BILL ANALYSIS
AB 673
Page 1
GOVERNOR'S VETO
AB 673 (Carter)
As Amended April 22, 2009
2/3 vote
EDUCATION 10-0 APPROPRIATIONS 16-0
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|Ayes:|Brownley, Nestande, |Ayes:|De Leon, Nielsen, |
| |Ammiano, Arambula, | |Ammiano, |
| |Buchanan, Carter, Eng, | |Charles Calderon, Davis, |
| |Miller, Solorio, | |Duvall, Krekorian, Hall, |
| |Torlakson | |Harkey, Miller, |
| | | |John A. Perez, Price, |
| | | |Skinner, Solorio, Audra |
| | | |Strickland, Torlakson |
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ASSEMBLY: 77-0 (May 21, 2009) SENATE: 39-0 (August 24,
2009)
SUMMARY : Requires, commencing in 2009-10 and in each fiscal
year thereafter, the Superintendent of Public Instruction (SPI)
to allocate any negative adjustment to funding provided for
regional occupational center and program (ROC/P) growth among
the various ROC/Ps as an equal percentage reduction in each
ROC/P's average daily attendance (ADA) cap, and makes a change
to the calculation of 2009-10 prior year ADA for each ROC/P in
order to implement this change to include the negative
adjustment to ROC/P funding already provided for the 2008-09
fiscal year.
EXISTING LAW :
1)Authorizes the establishment of ROC/Ps by high school
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districts, district consortia, or county offices of education.
2)Establishes a funding formula for ROC/Ps based on per pupil
revenue limits for each ROC/P, current year ADA or a cap on
funded ADA as established historically and in the prior year,
any annual cost of living adjustment (COLA) made to the per
pupil revenue limit amounts in the annual Budget Act, and any
adjustments to the funded cap on ADA made for growth.
3)Requires the Superintendent of Public Instruction (SPI), in a
manner specified, to calculate the level of growth ADA for
each regional occupational centers and programs (ROC/P) in
order to allocate any funding adjustment, either positive or
zero (if negative), provided for ROC/P growth among the
various ROC/Ps.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, minor, absorbable costs to the California Department
of Education (CDE) to implement this measure; also the state
will realize the General Fund Proposition 98 savings through the
application of a negative growth adjustment to ROC/Ps regardless
of the programmatic effect to these programs.
COMMENTS : ROC/Ps offer a vocational educational program for high
school students and adults, and may be operated by a district, a
consortium of districts under a joint powers agreement (JPA), or
by a county office of education. Nearly every county office of
education in California operates a single, countywide ROC/P.
According to the California Department of Education (CDE),
California's 73 ROC/Ps have been a strong and integral part of
California's educational system for over 35 years; approximately
460,000 students age 16 or older enroll in ROC/Ps each year.
ROC/Ps offer training in a variety of venues from regular
classrooms to actual business and industry facilities; courses
are generally offered during the regular school day throughout
the school year, in the late afternoon and evening, and
sometimes during the summer months. Courses provide specific
work skills, comprehensive career education, and employment
survival skills, in addition to placement assistance, counseling
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and guidance services, and other student support services.
Total revenue limit funding for ROC/Ps is comprised of three
components: an amount of base funding per unit of ADA (up to
that ROC/P's current ADA cap), an amount of funding (if
provided) to cover cost increases related to the cost of living
(COLA), and an amount of funding to cover program growth (if
provided) that is allocated among the ROC/Ps in the form of an
expansion in ADA caps. Under current law, in order to determine
this third component, the SPI calculates growth ADA for each
ROC/P by computing the sum of i) ADA growth between the previous
two years, ii) an allocation to low participation ROC/Ps of 25%
of the growth ADA funded, and iii) the share of funded growth
ADA as determined by the ADA in grades 9-12 in the districts
served by that ROC/P as a proportion of statewide ADA in grades
9-12, with each ROC/P at least ten units of growth ADA.
The total amount of additional revenue limit funding allowed for
growth ADA for each ROC/P is then determined by multiplying this
growth ADA by the statewide average revenue limit per growth
ADA. This process results in an allocation of growth funding
that has a slight bias toward or prioritization of ROC/Ps with
low participation or with low enrollments in the districts
served, and would tend to have a slight equalizing effect on
ROC/P ADA caps as long as growth funding is positively adjusted.
These effects are consistent with the Legislative intent of AB
322 (Baca), Chapter 149, Statutes of 1998, that enacted the
current statutory calculations. This sort of cap equalization
has also been provided more directly by the Legislature. For
example, in the 1996-97 fiscal year, the Legislature provided
$10 million in equalization funds for ROC/Ps, with 40% of those
funds distributed to low participation ROC/Ps.
