, 2014 but  








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                 failed passage in the Assembly Appropriations  
                 Committee.

                 SB 1166 (Vidak, 2014), required school districts to  
                 receive state reimbursement for the full cost of  
                 home-to-school transportation of pupils. Commencing  
                 with the 2014-15 fiscal year, these costs shall be  
                 reimbursed through an appropriation in the annual  
                 Budget Act.  SB 1166 failed passage in this Committee  
                 on April 9, 2014.

            SUPPORT
            
            Antelope Valley Schools Transportation Agency
            California Association of School Business Officials
            California Association of School Transportation Officials
            California Association of Suburban School Districts
            California School Boards Association (sponsor)
            California School Employees Association
            Central Valley Education Coalition
            Elk Grove Unified School District
            Kern County Superintendent of Schools
            Mid-Placer Public Schools Transportation Agency
            Pajaro Valley Unified School District
            Riverdale Joint Unified School District
            Rural County Representatives of California
            San Jose Unified School District
            School Transportation Coalition
            Small School Districts' Association
            Southwest Transportation Agency
            West County Transportation
            Wilsona School District

            OPPOSITION
             
             California Charter Schools Association

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