BILL ANALYSIS
AB 851
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 851 (Brownley)
As Amended September 2, 2009
Majority vote
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|ASSEMBLY: |78-0 |(May 21, 2009) |SENATE: |39-0 |(September 4, |
| | | | | |2009) |
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Original Committee Reference: ED.
SUMMARY : Consolidates four revenue limit add-ons into two fixed
adjustments to be included in each district's total revenue
limit funding, commencing with the 2010-11 fiscal year.
Specifically, this bill :
1)States the intent of the Legislature to simplify the state's
system of education finance, while increasing transparency,
ease of administration, and local flexibility.
2)Requires the Superintendent of Public Instruction (SPI) to
compute an amount for each school district equal to the sum of
funding received in fiscal year (FY) 2007-08 for the Meals for
Needy Pupils program [Education Code (EC) Section 42241.2],
and incentives to increase beginning teachers salaries (EC
Section 45023.4), all divided by the district's average daily
attendance; also applies an annual cost-of-living adjustment
(COLA) to this amount.
3)Requires the SPI to compute an amount for each school district
equal to the sum of funding received in FY 2007-08 for Orange
County bankruptcy proceedings (EC Section 42238.21), and
inter-district transfers (EC Section 42238.22), all divided by
the district's average daily attendance (ADA).
4)Computes total revenue limit funding for each school district
by multiplying the sum of the base revenue limit and the
amounts calculated in 2) through 4) above by ADA.
5)Makes statutory language, authorizing the four school district
funding streams being consolidated, inoperative as of July 1,
2010, and repeals those sections as of January 1, 2011, unless
a later statute is enacted.
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The Senate amendments :
1)Eliminate technical conflicts with AB 2 X4 (Evans), Chapter 2,
Statutes of the 2009-2010 Fourth Extraordinary Session, an
education budget trailer bill enacted in July of this year.
2)Delete the bill's proposal to consolidate funding for the
reimbursement of unemployment insurance costs (EC Section
42241.7) into the adjustment described in 3) above.
3)Make technical, corrective changes in language and dates.
EXISTING LAW :
1)Provides for revenue limit funding for school districts that
is based on a per pupil base revenue limit multiplied by ADA,
and defines base revenue limit for any school district to be
equal to the prior year amount adjusted to account for
cost-of-living increases and any other adjustment specified by
statute (e.g., an adjustment implementing revenue limit
equalization).
2)Adjusts revenue limit funding further by making adjustments,
as specified in statute, for individual programs or district
characteristics; these adjustments are collectively referred
to as revenue limit add-ons.
AS PASSED BY THE ASSEMBLY , this bill was substantially similar
to the version passed by the Senate, with the exception that
funding for the reimbursement of unemployment insurance costs
(EC Section 42241.7) was also proposed for consolidation in the
Assembly version.
FISCAL EFFECT : According to the Senate Appropriations
Committee, the provisions regarding the Meals for Needy Pupils,
Minimum Teacher Salary, and the district-specific adjustments
would essentially be cost neutral. The Committee also noted
significant savings in Proposition 98 General Fund, depending on
the Unemployment Insurance contribution rate in a given fiscal
year, however, this provision has subsequently been deleted from
the bill.
COMMENTS : Revenue limits as a mechanism for providing general
purpose funds to school districts were created following the
Serrano v. Priest lawsuit that determined that the education
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finance system used in California at the time led to significant
per pupil funding differences and violated the state
constitution. In order to conform to the court's decision and
reduce these differences, the state created the revenue limit
system that combines local property tax revenues with state
general aid and allows the state to control the two revenue
sources on a per pupil basis.
Each district's base revenue limit has been determined by a
series of historical actions based on statute. Each year a
district's base revenue limit is calculated to be its prior year
base revenue limit adjusted in that year to account for
cost-of-living increases and other adjustments such as
equalization. This base revenue limit is then multiplied by ADA
to convert the per pupil base to a total level of funding.
