BILL ANALYSIS
AB 851
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Date of Hearing: April 22, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 851 (Brownley) - As Introduced: February 26, 2009
Policy Committee: Education
Vote:11-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill requires, as of the 2010-11 fiscal year, existing
school district revenue limit adjustments for Meals for Needy
Pupils and minimum teacher salaries to be rolled into the base
revenue limit per unit of average daily attendance (ADA) for
each district. This measure also requires unemployment
insurance (UI) funding and adjustments related to the Orange
County bankruptcy proceedings and inter-district attendance to
be calculated as a fixed adjustment and included in each school
district's total revenue limit funding.
FISCAL EFFECT
1)No direct fiscal impact. As proposed, this bill makes two
different calculations for the purpose of rolling adjustments
into school districts' base revenue limit funding. The main
difference between these two calculations is that one set of
adjustments historically has received a cost-of-living
adjustment (COLA) (i.e., Meals for Needy Pupils and minimum
teacher salaries) while the other set has not (i.e., UI,
Orange County bankruptcy, and inter-district attendance). The
issue of the COLA would generally factor into an increase in
funding; however, because the calculation for UI, Orange
County, etc. is made after the base revenue limit is
calculated, increased funding will not occur.
2)The 2009 Budget Act reduces revenue limit funding by a total
of 3% ($1.2 billion GF/98), including a 2.5% ($943.8 million
AB 851
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GF/98) reduction in the current year (2008-09 fiscal year)
that is carried forward. SB 4xxx (Committee on Fiscal
Review), Chapter 12, Statutes of 2009, also eliminated the
revenue limit COLA (.7% or $247 million) provided to school
districts and county offices of education in the 2008 Budget
Act.
COMMENTS
1)Purpose . In December 2003, the Legislative Analyst's Office
(LAO) released a report entitled: The Distribution of K-12
General Purpose Funds. This report states that on average, the
adjustments to base revenue limits add a relatively small
amount of general purpose funding. It further contends that
because the distribution of funds provided by the adjustments
is so uneven, the distribution of general purpose funds
provided through the revenue limit formula varies considerably
more than base revenue limits.
The LAO report also demonstrated that all of the revenue limit
adjustments play a role in the final amount of general purpose
funds received by districts. High-funded districts usually
receive large amounts through the base revenue limit, excess
property taxes, or Meals for Needy Pupils. Low-funded
districts tend to receive small amounts through all of the
adjustments or have a large Public Employee Retirement System
reduction.
This bill attempts to simplify the distribution of revenue
limit funding by rolling in specified revenue limit
adjustments into the base.
2)Revenue limit funding is the single largest source of support
for K-12 school districts and county offices of education,
accounting for $34.3 billion in the 2009 Budget Act. Of this
amount, $21.3 billion is GF/98 and $13 billion is local
property tax funding. Revenue limits were initially developed
30 years ago as a means of constraining growth in high revenue
districts. After Proposition 13, the state used the revenue
limit system to establish state funding levels.
AB 851
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There are approximately 11 elements of revenue limit funding,
including the Meals for Needy Pupils program, and Minimum
Teacher Salary program.
3)Previous legislation . AB 599 (Mullin), substantially similar
to this measure, was vetoed by the Governor in September 2008,
with the following message:
"While this bill attempts to simplify an overly complex
education finance system, this bill has several technical
concerns in the way it was drafted. I am concerned that the
consolidated "add-on" may not be revenue neutral, as the
author intended, since various factors could result in
unanticipated General Fund costs or savings in future years.
Furthermore, the bill as crafted may diminish the incentives
for districts to offer longer instructional time."
The measure before this committee attempts to address the veto
message by eliminating the consolidation of the instructional
time incentives in revenue limit funding.
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081