One problem that the ROC/P community has identified with this
approach to allocating growth funding is that there is an
asymmetry with respect to the impacts of positive versus
negative adjustments for growth. As noted, in years when ROC/P
funding for growth creates a positive adjustment in ADA caps,
the current allocation calculations tend to move toward
equalizing ADA caps across ROC/Ps; however, negative adjustments
in funding for growth will result in no effect on ROC/P caps,
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since statute directs that any negative adjustment determined in
the SPI's calculations be deemed to be zero. According to the
author, "Estimates are that the statutory growth adjustment for
[ROC/Ps] for the next several fiscal years will be a negative
adjustment. However, current law contains no provisions for the
allocation of a negative growth adjustment."
The problem with this result is that total funding for ROC/Ps
would be reduced, but the caps on the level of ADA eligible for
funding for each ROC/P is not reduced. Since ROC/Ps have no
incentive to voluntarily reduce the number of pupils served
(such a reduction in pupils served would lead to a reduction in
that ROC/P's funded cap in the subsequent year), an ROC/P
operating at the cap (i.e., not serving, in an unfunded manner,
any pupils beyond the ADA cap) could only operate within its
reduced budget by reducing the amount of ROC/P funding expended
per pupil. According to the author, this reduction in funds
available per pupil "results in the elimination of higher
quality, more expensive courses like nursing, automotive and
technology." from the affected ROC/P. Effectively the argument
provided by the author is the funding system creates a situation
where ROC/Ps do not have the usual choice available to districts
or programs when faced with reduced revenues: either reduce
participation or reduce the per pupil amount expended on the
program. Since a reduction in participation, for an ROC/P at
the ADA cap, would bring further revenue reductions in the
future, that ROC/P's response would be to reduce expenditures
per pupil in the program.
For an ROC/P operating above its ADA cap (i.e., serving pupils
in the program even though additional ROC/P funds would not be
provided to the program), the alternatives for dealing with a
revenue reduction would be more traditional; that ROC/P could
reduce pupil participation down as far as the cap without the
subsequent reduction in the ADA cap and funding in future years,
or that ROC/P could choose to continue to serve the same number
of students with lower expenditures per pupil. In fact, an
ROC/P operating beyond its ADA cap has already made this
decision in the past, in that serving more pupils than it is
receiving funding for means that the ROC/P is expending less on
each of its pupils than the funded per pupil amount. According
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to the California Department of Education, 58 (80%) of the
state's 73 ROC/Ps were operating beyond their ADA cap in
2007-08.
This problem could be resolved by eliminating the direction to
the SPI to deem a negative result in calculating an ROC/P's
share of the growth ADA to be zero, but that approach would
create symmetry in the calculation that would tend to have a
de-equalizing effect on ROC/P ADA caps. This appears to be
inconsistent with the intent of the calculations established in
1998 by AB 322 (Baca), and is likely the problem that bill was
avoiding by deeming a negative result to be zero.
This bill proposes to address those issues, commencing with the
2009-10 fiscal year, by requiring that any negative adjustment
in funding for ROC/P growth be allocated among the ROC/Ps as an
equal percentage reduction in each ROC/P's ADA cap. Under this
bill increases in funded growth would continue to be allocated
consistent with the implicit priorities in current law and would
continue to have an equalizing effect on ROC/P ADA caps, but
decreases in funded growth would be allocated among the ROC/Ps
as a reduction in each ROC/P's ADA cap on a proportional basis.
This approach would not have a de-equalizing impact; it would
also allow each ROC/P, in the face of a funding reduction, to
make the choice as to whether to reduce the number of pupils
served and thus maintain expenditures per pupil (and maintain
the existing program), to maintain the number of participating
students and thus reduce per pupil expenditures, or to implement
some mix of fewer pupils served and lower per pupil
expenditures. Note that this choice would already be available
to any ROC/P operating beyond its ADA cap; this bill would
extend the same choice to those ROC/Ps operating at or near
their cap.
This bill also proposes to apply a percentage reduction of .55%
(the growth funding adjustment applied in the Budget Act of
2008) to each ROC/P's funded ADA in the prior year for the
purposes of making growth calculations in 2009-10. This would
have the result of reducing ROC/P ADA caps by an equal
percentage amount in the 2009-10 fiscal year; in this way the
bill proposes to begin the equal percentage cap reduction
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proposed in the bill the year in which this statutory change is
enacted - effectively this provides a "fast start" for the
policy change proposed by this bill. This proposal would sunset
following the 2009-10 fiscal year.
GOVERNOR'S VETO MESSAGE :
"This bill may create fiscal incentives for Regional
Occupational Centers and Programs (ROC/Ps) to reduce the number
of students they serve, rather than allowing districts to manage
their programs based on local priorities. Furthermore, because
of the categorical flexibility provided through the recent
budget negotiations, the bill's focus on adjusting ROC/P
enrollment caps is moot and serves no practical purpose. For
these reasons, I am unable to sign this bill."
Analysis Prepared by : Gerald Shelton / ED. / (916) 319-2087
FN: 0003429