Further adjustments are made to total revenue limit funding in
the form of revenue limit "add-ons." These adjustments
initially were categorical funding programs, but have become
simply additions to discretionary funding without any spending
restrictions. Many of these add-ons provide a proportionally
equal amount of funding to all or nearly all districts each
year, and/or provide an amount that does not vary over time to
some subset of districts.
This bill proposes to incorporate two of these revenue limit
add-ons (Meals for Needy Pupils program and incentives to
increase beginning teachers' salaries), into a single, fixed
adjustment and to consolidate two additional revenue limit
add-ons (adjustments for Orange County bankruptcy proceedings,
and inter-district transfers) into a separate, fixed adjustment;
both adjustments would be included in the calculation of each
district's total revenue limit funding, but not in the base
revenue limit. The slightly different treatment given to the
two sets of add-ons results from the fact that the first group
of add-ons has historically had the annual revenue limit COLA
applied, while the second group has not; thus this proposal
treats the two groups separately and applies the revenue limit
COLA to the first adjustment in a manner consistent with
historical practice. According to the author, this proposal
will simplify and provide additional transparency for the
state's education finance system, goals that are consistent with
the Getting Down to Facts studies released in 2007. The author
also points to reduced administrative costs at the state and
local levels as a benefit of this proposal.
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Incorporation and consolidation of many revenue limit add-ons
makes sense in that often the funding has lost all historical
connection to the program as it initially existed, the add-ons
merely add revenue limit funding in a complicated fashion even
though that revenue may be used for any discretionary purpose,
the amounts received vary little from year to year, or the
annual process for calculating funding levels is complicated and
cumbersome. The Legislative Analyst's Office (LAO) has often
recommended to the Legislature that a number of revenue limit
add-ons, including those specified in this bill, be rolled into
revenue limit funding. A brief summary of the four revenue
limit add-ons addressed by this bill follows.
1)Meals for Needy Pupils: This program provides funding to
districts that enacted property tax levies to support free or
reduced-price meals prior to Proposition 13 and thus lost that
funding with the passage of Proposition 13. Despite the name
of the program, the districts receiving these funds have
complete freedom over their use and are not obligated to use
the revenues to pay for subsidized meals. Districts currently
receive other state and federal categorical funding that must
be used only for subsidized meals.
2)Minimum teacher salary incentives: Minimum Teacher Salary
incentive funding provides participating school districts with
additional unrestricted revenues for increasing the salaries
for beginning teachers; the funds need not be used for this
purpose.
3)Orange County bankruptcy proceedings: The base revenue limit
for the Newport-Mesa Unified School District was adjusted as a
result of funding that was not received in 1994-95 due to the
county of Orange filing of a voluntary Chapter 9 petition in
the United States Bankruptcy Court; no ongoing funding impacts
result from this statute.
4)Inter-district attendance agreements: A small number of
districts receive a revenue limit adjustment pursuant to an
inter-district attendance agreement affecting districts in the
Santa Cruz area. As a result, funding provided for this
arrangement constitutes a transfer in general purpose funding
between the districts.
Previous legislation: AB 599 (Mullin), vetoed in 2008, was
substantially similar to this bill, except that it also included
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longer day-longer year incentive funding (commencing with
Section 46200) in the fixed adjustment that receives the annual
COLA. A number of bills have proposed rolling revenue limit
add-ons into revenue limit funding as part of a larger proposal
to reform or equalize revenue limits, or to consolidate
categorical funding; in general these bills have had opposition
related more to the larger proposal than to the treatment of
add-ons: AB 2531 (Mullin), vetoed in 2006; AB 60 (Nunez), held
in the Assembly Appropriations Committee in 2005; SB 1510
(Alpert), held on the Assembly Floor in 2004; AB 2153 (Daucher),
held in the Assembly Appropriations Committee in 2004.
Analysis Prepared by : Gerald Shelton / ED. / (916) 319-2087
FN: 0002817